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EXECUTION COPY
EXHIBIT 4.1
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DJ ORTHOPEDICS, LLC
DJ ORTHOPEDICS CAPITAL CORPORATION
12_% Senior Subordinated Notes due 2009
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INDENTURE
Dated as of June 30, 1999
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THE BANK OF NEW YORK,
as Trustee
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
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SECTION 1.01. Definitions............................................... 1
SECTION 1.02. Other Definitions......................................... 20
SECTION 1.03. Incorporation by Reference of Trust Indenture Act......... 20
SECTION 1.04. Rules of Construction..................................... 21
ARTICLE 2
THE SECURITIES
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SECTION 2.01. Form and Dating........................................... 21
SECTION 2.02. Execution and Authentication.............................. 22
SECTION 2.03. Registrar and Paying Agent................................ 22
SECTION 2.04. Paying Agent To Hold Money in Trust....................... 23
SECTION 2.05. Holder Lists.............................................. 23
SECTION 2.06. Transfer and Exchange..................................... 23
SECTION 2.07. Replacement Securities.................................... 24
SECTION 2.08. Outstanding Securities.................................... 24
SECTION 2.09. Temporary Securities...................................... 25
SECTION 2.10. Cancelation............................................... 25
SECTION 2.11. Defaulted Interest........................................ 25
SECTION 2.12. CUSIP and "ISIN" Numbers.................................. 25
ARTICLE 3
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REDEMPTION
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SECTION 3.01. Notices to Trustee........................................ 26
SECTION 3.02. Selection of Securities To Be Redeemed.................... 26
SECTION 3.03. Notice of Redemption...................................... 26
SECTION 3.04. Effect of Notice of Redemption............................ 27
SECTION 3.05. Deposit of Redemption Price............................... 27
SECTION 3.06. Securities Redeemed in Part............................... 27
ARTICLE 4
COVENANTS
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SECTION 4.01. Payment of Securities..................................... 27
SECTION 4.02. SEC Reports............................................... 28
SECTION 4.03. Limitation on Indebtedness................................ 28
SECTION 4.04. Limitation on Restricted Payments......................... 31
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries................................ 35
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Equity
Interests ............................................. 36
SECTION 4.07. Limitation on Transactions with Affiliates................ 39
SECTION 4.08. Change of Control......................................... 40
SECTION 4.09. Compliance Certificate.................................... 42
SECTION 4.10. Further Instruments and Acts.............................. 42
SECTION 4.11. Future Note Guarantors.................................... 42
SECTION 4.12. Limitation on Lines of Business........................... 42
SECTION 4.13. Limitation on the Conduct of Business of DJ Capital....... 42
ARTICLE 5
SUCCESSOR COMPANY
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SECTION 5.01. When Company May Merge or Transfer Assets................. 43
ARTICLE 6
DEFAULTS AND REMEDIES
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SECTION 6.01. Events of Default......................................... 44
SECTION 6.02. Acceleration.............................................. 46
SECTION 6.03. Other Remedies............................................ 46
SECTION 6.04. Waiver of Past Defaults................................... 46
SECTION 6.05. Control by Majority....................................... 47
SECTION 6.06. Limitation on Suits....................................... 47
SECTION 6.07. Rights of Holders To Receive Payment...................... 47
SECTION 6.08. Collection Suit by Trustee................................ 47
SECTION 6.09. Trustee May File Proofs of Claim.......................... 48
SECTION 6.10. Priorities................................................ 48
SECTION 6.11. Undertaking for Costs..................................... 48
SECTION 6.12. Waiver of Stay or Extension Laws.......................... 48
ARTICLE 7
TRUSTEE
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SECTION 7.01. Duties of Trustee......................................... 49
SECTION 7.02. Rights of Trustee......................................... 50
SECTION 7.03. Individual Rights of Trustee.............................. 50
SECTION 7.04. Trustee's Disclaimer...................................... 51
SECTION 7.05. Notice of Defaults........................................ 51
SECTION 7.06. Reports by Trustee to Holders............................. 51
SECTION 7.07. Compensation and Indemnity................................ 51
SECTION 7.08. Replacement of Trustee.................................... 52
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SECTION 7.09. Successor Trustee by Merger............................... 53
SECTION 7.10. Eligibility; Disqualification............................. 53
SECTION 7.11. Preferential Collection of Claims Against Issuers......... 53
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
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SECTION 8.01. Discharge of Liability on Securities; Defeasance.......... 53
SECTION 8.02. Conditions to Defeasance.................................. 54
SECTION 8.03. Application of Trust Money................................ 56
SECTION 8.04. Repayment to Issuers...................................... 56
SECTION 8.05. Indemnity for Government Obligations...................... 56
SECTION 8.06. Reinstatement............................................. 56
ARTICLE 9
AMENDMENTS
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SECTION 9.01. Without Consent of Holders................................ 56
SECTION 9.02. With Consent of Holders................................... 57
SECTION 9.03. Compliance with Trust Indenture Act....................... 58
SECTION 9.04. Revocation and Effect of Consents and Waivers............. 58
SECTION 9.05. Notation on or Exchange of Securities..................... 59
SECTION 9.06. Trustee To Sign Amendments................................ 59
ARTICLE 10
SUBORDINATION
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SECTION 10.01. Agreement To Subordinate.................................. 59
SECTION 10.02. Liquidation, Dissolution, Bankruptcy...................... 60
SECTION 10.03. Default on Designated Senior Indebtedness of the Issuers.. 60
SECTION 10.04. Acceleration of Payment of Securities; Five Business Day
Delay in Payment of Designated Senior Indebtedness
Outstanding............................................... 61
SECTION 10.05. When Distribution Must Be Paid Over....................... 61
SECTION 10.06. Subrogation............................................... 61
SECTION 10.07. Relative Rights........................................... 62
SECTION 10.08. Subordination May Not Be Impaired by Either Issuer........ 62
SECTION 10.09. Rights of Trustee and Paying Agent........................ 62
SECTION 10.10. Distribution or Notice to Representative.................. 62
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit
Right To Accelerate.................................... 62
SECTION 10.12. Trust Monies Not Subordinated............................. 63
SECTION 10.13. Trustee Entitled To Rely.................................. 63
SECTION 10.14. Trustee To Effectuate Subordination....................... 63
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness.......................................... 63
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................... 63
ARTICLE 11
NOTE GUARANTEES
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SECTION 11.01. Note Guarantees........................................... 64
SECTION 11.02. Limitation on Liability................................... 66
SECTION 11.03. Successors and Assigns.................................... 67
SECTION 11.04. No Waiver................................................. 67
SECTION 11.05. Modification.............................................. 67
SECTION 11.06. Execution of Supplemental Indenture for Future Note
Guarantors................................................ 67
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SECTION 11.07. NonImpairment............................................ 67
ARTICLE 12
SUBORDINATION OF THE NOTE GUARANTEES
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SECTION 12.01. Agreement To Subordinate.................................. 68
SECTION 12.02. Liquidation, Dissolution, Bankruptcy...................... 68
SECTION 12.03. Default on Designated Senior Indebtedness of a
Note Guarantor......................................... 68
SECTION 12.04. Demand for Payment; Five Business Day Delay in Payment of
Designated Senior Indebtedness Outstanding................ 69
SECTION 12.05. When Distribution Must Be Paid Over....................... 70
SECTION 12.06. Subrogation............................................... 70
SECTION 12.07. Relative Rights........................................... 70
SECTION 12.08. Subordination May Not Be Impaired by a Note
Guarantor.............................................. 70
SECTION 12.09. Rights of Trustee and Paying Agent........................ 70
SECTION 12.10. Distribution or Notice to Representative.................. 71
SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit
Right To Accelerate.................................... 71
SECTION 12.12. Trustee Entitled to Rely.................................. 71
SECTION 12.13. Trustee To Effectuate Subordination....................... 71
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness
of a Note Guarantor.................................... 71
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Note Guarantor on Subordination Provisions............. 72
SECTION 12.16. Defeasance................................................ 72
ARTICLE 13
MISCELLANEOUS
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SECTION 13.01. Trust Indenture Act Controls.............................. 72
SECTION 13.02. Notices................................................... 72
SECTION 13.03. Communication by Holders with Other Holders............... 73
SECTION 13.04. Certificate and Opinion as to Conditions Precedent........ 73
SECTION 13.05. Statements Required in Certificate or Opinion............. 73
SECTION 13.06. When Securities Disregarded............................... 74
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.............. 74
SECTION 13.08. Legal Holidays............................................ 74
SECTION 13.09. GOVERNING LAW............................................. 74
SECTION 13.10. No Recourse Against Others................................ 74
SECTION 13.11. Successors................................................ 74
SECTION 13.12. Multiple Originals........................................ 74
SECTION 13.13. Table of Contents; Headings............................... 75
Appendix A - Provisions Relating to Initial Securities, Private Exchange
Securities and Exchange Securities
Exhibit A - Form of Initial Security and Private Exchange Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Supplemental Indenture
Exhibit D - Form of Transferee Letter of Representation
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
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310(a)(1) ....................................................................... 7.10
(a)(2) ....................................................................... 7.10
(a)(3) ....................................................................... N.A.
(a)(4) ....................................................................... N.A.
(b) ....................................................................... 7.08; 7.10
(c) ....................................................................... N.A.
311(a) .......................................................................... 7.11
(b) .......................................................................... 7.11
(c) .......................................................................... N.A.
312(a) .......................................................................... 2.05
(b) .......................................................................... 13.03
(c) .......................................................................... 13.03
313(a) .......................................................................... 7.06
(b)(1) ....................................................................... N.A.
(b)(2) ....................................................................... 7.06
(c) .......................................................................... 13.02
(d) .......................................................................... 7.06
314(a) .......................................................................... 4.02;4.11;13.02
(b) .......................................................................... N.A.
(c)(1) ....................................................................... 13.04
(c)(2) ....................................................................... 13.04
(c)(3) ....................................................................... N.A.
(d) .......................................................................... N.A.
(e) .......................................................................... 13.05
(f) .......................................................................... 4.11
315(a) .......................................................................... 7.01
(b) .......................................................................... 7.05;13.02
(c) .......................................................................... 7.01
(d) .......................................................................... 7.01
(e) .......................................................................... 6.11
316(a) (last sentence) .......................................................... 13.06
(a)(1)(A) .................................................................... 6.05
(a)(1)(B) .................................................................... 6.04
(a)(2) ....................................................................... N.A.
(b) .......................................................................... 6.07
317(a)(1) ....................................................................... 6.08
(a)(2) ....................................................................... 6.09
(b) .......................................................................... 2.04
318(a) .......................................................................... 13.01
N.A. means Not Applicable.
_________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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INDENTURE dated as of June 30, 1999, among DJ
Orthopedics, LLC, a Delaware limited liability company
(the "Company"), DJ Orthopedics Capital Corporation, a
Delaware corporation ("DJ Capital," and together with the
Company, the "Issuers"), DonJoy, L.L.C., a Delaware
limited liability company ("DonJoy"), and The Bank of New
York, a New York banking corporation, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of (a) the
Issuers' 12-_% Senior Subordinated Notes due 2009 issued on the date hereof
(the "Initial Securities"), (b) if and when issued as provided in the
Registration Agreement (as defined in Appendix A hereto (the "Appendix")), the
Issuers' 12-_% Senior Subordinated Notes due 2009 issued in the Registered
Exchange Offer (as defined in the Appendix) in exchange for any Initial
Securities (the "Exchange Securities") and (c) if and when issued as provided
in the Registration Agreement, the Private Exchange Securities (as defined in
the Appendix and, together with the Initial Securities and any Exchange
Securities issued hereunder, the "Securities") issued in the Private Exchange.
Except as otherwise provided herein, the Securities will be limited to
$100,000,000 in aggregate principal amount outstanding.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (a) any property or assets (other than
Indebtedness and Equity Interests) to be used by the Company or a Restricted
Subsidiary in a Permitted Business or any improvements to any property or
assets that are used by the Company or a Restricted Subsidiary in a Permitted
Business; (b) Equity Interests of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Equity Interests by the Company or
another Restricted Subsidiary; or (c) Equity Interests constituting a minority
interest in any Person that at such time is a Restricted Subsidiary; provided,
however, that any such Restricted Subsidiary described in clauses (b) or (c)
above is primarily engaged in a Permitted Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with
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respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of
Sections 4.06 and 4.07 only, "Affiliate" shall also mean any beneficial owner
of Equity Interests representing 5% or more of the total voting power of the
Voting Equity Interests (on a fully diluted basis) of DonJoy (or any other
direct or indirect parent company of the Company) or the Company or of rights
or warrants to purchase such Voting Equity Interests (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer or
other disposition (or series of related sales, leases, transfers or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition"), of (a) any
Equity Interests of a Restricted Subsidiary (other than directors' qualifying
Equity Interests or Equity Interests required by applicable law to be held by a
Person other than the Company or a Restricted Subsidiary), (b) all or
substantially all the assets of any division or line of business of the Company
or any Restricted Subsidiary or (c) any other assets of the Company or any
Restricted Subsidiary outside of the ordinary course of business of the Company
or such Restricted Subsidiary (other than, in the case of (a), (b) and (c)
above, (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) for
purposes of Section 4.06 only, the making of a Permitted Investment or a
disposition that constitutes a Restricted Payment permitted by Section 4.04,
(iii) a disposition of obsolete or worn out property or equipment or property
or equipment that is no longer useful in the conduct of the business of the
Company and its Restricted Subsidiaries, and (iv) any other disposition of
assets with a fair market value, as conclusively determined by senior
management of the Company in good faith, of less than $500,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Equity Interests, the quotient
obtained by dividing (a) the sum of the products of the numbers of years from
the date of determination to the dates of each successive scheduled principal
payment of such Indebtedness or scheduled redemption or similar payment with
respect to such Preferred Equity Interests multiplied by the amount of such
payment by (b) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or
in respect of the Credit Agreement and any Refinancing Indebtedness with
respect thereto,
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as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be prepaid
by the lessee without payment of a penalty.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the earlier to occur of (i) the first public
offering of common Equity Interests of DonJoy or (ii) the first public
offering of common Equity Interests of the Company, the Permitted
Holders cease to be the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of a
majority in the aggregate of the total voting power of the Voting
Equity Interests of the Company or DonJoy, whether as a result of
issuance of securities of DonJoy or the Company, any merger,
consolidation, liquidation or dissolution of DonJoy or the Company, any
direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (a) and clause (b) below, the
Permitted Holders shall be deemed to beneficially own any Voting Equity
Interests of an entity (the "specified entity") held by any other
entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Equity Interests
of the parent entity);
(b) (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, including any group acting for the purpose
of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above, except that for purposes of this clause (b) a person
(including a Permitted Holder) shall be deemed to have "beneficial
ownership" of all Equity Interests that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time, upon the happening of any event or otherwise),
directly or indirectly, of
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more than 35% of the total voting power of the Voting Equity Interests
of the Company or DonJoy and (ii) the Permitted Holders "beneficially
own" (as defined in clause (a) above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting
Equity Interests of the Company or DonJoy than such other person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Governing Board of
the Company or DonJoy, as the case may be (for the purposes of this
clause (b), such other person shall be deemed to beneficially own any
Voting Equity Interests of a specified entity held by a parent entity,
if such other person is the beneficial owner (as defined in this clause
(b)), directly or indirectly, of more than 35% of the voting power of
the Voting Equity Interests of such parent entity and the Permitted
Holders "beneficially own" (as defined in clause (a) above), directly
or indirectly, in the aggregate a lesser percentage of the voting power
of the Voting Equity Interests of such parent entity and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Governing Board of such parent
entity);
(c) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Governing Board of the
Company or DonJoy, as the case may be (together with any new persons
(i) elected in accordance with the Members' Agreement so long as such
agreement is in effect or (ii) whose election by such Governing Board
of the Company or DonJoy, as the case may be, or whose nomination for
election by the equity holders of the Company or DonJoy, as the case
may be, was approved by a vote of at least a majority of the members of
the Governing Board of the Company or DonJoy, as the case may be, then
still in office who were either members of the Governing Board at the
beginning of such period or who were selected in accordance with the
Members' Agreement or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Governing Board of the Company or DonJoy, as the case may be,
then in office;
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, DJ Capital or DonJoy;
(e) the merger or consolidation of the Company or DonJoy with or
into another Person or the merger of another Person with or into the
Company or DonJoy, or the sale of all or substantially all the assets
of the Company or DonJoy to another Person (other than a Person that is
controlled by the Permitted Holders), and, in the case of any such
merger or consolidation, the securities of the Company or DonJoy that
are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the Voting Equity
Interests of the Company or DonJoy are changed into or exchanged
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for cash, securities or property, unless pursuant to such transaction
such securities are changed into or exchanged for, in addition to any
other consideration, securities of the surviving Person or transferee
that represent immediately after such transaction, at least a majority
of the aggregate voting power of the Voting Equity Interests of the
surviving Person or transferee; or
(f) the Company ceases to own, of record or beneficially, all
the Equity Interests of DJ Capital.
"Closing Date" means the date of this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (a) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters for which financial statements are
publicly available ending prior to the date of such determination to (b)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that (i) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (ii) if the Company or any Restricted
Subsidiary has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of such period or if any Indebtedness is to be
repaid, repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the date
of the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall
be calculated on a pro forma basis as if such discharge had occurred on the
first day of such period and as if the Company or such Restricted Subsidiary
has not earned the interest income actually earned during such period in
respect of cash or Temporary Cash Investments used to repay, repurchase,
defease or otherwise discharge such Indebtedness, (iii) if since the beginning
of such period the Company or any Restricted Subsidiary shall have made any
Asset Disposition, the EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets that are
the subject of such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly
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attributable thereto for such period and Consolidated Interest Expense
for such period shall be reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness of the Company or
any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Equity
Interests of any Restricted Subsidiary are sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale), (iv)
if since the beginning of such period the Company or any Restricted Subsidiary
(by merger or otherwise) shall have made an Investment in any Restricted
Subsidiary (or any Person that becomes a Restricted Subsidiary or is merged
with and into the Company) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (v) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or
any Investment or acquisition of assets that would have required an adjustment
pursuant to clause (iii) or (iv) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition of assets occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an Investment or acquisition of assets, the amount of
income or earnings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. Any such pro forma calculations
may include operating expense reductions for such period resulting from the
acquisition which is being given pro forma effect that (a) would be permitted
pursuant to Article XI of Regulation S-X under the Securities Act or (b) have
been realized or for which the steps necessary for realization have been taken
or are reasonably expected to be taken within six months following any such
acquisition, including, but not limited to, the execution or termination of any
contracts, the termination of any personnel or the closing (or approval by the
Governing Board of any closing) of any facility, as applicable, provided that,
such adjustments are set forth in an Officers' Certificate signed by the
Company's chief financial officer and another Officer which states (i) the
amount of such adjustment or adjustments, (ii) that such adjustment or
adjustments are based on the reasonable good faith beliefs of the officers
executing such Officers' Certificate at the time of such execution and (iii)
that any related Incurrence of Indebtedness is permitted
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pursuant to this Indenture. In addition, to the extent not covered by the
foregoing, if the Transactions have occurred in the four quarter period used to
determine the Consolidated Coverage Ratio, then the Consolidated Coverage Ratio
shall be determined giving pro forma effect on the basis given in the Offering
Memorandum to the Transactions, with all calculations relating thereto to be
made at the date of determination by the Company's chief financial officer, and
set forth in an Officers' Certificate signed by the chief financial officer and
another Officer and meeting the requirements for the Officers' Certificate
described in the preceding sentence.
If any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest expense on such Indebtedness shall
be calculated as if the rate in effect on the date of determination had been
the applicable rate for the entire period (taking into account any Interest
Rate Agreement or Currency Agreement applicable to such Indebtedness if such
Interest Rate Agreement or Currency Agreement has a remaining term as at the
date of determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Consolidated Restricted Subsidiaries
(excluding amortization and write-off of debt issuance costs), plus, to the
extent Incurred by the Company and its Restricted Subsidiaries in such period
but not included in such interest expense, (a) interest expense attributable to
Capitalized Lease Obligations and the interest expense attributable to leases
constituting part of a Sale/Leaseback Transaction, (b) amortization of debt
discount, (c) capitalized interest, (d) noncash interest expense, (e)
commissions, discounts and other fees and charges attributable to letters of
credit and bankers' acceptance financing, (f) interest accruing on any
Indebtedness of any other Person to the extent such Indebtedness is Guaranteed
by the Company or any Restricted Subsidiary; (g) net costs associated with
Hedging Obligations (including amortization of fees), (h) dividends and
distributions in respect of all Disqualified Equity Interests of the Company
and all Preferred Equity Interests of any of the Subsidiaries of the Company,
to the extent held by Persons other than the Company or a Wholly Owned
Subsidiary, (i) interest Incurred in connection with investments in
discontinued operations, and (j) the cash contributions to any employee equity
ownership or participation plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Indebtedness Incurred by
such plan or trust. Notwithstanding anything to the contrary contained herein,
commissions, discounts, yield and other fees and charges Incurred in connection
with any transaction pursuant to which the Company or any Subsidiary of the
Company may sell, convey or otherwise transfer or grant a security interest in
any accounts receivable or related assets shall be included in Consolidated
Interest Expense.
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"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its Consolidated Subsidiaries for such period;
provided, however, that there shall not be included in such Consolidated Net
Income:
(a) any net income (loss) of any Person (other than the Company)
if such Person is not a Restricted Subsidiary, except that (i) subject
to the limitations contained in clauses (d), (e) and (f) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
made to a Restricted Subsidiary, to the limitations contained in clause
(c) below) and (ii) the Company's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Net Income to the extent such loss has been funded with
cash from the Company or a Restricted Subsidiary;
(b) other than for purposes of clauses (iv) and (v) of the
definition of Consolidated Coverage Ratio, any net income (or loss) of
any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such
acquisition;
(c) any net income (or loss) of any Restricted Subsidiary if
such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
or loans or intercompany advances by such Restricted Subsidiary,
directly or indirectly, to the Company, except that (i) subject to the
limitations contained in clauses (d), (e) and (f) below, the Company's
equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed, loaned or advanced by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend, distribution, loan or advance
(subject, in the case of a dividend distribution made to another
Restricted Subsidiary, to the limitation contained in this clause) and
(ii) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(d) any gain (loss) realized upon the sale or other disposition
of any asset of the Company or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Equity
Interests of any Person;
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(e) any extraordinary gain or loss; and
(f) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under Section 4.04(a)(3)(E).
"Consolidation" means the consolidation of the amounts of each
of the Restricted Subsidiaries with those of the Company in accordance with
GAAP consistently applied; provided, however, that "Consolidation" shall not
include consolidation of the accounts of any Unrestricted Subsidiary, but the
interest of the Company or any Restricted Subsidiary in an Unrestricted
Subsidiary shall be accounted for as an investment. The term "Consolidated" has
a correlative meaning.
"Credit Agreement" means the credit agreement dated as of the
Closing Date among the Company, DonJoy, the lenders named therein, First Union
National Bank, as administrative agent and collateral agent, and The Chase
Manhattan Bank, as syndication agent, in each case as amended, modified,
supplemented, restated, renewed, refunded, replaced, restructured, repaid or
refinanced from time to time (including any agreement extending the maturity
thereof or increasing the amount of available borrowings thereunder or adding
Restricted Subsidiaries of the Company as additional borrowers or guarantors
thereunder) whether with the original agents and lenders or otherwise and
whether provided under the original credit agreement or other credit agreements
or otherwise.
"Currency Agreement" means with respect to any Person any
foreign exchange contract, currency swap agreements or other similar agreement
or arrangement to which such Person is a party or of which it is a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" of the Company means (a) the
Bank Indebtedness and (b) any other Senior Indebtedness of the Company that, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $15.0 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes
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of this Indenture. "Designated Senior Indebtedness" of DJ Capital or a Note
Guarantor has a correlative meaning.
"Disqualified Equity Interest" means, with respect to any
Person, any Equity Interest of such Person which by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (a) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise, (b) is
convertible or exchangeable for Indebtedness or Disqualified Equity Interests
(excluding Equity Interests convertible or exchangeable solely at the option of
the Company or a Restricted Subsidiary, provided, that any such conversion or
exchange shall be deemed an issuance of Indebtedness or an issuance of
Disqualified Equity Interests, as applicable) or (c) is redeemable at the
option of the holder thereof, in whole or in part, in the case of clauses (a),
(b) and (c) on or prior to 91 days after the Stated Maturity of the Securities;
provided, however, that only the portion of the Equity Interests which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is
so redeemable at the option of the holder thereof prior to such date will be
deemed Disqualified Equity Interests; provided, further, any Equity Interests
that would not constitute Disqualified Equity Interests but for provisions
thereof giving holders thereof the right to require such Person to repurchase
or redeem such Equity Interests upon the occurrence of an "asset sale" or
"change of control" shall not constitute Disqualified Equity Interests if the
"asset sale" or "change of control" provisions applicable to such Equity
Interests provide that such Person may not repurchase or redeem such Equity
Interests pursuant to such provisions unless such Person has first complied
with the provisions of Sections 4.06 and 4.08, as applicable; and provided,
further that any class of Equity Interests of such Person that, by its terms,
authorizes such Person to satisfy in full its obligations with respect to
payment of dividends or upon maturity, redemption (pursuant to a sinking fund
or otherwise) or repurchase thereof or other payment obligations or otherwise
by delivery of Equity Interests that are not Disqualified Equity Interests, and
that is not convertible, puttable or exchangeable for Disqualified Equity
Interests or Indebtedness, shall not be deemed Disqualified Equity Interests so
long as such Person satisfies its obligations with respect thereto solely by
the delivery of Equity Interests that are not Disqualified Equity Interests.
"Domestic Subsidiary" means any Restricted Subsidiary of the
Company other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for
such period, plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income: (a) income tax expense of the Company
and its Consolidated Restricted Subsidiaries, (b) Consolidated Interest
Expense, (c) depreciation expense of the Company and its Consolidated
Restricted Subsidiaries, (d) amortization expense of
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11
the Company and its Consolidated Restricted Subsidiaries (excluding
amortization expense attributable to a prepaid cash item that was paid in a
prior period) and (e) other noncash charges of the Company and its Consolidated
Restricted Subsidiaries (excluding any such noncash charge to the extent that
it represents an accrual of or reserve for cash expenditures in any future
period). Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and noncash charges
of, a Restricted Subsidiary of the Company shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income (loss) of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted
at the date of determination to be dividended, loaned or advanced to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted Subsidiary or its equity holders.
"Equity Interest" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Equity Interests, but excluding any debt securities
convertible into such equity.
"Equity Offering" means any public or private sale of common
Equity Interests of the Company or DonJoy, as applicable, other than public
offerings with respect to the Company's or DonJoy's common Equity Interests
registered on Form S-8 or other issuances upon exercise of options by employees
of the Company or any of its Restricted Subsidiaries.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Management Stockholders" means each of Leslie H.
Cross, Cyril Talbot III and Michael McBrayer.
"Foreign Subsidiary" means any Restricted Subsidiary of the
Company that is not organized under the laws of the United States of America or
any State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Closing Date, including those
set forth in (a) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (b) statements
and pronouncements of the Financial Accounting Standards Board, (c) such other
statements by such other entities as are approved by a significant segment of
the accounting profession and (d) the rules and
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regulations of the SEC governing the inclusion of financial statements
(including pro forma financial statements) in periodic reports required to be
filed pursuant to Section 13 of the Exchange Act, including opinions and
pronouncements in staff accounting bulletins and similar written statements
from the accounting staff of the SEC. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP.
"Governing Board" of the Company or any other Person means, (i)
the managing member or members or any controlling committee of members of the
Company or such Person, for so long as the Company or such Person is a limited
liability company, (ii) the board of directors of the Company or such Person,
if the Company or such Person is a corporation or (iii) any similar governing
body.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a Security is registered
on the Registrar's books.
"Income Tax Liabilities" means an amount determined by
multiplying (a)(i) all taxable income and gains of the Company for such
calendar year (the "Taxable Amount") minus (ii) an amount (not to exceed the
Taxable Amount for such calendar year) equal to all losses of the Company in
any of the three prior calendar years that have not been previously subtracted
pursuant to this clause (ii) from the Taxable Amount for any prior year by (b)
forty-four percent (44%).
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Equity Interests
of a Person existing at
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the time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary. The term "Incurrence" when used as a noun
shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication),
(a) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(b) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto);
(d) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables
and other accrued liabilities arising in the ordinary course of
business which are not overdue), which purchase price is due more than
six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services;
(e) all Capitalized Lease Obligations and all Attributable Debt
of such Person;
(f) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified
Equity Interests or, with respect to any Subsidiary of such Person, any
Preferred Equity Interests (but excluding, in each case, any accrued
dividends);
(g) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of (i) the fair market value of such asset
at such date of determination and (ii) the amount of such Indebtedness
of such other Persons;
(h) to the extent not otherwise included in this definition, the
net obligations under Hedging Obligations of such Person; and
(i) to the extent not otherwise included, the amount then
outstanding (i.e., advanced, and received by, and available for use by,
such Person) under any
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receivables financing (as set forth in the books and records of such
Person and confirmed by the agent, trustee or other representative of
the institution or group providing such receivables financing); and
(j) all obligations of the type referred to in clauses (a)
through (i) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or is a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or
other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Equity Interests,
Indebtedness or other similar instruments issued by such Person. For purposes
of the definition of "Unrestricted Subsidiary" and Section 4.04, (a)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (i) the Company's "Investment" in such Subsidiary at the
time of such redesignation less (ii) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (b) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case
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15
as determined in good faith by (i) the senior management of the Company if the
amount thereof is less than $1.0 million and (ii) the Governing Board if in
excess thereof.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Issuers" means the parties named as such in this Indenture
until a successor replaces either such party and, thereafter, means any
remaining party named as such in this Indenture and any such successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"liquidated damages" means any liquidated damages payable under
the Registration Agreement.
"Members' Agreement" means the Members' Agreement among DonJoy,
Chase DJ Partners, LLC, Smith & Nephew, Inc., Leslie H. Cross, Cyril Talbot III
and Michael R. McBrayer, as such agreement shall be in effect on the Closing
Date and any amendments, modifications, supplements or waivers thereto
(collectively, "amendments"), other than any such amendment to the provisions
thereof relating to the election or appointment of members of the Governing
Board of the Company or DonJoy that are materially adverse to the Holders of
the Securities.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Disposition or received in any other non-cash form)
therefrom, in each case net of (a) all legal, accounting, investment banking,
title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (b) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition, (c) all distributions and other payments required to be made
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16
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and (d) appropriate amounts to be provided by the seller
as a reserve, in accordance with GAAP, against any liabilities associated with
the property or other assets disposed of in such Asset Disposition and retained
by the Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Equity Interests, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees and expenses
actually incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Note Guarantee" means each Guarantee of the Guaranteed
Obligations by a Note Guarantor pursuant to the terms of this Indenture.
"Note Guarantor" means DonJoy and any other Person that has
issued a Note Guarantee.
"Officer" of either Issuer, as the case may be, means the
Chairman of the Board, the Chief Executive Officer, the Chief Financial
Officer, the President, any Vice President, the Treasurer or the Secretary of
such Issuer.
"Officers' Certificate" of either Issuer, as the case may be,
means a certificate signed by two Officers of such Issuer.
"Offering Memorandum" means the Offering Memorandum dated June
17, 1999, relating to the Initial Securities.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee.
"Permitted Business" means the design, manufacture and/or
marketing of orthopedic products, devices, accessories or services, other
medical products, devices, accessories or services or any businesses that are
reasonably related, ancillary or complimentary thereto.
"Permitted Holders" means each of (i) Chase Capital Partners and
its Affiliates, (ii) Chase DJ Partners, LLC and its Affiliates, (iii) First
Union Capital Corporation and its Affiliates, (iv) Fairfield Chase Medical
Partners, LLC and its Affiliates, (v) Charles T. Orsatti and his Related
Parties, (vi) the Existing Management Stockholders and their Related Parties
and (vii) any Person acting in the capacity of an
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underwriter in connection with a public or private offering of the Company's or
DonJoy's Equity Interests.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (a) the Company, a Restricted Subsidiary or a Person
that will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary is a
Permitted Business; (b) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys
all or substantially all its assets to, the Company or a Restricted Subsidiary
(other than DJ Capital); provided, however, that such Person's primary business
is a Permitted Business; (c) Temporary Cash Investments; (d) receivables owing
to the Company or any Restricted Subsidiary (other than DJ Capital) if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as the Company or any such
Restricted Subsidiary deems reasonable under the circumstances; (e) payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; (f) loans or advances to
officers, directors, consultants or employees made in the ordinary course of
business and not exceeding $1.5 million in the aggregate outstanding at any one
time; (g) Equity Interests, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of a debtor; (h) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition that
was made pursuant to and in compliance with Section 4.06; (i) Hedging
Obligations entered into in the ordinary course of business; (j) endorsements
of negotiable instruments and documents in the ordinary course of business; (k)
assets or Equity Interests of a Person acquired by the Company or a Restricted
Subsidiary to the extent the consideration for such acquisition consists of
Equity Interests (other than Disqualified Equity Interests) of the Company or
DonJoy; (l) Investments in existence on the Closing Date; (m) Investments of a
Person or any of its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary of the Company or at the time such Person merges or
consolidates with the Company or any of its Restricted Subsidiaries, in either
case in compliance with this Indenture, provided that such Investments were not
made by such Person in connection with, or in anticipation or contemplation of,
such Person becoming a Restricted Subsidiary of the Company or such merger or
consolidation; and (n) additional Investments having an aggregate fair market
value (as determined in good faith by (i) senior management of the Company if
such fair market value is less than $1.0 million or (ii) by the Governing Board
of the Company if in excess thereof), taken together with all other Investments
made pursuant to this clause (n) that are at the time outstanding, not to
exceed the greater of 10% of Total Assets or
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$10.0 million at the time of such Investment (with the fair market value of
each Investment being measured at the time made and without giving effect to
subsequent changes in value).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Equity Interests", as applied to the Equity Interests
of any Person, means Equity Interests of any class or classes (however
designated) that are preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Recapitalization" shall have the meaning set forth in the
Offering Memorandum.
"Recapitalization Agreement" means the recapitalization
agreement dated as of April 29, 1999 among Chase DJ Partners, LLC, Smith &
Nephew, Inc. and DonJoy as such agreement is in effect on the Closing Date.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred
to refund, refinance, replace, renew, repay or extend (including pursuant to
any defeasance or discharge mechanism) any Indebtedness of the Company or any
Restricted Subsidiary existing on the Closing Date or Incurred in compliance
with this Indenture (including Indebtedness of the Company or a Restricted
Subsidiary that Refinances Refinancing Indebtedness); provided, however, that
(a) the Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced, (b) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, (c) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) (whether in
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U.S. dollars or a foreign currency) that is equal to or less than the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) (in U.S. dollars or such foreign currency, as applicable) then
outstanding (plus, without duplication, accrued interest, fees and expenses,
including premium and defeasance costs) of the Indebtedness being Refinanced
and (d) if the Indebtedness being refinanced is subordinated in right of
payment to the Securities or a Note Guarantee of a Note Guarantor, such
Refinancing Indebtedness is subordinated in right of payment to the Securities
or the Note Guarantee at least to the same extent as the Indebtedness being
Refinanced; provided further, however, that Refinancing Indebtedness shall not
include (i) Indebtedness of a Restricted Subsidiary that is not a Note
Guarantor that Refinances Indebtedness of the Company or (ii) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Related Parties" means with respect to a Person that is a
natural person (a)(1) any spouse, parent or lineal descendant of such Person or
(2) the estate of such Person during any period in which such estate holds
Equity Interests of DonJoy or the Company for the benefit of any person
referred to in clause (a)(1) and (b) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially owning an interest of more than 50% of which consist of such
Person and/or such other Persons referred to in the immediately preceding
clause (a).
"Representative" means the trustee, agent or representative (if
any) for an issue of Senior Indebtedness.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Subsidiary" means DJ Capital and any other
Subsidiary of the Company other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or a Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or
DJ Capital secured by a Lien. "Secured Indebtedness" of a Note Guarantor has a
correlative meaning.
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"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" of the Company, DJ Capital or any Note
Guarantor, as the case may be, means the principal of, premium (if any) and
accrued and unpaid interest on (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization of the Company, DJ
Capital or any Note Guarantor, as applicable, regardless of whether or not a
claim for post-filing interest is allowed in such proceedings) and fees and all
other amounts owing in respect of, Bank Indebtedness and all other Indebtedness
of the Company, DJ Capital or any Note Guarantor, as applicable, whether
outstanding on the Closing Date or thereafter Incurred, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are subordinated in right of
payment to the Securities or such Note Guarantor's Note Guarantee; provided,
however, that Senior Indebtedness shall not include (a) any obligation of the
Company to any Subsidiary of the Company or of any Note Guarantor or DJ Capital
to the Company or any other Subsidiary of the Company, (b) any liability for
Federal, state, local or other taxes owed or owing by the Company, DJ Capital
or any Note Guarantor, (c) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (d) any Indebtedness or
obligation of the Company, DJ Capital or any Note Guarantor (and any accrued
and unpaid interest in respect thereof) that by its terms is subordinate or
junior in right of payment to any other Indebtedness or obligation of the
Company, DJ Capital or such Note Guarantor, including any Senior Subordinated
Indebtedness and any Subordinated Obligations, (e) any obligations with respect
to any Equity Interest or (f) any Indebtedness Incurred in violation of this
Indenture.
"Senior Subordinated Indebtedness" of the Company means the
Securities and any other Indebtedness of the Company that specifically provides
that such Indebtedness is to rank pari passu with the Securities in right of
payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior
Indebtedness. "Senior Subordinated Indebtedness" of DJ Capital or a Note
Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but
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excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency beyond the
control of the issuer unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of DJ Capital or a Note Guarantor
has a correlative meaning.
"Subsidiary" of any Person means any corporation, association,
partnership, limited liability company or other business entity of which more
than 50% of the total voting power of Equity Interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, representatives, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (a) such
Person, (b) such Person and one or more Subsidiaries of such Person or (c) one
or more Subsidiaries of such Person.
"Tax Distribution" means any distribution by the Company to its
members which (i) with respect to quarterly estimated tax payments due in each
calendar year shall be equal to twenty-five percent (25%) of the Income Tax
Liabilities for such calendar year as estimated in writing by the chief
financial officer of the Company and (ii) with respect to tax payments to be
made with income tax returns filed for a full calendar year or with respect to
adjustments to such returns imposed by the Internal Revenue Service or other
taxing authority, shall be equal to the Income Tax Liabilities for each
calendar year minus the aggregate amount distributed for such calendar year as
provided in clause (i) above. In the event the amount determined under clause
(ii) is a negative amount, the amount of any Tax Distributions in the
succeeding calendar year (or, if necessary, any subsequent calendar years)
shall be reduced by such negative amount.
"Temporary Cash Investments" means any of the following: (a) any
investment in direct obligations of the United States of America or any agency
or instrumentality thereof or obligations Guaranteed or insured by the United
States of America or any agency or instrumentality thereof, (b) investments in
checking accounts, savings accounts, time deposit accounts, certificates of
deposit, bankers' acceptances and money market deposits maturing within 180
days of the date of acquisition thereof issued by a bank or trust company that
is organized under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America having
capital, surplus and undivided profits aggregating in excess of $250,000,000
(or the foreign currency equivalent thereof) and whose long-term debt is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act), (c) repurchase obligations with a term of not more than 30
days for underlying
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securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above, (d) investments in
commercial paper, maturing not more than 270 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard and Poor's Ratings Service, a division of The McGraw-Hill Companies,
Inc. ("S&P"), (e) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A"
by Moody's Investors Service, Inc., and (f) investments in money market funds
that invest substantially all of their assets in securities of the types
described in clauses (a) through (e) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa- 77bbbb) as in effect on the Closing Date.
"Total Assets" means the total consolidated assets of the
Company and its Restricted Subsidiaries, as shown on the most recent balance
sheet of the Company.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transactions" shall have the meaning set forth in the Offering
Memorandum.
"Trustee" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor.
"Trust Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
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"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"Unrestricted Subsidiary" means (a) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Governing Board in the manner provided below and (b) any
Subsidiary of an Unrestricted Subsidiary. The Governing Board may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company), other than DJ Capital, to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity
Interests or Indebtedness of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (i) the
Subsidiary to be so designated has total Consolidated assets of $1,000 or less
or (ii) if such Subsidiary has Consolidated assets greater than $1,000, then
such designation would be permitted under Section 4.04. The Governing Board may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (a) the
Company could Incur $1.00 of additional Indebtedness under Section 4.03(a), and
(b) no Default shall have occurred and be continuing. Any such designation of a
Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary by the
Governing Board shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Governing Board giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Equity Interests" of a Person means the Equity Interests
in a corporation or other Person with voting power under ordinary circumstances
(without regard to the occurrence of any contingency) entitling the holders
thereof to elect or appoint the board of managers, board of directors,
executive committee, management committee or other governing body of such
corporation or Person.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Equity Interests of which (other than directors' qualifying
Equity Interests) are owned by the Company or another Wholly Owned Subsidiary.
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SECTION 1.02. Other Definitions.
Defined in
Term Section
--------------
"Affiliate Transaction"......................................... 4.07(a)
"Appendix"...................................................... Preamble
"Bankruptcy Law"................................................ 6.01
"beneficially own".............................................. 1.01
"Blockage Notice"............................................... 10.03
"covenant defeasance option".................................... 8.01(b)
"Custodian"..................................................... 6.01
"Definitive Securities"......................................... Appendix A
"Event of Default".............................................. 6.01
"Exchange Securities"........................................... Preamble
"Global Securities"............................................. Appendix A
"Guarantee Blockage Notice"..................................... 12.03
"Guaranteed Obligation"......................................... 11.01
"Guarantee Payment Blockage Period"............................. 12.03
"Initial Securities"............................................ Preamble
"legal defeasance option"....................................... 8.01(b)
"Legal Holiday"................................................. 13.08
"Offer"......................................................... 4.06(b)
"Offer Amount".................................................. 4.06(c)(ii)
"Offer Period".................................................. 4.06(c)(ii)
"pay the Guarantees"............................................ 12.03
"pay the Securities"........................................... 10.03
"Paying Agent".................................................. 2.03
"Payment Blockage Period"....................................... 10.03
"Private Exchange Securities"................................... Appendix A
"protected purchaser"........................................... 2.07
"Purchase Date"................................................. 4.06(c)(i)
"Registered Exchange Offer"..................................... Appendix A
"Registrar"..................................................... 2.03
"Restricted Payment"............................................ 4.04(a)
"Securities Custodian".......................................... Appendix A
"Successor Company"............................................. 5.01(a)
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SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Note
Guarantees.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, DJ
Capital, the Note Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the
plural include the singular;
(f) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(g) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on
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a balance sheet of the issuer dated such date prepared in accordance
with GAAP; and
(h) the principal amount of any Preferred Equity Interest shall
be (i) the maximum liquidation value of such Preferred Equity Interest
or (ii) the maximum mandatory redemption or mandatory repurchase (not
including, in either case, any redemption or repurchase premium) price
with respect to such Preferred Equity Interests, whichever is greater.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Indenture. The (a) Initial Securities and the Trustee's
certificate of authentication and (b) Private Exchange Securities and the
Trustee's certificate of authentication shall each be substantially in the form
of Exhibit A hereto, which is hereby incorporated in and expressly made a part
of this Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit B hereto,
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Issuers or any Note Guarantor is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Issuers). Each Security shall be
dated the date of its authentication. The Securities shall be issuable only in
registered form without interest coupons and only in denominations of $1,000
and integral multiples thereof.
SECTION 2.02. Execution and Authentication. One Officer shall
sign the Securities for the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
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The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer, a copy of which
shall be furnished to the Issuers. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. (a) The Issuers shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent, and the
term "Registrar" includes any co-registrars. The Issuers initially appoint the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian with respect to the Global Securities.
(b) The Issuers shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Issuers shall notify the
Trustee of the name and address of any such agent. If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07.
Either of the Issuers or any of their domestically organized Wholly Owned
Subsidiaries may act as Paying Agent or Registrar.
(c) The Issuers may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee; provided,
however, that no such removal shall become effective until (i) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered
into by the Issuers and such successor Registrar or Paying Agent, as the case
may be, and delivered to the Trustee or (ii) notification to the Trustee that
the Trustee shall serve as Registrar or Paying Agent until the appointment of a
successor in accordance with clause (i) above. The Registrar or Paying Agent
may resign at any time upon written notice to the Issuers and the Trustee.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each
due date of the principal of and interest on any Security, the Issuers shall
deposit with the Paying Agent (or if either of the Issuers or a Subsidiary is
acting as Paying Agent,
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segregate and hold in trust for the benefit of the Persons entitled thereto) a
sum sufficient to pay such principal and interest when so becoming due. The
Issuers shall require each Paying Agent (other than the Trustee) to agree in
writing that the Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Securities, shall notify the Trustee of any default by the
Issuers in making any such payment. If either of the Issuers or a Subsidiary of
the Issuers acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.05. Holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. If the Trustee is not the Registrar,
the Issuers shall furnish, or cause the Registrar to furnish, to the Trustee,
in writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Holders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of
a Security for registration of transfer and in compliance with the Appendix.
When a Security is presented to the Registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements therefor are met. When Securities are presented to the Registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Registrar shall make the exchange as requested if the
same requirements are met. To permit registration of transfers and exchanges,
the Issuers shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Issuers may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Issuers shall not be
required to make and the Registrar need not register transfers or exchanges of
Securities selected for redemption (except, in the case of Securities to be
redeemed in part, the portion thereof not to be redeemed) or any Securities for
a period of 15 days before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of
any Security, the Issuers, the Note Guarantors, the Trustee, the Paying Agent,
and the Registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and (subject to paragraph 2 of the Securities)
interest, if any, on such Security and for all other purposes whatsoever,
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whether or not such Security is overdue, and none of the Issuers, any Note
Guarantor, the Trustee, the Paying Agent, or the Registrar shall be affected by
notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interest in such Global
Security may be effected only through a book-entry system maintained by (a) the
Holder of such Global Security (or its agent) or (b) any Holder of a beneficial
interest in such Global Security, and that ownership of a beneficial interest
in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt and will be entitled to
the same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met, such that the Holder
(a) satisfies the Issuers and the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (b) makes such
request to the Issuers and the Trustee prior to the Security being acquired by
a protected purchaser as defined in Section 8-303 of the Uniform Commercial
Code (a "protected purchaser") and (c) satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Issuers, such
Holder shall furnish an indemnity bond sufficient in the judgment of the
Trustee and the Issuers to protect the Issuers, the Trustee, the Paying Agent
and the Registrar from any loss that any of them may suffer if a Security is
replaced. The Issuers and the Trustee may charge the Holder for their expenses
in replacing a Security. In the event any such mutilated, lost, destroyed or
wrongfully taken Security has become or is about to become due and payable, the
Issuers in their discretion may pay such Security instead of issuing a new
Security in replacement thereof.
Every replacement Security is an additional obligation of the
Issuers.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding.
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Subject to Section 13.06, a Security does not cease to be outstanding because
the Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee and the Issuers receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest and liquidated damages payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, and the Paying Agent is not prohibited from paying such money
to the Holders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. In the event that Definitive
Securities are to be issued under the terms of this Indenture, until such
Definitive Securities are ready for delivery, the Issuers may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Issuers consider appropriate for temporary Securities. Without unreasonable
delay, the Issuers shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon surrender
of such temporary Securities at the office or agency of the Issuers, without
charge to the Holder.
SECTION 2.10. Cancelation. The Issuers at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange,
payment or cancelation and shall dispose of canceled Securities in accordance
with its customary procedures or deliver canceled Securities to the Issuers
pursuant to written direction by an Officer. The Issuers may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancelation. The Trustee shall not authenticate Securities in place
of canceled Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
payment of interest on the Securities, the Issuers shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Issuers may pay the defaulted interest to the Persons who
are Holders on a subsequent special record date. The Issuers shall fix or cause
to be fixed any such special record date and payment date to the reasonable
satisfaction of the Trustee and shall promptly mail or cause to be mailed to
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each Holder a notice that states the special record date, the payment date and
the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP and "ISIN" Numbers. The Issuers in issuing
the Securities may use "CUSIP" and "ISIN" numbers (if then generally in use)
and, if so, the Trustee shall use "CUSIP" and "ISIN" numbers in notices of
redemption as a convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Issuers elect to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Issuers shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Issuers to the effect that such
redemption will comply with the conditions herein. Any such notice may be
canceled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that the Trustee in
its sole discretion shall deem to be fair and appropriate. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Issuers promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. (a) At least 30 days but not
more than 60 days before a date for redemption of Securities, the Issuers shall
mail a notice of
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redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(i) the redemption date;
(ii) the redemption price and the amount of accrued interest and
liquidated damages (if any) to the redemption date;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(v) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(vi) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(vii) the CUSIP or ISIN number, if any, printed on the
Securities being redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP or ISIN number, if any, listed in such notice or
printed on the Securities.
(b) At the Issuers' request, the Trustee shall give the notice
of redemption in the Issuers' name and at the Issuers' expense. In such event,
the Issuers shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest and liquidated damages, if
any, to the redemption date; provided, however, that if the redemption date is
after a regular record date and on or prior to the interest payment date, the
accrued interest and liquidated damages, if any, shall be payable to the Holder
of the redeemed Securities registered on the relevant record date.
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Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m.
on the redemption date, the Issuers shall deposit with the Paying Agent (or, if
either of the Issuers or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest and liquidated damages, if any, on all Securities to be redeemed on
that date other than Securities or portions of Securities called for redemption
that have been delivered by the Issuers to the Trustee for cancelation. On and
after the redemption date, interest and liquidated damages (if any) will cease
to accrue on Securities or portions thereof called for redemption so long as
the Issuers have deposited with the Paying Agent funds sufficient to pay the
principal of, plus accrued and unpaid interest and liquidated damages (if any)
on, the Securities to be redeemed, unless the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Issuers shall promptly
pay the principal of, interest on and liquidated damages (if any) on the
Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal and interest shall be considered paid on the date due
if on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Holders on that date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Issuers may
not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC (if permitted by SEC practice
and applicable law and regulations) and provide the Trustee and Holders and
prospective Holders (upon request)
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within 15 days after it files them with the SEC (or if not permitted, within 15
days after it would have otherwise been required to file them with the SEC),
copies of the Company's or DonJoy's annual report and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act. In addition, following an Equity Offering, the Issuers shall
furnish to the Trustee and the Holders, promptly upon their becoming available,
copies of the annual report to equity holders and any other information
provided by the Company or DonJoy to its public equity holders generally. The
Issuers also shall comply with the other provisions of Section 314(a) of the
TIA.
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company or any
Restricted Subsidiary that is a Note Guarantor may Incur Indebtedness if on the
date of such Incurrence and after giving effect thereto the Consolidated
Coverage Ratio would be greater than 2.0 to 1.0 if such Indebtedness is
Incurred on or prior to December 31, 2000 and 2.25 to 1.0 if such Indebtedness
is Incurred thereafter. Notwithstanding the foregoing, the Company will not
permit DJ Capital to Incur any Indebtedness other than the Securities and its
guarantee in respect of the Credit Agreement.
(b) Notwithstanding Section 4.03(a), the Company and its
Restricted Subsidiaries (other than DJ Capital) may Incur the following
Indebtedness:
(i) Indebtedness Incurred pursuant to the Credit Agreement in an
aggregate principal amount not to exceed $40.5 million at any one time
outstanding less the aggregate amount of all repayments of principal of
such Indebtedness pursuant to Section 4.06;
(ii) Indebtedness of the Company owed to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed
to and held by the Company or any Restricted Subsidiary; provided,
however, that (1) any subsequent issuance or transfer of any Equity
Interests or any other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof, (2) if the
Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
obligations with respect to the Securities, (3) if a Restricted
Subsidiary is the obligor on such Indebtedness, such Indebtedness is
made pursuant to an intercompany note and (4) if a Note Guarantor is
the obligor on such Indebtedness, such Indebtedness is subordinated in
right of payment to the Note Guarantee of such Note Guarantor;
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(iii) Indebtedness (1) represented by the Securities and the
Note Guarantees, (2) outstanding on the Closing Date (other than the
Indebtedness described in clauses (i) and (ii) above), (3) consisting
of Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (iii) (including Indebtedness Refinancing
Refinancing Indebtedness) or Section 4.03(a) and (4) consisting of
Guarantees of any Indebtedness permitted under clauses (i) and (ii) of
this paragraph (b);
(iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary of or was otherwise acquired by the Company) and
(2) Refinancing Indebtedness Incurred by a Restricted Subsidiary in
respect of Indebtedness Incurred by such Restricted Subsidiary pursuant
to this clause (iv);
(v) Indebtedness of the Company or a Restricted Subsidiary (1)
in respect of performance bonds, bankers' acceptances, letters of
credit and surety or appeal bonds provided by the Company and the
Restricted Subsidiaries in the ordinary course of their business, and
(2) under Interest Rate Agreements and Currency Agreements entered into
for bona fide hedging purposes of the Company or any Restricted
Subsidiary in the ordinary course of business; provided, however, that
such Interest Rate Agreements or Currency Agreements do not increase
the principal amount of Indebtedness of the Company and its Restricted
Subsidiaries outstanding at any time other than as a result of
fluctuations in interest rates or foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;
(vi) Indebtedness (including Capitalized Lease Obligations)
Incurred by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real or
personal), equipment or other assets (in each case whether through the
direct purchase of assets or the Equity Interests of any Person owning
such assets) in an aggregate principal amount which, when aggregated
with the principal amount of all other Indebtedness then outstanding
and Incurred pursuant to this clause (vi) and all Refinancing
Indebtedness Incurred to refund, refinance or replace any Indebtedness
Incurred pursuant to this clause (vi), does not exceed $10.0 million;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument (except
in the case of daylight
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overdrafts) drawn against insufficient funds in the ordinary course,
provided that such Indebtedness is extinguished within five Business
Days of Incurrence;
(viii) Indebtedness of the Company and its Restricted
Subsidiaries arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price
or similar obligations, in each case incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary of the
Company in accordance with the terms of this Indenture, other than
Guarantees by the Company or any Restricted Subsidiary of Indebtedness
Incurred by any Person acquiring all or any portion of such business,
assets or a Subsidiary of the Company for the purpose of financing such
acquisition; provided, however, that (1) such Indebtedness is not
reflected on the consolidated balance sheet of the Company and (2) the
maximum aggregate liability in respect of all such Indebtedness shall
not exceed the gross proceeds, including the fair market value as
determined in good faith by a majority of the Governing Board of
noncash proceeds (the fair market value of such noncash proceeds being
measured at the time it is received and without giving effect to any
subsequent changes in value), actually received by the Company and its
Restricted Subsidiaries in connection with such disposition; or
(ix) Indebtedness of the Company and its Restricted Subsidiaries
(in addition to Indebtedness permitted to be Incurred pursuant to
Section 4.03(a) or any other clause of this paragraph (b)) in an
aggregate principal amount on the date of Incurrence that, when added
to all other Indebtedness Incurred pursuant to this clause (ix) and
then outstanding, shall not exceed $15.0 million.
(c) Notwithstanding the foregoing, the Company shall not Incur
any Indebtedness pursuant to Section 4.03(b) above if the proceeds thereof are
used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund
or refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. The Company shall not Incur any Indebtedness pursuant to Section
4.03(a) or 4.03(b) if such Indebtedness is subordinate or junior in right of
payment to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. In addition, the Company shall not Incur any
Secured Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Securities equally and
ratably with (or on a senior basis to, in the case of Indebtedness subordinated
in right of payment to the Securities) such Secured Indebtedness for so long as
such Secured Indebtedness is secured by a Lien, except for Senior Subordinated
Indebtedness and Subordinated Obligations secured by Liens on the assets of any
entity existing at the time such entity is acquired by, and becomes a
Restricted Subsidiary of, the Company, whether by merger,
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consolidation, purchase of assets or otherwise, provided that such Liens (x)
are not created, incurred or assumed in connection with, or in contemplation of
such entity being acquired by the Company and (y) do not extend to any other
assets of the Company or any of its Subsidiaries. A Note Guarantor shall not
Incur any Indebtedness if such Indebtedness is by its terms expressly
subordinate or junior in right of payment to any Senior Indebtedness of such
Note Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of
such Note Guarantor or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness of such Note Guarantor. In addition, a Note Guarantor
shall not Incur any Secured Indebtedness that is not Senior Indebtedness of
such Note Guarantor unless contemporaneously therewith effective provision is
made to secure the Note Guarantee of such Note Guarantor equally and ratably
with (or on a senior basis to, in the case of Indebtedness subordinated in
right of payment to such Note Guarantee) such Secured Indebtedness for as long
as such Secured Indebtedness is secured by a Lien, except for Senior
Subordinated Indebtedness and Subordinated Obligations of such Note Guarantor
secured by Liens on the assets of any entity existing at the time such entity
is acquired by such Note Guarantor, whether by merger, consolidation, purchase
of assets or otherwise, provided that such Liens (x) are not created, incurred
or assumed in connection with or in contemplation of such assets being acquired
by such Note Guarantor and (y) do not extend to any other assets of the Company
or any of its Subsidiaries.
(d) Notwithstanding any other provision of this Section 4.03,
the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary may Incur pursuant to this Section shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rates of
currencies. For purposes of determining the outstanding principal amount of any
particular Indebtedness Incurred pursuant to this Section 4.03, (i)
Indebtedness Incurred pursuant to the Credit Agreement prior to or on the
Closing Date shall be treated as Incurred pursuant to Section 4.03(b)(i), (ii)
Guarantees or obligations in respect of letters of credit relating to
Indebtedness which is otherwise included in the determination of a particular
amount of Indebtedness shall not be included, (iii) the principal amount of any
Disqualified Equity Interests or Preferred Equity Interests shall be equal to
the greater of the maximum mandatory redemption or repurchase price (not
including, in either case, any redemption or repurchase premium) or the maximum
liquidation preference, (iv) the principal amount of Indebtedness, Disqualified
Equity Interests or Preferred Equity Interests issued at a price less than the
principal amount thereof, the maximum fixed redemption or repurchase price
thereof or liquidation preference thereof, as applicable, will be equal to the
amount of the liability or obligation in respect thereof determined in
accordance with GAAP, (v) if such Indebtedness is denominated in a currency
other than U.S. dollars, the U.S. dollar equivalent principal amount thereof
shall be calculated based on the relevant currency exchange rates in effect on
the date such Indebtedness was Incurred, (vi) the accrual of interest, accrual
of dividends, the accretion of accreted value, the payment of
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interest in the form of additional Indebtedness and the payment of dividends or
distributions in the form of additional Equity Interests shall not be deemed an
incurrence of Indebtedness for purposes of this Section, (vii) Indebtedness
permitted by this Section 4.03 need not be permitted solely by reference to one
provision permitting such Indebtedness but may be permitted in part by one such
provision and in part by one or more other provisions of this Section
permitting such Indebtedness, and (viii) in the event that Indebtedness meets
the criteria of more than one of the types of Indebtedness described in this
Section, the Company, in its sole discretion, shall classify such Indebtedness
and only be required to include the amount of such Indebtedness in one of such
clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution of any
kind on or in respect of its Equity Interests (including any payment in
connection with any merger or consolidation involving the Company) or similar
payment to the direct or indirect holders (in their capacities as such) of its
Equity Interests except dividends or distributions payable solely in its Equity
Interests (other than Disqualified Equity Interests) and except dividends or
distributions payable to the Company or another Restricted Subsidiary (and, if
such Restricted Subsidiary has equity holders other than the Company or other
Restricted Subsidiaries, to its other equity holders on a pro rata basis), (ii)
purchase, redeem, retire or otherwise acquire for value any Equity Interests of
DonJoy (or any other direct or indirect parent company of the Company), the
Company or any Restricted Subsidiary held by Persons other than the Company or
another Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment any Subordinated Obligations (other
than (A) the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of
the date of acquisition and (B) Indebtedness described in Section 4.03(b)(ii))
or (iv) make any Investment (other than a Permitted Investment) in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
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(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Governing Board, whose
determination shall be conclusive and evidenced by a resolution of the
Governing Board) declared or made subsequent to the Closing Date would
exceed the sum of, without duplication:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of
the fiscal quarter immediately following the fiscal quarter
during which the Closing Date occurs to the end of the most
recent fiscal quarter ending prior to the date of such
Restricted Payment for which consolidated financial statements
of the Company are publicly available (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) the aggregate Net Cash Proceeds received by the
Company (x) as capital contributions to the Company after the
Closing Date or (y) from the issue or sale of its Equity
Interests (other than Disqualified Equity Interests) subsequent
to the Closing Date (other than a capital contribution from or
an issuance or sale to (x) a Subsidiary of the Company or (y) an
employee equity ownership or participation plan or other trust
established by the Company or any of its Subsidiaries);
(C) the amount by which Indebtedness of the Company or
its Restricted Subsidiaries is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Closing Date of any
Indebtedness of the Company or its Restricted Subsidiaries
issued after the Closing Date which is convertible or
exchangeable for Equity Interests (other than Disqualified
Equity Interests) of DonJoy or the Company (less the amount of
any cash or the fair market value of other property distributed
by the Company or any Restricted Subsidiary upon such conversion
or exchange);
(D) 100% of the aggregate amount received by the Company
or any Restricted Subsidiary in cash from the sale or other
disposition (other than to (x) the Company or a Subsidiary of
the Company or (y) an employee equity ownership or participation
plan or other trust established by the Company or any of its
Subsidiaries) of Restricted Investments made by the Company or
any Restricted Subsidiary after the Closing Date and from
repurchases and redemptions of such Restricted Investments from
the Company or any Restricted Subsidiary by any Person (other
than (x) the Company or any of its Subsidiaries or (y) an
employee equity ownership
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or participation plan or other trust established by the Company
or any of its Restricted Subsidiaries) and from repayments of
loans or advances which constituted Restricted Investments;
provided, however, that the amount included in this clause (D)
with respect to any particular Restricted Investment shall not
exceed the amount of cash expended by the Company or any
Restricted Subsidiary in connection with making such Restricted
Investment; and
(E) the amount equal to the net reduction in Investments
in Unrestricted Subsidiaries resulting from (x) payments of
dividends, repayments of the principal of loans or advances or
other transfers of assets to the Company or any Restricted
Subsidiary from Unrestricted Subsidiaries or (y) the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition
of "Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the
amount of Restricted Payments.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, repurchase, retirement or other acquisition or
retirement for value of, or other distribution in respect of, Equity
Interests of the Company made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Equity Interests of the
Company or capital contributions to the Company after the Closing Date
(other than Disqualified Equity Interests and other than Equity
Interests issued or sold to, or capital contributions from, a
Subsidiary of the Company or an employee equity ownership or
participation plan or other trust established by the Company or any of
its Subsidiaries); provided, however, that (1) such Restricted Payment
shall be excluded in the calculation of the amount of Restricted
Payments and (2) the Net Cash Proceeds from such sale or capital
contribution applied in the manner set forth in this clause (i) shall
be excluded from the calculation of amounts under Section
4.04(a)(3)(B);
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company or a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, (x) Equity Interests
of DonJoy or the Company (other than Disqualified Equity Interests) or
(y) Subordinated Obligations of the Company or a Restricted Subsidiary
that are permitted to be Incurred pursuant to Section 4.03; provided,
however, that such purchase repurchase, redemption, defeasance or
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other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 4.06;
provided, however, that such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments;
(iv) dividends or other distributions paid to holders of, or
redemptions from holders of, Equity Interests within 60 days after the
date of declaration thereof, or the giving of formal notice of
redemption, if at such date of declaration such dividends or other
distributions or redemptions would have complied with Section 4.04(a);
provided, however, that such dividend, distribution or redemption shall
be included in the calculation of the amount of Restricted Payments;
(v) payment of dividends, other distributions or other amounts
by the Company for the purposes set forth in clauses (1) and (2) below;
provided, however, that such dividend, distribution or amount set forth
in clause (1) shall be excluded and in clause (2) shall be included in
the calculation of the amount of Restricted Payments for the purposes
of Section 4.04(a):
(1) to DonJoy in amounts equal to the amounts required
for DonJoy to pay franchise taxes and other fees required to
maintain its existence and provide for all other operating costs
of DonJoy, including, without limitation, in respect of director
fees and expenses, administrative, legal and accounting services
provided by third parties and other costs and expenses of being
a public company, including, all costs and expenses with respect
to filings with the SEC, of up to $500,000 per fiscal year; and
(2) to DonJoy in amounts equal to amounts expended by
DonJoy to repurchase Equity Interests of DonJoy owned by
officers, directors, consultants and employees or former
officers, directors, consultants or employees of DonJoy, the
Company or its Subsidiaries or their assigns, estates and heirs;
provided, however, that the aggregate amount of dividends,
distributions or other amounts to DonJoy pursuant to this clause
(2) shall not, in the aggregate, exceed $3.0 million per fiscal
year of the Company, up to a maximum aggregate amount of $7.0
million during the term of this Indenture;
(vi) for so long as the Company is treated as a pass-through
entity for United States Federal income tax purposes, Tax
Distributions; provided, however,
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that such Tax Distributions shall be excluded in the calculation of the
amount of Restricted Payments;
(vii) in the event DonJoy is not treated as a pass-through
entity for United States Federal income tax purposes, dividends or
distributions to DonJoy in amounts equal to amounts required for DonJoy
to pay Federal, state and local income taxes to the extent such income
taxes are attributable to the income of the Company and its Restricted
Subsidiaries (and, to the extent of amounts actually received from its
Unrestricted Subsidiaries, in amounts required to pay such taxes to the
extent attributable to the income of such Unrestricted Subsidiaries);
provided, however, that such distributions shall be excluded in the
calculation of the amount of Restricted Payments;
(viii) the payment of dividends or distributions to DonJoy to
fund the payment by DonJoy of dividends on DonJoy's common Equity
Interests following the first public offering of common Equity
Interests of DonJoy after the Closing Date, of up to 6% per annum of
the net proceeds contributed to the Company by DonJoy from such public
offering; provided, however, that such dividends or distributions will
be included in the calculation of the amount of Restricted Payments; or
(ix) dividends or distributions to DonJoy in an amount equal to
the purchase price adjustment, if any, which DonJoy is required to pay
to Smith & Nephew, Inc. in connection with the Recapitalization
pursuant to Article III of the Recapitalization Agreement as such
agreement is in effect on the date hereof; provided, however, that such
distributions shall be excluded in the calculation of the amount of
Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of
any Restricted Subsidiary to (a) pay dividends or make any other distributions
on its Equity Interests or pay any Indebtedness or other obligations owed to
the Company or any of its Restricted Subsidiaries, (b) make any loans or
advances to the Company or any of its Restricted Subsidiaries or (c) transfer
any of its property or assets to the Company or any of its Restricted
Subsidiaries, except:
(i) any encumbrance or restriction pursuant to applicable law or
any applicable rule, regulation or order, or an agreement in effect at
or entered into on the Closing Date;
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(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Equity Interests or
Indebtedness of such Restricted Subsidiary, in each case Incurred by
such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Equity Interests or
Indebtedness Incurred as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was otherwise acquired by the Company) and outstanding on such date;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this Section 4.05 or
this clause (iii) or contained in any amendment to an agreement
referred to in clause (i) or (ii) of this Section 4.05 or this clause
(iii); provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement or amendment are no more
restrictive, taken as a whole, than the encumbrances and restrictions
contained in such predecessor agreements;
(iv) in the case of clause (c), any encumbrance or restriction
(1) that restricts in a customary manner the assignment of any lease,
license or similar contract or the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, (2) that is or was created by virtue of any transfer of,
agreement to transfer or option or right with respect to any property
or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture, (3) contained in security agreements
securing Indebtedness of a Restricted Subsidiary to the extent such
encumbrance or restriction restricts the transfer of the property
subject to such security agreements, or (4) encumbrances or
restrictions relating to Indebtedness permitted to be Incurred pursuant
to Section 4.03(b)(vi) for property acquired in the ordinary course of
business that only imposes encumbrances or restrictions on the property
so acquired;
(v) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Equity Interests or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition;
(vi) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business; and
(vii) net worth provisions in leases and other agreements
entered into by the Company or any Restricted Subsidiary in the
ordinary course of business.
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SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Equity Interests. (a) The Company shall not, and shall not permit any
Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or
such Restricted Subsidiary receives consideration (including by way of relief
from, or by any other Person assuming sole responsibility for, any liabilities,
contingent or otherwise) at the time of such Asset Disposition at least equal
to the fair market value of the Equity Interests and assets subject to such
Asset Disposition, (ii) at least 80% of the consideration thereof received by
the Company or such Restricted Subsidiary is in the form of (A) cash or
Temporary Cash Investments, (B) properties and assets to be owned by the
Company or any Restricted Subsidiary and used in a Permitted Business or (C)
Voting Equity Interests in one or more Persons engaged in a Permitted Business
that are or thereby become Restricted Subsidiaries of the Company, and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (1)
first, (i) to the extent the Company elects (or is required by the terms of any
Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the
Company or Indebtedness (other than any Disqualified Equity Interests) of a
Restricted Subsidiary (in each case other than Indebtedness owed to the Company
or an Affiliate of the Company and other than Preferred Equity Interests) or
(ii) to the extent the Company or such Restricted Subsidiary elects, to
reinvest in Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net Available Cash received
by the Company or another Restricted Subsidiary or the application by the
Company of the Net Available Cash received by a Restricted Subsidiary of the
Company), in each case within 320 days from the later of such Asset Disposition
or the receipt of such Net Available Cash, provided that pending the final
application of any such Net Available Cash, the Company and its Restricted
Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net
Available Cash in any manner not prohibited by this Indenture; (2) second,
within 365 days from the later of such Asset Disposition or the receipt of such
Net Available Cash, to the extent of the balance of such Net Available Cash
after such application in accordance with clause (1), to make an Offer (as
defined below) to purchase Securities pursuant to and subject to the conditions
set forth in Section 4.06(b); provided, however, that if the Company elects (or
is required by the terms of any other Senior Subordinated Indebtedness), such
Offer may be made ratably to purchase the Securities and other Senior
Subordinated Indebtedness of the Company; and (3) third, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(1) (other than the proviso thereof) and (2), for any general corporate purpose
not restricted by the terms of this Indenture; provided, however that in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (1) or (2) above, the Company or such Restricted Subsidiary shall
retire such Indebtedness and shall cause the related loan commitment (if any)
to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this
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Section 4.06, the Company and the Restricted Subsidiaries shall not be required
to apply any Net Available Cash in accordance with this Section 4.06(a) except
to the extent that the aggregate Net Available Cash from all Asset Dispositions
that is not applied in accordance with this Section 4.06(a) exceeds $5.0
million.
For the purposes of this Section 4.06, the following are deemed
to be cash: (A) the assumption of any liabilities of the Company (other than
Disqualified Equity Interests of the Company) or any Restricted Subsidiary and
the release of the Company or such Restricted Subsidiary from all liability on
such liabilities in connection with such Asset Disposition and (B) securities
received by the Company or any Restricted Subsidiary from the transferee that
are promptly converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Subordinated Indebtedness) pursuant to
Section 4.06(a)(iii)(2), the Issuers shall be required to purchase Securities
(and other Senior Subordinated Indebtedness) tendered pursuant to an offer by
the Issuers for the Securities (and other Senior Subordinated Indebtedness)
(the "Offer") at a purchase price of 100% of their principal amount plus
accrued and unpaid interest and liquidated damages thereon, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.06(c). If the aggregate purchase price
of Securities (and other Senior Subordinated Indebtedness) tendered pursuant to
the Offer is less than the Net Available Cash allotted to the purchase of the
Securities (and other Senior Subordinated Indebtedness), the Company shall
apply the remaining Net Available Cash for any general corporate purpose not
restricted by the terms of this Indenture. The Issuers shall not be required to
make an Offer for Securities (and other Senior Subordinated Indebtedness)
pursuant to this Section 4.06 if the Net Available Cash available therefor
(after application of the proceeds as provided in clause (1) of Section
4.06(a)(iii)) is less than $5.0 million for any particular Asset Disposition
(which lesser amount shall be carried forward for purposes of determining
whether an Offer is required with respect to the Net Available Cash from any
subsequent Asset Disposition). Upon completion of the Offer, the amount of Net
Available Cash shall be reduced to zero.
(c) (i) Promptly, and in any event within 10 days after the
Issuers become obligated to make an Offer, the Issuers shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Issuers
either in whole or in part (subject to prorating as hereinafter described in
the event the Offer is oversubscribed) in integral multiples of $1,000 of
principal amount, at the applicable purchase price. The notice shall specify a
purchase date not less than 30 days nor more than 60 days after the date of
such notice
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(the "Purchase Date") and shall contain such information concerning the
business of the Company which the Issuers in good faith believe will enable
such Holders to make an informed decision (which at a minimum shall include (1)
the most recently filed Annual Report on Form 10-K (including audited
consolidated financial statements) of the Company or DonJoy, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company or DonJoy filed subsequent to such Quarterly Report, other
than Current Reports describing Asset Dispositions otherwise described in the
offering materials (or corresponding successor reports), (2) a description of
material developments in the Company's business subsequent to the date of the
latest of such reports, and (3) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the address referred to in clause
(c)(iii).
(ii) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided above, the Issuers shall deliver
to the Trustee an Officers' Certificate as to (1) the amount of the Offer (the
"Offer Amount"), (2) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (3) the compliance
of such allocation with the provisions of Section 4.06(a). On the Business Day
immediately preceding the Purchase Date, the Issuers shall irrevocably deposit
with the Trustee or with a paying agent (or, if the Issuers are acting as their
own paying agent, segregate and hold in trust) an amount equal to the Offer
Amount or, if less, the purchase price of Securities (and other Senior
Subordinated Indebtedness) tendered and accepted for payment in the Offer. Upon
the expiration of the period for which the Offer remains open (the "Offer
Period"), the Issuers shall deliver to the Trustee for cancelation the
Securities or portions thereof that have been properly tendered to and are to
be accepted by the Issuers. The Trustee (or the Paying Agent, if not the
Trustee) shall, on the date of purchase, mail or deliver payment to each
tendering Holder in the amount of the purchase price.
(iii) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their
election if the Trustee or the Issuers receive not later than one Business Day
prior to the Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
which was delivered by the Holder for purchase and a statement that such Holder
is withdrawing his election to have such Security purchased. If at the
expiration of the Offer Period the aggregate principal amount of Securities and
any other Senior Subordinated Indebtedness included in the Offer surrendered by
holders thereof exceeds the Offer Amount, the Issuers shall select the
Securities and other Senior Subordinated Indebtedness to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the Issuers
so that only Securities and other Senior Subordinated
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Indebtedness in denominations of $1,000, or integral multiples thereof, shall
be purchased). Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
(iv) At the time the Issuers deliver Securities to the Trustee
which are to be accepted for purchase, the Issuers shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Issuers pursuant to and in accordance with the terms of this Section. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor to
the surrendering Holder.
(v) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or conduct any transaction or series of
related transactions (including, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company (an
"Affiliate Transaction") unless such Affiliate Transaction is on terms (i) that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (ii) that, in
the event that such Affiliate Transaction involves an aggregate amount in
excess of $1.0 million, (1) are set forth in writing and (2) except as provided
in Section 4.07(a)(iii) below, have been approved by a majority of the members
of the Governing Board having no personal stake in such Affiliate Transaction
(if any such members exist), and (iii) that, in the event (A) such Affiliate
Transaction involves an amount in excess of $5.0 million, or (B) if there are
no members of the Governing Board having no personal stake in such Affiliate
Transaction and such Affiliate Transaction involves an aggregate amount in
excess of $1.0 million, have been determined by a nationally recognized
appraisal, accounting or investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the
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funding of, employment arrangements, options to purchase Equity Interests of
DonJoy or the Company and equity ownership or participation plans approved by
the Governing Board, (iii) the grant of options (and the exercise thereof) to
purchase Equity Interests of DonJoy or the Company or similar rights to
employees and directors of DonJoy or the Company pursuant to plans approved by
the Governing Board, (iv) loans or advances to officers, directors or employees
in the ordinary course of business, but in any event not to exceed $1.5 million
in the aggregate outstanding at any one time, (v) the payment of reasonable
fees to directors of DonJoy or the Company and its Subsidiaries who are not
employees of DonJoy or the Company or its Subsidiaries and other reasonable
fees, compensation, benefits and indemnities paid or entered into by the
Company or its Restricted Subsidiaries in the ordinary course of business to or
with the officers, directors or employees of the Company and its Restricted
Subsidiaries, (vi) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries, (vii) the provision by Persons
who may be deemed Affiliates or stockholders of the Company (other than Chase
Capital Partners and Persons controlled by Chase Capital Partners) of
investment banking, commercial banking, trust, lending or financing,
investment, underwriting, placement agent, financial advisory or similar
services to the Company or its Subsidiaries, (viii) sales of Equity Interests
to Permitted Holders approved by a majority of the members of the Governing
Board who do not have a material direct or indirect financial interest in or
with respect to the transaction being considered, (ix) (A) the existence or
performance by the Company or any Restricted Subsidiary under any agreement as
in effect as of the Closing Date or any amendment thereto or replacement
agreement therefor or any transaction contemplated thereby (including
pursuant to any amendment thereto or replacement agreement therefor) so long as
such amendment or replacement is not more disadvantageous to the Holders of the
Securities in any material respect than the original agreement as in effect on
the Closing Date, and (B) the execution, delivery and performance of the
contemplated agreement among the Company, DonJoy and Charles T. Orsatti
described in the Offering Memorandum under the heading
"Management--Compensation of Board of Managers"; provided that the amount
payable to Mr. Orsatti pursuant to such agreement shall not exceed $250,000 per
year, (x) any tax sharing agreement or payments pursuant thereto among the
Company and its Subsidiaries and any other Person with which the Company or its
Subsidiaries is required or permitted to file a consolidated tax return or with
which the Company or any of its Restricted Subsidiaries is or could be part of
a consolidated group for tax purposes, which payments are not in excess of the
tax liabilities attributable solely to the Company and its Restricted
Subsidiaries (as a consolidated group), or (ix) any contribution to the capital
of the Company by DonJoy or any purchase of Equity Interests of the Company by
DonJoy.
SECTION 4.08. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Issuers
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the
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principal amount thereof plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the terms contemplated in Section
4.08(b); provided, however, that notwithstanding the occurrence of a Change of
Control, the Issuers shall not be obligated to purchase the Securities pursuant
to this Section 4.08 in the event that it has exercised its right to redeem all
the Securities under paragraph 5 of the Securities. In the event that at the
time of such Change of Control the terms of any agreement governing
Indebtedness of the Company or its Subsidiaries restrict or prohibit the
repurchase of Securities pursuant to this Section 4.08, then prior to the
mailing of the notice to Holders provided for in Section 4.08(b) below but in
any event within 30 days following any Change of Control, the Company shall (i)
repay in full all such Indebtedness or offer to repay in full all such
Indebtedness and repay the Indebtedness of each lender who has accepted such
offer or (ii) obtain the requisite consent of the lenders under such agreements
to permit the repurchase of the Securities as provided for in Section 4.08(b).
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), the Issuers
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(i) that a Change of Control has occurred and that such Holder
has the right to require the Issuers to purchase all or a portion (in
integral multiples of $1,000) of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and liquidated damages, if any, to the date
of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date);
(ii) the circumstances and relevant facts and financial
information regarding such Change of Control;
(iii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Issuers, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their
election if the Trustee or the Issuers receive not later than one Business Day
prior to the purchase date a telegram, telex, facsimile
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transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased. Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) On the purchase date, all Securities purchased by the
Issuers under this Section shall be delivered to the Trustee for cancelation,
and the Issuers shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in Section 4.08(b) applicable to a Change of Control Offer made by the
Issuers and purchases all Securities validly tendered and not withdrawn under
such Change of Control Offer.
(f) At the time the Issuers deliver Securities to the Trustee
which are to be accepted for purchase, the Issuers shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Issuers pursuant to and in accordance with the terms of this Section 4.08. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor to
the surrendering Holder.
(g) Prior to any Change of Control Offer, the Issuers shall
deliver to the Trustee an Officers' Certificate stating that all conditions
precedent contained herein to the right of the Issuers to make such offer have
been complied with.
(h) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Issuers shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
an Officers' Certificate (which certificate may be the same certificate
required by Section 314(a)(4) of the TIA) stating that in the course of the
performance by the signers of their duties as Officers of the Issuers they
would normally have knowledge of any Default and whether or not the signers
know of any Default that occurred during such period. If they do, the
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certificate shall describe the Default, its status and what action the Issuers
are taking or propose to take with respect thereto. The Issuers also shall
comply with Section 314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, the Issuers shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Future Note Guarantors. The Company shall cause
each Domestic Subsidiary to become a Note Guarantor, and, if applicable,
execute and deliver to the Trustee a supplemental indenture substantially in
the form of Exhibit C pursuant to which such Domestic Subsidiary will Guarantee
payment of the Securities.
SECTION 4.12. Limitation on Lines of Business. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any business,
other than a Permitted Business.
SECTION 4.13. Limitation on the Conduct of Business of DJ
Capital. DJ Capital shall not conduct any business or other activities, own any
property, enter into any agreements or Incur any Indebtedness or other
liabilities, other than in connection with serving as an Issuer and obligor
with respect to the Securities and its guarantee in respect of the Credit
Agreement.
ARTICLE 5
Successor Company
SECTION 5.01. (a) When Company May Merge or Transfer Assets.
Neither the Company nor DJ Capital shall consolidate with or merge with or
into, or convey, transfer or lease all or substantially all its assets to, any
Person; provided, however, that the Company may consolidate with or merge with
or into, or convey, transfer or lease all or substantially all its assets to,
any Person if:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership or limited
liability company organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by a
supplemental indenture hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture;
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(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but the predecessor Company in the case of a conveyance, transfer or lease of
all or substantially all its assets shall not be released from the obligation
to pay the principal of and interest on the Securities.
(b) The Company shall not permit any Note Guarantor (other than
DonJoy) to consolidate with or merge with or into, or convey, transfer or lease
all or substantially all of its assets to any Person unless: (i) the resulting,
surviving or transferee Person will be a corporation, partnership or limited
liability company organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia, and such Person (if not
such Note Guarantor) shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of such Note Guarantor under its Note Guarantee; (ii)
immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the resulting, surviving or
transferee Person as a result of such transaction as having been Incurred by
such Person at the time of such transaction), no Default shall have occurred
and be continuing; and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
(c) Notwithstanding any of the foregoing, (i) any Restricted
Subsidiary (other than DJ Capital) may consolidate with, merge into or transfer
all or part of its properties and assets to the Company or a Subsidiary that is
a Note Guarantor and (ii) the Company may merge with an Affiliate incorporated
solely for (A) the purpose of
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incorporating the Company or (B) organizing the Company in another jurisdiction
to realize tax or other benefits.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(a) the Issuers default in any payment of interest on any
Security when the same becomes due and payable or in any payment of
liquidated damages, whether or not such payment shall be prohibited by
Article 10, and such default continues for a period of 30 days;
(b) the Issuers (i) default in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon required redemption or repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article
10 or (ii) fail to redeem or purchase Securities when required pursuant
to this Indenture or the Securities, whether or not such redemption or
purchase shall be prohibited by Article 10;
(c) either Issuer fails to comply with Section 5.01;
(d) either Issuer fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.11, 4.12 or 4.13, (other than a failure to
purchase Securities when required under Section 4.06 or 4.08) and such
failure continues for 30 days after the notice specified below;
(e) either Issuer or any Note Guarantor fails to comply with any
of its agreements in the Securities or this Indenture (other than those
referred to in (a), (b), (c) or (d) above) and such failure continues
for 60 days after the notice specified below;
(f) Indebtedness of either Issuer or any Restricted Subsidiary
of the Company is not paid within any applicable grace period after
final maturity or the acceleration by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $10.0 million or its foreign currency equivalent at the time
and such failure continues for 10 days after the notice specified
below;
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(g) either Issuer or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against
it in an involuntary case;
(iii) consents to the appointment of a Custodian of it or
for any substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against either Issuer or any
Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of either Issuer or any
Significant Subsidiary or for any substantial part of its
property; or
(iii) orders the winding up or liquidation of either
Issuer or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(i) the rendering of any judgment or decree for the payment of
money in excess of $10.0 million (net of any amounts with respect to
which a reputable and creditworthy insurance company has acknowledged
liability in writing) or its foreign currency equivalent against the
Company, DJ Capital or a Restricted Subsidiary if (i) an enforcement
proceeding thereon is commenced by any creditor or (ii) there is a
period of 60 days following the entry of such judgment or decree during
which such judgment or decree is not discharged, waived or the
execution thereof stayed; or
(j) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Note Guarantor or
Person acting by or on behalf of such Note Guarantor denies or
disaffirms its obligations under this
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Indenture or any Note Guarantee and such Default continues for 10 days
after the notice specified below.
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (d), (e), (f) or (j) above is not an
Event of Default until the Trustee notifies the Issuers or the Holders of at
least 25% in principal amount of the outstanding Securities notify the Issuers
and the Trustee of the Default and the Issuers or the Note Guarantor, as
applicable, do not cure such Default within the time specified after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice or the lapse of time would become
an Event of Default, its status and what action the Issuers are taking or
propose to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(g) or (h) with respect to the
Company or DJ Capital) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the outstanding Securities, by written
notice to the Issuers and the Trustee specifying the Event of Default and that
it is a "notice of acceleration", may declare the principal of and accrued but
unpaid interest and liquidated damages on all the Securities to be due and
payable. Upon such a declaration, such principal and interest and liquidated
damages (if any) shall be due and payable immediately. If an Event of Default
specified in Section 6.01(g) or (h) with respect to the Company or DJ Capital
occurs, the principal of and interest and liquidated damages (if any) on all
the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
The Holders of a majority in principal amount of the Securities by notice to
the Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
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SECTION 6.03. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of
the principal of or interest on a Security, (b) a Default arising from the
failure to redeem or purchase any Security when required pursuant to the terms
of this Indenture or (c) a Default in respect of a provision that under Section
9.02 cannot be amended without the consent of each Holder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.01, that the Trustee determines is unduly prejudicial
to the rights of other Holders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. (a) Except to enforce the
right to receive payment of principal, premium (if any) or interest when due,
no Holder may pursue any remedy with respect to this Indenture or the
Securities unless:
(i) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
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(ii) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity;
and
(v) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
(b) A Holder may not use this Indenture to prejudice the rights
of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and liquidated damages and interest on the
Securities held by such Holder, on or after the respective due dates expressed
or provided for in the Securities, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Issuers or any other obligor on the Securities for the whole amount then due
and owing (together with interest on overdue principal and (to the extent
lawful) on any unpaid interest at the rate provided for in the Securities) and
the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Issuers, any Subsidiary or Note
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of either Issuer to
the extent required by Article 10 and to holders of Senior Indebtedness
of the Note Guarantors to the extent required by Article 12;
THIRD: to Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, and any liquidated damages without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, any liquidated damages and
interest, respectively; and
FOURTH: to the Issuers.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section. At least 15 days before such
record date, the Trustee shall mail to each Holder and the Issuers a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither the
Issuers nor any Note Guarantor (to the extent they may lawfully do so) shall at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Issuers and each Note Guarantor (to the extent that
they may lawfully do so) hereby expressly waive all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(iv) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in
the performance of any of its duties hereunder or in the exercise of
any of its rights or powers, if it shall
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have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority
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in principal amount of the Securities at the time outstanding, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuers, personally or by agent or attorney
at the Issuers' expense.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuers or their Affiliates with the same
rights it would have if it were not Trustee. Any Paying Agent, Registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, any Note Guarantee or the Securities, it shall not be
accountable for the Issuers' use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Issuers' or any Note
Guarantor in this Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's
certificate of authentication. The Trustee shall not be charged with knowledge
of any Default or Event of Default under Sections 6.01(c), (d), (e), (f), (i)
or (j) or of the identity of any Significant Subsidiary unless either (a) a
Trust Officer shall have actual knowledge thereof or (b) the Trustee shall have
received notice thereof in accordance with Section 13.02 hereof from the
Issuers, any Note Guarantor or any Holder.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder notice of the Default within the earlier of 90 days after it occurs or
30 days after it is known to a trust officer. Except in the case of a Default
in payment of principal of or interest on any Security (including payments
pursuant to the mandatory redemption provisions of such Security, if any), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Holders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, the Trustee shall mail to each Holder a brief report dated as
of such May 15 that complies with Section 313(a) of the TIA if and to the
extent required thereby. The Trustee shall also comply with Sections 313(b) and
313(c) of the TIA.
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The
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Company agrees to notify promptly the Trustee whenever the Securities become
listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuers shall pay
to the Trustee from time to time reasonable compensation for its services as
shall be agreed to in writing from time to time by the Issuers and the Trustee.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuers and each Note Guarantor, jointly and severally, shall
indemnify the Trustee and any predecessor Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees), including taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee) incurred by or in connection with the administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Issuers
of any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; provided, however, that any failure so to notify the Issuers
shall not relieve the Issuers or any Note Guarantor of their indemnity
obligations hereunder. The Issuers shall defend the claim and the indemnified
party shall provide reasonable cooperation at the Issuers' expense in the
defense. Such indemnified parties may have separate counsel and the Issuers and
the Note Guarantors, as applicable, shall pay the fees and expenses of such
counsel; provided, however, that the Issuers shall not be required to pay such
fees and expenses if they assume such indemnified parties' defense and, in such
indemnified parties' reasonable judgment, there is no conflict of interest
between the Issuers and the Note Guarantors, as applicable, and such parties in
connection with such defense. The Issuers need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Issuers' payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(g) or (h) with respect to
either of the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
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SECTION 7.08. Replacement of Trustee. (a) The Trustee may
resign at any time by so notifying the Issuers. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Issuers shall remove the
Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
(c) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
(d) If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any Holder
who has been a bona fide holder of a Security for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(f) Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuers' obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $100,000,000 as set forth in
its most recent published annual report of condition. The Trustee shall comply
with TIA Section 310(b), subject to its right to apply for a stay of its duty
to resign under the penultimate paragraph of TIA Section 310(b); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
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SECTION 8.01. Discharge of Liability on Securities; Defeasance.
(a) When (i) all outstanding Securities (other than Securities replaced or paid
pursuant to Section 2.07) have been canceled or delivered to the Trustee for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof, and the Issuers irrevocably deposit with the
Trustee funds in an amount sufficient or U.S. Government Obligations, the
principal of and interest on which will be sufficient, or a combination thereof
sufficient, in the written opinion of a nationally recognized firm of
independent public accountants delivered to the Trustee (which delivery shall
only be required if U.S. Government Obligations have been so deposited) to pay
the principal of and interest on the outstanding Securities when due at maturity
or upon redemption of, including interest thereon to maturity or such redemption
date (other than Securities replaced or paid pursuant to Section 2.07) and
liquidated damages, if any, and if in either case the Issuers pay all other sums
payable hereunder by the Issuers, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Issuers
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Issuers.
(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any
time may terminate (i) all of their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13 and the operation of
Section 5.01(a)(iii), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant
Subsidiaries of the Company only), 6.01(h) (with respect to Significant
Subsidiaries of the Company only), 6.01(i) and 6.01(j) ("covenant defeasance
option"). The Issuers may exercise their legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option. In the
event that the Issuers terminate all of their obligations under the Securities
and this Indenture by exercising their legal defeasance option or their
covenant defeasance option, the obligations under the Note Guarantees shall
each be terminated simultaneously with the termination of such obligations.
If the Issuers exercise their legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Issuers exercise their covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default specified in Section
6.01(d), 6.01(f), 6.01(g) (with respect to Significant Subsidiaries of the
Company only), 6.01(h) (with respect to Significant Subsidiaries of the Company
only), 6.01(i) or 6.01(j) or because of the failure of the Issuers to comply
with Section 5.01(a)(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
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(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Issuers' obligations in Sections 7.07, 8.04, 8.05 and 8.06
shall survive.
SECTION 8.02. (a) Conditions to Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option only
if:
(i) the Issuers irrevocably deposit in trust with the Trustee
money in an amount sufficient or U.S. Government Obligations, the
principal of and interest on which will be sufficient, or a combination
thereof sufficient, to pay the principal, premium (if any) and interest
on the Securities when due at maturity or redemption, as the case may
be, including interest thereon to maturity or such redemption date and
liquidated damages, if any;
(ii) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(iii) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(g) or (h) with
respect to the Issuers occurs which is continuing at the end of the
period;
(iv) the deposit does not constitute a default under any other
agreement binding on the Issuers and is not prohibited by Article 10;
(v) the Issuers deliver to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(vi) in the case of the legal defeasance option, the Issuers
shall have delivered to the Trustee an Opinion of Counsel stating that
(1) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling, or (2) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
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defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the Issuers
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(viii) the Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
(b) Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold
in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10 or 12.
SECTION 8.04. Repayment to Issuers. The Trustee and the Paying
Agent shall promptly turn over to the Issuers upon request any money or U.S.
Government Obligations held by it as provided in this Article which, in the
written opinion of nationally recognized firm of independent public accountants
delivered to the Trustee (which delivery shall only be required if U.S.
Government Obligations have been so deposited), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
discharge or defeasance in accordance with this Article.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuers upon written request any money
held by them for the payment of principal or interest that remains unclaimed
for two years, and, thereafter, Holders entitled to the money must look to the
Issuers for payment as general creditors and the Trustee, and the Paying Agent
shall have no further liability with respect to such monies.
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SECTION 8.05. Indemnity for Government Obligations. The
Issuers shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. (a) Without Consent of Holders. The Issuers, the
Note Guarantors and the Trustee may amend this Indenture or the Securities
without notice to or consent of any Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to comply with Article 5;
(iii) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(iv) to make any change in Article 10 or Article 12 that would
limit or terminate the benefits available to any holder of Senior
Indebtedness (or Representatives therefor) under Article 10 or Article
12;
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(v) to add additional Note Guarantees with respect to the
Securities or to secure the Securities;
(vi) to add to the covenants of the Issuers for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Issuers;
(vii) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under
the TIA;
(viii) to make any change that does not materially and adversely
affect the rights of any Holder; or
(ix) to provide for the issuance of the Exchange Securities or
Private Exchange Securities which shall have terms substantially
identical in all material respects to the Initial Securities (except
that the transfer restrictions contained in the Initial Securities
shall be modified or eliminated, as appropriate), and which shall be
treated, together with any outstanding Initial Securities, as a single
issue of securities.
(b) An amendment under this Section 9.01 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the
Issuers shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. (a) The Issuers, the Note
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Holder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities) and compliance with any provisions of this Indenture may be waived
with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Securities). However,
without the consent of each Holder affected, an amendment or waiver may not:
(i) reduce the amount of Securities whose Holders must consent
to an amendment;
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(ii) reduce the rate of or extend the time for payment of
interest or any liquidated damages on any Security;
(iii) reduce the principal of or extend the Stated Maturity of any
Security;
(iv) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(v) make any Security payable in money other than that stated in
the Security;
(vi) make any change in Article 10 or Article 12 that adversely
affects the rights of any Holder under Article 10 or Article 12;
(vii) make any change in Section 6.04 or 6.07 or the second
sentence of this Section 9.02; or
(viii) modify the Note Guarantees in any manner adverse to the
Holders.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.02 becomes effective,
the Issuers shall mail to Holders a notice briefly describing such amendment.
The failure to give such notice to all Holders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. (a)
A consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke
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the consent or waiver as to such Holder's Security or portion of the Security
if the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate from the Issuers certifying that the
requisite number of consents have been received. After an amendment or waiver
becomes effective, it shall bind every Holder. An amendment or waiver becomes
effective upon the (i) receipt by the Issuers or the Trustee of the requisite
number of consents, (ii) satisfaction of conditions to effectiveness as set
forth in this Indenture and any indenture supplemental hereto containing such
amendment or waiver and (iii) execution of such amendment or waiver (or
supplemental indenture) by the Issuers and the Trustee.
(b) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Issuers or the Trustee so determine, the
Issuers in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it
and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture and that such
amendment is the legal, valid and binding obligation of the Issuers and the
Note Guarantors enforceable against them in accordance with its terms, subject
to customary exceptions, and complies with the provisions hereof (including
Section 9.03).
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ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Issuers agree, and
each Holder by accepting a Security agrees, that the Indebtedness evidenced by
the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full of all Senior
Indebtedness of each of the Issuers and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness. The
Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of each of the Issuers and shall rank senior to all
existing and future Subordinated Obligations of each of the Issuers; and only
Indebtedness of either of the Issuers that is Senior Indebtedness of the
Issuers shall rank senior to the Securities in accordance with the provisions
set forth herein. For purposes of this Article 10, the Indebtedness evidenced
by the Securities shall be deemed to include the liquidated damages payable
pursuant to the provisions set forth in the Securities and the Registration
Agreement. All provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company or DJ Capital to their
respective creditors upon a total or partial liquidation or a total or partial
dissolution of the Company or DJ Capital or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property or DJ Capital or its property:
(a) holders of Senior Indebtedness of the Company or DJ Capital,
as the case may be, shall be entitled to receive payment in full of
such Senior Indebtedness before Holders shall be entitled to receive
any payment of principal of or interest on the Securities; and
(b) until the Senior Indebtedness of the Company and DJ Capital,
as the case may be, is paid in full, any payment or distribution to
which Holders would be entitled but for this Article 10 shall be made
to holders of such Senior Indebtedness as their interests may appear,
except that Holders may receive Equity Interests and any debt
securities that are subordinated to such Senior Indebtedness to at
least the same extent as the Securities.
SECTION 10.03. Default on Designated Senior Indebtedness of the
Issuers. The Issuers may not pay the principal of, premium (if any) or interest
on the Securities or make any deposit pursuant to Section 8.01 and may not
otherwise repurchase, redeem or otherwise retire any Securities (collectively,
"pay the Securities")
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if (a) any Designated Senior Indebtedness of either of the Issuers is not paid
when due or (b) any other default on such Designated Senior Indebtedness occurs
and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (i) the default has been
cured or waived and any such acceleration has been rescinded or (ii) such
Designated Senior Indebtedness has been paid in full; provided, however, that
the Issuers may pay the Securities without regard to the foregoing if the
Issuers and a Trust Officer of the Trustee receive written notice approving
such payment from the Representative of the holders of such Designated Senior
Indebtedness with respect to which either of the events set forth in clause (a)
or (b) of this sentence has occurred and is continuing. During the continuance
of any default (other than a default described in clause (a) or (b) of the
preceding sentence) with respect to any Designated Senior Indebtedness of
either Issuer pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
the Issuers may not pay the Securities for a period (a "Payment Blockage
Period") commencing upon the receipt by a Trust Officer of the Trustee (with a
copy to the Issuers) of written notice, specified as a "notice of default" and
describing with particularity the default under such Designated Senior
Indebtedness (a "Blockage Notice"), of such default from the Representative of
the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (a) by written notice to the Trustee
and the Issuers from the Person or Persons who gave such Blockage Notice, (b)
by repayment in full of such Designated Senior Indebtedness or (c) because the
default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section
10.03), unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, the Issuers may resume payments on the
Securities after the end of such Payment Blockage Period, including any missed
payments. Not more than one Blockage Notice may be given in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness during such period; provided, however, that if
any Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period; provided further, however, that in no event may the total number
of days during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any 360 consecutive day period. For purposes
of this Section 10.03, no default or event of default that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, whether or not
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within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 10.04. Acceleration of Payment of Securities; Five
Business Day Delay in Payment of Designated Senior Indebtedness Outstanding. If
payment of the Securities is accelerated because of an Event of Default, the
Issuers or the Trustee (provided, that a Trust Officer of the Trustee shall
have received written notice from the Issuers or a Representative identifying
such Designated Senior Indebtedness, on which notice the Trustee shall be
entitled to conclusively rely) shall promptly notify the holders of each
Issuer's Designated Senior Indebtedness (or their Representative) of the
acceleration. If any such Designated Senior Indebtedness is outstanding, the
Issuers may not pay the Securities until five Business Days after such holders
or the Representative of such Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Securities only if this Article
10 otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a payment
or distribution is made to Holders that because of this Article 10 should not
have been made to them, the Holders who receive the distribution shall hold
such payment or distribution in trust for holders of each Issuer's Senior
Indebtedness and pay it over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
Issuers is paid in full and until the Securities are paid in full, Holders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to Senior Indebtedness of the Issuers. A
distribution made under this Article 10 to holders of such Senior Indebtedness
which otherwise would have been made to Holders is not, as between the
applicable Issuer and Holders, a payment by such Issuer on such Senior
Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Holders and holders of each Issuer's Senior Indebtedness.
Nothing in this Indenture shall:
(a) impair, as between either Issuer and Holders, the obligation
of such Issuer, which is absolute and unconditional, to pay principal
of and interest on and liquidated damages in respect of, the Securities
in accordance with their terms; or
(b) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of either Issuer to receive distributions otherwise
payable to Holders.
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SECTION 10.08. Subordination May Not Be Impaired by Either
Issuer. No right of any holder of Senior Indebtedness of either Issuer to
enforce the subordination of the Indebtedness evidenced by the Securities shall
be impaired by any act or failure to act by such Issuer or by its failure to
comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article 10. The Issuers, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of either Issuer's
Senior Indebtedness may give the notice; provided, however, that, if an issue
of either of the Issuer's Senior Indebtedness has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of either of the Issuers with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article 10 with respect to either Issuer's Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of such Senior Indebtedness; and nothing in Article 7 shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article 10 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 or any other Section of this Indenture.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of either
Issuer's Senior Indebtedness, the distribution may be made and the notice given
to their Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
SECTION 10.12. Trust Monies Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities and liquidated
damages, if any, shall not be subordinated to the prior payment of any Senior
Indebtedness of either of the Issuers or
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subject to the restrictions set forth in this Article 10, and none of the
Holders shall be obligated to pay over any such amount to either of the Issuers
or any holder of Senior Indebtedness or any other creditor of either of the
Issuers.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Holders shall be
entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (b) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders or (c) upon the Representatives for the holders of Senior Indebtedness
of either of the Issuers for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Issuers, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10. In the event that the
Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of either of the
Issuers to participate in any payment or distribution pursuant to this Article
10, the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and other facts pertinent to the rights of such
Person under this Article 10, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each Holder
by accepting a Security authorizes and directs the Trustee on his, her or its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of either of the Issuers as provided in this Article 10 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of either of the Issuers and shall not be liable
to any such holders if it shall mistakenly pay over or distribute to Holders or
either of the Issuers or any other Person, money or assets to which any holders
of Senior Indebtedness of either of the Issuers shall be entitled by virtue of
this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Security acknowledges and
agrees
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that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of
either of the Issuers, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Securities, to acquire and continue to
hold, or to continue to hold, such Senior Indebtedness and such holder of such
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 11
Note Guarantees
SECTION 11.01. (a) Note Guarantees. DonJoy and each other Note
Guarantor hereby jointly and severally irrevocably and unconditionally
guarantees, as a primary obligor and not merely as a surety, to each Holder and
to the Trustee and its successors and assigns (i) the full and punctual payment
when due, whether at Stated Maturity, by acceleration, by redemption or
otherwise, of all obligations of the Issuers under this Indenture (including
obligations to the Trustee) and the Securities, whether for payment of
principal of, interest on or liquidated damages in respect of the Securities
and all other monetary obligations (to the extent permitted by law) of the
Issuers under this Indenture and the Securities and (ii) the full and punctual
performance within applicable grace periods of all other obligations of the
Issuers whether for fees, expenses, indemnification or otherwise under this
Indenture and the Securities (all the foregoing being hereinafter collectively
called the "Guaranteed Obligations"). To the fullest extent permitted by
applicable law, each Note Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from each such Note Guarantor, and that each such Note Guarantor
shall remain bound under this Article 11 notwithstanding any extension or
renewal of any Guaranteed Obligation.
(b) Each Note Guarantor waives presentation to, demand of
payment from and protest to the Issuers of any of the Guaranteed Obligations
and also waives notice of protest for nonpayment. Each Note Guarantor waives
notice of any default under the Securities or the Guaranteed Obligations. The
obligations of each Note Guarantor hereunder shall not be affected by (i) the
failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Issuers or any other Person under this
Indenture, the Securities or any other agreement or otherwise; (ii) any
extension or renewal of any thereof; (iii) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (iv) the release of any security held by any
Holder or the Trustee for the Guaranteed Obligations or any of them; (v) the
failure of any Holder or Trustee to exercise any right or remedy against any
other guarantor of the Guaranteed Obligations; or (vi) any change in the
ownership of such Note Guarantor, except as provided in Section 11.02(b).
(c) Each Note Guarantor hereby waives any right to which it may
be entitled to have its obligations hereunder divided among the Note
Guarantors, such that such Note Guarantor's obligations would be less than the
full amount claimed. Each Note Guarantor hereby waives any right to which it
may be entitled to have the assets of the Issuers first be used and depleted as
payment of the Issuers' or such Note Guarantor's obligations hereunder prior to
any amounts being claimed from or paid by such Note Guarantor hereunder. Each
Note Guarantor hereby waives any right to which it may be entitled to require
that the Issuers be sued prior to an action being initiated against such Note
Guarantor.
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(d) Each Note Guarantor further agrees that its Note Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
(e) The Note Guarantee of each Note Guarantor is, to the extent
and in the manner set forth in Article 12, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Senior Indebtedness of the relevant Note Guarantor and is
made subject to such provisions of this Indenture.
(f) Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Note Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall
not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Note Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any Note Guarantor or would otherwise
operate as a discharge of any Note Guarantor as a matter of law or equity.
(g) Each Note Guarantor agrees that its Note Guarantee shall
remain in full force and effect until payment in full of all the Guaranteed
Obligations. Each Note Guarantor further agrees that its Note Guarantee herein
shall, to the fullest extent
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permitted by applicable law, continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of principal of or
interest on any Guaranteed Obligation is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
either of the Issuers or otherwise.
(h) In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Note Guarantor by virtue hereof, upon the failure of the Issuers to pay the
principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation, each
Note Guarantor hereby promises to and shall, upon receipt of written demand by
the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid principal amount of such
Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed
Obligations (but only to the extent not prohibited by law) and (iii) all other
monetary obligations of the Issuers to the Holders and the Trustee.
(i) Each Note Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
Guaranteed Obligations guaranteed hereby until payment in full of all
Guaranteed Obligations and all obligations to which the Guaranteed Obligations
are subordinated as provided in Article 12. Each Note Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, to the fullest extent permitted by applicable law, (i) the maturity
of the Guaranteed Obligations guaranteed hereby may be accelerated as provided
in Article 6 for the purposes of any Note Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of such Guaranteed Obligations as provided in
Article 6, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Note Guarantor for the purposes of
this Section 11.01.
(j) Each Note Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section 11.01.
(k) Upon request of the Trustee, each Note Guarantor shall
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.
SECTION 11.02. Limitation on Liability. (a) Any term or
provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Note
Guarantor shall not exceed the
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maximum amount that can be hereby guaranteed without rendering this Indenture,
as it relates to such Note Guarantor, void or voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) A Note Guarantee as to any Note Guarantor that is a
Subsidiary of the Company shall terminate and be of no further force or effect
and such Note Guarantor shall be deemed to be released from all obligations
under this Article 11 upon (i)(A) the merger or consolidation of such Note
Guarantor with or into any Person other than the Company or a Subsidiary or
Affiliate of the Company where such Note Guarantor is not the surviving entity
of such consolidation or merger or (B) the sale by the Company or any
Subsidiary of the Company (or any pledgee of the Company) of the Equity
Interests of such Note Guarantor (or by any other Person as a result of a
foreclosure of any lien on such Equity Interests securing Senior Indebtedness),
where, after such sale, such Note Guarantor is no longer a Subsidiary of the
Company; provided, however, that each such merger, consolidation or sale (or,
in the case of a sale by such a pledgee, the disposition of the proceeds of
such sale actually received by the Company or any of its Subsidiaries) shall
comply with Section 4.06 and Section 5.01(b) and (ii) such Note Guarantor being
released from its Guarantee of, and all pledges and security interests granted
in connection with, the Credit Agreement and any other Indebtedness of the
Company or any Subsidiary of the Company.
(c) In addition, a Note Guarantee of any Note Guarantor that is
a Subsidiary of the Company shall terminate and be of no further force or
effect and such Note Guarantor shall be deemed to be released from all
obligations under this Article 11 upon the Issuer's designation of such Note
Guarantor as an Unrestricted Subsidiary, provided that such designation
complies with the other applicable provisions of this Indenture.
At the written request of the Issuers, the Trustee shall execute
and deliver an appropriate instrument evidencing such release (in the form
provided by the Issuers).
SECTION 11.03. Successors and Assigns. This Article 11 shall be
binding upon each Note Guarantor and its successors and assigns and shall inure
to the benefit of the successors and assigns of the Trustee and the Holders
and, in the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in this Indenture
and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this
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Article 11 shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any right, power or
privilege. The rights, remedies and benefits of the Trustee and the Holders
herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at
law, in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Note Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Note Guarantor in any case shall entitle
such Note Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future
Note Guarantors. Each Subsidiary which is required to become a Note Guarantor
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which such
Subsidiary shall become a Note Guarantor under this Article 11 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating
to creditors' rights generally and to the principles of equity, whether
considered in a proceeding at law or in equity, the Note Guarantee of such Note
Guarantor is a valid and binding agreement of such Note Guarantor, enforceable
against such Note Guarantor in accordance with its terms.
SECTION 11.07. Non-Impairment. The failure to endorse a Note
Guarantee on any Security shall not affect or impair the validity thereof.
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ARTICLE 12
Subordination of the Note Guarantees
SECTION 12.01. Agreement To Subordinate. Each Note Guarantor
agrees, and each Holder by accepting a Security agrees, that the obligations of
a Note Guarantor hereunder are subordinated in right of payment, to the extent
and in the manner provided in this Article 12, to the prior payment in full of
all Senior Indebtedness of such Note Guarantor and that the subordination is
for the benefit of and enforceable by the holders of such Senior Indebtedness
of such Note Guarantor. The obligations hereunder with respect to a Note
Guarantor shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Note Guarantor and shall rank senior to all
existing and future Subordinated Obligations of such Note Guarantor; and only
Indebtedness of such Note Guarantor that is Senior Indebtedness of such Note
Guarantor shall rank senior to the obligations of such Note Guarantor in
accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Note Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such Note
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to such Note Guarantor or its property:
(a) holders of Senior Indebtedness of such Note Guarantor shall
be entitled to receive payment in full of such Senior Indebtedness
before Holders shall be entitled to receive any payment pursuant to any
Guaranteed Obligations from such Note Guarantor; and
(b) until the Senior Indebtedness of such Note Guarantor is paid
in full, any payment or distribution to which Holders would be entitled
but for this Article 12 shall be made to holders of such Senior
Indebtedness as their respective interests may appear, except that
Holders may receive Equity Interests and any debt securities that are
subordinated to such Senior Indebtedness to at least the same extent as
the Note Guarantees.
SECTION 12.03. Default on Designated Senior Indebtedness of a
Note Guarantor. A Note Guarantor may not make any payment pursuant to any of
the Guaranteed Obligations or repurchase, redeem or otherwise retire any
Securities (collectively, "pay its Guarantee") if (a) any Designated Senior
Indebtedness of such Note Guarantor is not paid when due or (b) any other
default on Designated Senior Indebtedness of such Note Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, (i) the
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default has been cured or waived and any such acceleration has been rescinded
or (ii) such Designated Senior Indebtedness has been paid in full; provided,
however, that such Note Guarantor may pay its Guarantee without regard to the
foregoing if such Note Guarantor and a Trust Officer of the Trustee receive
written notice approving such payment from the Representative of the holders of
such Designated Senior Indebtedness with respect to which either of the events
in clause (a) or (b) of this sentence has occurred and is continuing. During
the continuance of any default (other than a default described in clause (a) or
(b) of the preceding sentence) with respect to any Designated Senior
Indebtedness of a Note Guarantor pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, such Note Guarantor may not pay its Guarantee for a period (a
"Guarantee Payment Blockage Period") commencing upon the receipt by a Trust
Officer of the Trustee (with a copy to such Note Guarantor and the Issuers) of
written notice, specified as a "notice of default" and describing with
particularity the default under such Designated Senior Indebtedness (a
"Guarantee Blockage Notice"), of such default from the Representative of the
holders of the Designated Senior Indebtedness of such Note Guarantor specifying
an election to effect a Guarantee Payment Blockage Period and ending 179 days
thereafter (or earlier if such Guarantee Payment Blockage Period is terminated
(a) by written notice to the Trustee (with a copy to such Note Guarantor and
the Issuers) from the Person or Persons who gave such Guarantee Blockage
Notice, (b) because such Designated Senior Indebtedness has been repaid in full
or (c) because the default giving rise to such Guarantee Blockage Notice is no
longer continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section 12.03), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, such Note Guarantor may resume
paying its Note Guarantee after the end of such Guarantee Payment Blockage
Period, including any missed payments. Not more than one Guarantee Blockage
Notice may be given with respect to a Note Guarantor in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated
Senior Indebtedness of such Note Guarantor during such period; provided,
however, that if any Guarantee Blockage Notice within such 360-day period is
given by or on behalf of any holders of Designated Senior Indebtedness of such
Note Guarantor other than the Bank Indebtedness, the Representative of the Bank
Indebtedness may give another Guarantee Blockage Notice within such period;
provided further, however, that in no event may the total number of days during
which any Guarantee Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period. For purposes of
this Section 12.03, no default or event of default that existed or was
continuing on the date of the commencement of any Guarantee Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Guarantee Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Guarantee Payment
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Blockage Period by the Representative of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such default or
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
SECTION 12.04. Demand for Payment; Five Business Day Delay in
Payment of Designated Senior Indebtedness Outstanding. If payment of the
Securities is accelerated because of an Event of Default and a demand for
payment is made on a Note Guarantor pursuant to Article 11, the Trustee
(provided that a Trust Officer of the Trustee shall have received written
notice from the Issuers, such Note Guarantor or a Representative identifying
such Designated Senior Indebtedness, on which notice the Trustee shall be
entitled to conclusively rely) shall promptly notify the holders of the
Designated Senior Indebtedness of such Note Guarantor (or the Representative of
such holders) of such demand. If any Designated Senior Indebtedness of such
Note Guarantor is outstanding, such Note Guarantor may not pay its Guarantee
until five Business Days after such holders or the Representative of the
holders of the Designated Senior Indebtedness of such Note Guarantor receive
notice of such demand and, thereafter, may pay its Guarantee only if this
Article 12 otherwise permits payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment
or distribution is made to Holders that because of this Article 12 should not
have been made to them, the Holders who receive the payment or distribution
shall hold such payment or distribution in trust for holders of the Senior
Indebtedness of the relevant Note Guarantor and pay it over to them as their
respective interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Note Guarantor is paid in full and until the Securities are paid in full,
Holders shall be subrogated to the rights of holders of Senior Indebtedness of
such Note Guarantor to receive distributions applicable to Senior Indebtedness
of such Note Guarantor. A distribution made under this Article 12 to holders of
Senior Indebtedness of such Note Guarantor which otherwise would have been made
to Holders is not, as between such Note Guarantor and Holders, a payment by
such Note Guarantor on Senior Indebtedness of such Note Guarantor.
SECTION 12.07. Relative Rights. This Article 12 defines the
relative rights of Holders and holders of Senior Indebtedness of a Note
Guarantor. Nothing in this Indenture shall:
(a) impair, as between a Note Guarantor and Holders, the
obligation of a Note Guarantor which is absolute and unconditional, to
make payments with respect to the Guaranteed Obligations to the extent
set forth in Article 11; or
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(b) prevent the Trustee or any Holder from exercising its
available remedies upon a default by a Note Guarantor under its
obligations with respect to the Guaranteed Obligations, subject to the
rights of holders of Senior Indebtedness of such Note Guarantor to
receive distributions otherwise payable to Holders.
SECTION 12.08. Subordination May Not Be Impaired by a Note
Guarantor. No right of any holder of Senior Indebtedness of a Note Guarantor to
enforce the subordination of the obligations of such Note Guarantor hereunder
shall be impaired by any act or failure to act by such Note Guarantor or by its
failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or the Paying Agent may continue to
make payments on the Guaranteed Obligations and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives written notice satisfactory to
it that payments may not be made under this Article 12. A Note Guarantor, the
Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness of a Note Guarantor may give the notice; provided, however,
that if an issue of Senior Indebtedness of a Note Guarantor has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of a Note Guarantor with the same rights it would have if
it were not Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 12 with respect to any Senior Indebtedness of a Note
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Note Guarantor; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 or any other Section of this Indenture.
SECTION 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of a Note Guarantor, the distribution may be made and the notice
given to their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure of a Note Guarantor to make a payment on
any of its Guaranteed Obligations by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default by such Note
Guarantor under such
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obligations. Nothing in this Article 12 shall have any effect on the right of
the Holders or the Trustee to make a demand for payment on a Note Guarantor
pursuant to Article 11.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Holders shall be
entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
12.02 are pending, (b) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders or (c) upon the Representatives for the holders of Senior Indebtedness
of a Note Guarantor for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness of a Note Guarantor and other Indebtedness of a Note Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
12. In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of a Note Guarantor to participate in any payment or distribution
pursuant to this Article 12, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of such Note Guarantor held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 12,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each Holder
by accepting a Security authorizes and directs the Trustee on his, her or its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of each of the Note Guarantors as provided in this Article 12 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Note Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of a Note Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Holders or the relevant Note Guarantor or any other Person, money
or assets to which any holders of Senior Indebtedness of such Note Guarantor
shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Note Guarantor on Subordination Provisions. Each Holder by accepting a Security
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acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness of a Note Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 12.16. Defeasance. The terms of this Article 12 shall
not apply to payments from money or the proceeds of U.S. Government Obligations
held in trust by the Trustee for the payment of principal of and interest on
the Securities pursuant to the provisions described in Section 8.03.
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, TIA Sections 310 to 318, inclusive,
such imposed duties or incorporated provision shall control.
SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to either Issuer or DonJoy:
c/o DJ Orthopedics, LLC
2985 Scott Street
Vista, California 92083
Attention of:
Chief Financial Officer
(760) 734-0320
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if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention of:
Corporate Trust Administration
(212) 815-5763
The Issuers, DonJoy or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed,
first class mail, to the Holder at the Holder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Issuers to the Trustee to
take or refrain from taking any action under this Indenture, the Issuers shall
furnish to the Trustee:
(a) an Officers' Certificate in form reasonably satisfactory to
the Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
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SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than pursuant to Section 4.09)
shall include:
(a) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Issuers,
any Note Guarantor or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuers or
any Note Guarantor shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
which the Trustee knows are so owned shall be so disregarded. Subject to the
foregoing, only Securities outstanding at the time shall be considered in any
such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or other day on which banking institutions are not required by law or
regulation to be open in the State of New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK BUT
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WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Issuers or any of the Note Guarantors,
shall not have any liability for any obligations of the Issuers or any of the
Note Guarantors under the Securities or this Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION 13.11. Successors. All agreements of the Issuers and
each Note Guarantor in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have
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been inserted for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
DJ ORTHOPEDICS, LLC,
by /s/ Leslie H. Cross
------------------------------
Name: Leslie H. Cross
Title: President and CEO
DJ ORTHOPEDICS CAPITAL CORPORATION,
by /s/ Leslie H. Cross
------------------------------
Name: Leslie H. Cross
Title: President and CEO
DONJOY, L.L.C.,
by /s/ Leslie H. Cross
------------------------------
Name: Leslie H. Cross
Title: President and CEO
THE BANK OF NEW YORK, as Trustee,
by /s/ Michele L. Russo
------------------------------
Name: Michele L. Russo
Title: Assistant Treasurer
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APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities
clearing agency.
"Definitive Security" means a certificated Initial Security,
Private Exchange Security or Exchange Security (bearing the Restricted
Securities Legend if the transfer of such Security is restricted by applicable
law) that does not include the Global Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchaser" means Chase Securities Inc.
"Private Exchange" means an offer by the Company, pursuant to the
Registration Agreement, to issue and deliver to certain Holders, in exchange
for the
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Initial Securities held by such Holders as part of their initial distribution,
a like aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means the Securities of the Company
issued in exchange for Initial Securities pursuant to this Indenture in
connection with the Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated June 17,
1999, among the Company, DJ Capital, DonJoy, and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means the offer by the Issuers,
pursuant to the Registration Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for their Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.
"Registration Agreement" means the Exchange and Registration
Rights Agreement dated June 30, 1999, among the Company, DJ Capital, DonJoy and
the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (a) the
day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S, notice of which day shall be promptly given by the Company to
the Trustee, and (b) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in
Section 2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Initial Securities offered and
sold to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depositary) or any successor person
thereto, who shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement
filed by the Issuers and DonJoy in connection with the offer and sale of
Initial Securities or Private Exchange Securities pursuant to the Registration
Agreement.
"Transfer Restricted Securities" means Definitive Securities and
any other Securities that bear or are required to bear the Restricted
Securities Legend.
1.2 Other Definitions
Term: Defined in Section:
----- -------------------
"Agent Members"..............................................................2.1(c)
"IAI Global Security"........................................................2.1(b)
"Global Security"............................................................2.1(b)
"Regulation S Global Security"...............................................2.1(b)
"Rule 144A Global Security"..................................................2.1(b)
2. The Securities
2.1 Form and Dating
(a) The Initial Securities issued on the date hereof will be (i)
offered and sold by the Issuers pursuant to the Purchase Agreement and (ii)
resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons
other than U.S. Persons (as defined in Regulation S) in reliance on Regulation
S. Such Initial Securities may thereafter be transferred to, among others,
QIBs, purchasers in reliance on Regulation S and, except as set forth below,
IAIs in accordance with Rule 501.
(b) Global Securities. Rule 144A Securities shall be issued
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Security"), in each
case without interest coupons and bearing the Global Securities Legend and
Restricted Securities Legend, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Issuers and authenticated by the Trustee as provided in
this Indenture. One or more global securities in
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definitive, fully registered form without interest coupons and bearing the
Global Securities Legend and the Restricted Securities Legend (collectively,
the "IAI Global Security") shall also be issued on the Closing Date, deposited
with the Securities Custodian, and registered in the name of the Depositary or
a nominee of the Depositary, duly executed by the Issuers and authenticated by
the Trustee as provided in this Indenture to accommodate transfers of
beneficial interests in the Securities to IAIs subsequent to the initial
distribution. The Rule 144A Global Security, the IAI Global Security and the
Regulation S Global Security are each referred to herein as a "Global Security"
and are collectively referred to herein as "Global Securities", provided, that
the term "Global Security" when used in Sections 2.1(c), 2.3 (c)(iii), 2.3(f),
2.3(g)(i), 2.3(h)(i) and 2.4 shall also include any Security in global form
issued in connection with a Registered Exchange Offer or Private Exchange. The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee and on the schedules thereto as hereinafter
provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only to
a Global Security deposited with or on behalf of the Depositary.
The Issuers shall execute and the Trustee shall, in accordance
with this Section 2.1(c) and Section 2.2 and pursuant to an order of the
Issuers signed by one Officer, authenticate and deliver initially one or more
Global Securities that (i) shall be registered in the name of the Depositary
for such Global Security or Global Securities or the nominee of such Depositary
and (ii) shall be delivered by the Trustee to such Depositary or pursuant to
such Depositary's instructions or held by the Trustee as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as Securities
Custodian or under such Global Security, and the Depositary may be treated by
the Issuers, the Trustee and any agent of the Issuers or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the
Trustee or any agent of the Issuers or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Security.
(d) Definitive Securities. Except as provided in Section 2.3 or
2.4, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and make available
for delivery upon a written order of the Issuers signed by one Officer (a)
Initial Securities for original
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issue on the date hereof in an aggregate principal amount of $100,000,000 and
(b) the (i) Exchange Securities for issue only in a Registered Exchange Offer
and (ii) Private Exchange Securities for issue only in the Private Exchange, in
the case of each of (i) and (ii) pursuant to the Registration Agreement and for
a like principal amount of Initial Securities exchanged pursuant thereto. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and whether
the Securities are to be Initial Securities, Exchange Securities or Private
Exchange Securities. The aggregate principal amount of Securities outstanding
at any time may not exceed $100,000,000 except as provided in Sections 2.07 and
2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar with a
request:
(i) to register the transfer of such Definitive Securities; or
(ii) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Issuers and the
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(2) in the case of Definitive Securities which are Transfer
Restricted Securities, are accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Securities are being delivered to
the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to
that effect (in the form set forth on the reverse side of the
Initial Security or Private Exchange Security, as applicable); or
(B) if such Definitive Securities are being transferred to
the Issuers, a certification to that effect (in the form set
forth on the reverse side of the Initial Security or Private
Exchange Security, as applicable); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with
Rule 144 under the Securities
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Act or in reliance upon another exemption from the registration
requirements of the Securities Act, (x) a certification to that
effect (in the form set forth on the reverse side of the Initial
Security or Private Exchange Security, as applicable,), (y) an
opinion of counsel or other evidence reasonably satisfactory to
it as to the compliance with the restrictions set forth in the
legend set forth in Section 2.3(e)(i) and (z) in the case of a
transfer to an IAI, a signed letter substantially in the form of
Exhibit D.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Issuers and the Registrar,
together with:
(i) certification (in the form set forth on the reverse side of
the Initial Security or Private Exchange Security, as applicable) that
such Definitive Security is being transferred (1) to a QIB in accordance
with Rule 144A, (2) to an IAI that has furnished to the Trustee a signed
letter substantially in the form of Exhibit D or (3) outside the United
States in an offshore transaction within the meaning of Regulation S and
in compliance with Rule 904 under the Securities Act, and in the case of
clauses (2) and (3) an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set forth
in the legend set forth in Section 2.3(e)(i); and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Global Security to reflect an increase in
the aggregate principal amount of the Securities represented by the
Global Security, such instructions to contain information regarding the
Depositary account to be credited with such increase, then the Trustee
shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Securities Custodian, the aggregate principal amount of Securities
represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall
credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Global Security equal to
the principal amount of the Definitive Security so canceled. If no
Global Securities are then outstanding and the Global Security has not
been previously exchanged for certificated securities pursuant to
Section 2.4, the Issuers shall issue and the Trustee shall authenticate,
upon written order of the Issuers in the form of an Officers'
Certificate, a new Global Security in the appropriate principal amount.
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(c) Transfer and Exchange of Global Securities. (i) The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor. A transferor of a beneficial interest in
a Global Security shall deliver a written order given in accordance with the
Depositary's procedures containing information regarding the participant
account of the Depositary to be credited with a beneficial interest in such
Global Security or another Global Security and such account shall be credited
in accordance with such order with a beneficial interest in the applicable
Global Security and the account of the Person making the transfer shall be
debited by an amount equal to the beneficial interest in the Global Security
being transferred. Transfers by an owner of a beneficial interest in the Rule
144A Global Security or the IAI Global Security to a transferee who takes
delivery of such interest through the Regulation S Global Security, whether
before or after the expiration of the Restricted Period, shall be made only
upon receipt by the Trustee of a certification (and an opinion of counsel or
other evidence reasonably satisfactory to the Trustee as to the compliance with
the restrictions set forth in the legend set forth in Section 2.3(e)(i)) in the
form provided on the reverse of the Initial Securities or Private Exchange
Securities, as the case may be, from the transferor to the effect that such
transfer is being made in accordance with Regulation S or (if available) Rule
144 under the Securities Act and that, if such transfer is being made prior to
the expiration of the Restricted Period, the interest transferred shall be held
immediately thereafter through Euroclear or Cedel. In the case of a transfer of
a beneficial interest in either the Regulation S Global Security or the Rule
144A Global Security for an interest in the IAI Global Security, the transferee
must furnish a signed letter substantially in the form of Exhibit D to the
Trustee and an opinion of counsel or other evidence reasonably satisfactory to
the Trustee as to the compliance with the restrictions set forth in the legend
set forth in Section 2.3(e)(i).
(ii) If the proposed transfer is a transfer of a
beneficial interest in one Global Security to a beneficial
interest in another Global Security, the Registrar shall reflect
on its books and records the date and an increase in the
principal amount of the Global Security to which such interest is
being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall
reflect on its books and records the date and a corresponding
decrease in the principal amount of Global Security from which
such interest is being transferred.
(iii) Notwithstanding any other provisions of this
Appendix (other than the provisions set forth in Section 2.4), a
Global Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary.
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(iv) In the event that a Global Security is exchanged for
Definitive Securities pursuant to Section 2.4 prior to the
consummation of the Registered Exchange Offer or the
effectiveness of the Shelf Registration Statement with respect to
such Securities, such Securities may be exchanged only in
accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply
with Rule 144A, Regulation S or such other applicable exemption
from registration under the Securities Act, as the case may be)
and such other procedures as may from time to time be adopted by
the Issuers.
(d) Restrictions on Transfer of Regulation S Global Security. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (1) to the Issuers, (2) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (3) in an offshore
transaction in accordance with Regulation S, (4) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable)
under the Securities Act, (5) to an IAI purchasing for its own account, or for
the account of such an IAI, in a minimum principal amount of Securities of
$250,000 or (6) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. Prior to the expiration of the Restricted
Period, transfers by an owner of a beneficial interest in the Regulation S
Global Security to a transferee who takes delivery of such interest through the
Rule 144A Global Security or the IAI Global Security shall be made only in
accordance with Applicable Procedures and upon receipt by the Trustee of a
written certification (and an appropriate opinion, if provided for in the
legend on such Regulations S Global Security and requested by the Trustee) from
the transferor of the beneficial interest in the form provided on the reverse
of the Initial Security to the effect that such transfer is being made to (1) a
QIB within the meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A or (2) an IAI purchasing for its own account, or for the account
of such an IAI, in a minimum principal amount of the Securities of $250,000.
Such written certification shall no longer be required after the expiration of
the Restricted Period. In the case of a transfer of a beneficial interest in
the Regulation S Global Security for an interest in the IAI Global Security,
the transferee must furnish a signed letter substantially in the form of
Exhibit D to the Trustee.
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(ii) Upon the expiration of the Restricted Period,
beneficial ownership interests in the Regulation S Global
Security shall be transferable in accordance with applicable law
and the other terms of this Indenture.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) or (iv), each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities
issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form (each defined
term in the legend being defined as such for purposes of the
legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE
ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
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ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH
CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the legends
set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security if the Holder certifies in
writing to the Registrar that its request for such exchange was
made in reliance on Rule 144 (such certification to be in the
form set forth on the reverse of the Initial Security, or Private
Exchange Security, as applicable) and delivers an opinion of
counsel or other evidence reasonably satisfactory to the
Registrar as to the compliance with the restrictions set forth in
the legend set forth in Section 2.3(e)(i).
(iii) After a transfer of any Initial Securities or
Private Exchange Securities during the period of the
effectiveness of a Shelf Registration Statement with respect to
such Initial Securities or Private Exchange Securities, as the
case may be, all requirements pertaining to the Restricted
Securities Legend on such Initial Securities or such Private
Exchange Securities shall cease to apply and the requirements
that any such Initial Securities or such Private Exchange
Securities be issued in global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer
with respect to the Initial Securities pursuant to which Holders
of such Initial Securities are offered Exchange Securities in
exchange for their Initial Securities, all requirements
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pertaining to Initial Securities that Initial Securities be
issued in global form shall continue to apply, and Exchange
Securities in global form without the Restricted Securities
Legend shall be available to Holders that exchange such Initial
Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with
respect to the Initial Securities pursuant to which Holders of
such Initial Securities are offered Private Exchange Securities
in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities be
issued in global form shall continue to apply, and Private
Exchange Securities in global form with the Restricted Securities
Legend shall be available to Holders that exchange such Initial
Securities in such Private Exchange.
(vi) Upon a sale or transfer after the expiration of the
Restricted Period of any Initial Security acquired pursuant to
Regulation S, all requirements that such Initial Security bear
the Restricted Securities Legend shall cease to apply and the
requirements requiring any such Initial Security be issued in
global form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, transferred, redeemed, repurchased or
canceled, such Global Security shall be returned by the Depositary to the
Trustee for cancelation or retained and canceled by the Trustee. At any time
prior to such cancelation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, transferred in exchange for an interest in
another Global Security, redeemed, repurchased or canceled, the principal
amount of Securities represented by such Global Security shall be reduced and
an adjustment shall be made on the books and records of the Trustee (if it is
then the Securities Custodian for such Global Security) with respect to such
Global Security, by the Trustee or the Securities Custodian, to reflect such
reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Issuers shall execute and the Trustee shall authenticate,
Definitive Securities and Global Securities at the Registrar's
request.
(ii) No service charge shall be made for any registration
of transfer or exchange, but the Issuers may require payment of a
sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than
any such transfer taxes, assessments or similar governmental
charge payable upon exchanges to be registered in the name of the
registered Holder
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effecting the exchange pursuant to Sections 2.06, 3.06, 4.06,
4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of
transfer of any Security, the Issuers, the Trustee, the Paying
Agent or the Registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Issuers,
the Trustee, the Paying Agent or the Registrar shall be affected
by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same
debt and shall be entitled to the same benefits under this
Indenture as the Securities surrendered upon such transfer or
exchange.
(h) No Obligation of the Trustee or Issuers.
(i) Neither the Issuers nor the Trustee shall have no
responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in the Depositary or any
other Person with respect to the accuracy of the records of the
Depositary or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Securities
or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of
any notice (including any notice of redemption or repurchase) or
the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the
Securities shall be given or made only to the registered Holders
(which shall be the Depositary or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global
Security shall be exercised only through the Depositary subject
to the applicable rules and procedures of the Depositary. The
Trustee may rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in
any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Indenture, and to examine
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the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depositary or with
the Trustee as Securities Custodian pursuant to Section 2.1 or issued in
connection with a Registered Exchange Offer or Private Exchange shall be
transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Issuers
that it is unwilling or unable to continue as a Depositary for such Global
Security or if at any time the Depositary ceases to be a "clearing agency"
registered under the Exchange Act, and a successor depositary is not appointed
by the Issuers within 90 days of such notice or after the Issuers become aware
of such cessation, or (ii) an Event of Default has occurred and is continuing
or (iii) the Issuers, in their sole discretion, notify the Trustee in writing
that they elect to cause the issuance of certificated Securities under this
Indenture.
(b) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by
the Depositary to the Trustee, to be so transferred, in whole or from time to
time in part, without charge, and the Trustee shall authenticate and deliver,
upon such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any certificated Initial Security or Private Exchange Security in the
form of a Definitive Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(e), bear the
Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a)(i), (ii) or (iii), the Issuers will promptly make
available to the Trustee a reasonable supply of Definitive Securities in fully
registered form without interest coupons.
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EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY AND PRIVATE EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
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ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS' AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.
Each Definitive Security shall bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
116
No. $__________
12-_% Senior Subordinated Note due 2009
CUSIP No. ______
[ISIN No._]
DJ ORTHOPEDICS, LLC, a Delaware limited liability company, and DJ
ORTHOPEDICS CAPITAL CORPORATION, a Delaware corporation, promise to pay to Cede
& Co., or registered assigns, the principal sum [of Dollars] [listed on the
Schedule of Increases or Decreases in Global Security attached hereto](1) on
June 15, 2009.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
- -------------------
(1) Use the Schedule of Increases and Decreases language if the Note is in
Global Form.
117
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
DJ ORTHOPEDICS, LLC,
by
------------------------------
Name:
Title:
DJ ORTHOPEDICS CAPITAL CORPORATION,
by
------------------------------
Name:
Title:
118
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
By:
---------------------------
Authorized Signatory
- ------------------------
*/ If the Note is to be issued in global form, add the Global Notes Legend and
the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES-SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
[FORM OF REVERSE SIDE OF INITIAL SECURITY
AND PRIVATE EXCHANGE SECURITY]
12-_% Senior Subordinated Note due 2009
1. Interest
(a) DJ ORTHOPEDICS, LLC a Delaware limited liability company (the
"Company") and DJ ORTHOPEDICS CAPITAL CORPORATION, a Delaware corporation ("DJ
Capital") (such entities, and their respective successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promise
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers shall pay interest semiannually on June 15 and
December 15 of each year. Interest on the Securities shall accrue from the most
recent date to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for, from June 30, 1999 until the
principal hereof
119
4
is due. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Issuers shall pay interest on overdue principal at the rate
borne by the Securities, and they shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
(b) Liquidated Damages. The holder of this Security is entitled
to the benefits of an Exchange and Registration Rights Agreement, dated as of
June 30, 1999, among the Company, DJ Capital, DonJoy, L.L.C. ("DonJoy") and
the Initial Purchaser named therein (the "Registration Agreement"). Capitalized
terms used in this paragraph (b) but not defined herein have the meanings
assigned to them in the Registration Agreement. Subject to the terms of the
Registration Agreement, if (i) the Shelf Registration Statement or Exchange
Offer Registration Statement, as applicable under the Registration Agreement,
is not filed with the Commission on or prior to the date specified in the
Registration Agreement, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective on
or prior to the date specified in the Registration Agreement, (iii) the
Registered Exchange Offer is not consummated on or prior to 225 days after the
Issue Date (other than in the event the Issuers file a Shelf Registration
Statement), or (iv) the Shelf Registration Statement is filed and declared
effective on or prior to the date specified in the Registration Agreement but
shall thereafter cease to be effective (at any time that the Issuers and DonJoy
are obligated to maintain the effectiveness thereof) without being succeeded
within 60 days by an additional Registration Statement filed and declared
effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Issuers and DonJoy, jointly and severally, shall
pay liquidated damages to each holder of Transfer Restricted Securities (but
not in respect of any Transfer Restricted Securities for any period after such
securities cease to be Transfer Restricted Securities pursuant to clause (iii)
of the definition thereof), during the period of such Registration Default, in
an amount equal to $0.192 per week per $1,000 principal amount of the
Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed or declared effective, the
Registered Exchange Offer is consummated or the Shelf Registration Statement
again becomes effective, as the case may be. All accrued liquidated damages
shall be paid to holders in the same manner as interest payments on the
Securities on semi-annual payment dates which correspond to interest payment
dates for the Securities. Following the cure of all Registration Defaults, the
accrual of liquidated damages shall cease. The Trustee shall have no
responsibility with respect to the determination of the amount of any such
liquidated damages. For purposes of the foregoing, "Transfer Restricted
Securities" means (i) each Initial Security until the date on which such
Initial Security has been exchanged for a freely transferable Exchange Security
in the Registered Exchange Offer (but not including Exchange Securities issued
to an Exchanging Dealer in the Registered Exchange Offer), (ii) each Initial
Security or Private Exchange Security until the date on which such Initial
Security or Private Exchange Security has been effectively registered under the
Securities Act and disposed of in accordance with a Shelf Registration
Statement or (iii) each Initial Security or Private Exchange Security until the
date on which such Initial
120
5
Security or Private Exchange Security is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act.
2. Method of Payment
The Issuers shall pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the June 1 or December 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Issuers shall pay principal, premium,
liquidated damages and interest in money of the United States of America that
at the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security
(including principal, premium, liquidated damages and interest) shall be made
by wire transfer of immediately available funds to the accounts specified by
The Depository Trust Company. The Issuers will make all payments in respect of
a certificated Security (including principal, premium and interest), by mailing
a check to the registered address of each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder of at
least $1,000,000 aggregate principal amount of Securities, by wire transfer to
a U.S. dollar account maintained by the payee with a bank in the United States
if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation
(the "Trustee"), will act as Paying Agent and Registrar. The Issuers may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
Either of the Issuers or any of their domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
June 30, 1999 (the "Indenture"), among the Company, DJ Capital, DonJoy and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "TIA"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all terms and provisions of the Indenture, and Holders (as defined in the
Indenture) are referred to the Indenture and the TIA for a statement of such
terms and provisions.
121
6
The Securities are senior subordinated unsecured obligations of
the Issuers limited to $100,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the [Initial Securities/Private Exchange Securities] referred to in the
Indenture issued in an aggregate principal amount of $100,000,000. The
Securities include the Initial Securities and any Exchange Securities and
Private Exchange Securities issued in exchange for Initial Securities. The
Initial Securities, the Exchange Securities and the Private Exchange Securities
are treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on the ability of the Issuers and their Restricted
Subsidiaries to, among other things, make certain Investments and other
Restricted Payments, pay dividends and other distributions, incur Indebtedness,
enter into consensual restrictions upon the payment of certain dividends and
distributions by such Restricted Subsidiaries, enter into or permit certain
transactions with Affiliates and make asset sales. The Indenture also imposes
limitations on the ability of the Issuers to consolidate or merge with or into
any other Person or convey, transfer or lease all or substantially all of the
property of the Issuers.
To guarantee the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Issuers under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of
the Securities and the Indenture, the Note Guarantors have jointly and
severally unconditionally guaranteed the Guaranteed Obligations on a senior
subordinated basis as and to the extent provided in the Indenture.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities
shall not be redeemable at the option of the Issuers prior to June 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Issuers, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at
the following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest and liquidated damages (if any) to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on June 15 of the years set
forth below:
REDEMPTION
YEAR PRICE
-----------------------------------------------------------
2004 106.313%
2005 104.208%
2006 102.104%
2007 and thereafter 100.000%
122
7
In addition, prior to June 15, 2002, the Issuers may on one or
more occasions redeem up to a maximum of 35% of the original aggregate
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings (i) by the Company or (ii) by DonJoy to the extent the Net
Cash Proceeds thereof are contributed to the Company or used to purchase Equity
Interests (other than Disqualified Equity Interests) of the Company from the
Company, at a redemption price equal to 112.625% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption, at
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption shall be made within 90 days of such Equity
Offering upon not less than 30 nor more than 60 days notice mailed to each
holder of Securities being redeemed and otherwise in accordance with the
procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least
30 days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest (and, if applicable, liquidated
damages) ceases to accrue on such Securities (or such portions thereof) called
for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Issuers to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and liquidated damages, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject
to the terms of, the Indenture.
123
8
In accordance with Section 4.06 of the Indenture, the Issuers
will be required to offer to purchase Securities upon the occurrence of certain
events.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Issuers and
each Note Guarantor agree, and each Holder by accepting a Security agrees, to
the subordination provisions contained in the Indenture and authorizes the
Trustee to give it effect and appoints the Trustee as attorney-in-fact for such
purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with, and subject to the restrictions on
transfer and exchange set forth in, the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
Except as provided in paragraph 2 hereof, the registered Holder
of this Security may be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest or liquidated
damages (if any) remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Issuers at their written request unless an
abandoned property law designates another Person. After any such payment,
Holders entitled to the money must look only to the Issuers and not to the
Trustee for payment.
124
9
13. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may
terminate some of or all their obligations under the Securities and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default or
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Issuers and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article 5 of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Note Guarantees with respect to
the Securities; (v) to secure the Securities; (vi) to add additional covenants
or to surrender rights and powers conferred on the Issuers; (vii) to comply
with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; (viii) to make any change that
does not materially and adversely affect the rights of any Securityholder; (ix)
to make any change in the subordination provisions of the Indenture that would
limit or terminate the benefits available to any holder of Senior Indebtedness
of either of the Issuers or a Note Guarantor (or any representative thereof)
under such subordination provisions; or (x) to provide for the issuance of the
Exchange Securities or Private Exchange Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
either of the Issuers) and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due
and payable. If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of either of the Issuers occurs, the principal of
and interest on all the Securities shall become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
Under certain circumstances, the Holders of a majority in principal amount of
the outstanding Securities may rescind any such acceleration with respect to
the Securities and its consequences.
125
10
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Securities unless (i) such Holder has previously given the Trustee notice that
an Event of Default is continuing, (ii) Holders of at least 25% in principal
amount of the outstanding Securities have requested the Trustee in writing to
pursue the remedy, (iii) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the receipt of the
request and the offer of security or indemnity and (v) the Holders of a
majority in principal amount of the outstanding Securities have not given the
Trustee a direction inconsistent with such request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal amount
of the outstanding Securities are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability. Prior
to taking any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Issuers, a Note Guarantor or their Affiliates and
may otherwise deal with the Issuers, a Note Guarantor or their Affiliates with
the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of either
Issuer or any Note Guarantor shall not have any liability for any obligations
of the Issuers under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
126
11
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP and ISIN Numbers
The Issuers have caused CUSIP and ISIN numbers to be printed on
the Securities and has directed the Trustee to use CUSIP and ISIN numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
THE ISSUERS WILL FURNISH TO ANY HOLDER OF SECURITIES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN
IT THE TEXT OF THIS SECURITY.
127
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Issuers. The agent may substitute another to act for him.
- -----------------------------------------------------------------
Date: Your Signature:
----------------- ---------------------
- -----------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
128
13
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and in an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof
indicated above);
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate the undersigned confirms that such Securities are being transferred
in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Issuers; or
(2) [ ] to the Registrar for registration in the name of
the Holder, without transfer; or
(3) [ ] pursuant to an effective registration statement
under the Securities Act of 1933; or
(4) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that purchases
for its own account or for the account of a
qualified institutional buyer to whom notice is
given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to
and in compliance with Rule 144A under the
Securities Act of 1933; or
(5) [ ] outside the United States in an offshore
transaction within the meaning of Regulation S
under the Securities Act in compliance with Rule
904 under the Securities Act of 1933 and such
Security shall be held
129
14
immediately after the transfer through Euroclear
and Cedel until the expiration of the Restricted
Period (as defined in the Indenture); or
(6) [ ] to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933) that has furnished to
the Trustee a signed letter containing certain
representations and agreements; or
(7) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered holder thereof; provided, however, that
if box (5), (6) or (7) is checked, the Trustee shall have received,
prior to registering any such transfer of the Securities, the legal
opinions, certifications and other information required by the Indenture
to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements
of the Securities Act of 1933.
------------------------
Your Signature
Signature Guarantee:
Date:
---------------------- -------------------------
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- ------------------------------------------------------------
130
15
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Issuers as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
---------------- ------------------------------
NOTICE: To be executed by
an executive officer
131
16
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal in Principal Amount this Global Security authorized signatory
Amount of this of this Global following such of Trustee or
Global Security Security decrease or increase Securities Custodian
132
17
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE
ISSUERS PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF
CONTROL) OF THE INDENTURE, CHECK THE BOX:
ASSET DISPOSITION [ ] CHANGE OF CONTROL [ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED
BY THE ISSUERS PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE
AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF):
$
DATE: __________________ YOUR SIGNATURE: __________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:_______________________________________
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR
OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE
133
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
134
2
No. $__________
12-_% Senior Subordinated Note due 2009
CUSIP No. ______
[ISIN No._]
DJ ORTHOPEDICS, LLC, a Delaware limited liability company, and DJ
ORTHOPEDICS CAPITAL CORPORATION, a Delaware corporation, promise to pay to Cede
& Co., or registered assigns, the principal sum [of Dollars] [listed on the
Schedule of Increases or Decreases in Global Security attached hereto](2) on
June 15, 2009.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
- -------------------
(2) Use the Schedule of Increases and Decreases language if Note is in Global
Form.
135
3
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
DJ ORTHOPEDICS, LLC,
by
-------------------------------------
Name:
Title:
DJ ORTHOPEDICS CAPITAL
CORPORATION,
by
-------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
136
4
*/ If the Security is to be issued in global form, add the Global Securities
Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
137
5
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
12-_% Senior Subordinated Note due 2009
1. Interest.
DJ ORTHOPEDICS, LLC, a Delaware limited liability company (the
"Company"), and DJ ORTHOPEDICS CAPITAL CORPORATION, a Delaware corporation ("DJ
Capital") (such entities, and their respective successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers shall pay interest semiannually on June 15 and
December 15 of each year. Interest on the Securities shall accrue from the most
recent date to which interest has been paid or duly provided for or, if no
interest has been paid or duly provided for, from June 30, 1999 until the
principal hereof is due. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months. The Issuers shall pay interest on overdue
principal at the rate borne by the Securities, and they shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Issuers shall pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the June 1 or December 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Issuers shall pay principal, premium
and interest in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including
principal, premium and interest) shall be made by wire transfer of immediately
available funds to the accounts specified by The Depository Trust Company. The
Issuers will make all payments in respect of a certificated Security (including
principal, premium and interest), by mailing a check to the registered address
of each Holder thereof; provided, however, that payments on the Securities may
also be made, in the case of a Holder of at least $1,000,000 aggregate
principal amount of Securities, by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 30 days immediately
preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
138
6
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation
(the "Trustee"), will act as Paying Agent and Registrar. The Issuers may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
Either of the Issuers or any of their domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
June 30, 1999 (the "Indenture"), among the Company, DJ Capital, DonJoy and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "TIA"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all terms and provisions of the Indenture, and Holders (as defined in the
Indenture) are referred to the Indenture and the TIA for a statement of such
terms and provisions.
The Securities are senior subordinated unsecured obligations of
the Issuers limited to $100,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture), of which $100,000,000
in aggregate principal amount will be initially issued on the Closing Date.
This Security is one of the Exchange Securities referred to in the Indenture.
The Securities include the Initial Securities and any Exchange Securities and
Private Exchange Securities issued in exchange for the Initial Securities
pursuant to the Indenture. The Initial Securities, the Exchange Securities and
the Private Exchange Securities are treated as a single class of securities
under the Indenture. The Indenture imposes certain limitations on the ability
of the Issuers and their Restricted Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
enter into or permit certain transactions with Affiliates and make Asset Sales.
The Indenture also imposes limitations on the ability of the Issuers to
consolidate or merge with or into any other Person or convey, transfer or lease
all or substantially all of the property of the Issuers.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Issuers under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and the Indenture, the Note Guarantors have,
jointly and severally, unconditionally guaranteed the Guaranteed Obligations on
a senior basis subordinated as and to the extent provided in the Indenture.
139
7
5. Optional Redemption
Except as set forth in the following paragraph, the Securities
shall not be redeemable at the option of the Issuers prior to June 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Issuers, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at
the following redemption prices (expressed as percentages of principal amount),
plus accrued and unpaid interest and liquidated damages (if any) to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on June 15 of the years set
forth below:
REDEMPTION
YEAR PRICE
--------------------------------------------------------
2004 106.313%
2005 104.208%
2006 102.104%
2007 and thereafter 100.000%
In addition, prior to June 15, 2002, the Company may, on one or
more occasions, redeem up to a maximum of 35% of the original aggregate
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings (i) by the Company or (ii) by DonJoy to the extent the Net
Cash Proceeds thereof are contributed to the Company or used to purchase Equity
Interests (other than Disqualified Equity Interests) of the Company from the
Company, at a redemption price equal to 112.625% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages thereon, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption, at
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption shall be made within 90 days of such Equity
Offering upon not less than 30 nor more than 60 days notice mailed to each
holder of Securities being redeemed and otherwise in accordance with the
procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
140
8
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least
30 days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Issuers to repurchase all or any part of the Securities of such Holder at a
purchase price equal to [101%] of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and liquidated damages, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject
to the terms of, the Indenture.
In accordance with Section 4.06 of the Indenture, the Issuers
will be required to offer to purchase Securities upon the occurrence of certain
events.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Issuers and
each Note Guarantor agree, and each Holder by accepting a Security agrees, to
the subordination provisions contained in the Indenture and authorizes the
Trustee to give it effect and appoints the Trustee as attorney-in-fact for such
purpose.
141
9
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
11. Persons Deemed Owners
Except as provided in paragraph 2 hereof, the registered Holder
of this Security may be treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Issuers at their written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Issuers and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may
terminate some of or all their obligations under the Securities and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
142
10
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default or
compliance with any of the provisions of the Indenture may be waived with the
written consent of the Holders of at least a majority in principal amount of
the outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Issuers and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article 5 of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Note Guarantees with respect to
the Securities; (v) to secure the Securities; (vi) to add additional covenants
or to surrender rights and powers conferred on the Issuers; (vii) to comply
with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; (viii) to make any change that
does not materially and adversely affect the rights of any Holder; (ix) to make
any change in the subordination provisions of the Indenture that would limit or
terminate the benefits available to any holder of Senior Indebtedness of either
of the Issuers or a Note Guarantor (or any representative thereof) under such
subordination provisions; or (x) to provide for the issuance of the Exchange
Securities or Private Exchange Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
either of the Issuers) and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due
and payable. If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of either of the Issuers occurs, the principal of
and interest on all the Securities shall become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
Under certain circumstances, the Holders of a majority in principal amount of
the outstanding Securities may rescind any such acceleration with respect to
the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Securities unless (i) such Holder has previously given the Trustee notice that
an Event of Default is continuing, (ii) Holders of at least 25% in principal
amount of the outstanding
143
11
Securities have requested the Trustee in writing to pursue the remedy, (iii)
such Holders have offered the Trustee reasonable security or indemnity against
any loss, liability or expense, (iv) the Trustee has not complied with such
request within 60 days after the receipt of the request and the offer of
security or indemnity and (v) the Holders of a majority in principal amount of
the outstanding Securities have not given the Trustee a direction inconsistent
with such request within such 60-day period. Subject to certain restrictions,
the Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust
or power conferred on the Trustee. The Trustee, however, may refuse to follow
any direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that
would involve the Trustee in personal liability. Prior to taking any action
under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Issuers, a Note Guarantor or their Affiliates and
may otherwise deal with the Issuers, a Note Guarantor or their Affiliates with
the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of either
Issuer or any Note Guarantor shall not have any liability for any obligations
of the Issuer under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
144
12
19. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP and ISIN Numbers
The Issuers have caused CUSIP and ISIN numbers to be printed on
the Securities and has directed the Trustee to use CUSIP and ISIN numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
THE ISSUERS WILL FURNISH TO ANY HOLDER OF SECURITIES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN
IT THE TEXT OF THIS SECURITY.
145
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Issuers. The agent may substitute another to act for him.
- -----------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
- -----------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security. Signature
must be guaranteed by a participant in a recognized signature guaranty
medallion program or other signature guarantor acceptable to the Trustee.
146
14
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE
ISSUERS PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF
CONTROL) OF THE INDENTURE, CHECK THE BOX:
ASSET DISPOSITION [ ] CHANGE OF CONTROL [ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED
BY THE ISSUERS PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE
AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF):
$
DATE: __________________ YOUR SIGNATURE: __________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:_______________________________________
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR
OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.
147
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal in Principal Amount this Global Security authorized signatory
Amount of this of this Global following such of Trustee or
Global Security Security decrease or increase Securities Custodian
148
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture") dated as of , among [GUARANTOR] (the "New
Guarantor"), a subsidiary of DJ ORTHOPEDICS, LLC (or its
successor), a Delaware limited liability corporation (the
"Company"), DonJoy, L.L.C., a Delaware limited liability
company, [OTHER EXISTING GUARANTORS] and THE BANK OF NEW
YORK, a New York banking corporation, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company, DJ ORTHOPEDICS CAPITAL CORPORATION ("DJ
Capital" and, together with the company, the "Issuers") and [OLD GUARANTORS]
(the "Existing Guarantors") have heretofore executed and delivered to the
Trustee an Indenture (the "Indenture") dated as of June [ ], 1999, providing
for the issuance of an aggregate principal amount of up to $100,000,000 of [ ]%
Senior Subordinated Notes due 2009 (the "Securities");
WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Issuers are required to cause the New Guarantor to execute
and deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all the Issuers' obligations under
the Securities pursuant to a Note Guarantee on the terms and conditions set
forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee,
the Issuers and the Existing Guarantors are authorized to execute and deliver
this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the New Guarantor, the Issuers, the Existing Guarantors and the Trustee
mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:
1. Agreement to Guarantee. The New Guarantor hereby agrees,
jointly and severally with all the Existing Guarantors, to unconditionally
guarantee the Issuers' obligations under the Securities on the terms and
subject to the conditions set forth in Articles 11 and 12 of the Indenture and
to be bound by all other applicable provisions of the Indenture and the
Securities.
149
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.
5. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
by
----------------------------------
Name:
Title:
DJ ORTHOPEDICS, LLC,
by
----------------------------------
Name:
Title:
150
DJ ORTHOPEDICS CAPITAL CORPORATION,
by
------------------------------
Name:
Title:
DONJOY, L.L.C.
by
------------------------------
Name:
Title:
[OTHER EXISTING GUARANTORS],
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee,
by
------------------------------
Name:
Title:
151
EXHIBIT D
Form of
Transferee Letter of Representation
DJ Orthopedics, LLC
DJ Orthopedics Capital Corporation
In care of
DonJoy, L.L.C.
2985 Scott Street
Vista, California 92083
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal
amount of the 12_% Senior Subordinated Notes due 2009 (the "Securities") of DJ
Orthopedics, LLC and DJ Orthopedics Capital Corporation (together, the
"Issuers").
Upon transfer, the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
------------------------
Address:
---------------------
Taxpayer ID Number:
----------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such
an institutional "accredited investor" at least $250,000 principal amount of
the Securities, and we are acquiring the Securities not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment
in the Securities, and we invest in or purchase securities similar to the
Securities in the normal course of our business. We, and any accounts for which
we are acting, are each able to bear the economic risk of our or its investment
for an indefinite period of time, including a complete loss of the investment.
152
2
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted
in the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is two years after
the later of the date of original issue and the last date on which the Issuers
or any affiliate of the Issuers was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
the Issuers, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person
we reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") that is purchasing for its own account or for the account of a QIB and
to whom notice is given that the transfer is being made in reliance on Rule
144A, (d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is purchasing for its own account or
for the account of such an institutional "accredited investor," in each case in
a minimum principal amount of Securities of $250,000, or (f) pursuant to any
other available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or
accounts be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter
to the Issuers and the Trustee, which shall provide, among other things, that
the transferee is an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Issuers
and the Trustee reserve the right prior to the offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Securities pursuant to
clause (d), (e) or (f) above to require the delivery of an opinion of counsel,
certifications or other information satisfactory to the Issuers and the
Trustee.
TRANSFEREE: ,
------------------
by:
-------------------------