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Exhibit 4.3
EXECUTION COPY
DJ ORTHOPEDICS, LLC
DJ ORTHOPEDICS CAPITAL CORPORATION
$100,000,000
12 5/8% SENIOR SUBORDINATED NOTES DUE 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
June 30, 1999
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
DJ Orthopedics, LLC, a Delaware limited liability company (the
"Company"), and DJ Orthopedics Capital Corporation ("DJ Capital", and together
with the Company, the "Issuers"), propose to issue and sell to Chase Securities
Inc. ("CSI" or the "Initial Purchaser"), upon the terms and subject to the
conditions set forth in a purchase agreement dated June 17, 1999 (the "Purchase
Agreement"), $100,000,000 aggregate principal amount of their 12 5/8% Senior
Subordinated Notes due 2009 (the "Securities") to be guaranteed on a senior
subordinated basis by DonJoy, L.L.C., a Delaware limited liability company and
the direct parent of the Company ("DonJoy"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.
As an inducement to the Initial Purchaser to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchaser thereunder, the Issuers and DonJoy agree with the Initial
Purchaser, for the benefit of the holders (including the Initial Purchaser and
the Market-Maker (as defined herein)) of the Securities, the Exchange
Securities (as defined herein) and the Private Exchange Securities (as defined
herein) (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. Unless the Registered Exchange
Offer (as defined herein) is not permitted under applicable law or rules or
regulations of the Commission, the Issuers and DonJoy shall (i) prepare and,
not later than 75 days following the date of original issuance of the
Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act with respect to a proposed offer to the Holders of the
Securities (the "Registered Exchange Offer") to issue and deliver to such
Holders, in exchange for the Securities, a like aggregate principal amount of
debt securities of the Issuers (the "Exchange Securities") that are identical
in all material respects to the Securities, except for the transfer
restrictions relating to the Securities, (ii) use their reasonable best efforts
to cause the Exchange Offer Registration Statement to become effective under
the Securities Act no later than 180 days after the Issue Date and the
Registered Exchange Offer to be consummated no later than 225 days after the
Issue Date and (iii) keep the Registered Exchange Offer open for not less than
30 days (or
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longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called
the "Exchange Offer Registration Period"). The Exchange Securities will be
issued under the Indenture or an indenture (the "Exchange Securities
Indenture") among the Issuers, DonJoy and the Trustee or such other bank or
trust company that is reasonably satisfactory to the Initial Purchaser, as
trustee (the "Exchange Securities Trustee"), such indenture to be identical in
all material respects to the Indenture, except for the transfer restrictions
relating to the Securities (as described above). All references in this
Agreement to "prospectus" shall, except where the context otherwise requires,
include any prospectus (or amendment or supplement thereto) filed with the
Commission pursuant to Section 6 of this Agreement.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuers shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of the Issuers or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b)
is not the Initial Purchaser holding Securities that have, or that are
reasonably likely to have, the status of an unsold allotment in an initial
distribution, (c) acquires the Exchange Securities in the ordinary course of
such Holder's business and (d) has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities) and to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The Issuers, DonJoy, the Initial Purchaser and each Exchanging Dealer
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, each Holder that is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market-making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover, in
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer,
any Holder shall notify the Company in writing that it holds any Securities
acquired by it that have, or that are reasonably likely to be determined to
have, the status of an unsold allotment in an initial distribution, or any
Holder notifies the Company in writing that it believes that it is not entitled
to participate in the Registered Exchange Offer (other than because it has an
understanding or arrangement with any person to participate in the distribution
of the Exchange Securities) and such Holder has not received a written opinion
from counsel to the Issuers, reasonably acceptable to such Holder to the effect
that such Holder is legally permitted to participate in the Registered Exchange
Offer, the Issuers shall, upon the request of any such Holder, simultaneously
with the delivery of the Exchange Securities in the Registered Exchange Offer,
issue and deliver to any such Holder, in exchange for the Securities held by
such Holder (the "Private Exchange"), a like aggregate principal amount of debt
securities of the Issuers (the "Private Exchange Securities") that are
identical in all material respects to the Exchange Securities, except for the
transfer restrictions relating to such Private Exchange Securities. The Private
Exchange Securities will be issued under the same indenture as the Exchange
Securities, and the Issuers shall use their reasonable best efforts to cause
the Private Exchange Securities to bear the same CUSIP number as the Exchange
Securities.
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In connection with the Registered Exchange Offer, the Issuers
shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York City time, on the last business
day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Issuers shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancelation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder,
Exchange Securities or Private Exchange Securities, as the case may be,
equal in principal amount to the Securities of such Holder so accepted
for exchange.
The Issuers and DonJoy shall use their reasonable best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the prospectus contained therein in order to permit such prospectus
to be used by all persons (including Exchanging Dealers) subject to the
prospectus delivery requirements of the Securities Act for 180 days after the
consummation of the Registered Exchange Offer (such 180 days, the "Applicable
Period").
The Indenture or the Exchange Securities Indenture, as the case
may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange Securities or the
Private Exchange Securities will have the right to vote or consent as a
separate class on any matter.
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Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been
paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall
be required to represent to the Issuers and DonJoy in writing (which may be
contained in the applicable letter of transmittal) that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act, (iii) such Holder is not an affiliate
of the Issuers or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable and (iv) if such Holder is a broker-dealer, that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Issuers and
DonJoy will ensure that (i) any Exchange Offer Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Issuers and
DonJoy determine in good faith after consultation with counsel that they are
not permitted to effect the Registered Exchange Offer as contemplated by
Section 1 hereof, or (ii) any Securities validly tendered pursuant to the
Registered Exchange Offer are not exchanged for Exchange Securities within 225
days after the Issue Date, or (iii) the Initial Purchaser so requests with
respect to Securities or Private Exchange Securities not eligible to be
exchanged for Exchange Securities in the Registered Exchange Offer and held by
it following the consummation of the Registered Exchange Offer, or (iv) any
applicable law or interpretations do not permit any Holder to participate in
the Registered Exchange Offer, or (v) any Holder that participates in the
Registered Exchange Offer notifies the Company in writing within 30 days
following the consummation of the Registered Exchange Offer that such Holder
may not resell the Exchange Securities acquired by it in the Registered
Exchange Offer to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration Statement is not legally available
for such resales by such Holder, or (vi) the Issuers so elect, then the
following provisions shall apply:
(a) The Issuers and DonJoy shall use their reasonable best
efforts to file as promptly as practicable (but in no event more than 60
days after so required or requested
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pursuant to this Section 2; provided that in the case of any filing in
response to clause (i), (iii) or (iv) of the preceding paragraph, the
Issuers and DonJoy shall not be required to make any such filing earlier
than 75 days following the Issue Date (the date of such filing, the
"Shelf Filing Date")) with the Commission, and thereafter shall use
their reasonable best efforts to cause to be declared effective on or
prior to 105 days after the Shelf Filing Date (but, in the case of any
filing in response to clause (i), (iii), (iv) or (vi) of the preceding
paragraph, in no event earlier than the 180th day after the Issue Date),
a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders thereof from time to time
in accordance with the methods of distribution set forth in such
registration statement (hereafter, a "Shelf Registration Statement" and,
together with any Exchange Offer Registration Statement, a "Registration
Statement").
(b) The Issuers and DonJoy shall use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective
in order to permit the prospectus forming part thereof to be used by
Holders of Transfer Restricted Securities for a period ending on the
earlier of (i) two years from the Issue Date or such shorter period that
will terminate when all the Transfer Restricted Securities covered by
the Shelf Registration Statement have been sold pursuant thereto and
(ii) the date on which the Securities become eligible for resale without
volume restrictions pursuant to Rule 144 under the Securities Act (in
any such case, such period being called the "Shelf Registration
Period"). The Issuers and DonJoy shall be deemed not to have used their
reasonable best efforts to keep the Shelf Registration Statement
effective during the requisite period if any of them voluntarily take
any action that would result in Holders of Transfer Restricted
Securities covered thereby not being able to offer and sell such
Transfer Restricted Securities during that period, unless (A) such
action is required by applicable law or (B) such action was permitted by
Section 2(c).
(c) Notwithstanding the provisions of Section 2(b) (but subject
to the provisions of Section 3(b)), the Issuers and DonJoy may for valid
business reasons, including without limitation, a potential acquisition,
divestiture of assets or other material corporate transaction, issue a
notice that the Shelf Registration Statement is no longer effective or
the prospectus included therein is no longer usable for offers and sales
of Transfer Restricted Securities and may issue any notice suspending
use of the Shelf Registration Statement required under applicable
securities laws to be issued. The provisions of this Section 2(c) shall
also be applicable to the Exchange Offer Registration Statement during
the Applicable Period; provided that the Applicable Period shall be
extended for the number of days (which shall not exceed 60) that the use
of the Exchange Offer Registration Statement is suspended.
(d) Notwithstanding any other provisions hereof, the Issuers and
DonJoy shall ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the Securities
Act and the rules and regulations of the Commission thereunder, (ii) any
Shelf Registration Statement and any amendment thereto (in either case,
other than with respect to information included therein in reliance upon
or in conformity with written information furnished to the Issuers by or
on behalf of any
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Holder specifically for use therein (the "Holders' Information")) does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such
prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuers
and DonJoy fail to fulfill their obligations under Section 1 or Section 2, as
applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the applicable Registration Statement is not filed
with the Commission on or prior to the date specified in this 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 this 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 are
requested or required or elect to file a Shelf Registration Statement), or (iv)
the Shelf Registration Statement is filed and declared effective on or prior to
the date specified in this 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 will be jointly and severally obligated to 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 one or more such Registration Defaults, in an
amount equal to $ 0.192 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder until (i) the applicable Registration
Statement is filed, (ii) the Exchange Offer Registration Statement is declared
effective and the Registered Exchange Offer is consummated, (iii) the Shelf
Registration Statement is declared effective or (iv) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of
all Registration Defaults, the accrual of liquidated damages will cease. As
used herein, the term "Transfer Restricted Securities" means (i) each Security
until the date on which such 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 Security or Private Exchange Security until the date
on which it has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iii) each
Security or Private Exchange Security until the date on which it 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. Notwithstanding anything to
the contrary in this Section 3(a), the Issuers shall not be required to pay
liquidated damages to a Holder of Transfer Restricted Securities if such Holder
failed to comply with its obligations to make the representations set forth in
the second to last paragraph of Section 1 or failed to provide the information
required to be provided by it, if any, pursuant to Section 4(n).
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(b) Notwithstanding the foregoing provisions of Section 3(a), the
Issuers and DonJoy may for valid business reasons, including without
limitation, a potential acquisition, divestiture of assets or other material
corporate transaction, issue a notice that the Shelf Registration Statement is
no longer effective or the prospectus included therein is no longer usable for
offers and sales of Transfer Restricted Subsidiaries and may issue any notice
suspending use of the Shelf Registration Statement required under applicable
securities laws to be issued and, in the event that the aggregate number of
days in any consecutive twelve-month period for which all such notices are
issued and effective exceeds 60 days in the aggregate, then the Issuers and
DonJoy will be jointly and severally obligated to pay liquidated damages to
each Holder of Transfer Restricted Securities covered by the Shelf Registration
Statement in an amount equal to $0.192 per week per $1,000 principal amount of
Securities constituting Transfer Restricted Securities covered by the Shelf
Registration Statement held by such Holder. Upon the Issuers and DonJoy
declaring that the Shelf Registration Statement is useable after the period of
time described in the preceding sentence, accrual of liquidated damages shall
cease; provided, however, that if after any such cessation of the accrual of
liquidated damages the Shelf Registration Statement again ceases to be useable
beyond the period permitted above, liquidated damages will again accrue
pursuant to the foregoing provisions.
(c) The Issuers shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Issuers and DonJoy shall pay the liquidated damages
due on the Transfer Restricted Securities by depositing with the Paying Agent
(which may not be the Issuers for these purposes), in trust, for the benefit of
the Holders thereof, prior to 10:00 a.m., New York City time, on the next
interest payment date specified by the Indenture and the Securities, sums
sufficient to pay the liquidated damages then due. The liquidated damages due
shall be payable on each interest payment date specified by the Indenture and
the Securities to the record holder entitled to receive the interest payment to
be made on such date. Each obligation to pay liquidated damages shall be deemed
to accrue from and including the date of the applicable Registration Default.
(d) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
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4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Issuers shall (i) furnish to the Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Exchange Offer
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and shall use its reasonable
best efforts to reflect in each such document, when so filed with the
Commission, such comments as the Initial Purchaser may reasonably
propose; (ii) include information substantially as set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and
in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement,
and include information substantially as set forth in Annex D hereto in
the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; and (iii) if requested by any Initial Purchaser, include the
information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement.
(b) The Issuers shall advise the Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by
any such person, confirm such advice in writing (which advice pursuant
to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been
made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification of the
Securities, the Exchange Securities or the Private Exchange
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making
of any changes in any Registration Statement or the prospectus
included therein in order that the statements therein are not
misleading and do not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
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(c) The Issuers and DonJoy will make every reasonable effort to
obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of any Registration Statement.
(d) The Issuers will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf
Registration Statement, without charge, at least one conformed copy of
such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules and, if any such
Holder so requests in writing, all exhibits thereto (including those, if
any, incorporated by reference).
(e) The Issuers will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the prospectus (including each
preliminary prospectus) included in such Shelf Registration Statement
and any amendment or supplement thereto as such Holder may reasonably
request; and the Issuers consent to the use of such prospectus or any
amendment or supplement thereto by each of the selling Holders of
Transfer Restricted Securities in connection with the offer and sale of
the Transfer Restricted Securities covered by such prospectus or any
amendment or supplement thereto.
(f) The Issuers will furnish to the Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if the Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(g) The Issuers will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver
to the Initial Purchaser, each Exchanging Dealer and such other persons
that are required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement or the Shelf
Registration Statement and any amendment or supplement thereto as the
Initial Purchaser, such Exchanging Dealer or other persons may
reasonably request; and the Issuers and DonJoy consent to the use of
such prospectus or any amendment or supplement thereto by the Initial
Purchaser, such Exchanging Dealer or other persons, as applicable, as
aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Issuers and DonJoy will use their reasonable best efforts to
register or qualify, or cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities included therein and
their respective counsel in connection with the registration or
qualification of, such Securities, Exchange Securities or Private
Exchange Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the Securities,
Exchange Securities or
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Private Exchange Securities covered by such Registration Statement;
provided that the Issuers and DonJoy will not be required to qualify
generally to do business in any jurisdiction where they are not then so
qualified or to take any action which would subject them to general
service of process or to taxation in any such jurisdiction where they
are not then so subject.
(i) The Issuers and DonJoy will cooperate with the Holders of
Securities, Exchange Securities or Private Exchange Securities to
facilitate the timely preparation and delivery of certificates
representing Securities, Exchange Securities or Private Exchange
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such
names as the Holders thereof may request in writing prior to sales of
Securities, Exchange Securities or Private Exchange Securities pursuant
to such Registration Statement.
(j) If any event contemplated by Sections 2(c), 3(b) or 4(b)(ii)
through (v) occurs during the period for which the Issuers and DonJoy
are required to maintain an effective Registration Statement, the
Issuers and DonJoy will, to the extent required after the end of the
applicable periods referred to in Sections 2(c) and 3(b), promptly
prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file
any other required document so that, as thereafter delivered to
purchasers of the Securities, Exchange Securities or Private Exchange
Securities from a Holder, the prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Issuers will provide a CUSIP number for the
Securities, the Exchange Securities and the Private Exchange Securities,
as the case may be, and provide the applicable trustee with printed
certificates for the Securities, the Exchange Securities or the Private
Exchange Securities, as the case may be, in a form eligible for deposit
with The Depository Trust Company.
(l) The Issuers and DonJoy will comply with all applicable rules
and regulations of the Commission and the Issuers and DonJoy will make
generally available to their security holders as soon as practicable
after the effective date of the applicable Registration Statement an
earning statement of DonJoy satisfying the provisions of Section 11(a)
of the Securities Act; provided that in no event shall such earning
statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the applicable Registration Statement, which statement
shall cover such 12-month period.
(m) The Issuers and DonJoy will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under
the Trust Indenture Act as required by applicable law in a timely
manner.
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(n) The Issuers may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement
to furnish to the Issuers such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Issuers may
from time to time reasonably require for inclusion in such Shelf
Registration Statement, and the Issuers may exclude from such
registration the Transfer Restricted Securities of any Holder that fails
to furnish such information within a reasonable time after receiving
such request. Each Holder of Transfer Restricted Securities as to which
a Shelf Registration Statement is being effected, by its participation
in the Shelf Registration Statement, shall be deemed to agree to furnish
the Issuers and DonJoy all information concerning such Holder required
to be described in order to make the information previously furnished by
such Holder to the Issuers and DonJoy not materially misleading.
(o) In the case of (A) a Shelf Registration Statement, each
Holder of Transfer Restricted Securities to be registered pursuant
thereto agrees by acquisition of such Transfer Restricted Securities
that, and (B) the Exchange Offer Registration Statement during the
Applicable Period only, each Holder of Exchange Securities subject to
the prospectus delivery requirements of the Securities Act agrees that,
upon receipt of any notice from the Issuers pursuant to Sections 2(c),
3(b) or 4(b)(ii) through (v), such Holder will discontinue disposition
of such Transfer Restricted Securities or Exchange Securities, as
applicable, until such Holder's receipt of copies of the supplemental or
amended prospectus contemplated by Section 4(j) or until advised in
writing (the "Advice") by the Issuers that the use of the applicable
prospectus may be resumed. If the Issuers shall give any notice under
Sections 2(c), 3(b) or 4(b)(ii) through (v) during the period that the
Issuers are required to maintain an effective Registration Statement
(the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the
date of the giving of such notice to and including the date when each
seller of Transfer Restricted Securities or Exchange Securities, as
applicable, covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by
Section 4(j) (if an amended or supplemental prospectus is required) or
(y) the Advice (if no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers
and DonJoy shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all
such other action, if any, as Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private
Exchange Securities covered by the Shelf Registration Statement or the
managing underwriters (if any) shall reasonably request in order to
facilitate any disposition of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Shelf Registration Statement.
Notwithstanding anything to the contrary contained in this Agreement,
the Issuers and DonJoy shall not be required to engage in more than one
underwritten offering pursuant to this Agreement.
(q) In the case of a Shelf Registration Statement, the Issuers
shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of a
majority in aggregate principal amount of the
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Securities, Exchange Securities and Private Exchange Securities covered
by the Shelf Registration Statement and any underwriter participating in
any disposition of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement, all relevant
financial and other records, pertinent corporate documents and
properties of the Issuers and their subsidiaries and (ii) use their
reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably
requested by such representative, Special Counsel or any such
underwriter (an "Inspector") in connection with such Shelf Registration
Statement.
(r) In the case of a Shelf Registration Statement, the Issuers
shall, if requested by Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange
Securities covered by the Shelf Registration Statement, their Special
Counsel or the managing underwriters (if any) in connection with such
Shelf Registration Statement, use its reasonable best efforts to cause
(i) their counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities, Exchange Securities or
Private Exchange Securities, as applicable, in customary form, (ii)
their officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange
Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) their independent public accountants to
provide a comfort letter or letters in customary form, subject to
receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Issuers and DonJoy will jointly and
severally bear all expenses incurred in connection with the performance of its
obligations under Sections 1, 2, 3 and 4 and the Issuers will reimburse the
Initial Purchaser and the Holders for the reasonable fees and disbursements of
one firm of attorneys (in addition to any local counsel) chosen by the Holders
of a majority in aggregate principal amount of the Securities, the Exchange
Securities and the Private Exchange Securities covered by each Registration
Statement (the "Special Counsel") acting for the Initial Purchaser or Holders
in connection therewith.
6. Market-Making. (a) For so long as any of the Securities,
Exchange Securities or Private Exchange Securities are outstanding and Chase
Securities Inc. (the "Market-Maker") or any of its affiliates (as defined in
the rules and regulations of the Commission) owns any equity securities of the
Issuers, DonJoy or any of their affiliates and proposes to make a market in the
Securities, Exchange Securities or Private Exchange Securities as part of its
business in the ordinary course, the following provisions shall apply for the
sole benefit of the Market Maker:
(i) The Issuers and DonJoy shall (A) on the date that the
Exchange Offer Registration Statement is filed with the Commission, file
a registration statement (the "Market-Making Registration Statement")
(which may be the Exchange Offer Registration Statement or the Shelf
Registration Statement if permitted by the rules and regulations of the
Commission) and use their best efforts to cause such Market-Making
Registration Statement to be declared effective by the Commission on or
prior to the consummation of the Exchange Offer; (B) periodically amend
such Market-Making
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Registration Statement so that the information contained therein
complies with the requirements of Section 10(a) under the Securities
Act; (C) within 45 days following the end of each of DonJoy's fiscal
quarters, file a supplement to the prospectus contained in the
Market-Making Registration Statement that sets forth the financial
results of DonJoy for such quarter; (D) amend the Market-Making
Registration Statement or supplement the related prospectus when
necessary to reflect any material changes in the information provided
therein; and (E) amend the Market-Making Registration Statement when
required to do so in order to comply with Section 10(a)(3) of the
Securities Act; provided, however, that (1) prior to filing the
Market-Making Registration Statement, any amendment thereto or any
supplement to the related prospectus, the Issuers will furnish to the
Market-Maker copies of all such documents proposed to be filed, which
documents will be subject to the review of the Market-Maker and their
counsel, (2) the Issuers and DonJoy will not file the Market-Making
Registration Statement, any amendment thereto or any supplement to the
related prospectus to which the Market-Maker and its counsel shall
reasonably object unless the Issuers are advised by counsel that such
Market-Making Registration Statement, amendment or supplement is
required to be filed and (3) the Issuers will provide the Market-Maker
and its counsel with copies of the Market-Making Registration Statement
and each amendment and supplement filed.
(ii) The Issuers shall notify the Market-Maker and, if requested
by the Market-Maker, confirm such advice in writing, (A) when any
post-effective amendment to the Market-Making Registration Statement or
any amendment or supplement to the related prospectus has been filed,
and, with respect to any post-effective amendment, when the same has
become effective; (B) of any request by the Commission for any
post-effective amendment to the Market-Making Registration Statement,
any supplement or amendment to the related prospectus or for additional
information; (C) the issuance by the Commission of any stop order
suspending the effectiveness of the Market-Making Registration Statement
or the initiation of any proceedings for that purpose; (D) of the
receipt by the Issuers of any notification with respect to the
suspension of the qualification of the Securities or Exchange Securities
for sale in any jurisdiction or the initiation or threatening of any
proceedings for such purpose; (E) of the happening of any event that
makes any statement made in the Market-Making Registration Statement,
the related prospectus or any amendment or supplement thereto untrue or
that requires the making of any changes in the Market-Making
Registration Statement, such prospectus or any amendment or supplement
thereto, in order to make the statements therein not misleading; and (F)
of any advice from a nationally recognized statistical rating
organization that such organization has placed the Issuers under
surveillance or review with negative implications or has determined to
downgrade the rating of the Securities, Exchange Securities or Private
Exchange Securities or any other debt obligation of the Issuers whether
or not such downgrade shall have been publicly announced.
(iii) If any event contemplated by Section 6(a)(ii)(B) through
(E) occurs during the period for which the Issuers and DonJoy are
required to maintain an effective Market-Making Registration Statement,
the Issuers and DonJoy shall promptly prepare and file with the
Commission a post-effective amendment to the Market-Making Registration
Statement or a supplement to the related prospectus or file any other
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required document so that the prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iv) In the event of the issuance of any stop order suspending
the effectiveness of the Market-Making Registration Statement or of any
order suspending the qualification of the Securities, Exchange
Securities or Private Exchange Securities for sale in any jurisdiction,
the Issuers and DonJoy shall use promptly their reasonable best efforts
to obtain its withdrawal.
(v) The Issuers shall furnish to the Market-Maker, without
charge, (i) at least one conformed copy of the Market-Making
Registration Statement and any post-effective amendment thereto; and
(ii) as many copies of the related prospectus and any amendment or
supplement thereto as the Market-Maker may reasonably request.
(vi) The Issuers and DonJoy shall consent to the use of the
prospectus contained in the Market-Making Registration Statement or any
amendment or supplement thereto by the Market-Maker in connection its
market making activities.
(vii) For so long as the Securities, Exchange Securities or
Private Exchange Securities shall be outstanding, the Issuers shall
furnish to the Market-Maker (A) as soon as practicable after the end of
each of DonJoy's fiscal years, the number of copies reasonably requested
by the Market-Maker of DonJoy's annual report for such year, (B) as soon
as available, the number of copies reasonably requested by the
Market-Maker of each report (including, without limitation, reports on
Forms 10-K, 10-Q and 8-K) or definitive proxy statements of DonJoy filed
under the Exchange Act or mailed to stockholders and (C) all public
reports and all reports and financial statements furnished by DonJoy to
the Nasdaq National Market System or any U.S. national securities
exchange or quotation service upon which the Securities or Exchange
Securities may be listed pursuant to requirements of or agreements with
such exchange or quotation service or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder.
(viii) Notwithstanding the foregoing provisions of Section 6, the
Issuers and DonJoy may for valid business reasons, including without
limitation, a potential acquisition, divestiture of assets or other
material corporate transaction, issue a notice that the Market-Making
Registration Statement is no longer effective or the prospectus included
therein is no longer usable for offers and sales of Securities, Exchange
Securities or Private Exchange Securities and may issue any notice
suspending use of the Market-Making Registration Statement required
under applicable securities laws to be issued; provided that the use of
the Market-Making Registration Statement shall not be suspending for
more than 60 days in the aggregate in any consecutive 12 month period.
The Market-Maker agrees that upon receipt of any notice from the Issuers
pursuant to this Section 6(a)(viii), it will discontinue use of the
Market-Making Registration Statement until receipt of copies of the
supplemented or amended prospectus relating thereto or until advised in
writing by the Issuers that the use of the Market-Making Registration
Statement may be resumed.
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(b) In connection with the Market-Making Registration Statement,
the Issuers shall (i) make reasonably available for inspection by a
representative of, and counsel acting for, the Market-Maker all relevant
financial and other records, pertinent corporate documents and properties of
the Issuers and their subsidiaries and (ii) use its reasonable best efforts to
have its officers, directors, employees, accountants and counsel supply all
relevant information reasonably requested by such representative or counsel or
the Market-Maker.
(c) Prior to the effective date of the Market-Making Registration
Statement, the Issuers and DonJoy will use their reasonable best efforts to
register or qualify, or cooperate with the Market-Maker and its counsel in
connection with the registration or qualification of, such Securities, Exchange
Securities or Private Exchange Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Market-Maker
reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of
the Securities, Exchange Securities or Private Exchange Securities covered by
the Market-Making Registration Statement; provided that the Issuers and DonJoy
will not be required to qualify generally to do business in any jurisdiction
where they are not then so qualified or to take any action which would subject
them to general service of process or to taxation in any such jurisdiction
where they are not then so subject.
(d) The Issuers represent that the Market-Making Registration
Statement, any post-effective amendments thereto, any amendments or supplements
to the related prospectus and any documents filed by them under the Exchange
Act will, when they become effective or are filed with the Commission, as the
case may be, conform in all respects to the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission thereunder
and will not, as of the effective date of such Market-Making Registration
Statement or post-effective amendments and as of the filing date of amendments
or supplements to such prospectus or filings under the Exchange Act, contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein in light of
the circumstances under which they were made not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Market-Making Registration Statement or the related prospectus in
reliance upon and in conformity with written information furnished to the
Issuers by the Market-Maker specifically for inclusion therein, which
information the parties hereto agree will be limited to the statements
concerning the Market-Making activities of the Market-Maker to be set forth on
the cover page and in the "Plan of Distribution" section of the prospectus (the
"Market-Maker's Information.")
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(e) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented, the Issuers shall (if requested by the
Market-Maker) furnish the Market-Maker and its counsel with a certificate of
its Chairman of the Board of Directors or President and Chief Financial Officer
to the effect that:
(i) the Market-Making Registration Statement has been declared
effective; (ii) in the case of an amendment or supplement, such
amendment has become effective under the Securities Act as of the date
and time specified in such certificate, if applicable; such amendment or
supplement to the prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) under the Securities Act specified in
such certificate on the date specified therein; (iii) to the knowledge
of such officers, no stop order suspending the effectiveness of the
Market-Making Registration Statement has been issued and no proceeding
for that purpose is pending or threatened by the Commission; (iv) such
officers have carefully examined the Market-Making Registration
Statement and the prospectus (and, in the case of an amendment or
supplement, such amendment or supplement) and as of the date of such
Market-Making Registration Statement, amendment or supplement, as
applicable, the Market-Making Registration Statement and the prospectus,
as amended or supplemented, if applicable, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
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(f) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented, the Issuers shall (if requested by the
Market-Maker) furnish the Market-Maker and its counsel with the written opinion
of counsel for the Issuers satisfactory to the Market-Maker to the effect that:
(i) the Market-Making Registration Statement has been declared
effective; (ii) in the case of an amendment or supplement, such
amendment has become effective under the Securities Act as of the date
and time specified in such opinion, if applicable; such amendment or
supplement to the prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) under the Securities Act specified in
such opinion on the date specified therein; (iii) to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Market-Making Registration Statement has been issued and no proceeding
for that purpose is pending or threatened by the Commission; and (iv)
such counsel has reviewed the Market-Making Registration Statement and
the prospectus (and, in the case of an amendment or supplement, such
amendment or supplement) and participated with officers of the Issuers
and independent public accountants for the Issuers in the preparation of
such Market-Making Registration Statement and prospectus (and, in the
case of an amendment or supplement, such amendment or supplement) and
has no reason to believe that (except for the financial statements and
other financial and statistical data contained therein as to which no
belief is required) as of the date of such Market-Making Registration
Statement, amendment or supplement, as applicable, the Market-Making
Registration Statement and the prospectus, as amended or supplemented,
if applicable, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(g) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented to include audited annual financial
information, the Issuers shall (if requested by the Market-Maker) furnish the
Market-Maker and its counsel with a letter of Ernst & Young, LLP (or other
independent public accountants for DonJoy or the Company of nationally
recognized standing), in form satisfactory to the Market-Maker, addressed to
the Market-Maker and dated the date of delivery of such letter, (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and, (ii) in all other respects, substantially in the form of the
letter delivered to the Initial Purchasers pursuant to Section 5(f) of the
Purchase Agreement, with, in the case of an amendment or supplement to include
audited financial information, such changes as may be necessary to reflect the
amended or supplemented financial information.
(h) The Issuers and DonJoy, on the one hand, and the
Market-Maker, on the other hand, hereby agree to indemnify each other, and, if
applicable, contribute to the other, in accordance with Sections 7 and 8 of
this Agreement.
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(i) The Issuers will comply with the provisions of this Section 6
at their own expense and will reimburse the Market-Maker for its expenses
associated with this Section 6 (including reasonable fees of counsel).
(j) The agreements contained in this Section 6 and the
representations, warranties and agreements contained in this Agreement shall
survive all offers and sales of the Securities and Exchange Securities and
shall remain in full force and effect, regardless of any termination or
cancelation of this Agreement or any investigation made by or on behalf of any
indemnified party.
(k) For purposes of this Section 6, any reference to the terms
"amend", "amendment" or "supplement" with respect to the Market-Making
Registration Statement or the prospectus contained therein shall be deemed to
refer to and include the filing under the Exchange Act of any document deemed
to be incorporated therein by reference.
7. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchaser or Exchanging Dealer, as
applicable, or in connection with any prospectus delivery by the Market-Maker,
the Issuers and DonJoy shall jointly and severally indemnify and hold harmless
each Holder (including, without limitation, the Initial Purchaser, the
Market-Maker or such Exchanging Dealer), its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 7 and
Section 8 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Securities, Exchange Securities or Private Exchange Securities),
to which that Holder may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or Market-Making Registration Statement or any
prospectus forming part thereof or in any amendment or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or (iii)
in the case of the Market-Maker, any material breach by the Issuers of the
representations, warranties and agreements contained in Section 6, and shall
reimburse each Holder promptly upon demand for any legal or other expenses
reasonably incurred by that Holder in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Issuers and DonJoy shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information or
Market-Maker's Information; and provided, further, that with respect to any
such untrue statement in or omission from any related preliminary prospectus,
the indemnity agreement contained in this Section 7(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received
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Securities, Exchange Securities or Private Exchange Securities to the extent
that such loss, claim, damage, liability or action of or with respect to such
Holder results from the fact that both (A) a copy of the final prospectus was
not sent or given to such person at or prior to the written confirmation of the
sale of such Securities, Exchange Securities or Private Exchange Securities to
such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of
non-compliance by the Issuers with Section 4(d), 4(e), 4(f), 4(g) or 6(a)(vi),
as applicable.
(b) In the event of a Shelf Registration Statement or in
connection with any prospectus delivery by the Market-Maker, each Holder
(including, if applicable, the Market-Maker) shall indemnify and hold harmless
the Issuers, their affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Issuers
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 7(b) and Section 8 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or Market-Making Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information or
Market-Maker's Information furnished to the Company by such Holder, and shall
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that no such Holder shall be liable for any indemnity claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement or prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 7(a) or 7(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 7. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
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the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than the reasonable costs of investigation;
provided, however, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel for the indemnified party will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a) and 7(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
8. Contribution. If the indemnification provided for in Section 7
is unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (a) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the initial offering
and sale of the Securities, on the one hand, and by a Holder from receiving
Securities, Exchange Securities or Private Exchange Securities, as applicable,
registered under the Securities Act, on the other, or (b) if the allocation
provided by clause (a) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (a) above but also the relative fault of the Company and DonJoy,
on the one hand, and such Holder, on the other, with
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respect to the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to the Company and DonJoy or information supplied by the
Company and DonJoy, on the one hand, or to any Holders* Information or
Market-Maker's Information supplied by such Holder, on the other, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 8 were to be determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8 shall be deemed to include, for purposes of
this Section 8, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this Section
8, an indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to
any purchaser exceeds the amount of any damages which such indemnifying party
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Rules 144 and 144A. The Issuers and DonJoy shall use their
reasonable best efforts to file the reports required to be filed by them under
the Securities Act and the Exchange Act in a timely manner and, if at any time
the Issuers and DonJoy are not required to file such reports, they will, upon
the written request of any Holder of Transfer Restricted Securities or the
Market-Maker, make publicly available other information so long as necessary to
permit sales of such Holder's or the Market-Maker's securities pursuant to Rules
144 and 144A. The Issuers and DonJoy covenant that they will take such further
action as any Holder of Transfer Restricted Securities or the Market-Maker may
reasonably request, all to the extent required from time to time to enable such
Holder or the Market-Maker to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including, without limitation, the requirements
of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer
Restricted Securities, the Issuers and DonJoy shall deliver to such Holder or
the Market-Maker a written statement as to whether they have complied with such
requirements. Notwithstanding the foregoing, nothing in this Section 9 shall be
deemed to require the Issuers to register any of their securities pursuant to
the Exchange Act.
10. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders
of a majority in aggregate principal amount of such Transfer Restricted
Securities included in such offering, subject to the consent of the Issuers and
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DonJoy (which shall not be unreasonably withheld or delayed), and such Holders
shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Issuers have obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class (and, with respect to the
provisions of Section 6, the written consent of the Market-Maker).
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities, Exchange Securities or Private Exchange
Securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Securities, the
Exchange Securities and the Private Exchange Securities being sold by such
Holders pursuant to such Registration Statement whose rights are so affected.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1)if to a Holder, at the most current address given by such
Holder to the Issuers in accordance with the provisions of this Section
11(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the registrar under the Indenture,
with a copy in like manner to Chase Securities Inc.;
(2)if to the Initial Purchaser or the Market-Maker, initially at
its address set forth in the Purchase Agreement; and
(3)if to the Issuers or DonJoy, initially at the address of the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon
the Issuers and their successors and assigns.
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(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) Remedies. In the event of a breach by the Issuers, DonJoy or
by any Holder of any of their obligations under this Agreement, each Holder,
the Issuers or DonJoy, as the case may be, in addition to being entitled to
exercise all rights granted by law, including recovery of damages (other than
the recovery of damages for a breach by the Issuers or DonJoy of their
obligations under Sections 1 or 2 hereof for which liquidated damages have been
paid pursuant to Section 3 hereof), will be entitled to specific performance of
its rights under this Agreement. The Issuers, DonJoy and each Holder agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by each such person of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, each such person shall waive
the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. Each of the Issuers and DonJoy
represents, warrants and agrees with the Initial Purchaser that (i) it has not
entered into, and shall not, on or after the date of this Agreement, enter into
any agreement that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof, (ii) it has
not previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person
and (iii) (with respect to the Issuers) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in
aggregate principal amount of the then outstanding Transfer Restricted
Securities and the Market-Maker, it shall not grant to any person the right to
request the Issuers to register any debt securities of the Issuers under the
Securities Act unless the rights so granted are not in conflict or inconsistent
with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Issuers nor any of
their security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Issuers in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
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(k) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers, DonJoy and the Initial Purchaser.
Very truly yours,
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
Accepted:
CHASE SECURITIES INC.
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by /s/ R. David McDonough
------------------------------
Authorized Signatory
26
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuers have agreed
that, for a period of 180 days after the Expiration Date (as defined herein),
they will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution".
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ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".
28
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Issuers
have agreed that, for a period of 180 days after the Expiration Date, they will
make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
[ ] 199[ ], all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Issuers
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
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ANNEX D
[ ] CHECK HERE IF
YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.