EXHIBIT 1.1
dj ORTHOPEDICS, INC.
COMMON STOCK
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[FORM OF] UNDERWRITING AGREEMENT
_________, 2001
Xxxxxxx, Xxxxx & Co.,
X.X. Xxxxxx Securities Inc.,
UBS Warburg LLC,
U.S. Bancorp Xxxxx Xxxxxxx Inc.,
First Union Securities, Inc.,
As representatives of the several Underwriters
named in Schedule I hereto (the "Representatives")
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
dj Orthopedics, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
_____ shares of common stock, par value $0.01 per share ("Stock"), of the
Company and the stockholders of the Company named in Schedule II hereto (the
"Selling Stockholders") propose, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of _____ shares and, at the
election of the Underwriters, up to _____ additional shares of Stock. The
aggregate of _____ shares to be sold by the Company and the Selling Stockholders
is herein called the "Firm Shares" and the aggregate of _____ additional shares
to be sold by the Selling Stockholders is herein called the "Optional Shares".
The Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 3 hereof are herein collectively called the "Shares."
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-68358) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement or filed
with the Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 6(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective, each as amended at
the time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement"; and such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder (provided that the Preliminary Prospectus that was included in the
Registration Statement as originally filed with the Commission on August 24,
2001 and as first amended on October 5, 2001 did not include share or per share
data, the number of Shares being sold in the offering or the estimated price
range of the Shares), and did 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, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, 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; PROVIDED, HOWEVER, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through Xxxxxxx, Sachs & Co. expressly for use
therein;
(d) As of the date hereof, none of the Company, DonJoy, L.L.C.
("DonJoy") nor any of their subsidiaries has, and upon consummation of the
Reorganization described in the prospectus under the caption "The
Reorganization" (the "Reorganization") at each Time of Delivery (as hereinafter
defined), neither the Company nor any of its subsidiaries will have, sustained
since the date of the latest audited financial statements of DonJoy included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries (other than, in the case of the
Company, as contemplated by the Reorganization), or as of the date hereof of
DonJoy or any of its subsidiaries, or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders'
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or members' equity, as applicable, or results of operations of the Company and
its subsidiaries, taken as a whole, or as of the date hereof of DonJoy and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus;
(e) As of the date hereof, DonJoy and its subsidiaries have, and upon
consummation of the Reorganization at each Time of Delivery, the Company and its
subsidiaries will have, good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects except (i)
such as are described in the Prospectus, (ii) such as do not interfere with the
use made or proposed to be made of such property by DonJoy and its subsidiaries
or, upon consummation of the Reorganization, at each Time of Delivery, made or
proposed to be made by the Company and its subsidiaries; and any real property
and buildings held under lease by DonJoy and its subsidiaries on the date hereof
are, and, upon consummation of the Reorganization, at each Time of Delivery, any
real property and buildings held under lease by the Company and its subsidiaries
will be, held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by DonJoy and its
subsidiaries on the date hereof or, upon consummation of the Reorganization, at
each Time of Delivery, made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and at each Time of Delivery will have
been duly qualified as a foreign corporation for the transaction of business and
will be in good standing under the laws of each jurisdiction set forth on Annex
IV hereto, which is the list of other jurisdictions in which it owns or leases
properties or conducts any business so as to require such qualification; and as
of the date hereof, each of DJ Acquisition Corporation, DonJoy and DonJoy's
subsidiaries has been duly organized or incorporated and is validly existing as
a corporation or limited liability company in good standing under the laws of
its jurisdiction of organization or incorporation, and upon consummation of the
Reorganization at each Time of Delivery, each of the Company's subsidiaries will
have been duly organized or incorporated and will be validly existing as a
corporation or limited liability company in good standing under the laws of its
jurisdiction of organization or incorporation;
(g) At each Time of Delivery, the Company will have an authorized
capitalization as set forth in the Prospectus, and all of the shares of Stock of
the Company to be issued in the Reorganization in exchange for the outstanding
membership interests of DonJoy pursuant to the Agreement and Plan of Merger
dated as of __________, 2001 among DonJoy, DJ Acquisition Corporation and the
Company (the "Merger Agreement") will have been duly authorized and, upon
issuance of such Stock in exchange for such membership interests as provided in
the Merger Agreement, such shares of Stock (including the shares of Stock to be
sold by the Selling Stockholders pursuant to this Agreement) will be duly and
validly issued, fully paid and non-assessable and such shares of stock will
conform to the description of the Stock contained in the Prospectus;
(h) As of the date hereof, all of the issued shares of capital stock or
membership interests of DJ Acquisition Corporation and of DonJoy and each
subsidiary of DonJoy have been duly and validly authorized and issued, and are,
as of the date hereof with respect to DJ Acquisition Corporation and DonJoy and
its subsidiaries, and will be, upon consummation of the Reorganization at each
Time of Delivery with respect to the Company's subsidiaries, in the case of
capital stock, fully paid and non-assessable and, in the case of membership
interests of DonJoy and dj Orthopedics, L.L.C. ("dj Ortho"), not subject to
assessment by DonJoy or dj Ortho, respectively, for additional capital
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contributions (PROVIDED, HOWEVER, that each member of DonJoy and dj Ortho will
be liable for the amount of any distribution to such member (or its predecessor
in interest) made in violation of Section 18-607 or Section 18-804 of the
Limited Liability Company Act of the State of Delaware (the "LLC Act") to the
extent the same is required to be returned to or for the account of DonJoy or dj
Ortho, respectively, as provided in Section 18-607 or Section 18-804, as
applicable, of the LLC Act, potentially with interest) and (except for
directors' qualifying shares), all of the issued shares of capital stock of DJ
Acquisition Corporation are owned directly or indirectly by the Company on the
date hereof, all of the issued shares of capital stock or membership interests
of each subsidiary of DonJoy are owned directly or indirectly by DonJoy on the
date hereof and, upon consummation of the Reorganization at each Time of
Delivery, all of the issued shares of capital stock or membership interests of
each subsidiary of the Company will be owned directly or indirectly by the
Company, in each case free and clear of all liens, encumbrances, equities or
claims, except for those created pursuant to the Amended Credit Facility
referred to in the Prospectus or otherwise described in the Prospectus and
except that DonJoy owns indirectly at the date hereof and the Company will own
indirectly, upon consummation of the Reorganization at each Time of Delivery,
60% of the outstanding capital stock of dj Orthopaedics Pty Ltd. ("dj
Australia").
(i) At the First Time of Delivery, the unissued Shares to be issued and
sold by the Company to the Underwriters hereunder will be duly and validly
authorized and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and non-assessable and
will conform to the description of the Stock contained in the Prospectus;
(j) The issue and sale of the Shares to be sold by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated herein and in the Prospectus under
the caption "Reorganization" will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which DonJoy or any of its subsidiaries at the date hereof is, or
the Company or any of its subsidiaries at each Time of Delivery will be, a party
or by which DonJoy or any of its subsidiaries at the date hereof is, or the
Company or any of its subsidiaries at each Time of Delivery will be, bound or to
which any of the property or assets of DonJoy or any of its subsidiaries at the
date hereof is, or the Company or any of its subsidiaries at each Time of
Delivery will be, subject, and at the date hereof such action will not result in
any violation of the provisions of the organizational documents of DonJoy and at
each Time of Delivery such action will not result in any violation of the
provisions of the Amended and Restated Certificate of Incorporation or Amended
By-laws of the Company and such action at the date hereof and at each Time of
Delivery will not result in any violation of the provisions of any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except such as have been
obtained or made under the Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and such consents, approvals, authorizations,
registrations or qualifications as may be required (i) by the National
Association of Securities Dealers, Inc. ("NASD"), (ii) under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters or (iii) under the federal or provincial laws of Canada or
under the laws of any other foreign jurisdiction in which the Shares may be
offered or sold;
(k) At the date hereof, the Company is not in violation of its
Certificate of Incorporation or By-laws and at each Time of Delivery will not be
in violation of its Amended and Restated Certificate of Incorporation or Amended
By-Laws; at the date hereof, neither DonJoy nor any
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of its subsidiaries is in violation of its charter or by-laws (or other
organizational documents) and at each Time of Delivery none of the subsidiaries
of the Company will be in violation of its charter or by-laws (or other
organizational documents); and at the date hereof, neither DonJoy nor any of its
subsidiaries is, and at each Time of Delivery, neither the Company nor any of
its subsidiaries will be, in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties may be
bound;
(l) The statements set forth in the Prospectus under the captions
"Description of Capital Stock" and "Material Federal Income Tax Consequences to
Non-U.S. Holders of Common Stock", insofar as they purport to constitute a
summary of the terms of the Stock or other legal matters and documents referred
to therein, are accurate, complete and fair in all material respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or DonJoy or any of their
subsidiaries is a party or of which any property of the Company or DonJoy or any
of their subsidiaries is the subject which, if determined adversely to the
Company or DonJoy or any of their subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(n) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company", as such term is defined
in the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(o) Ernst & Young LLP, who have certified certain financial statements
of DonJoy and its subsidiaries, and PricewaterhouseCoopers LLP, who have
certified certain financial statements of DePuy Orthopaedic Technology, Inc. and
the Bracing and Soft Supports business of Xxxxxxx & Xxxxxxx, are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(p) As of the date hereof, each of DonJoy and its subsidiaries owns or
possesses, or can acquire or license, and at each Time of Delivery each of the
Company and its subsidiaries will own or possess, or be able to acquire or
license, on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business now
operated by it, except where the failure to own or possess such rights would not
individually or in the aggregate have a material adverse effect on the
consolidated financial position, stockholders' or members' equity, as
applicable, or results of operations at the date hereof of DonJoy and its
subsidiaries, taken as a whole, and, at each Time of Delivery, of the Company
and its subsidiaries, taken as a whole; and none of the Company, DonJoy or any
of their subsidiaries has received any correspondence relating to any
Intellectual Property or notice of infringement of or conflict with asserted
rights of others with respect to any Intellectual Property nor is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest at the date hereof of DonJoy or any of its subsidiaries therein and, at
each Time of Delivery, of the Company or any of its subsidiaries therein, except
in any such case as would not individually or in the aggregate have a material
adverse effect on the consolidated financial position, stockholders' or members'
equity, as applicable, or results of operations at the date hereof of DonJoy
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and its subsidiaries, taken as a whole and, at each Time of Delivery, of the
Company and its subsidiaries, taken as a whole;
(q) As of the date hereof, each of DonJoy and its subsidiaries
possesses, and at each Time of Delivery each of the Company and its subsidiaries
will possess, such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business operated at the date hereof by DonJoy and its subsidiaries
and at each Time of Delivery by the Company and its subsidiaries, except in each
case where the failure to possess such Governmental Licenses would not
individually or in the aggregate have a material adverse effect on the
consolidated financial position, stockholders' or members' equity, as
applicable, or results of operations at the date hereof of DonJoy and its
subsidiaries, taken as a whole, and, at each Time of Delivery, of the Company
and its subsidiaries, taken as a whole; at the date hereof DonJoy and its
subsidiaries are, and at each Time of Delivery the Company and its subsidiaries
will be, in compliance with the terms and conditions of all such Governmental
Licenses, except in each case where the failure to be in compliance would not
individually or in the aggregate have a material adverse effect on the
consolidated financial position, stockholders' or members' equity, as
applicable, or results of operations at the date hereof of DonJoy and its
subsidiaries, taken as a whole, and, at each Time of Delivery, of the Company
and its subsidiaries, taken as a whole; all of the Governmental Licenses are
valid and in full force and effect, except as would not individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' or members' equity, as applicable, or results of operations at the
date hereof of DonJoy and its subsidiaries, taken as a whole, and, at each Time
of Delivery, of the Company and its subsidiaries, taken as a whole; and neither
DonJoy nor the Company has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses, which, if the
subject of an unfavorable decision, ruling or finding, would result individually
or in the aggregate in a material adverse effect on the consolidated financial
position, stockholders' or members' equity, as applicable, or results of
operations at the date hereof of DonJoy and its subsidiaries, taken as a whole
and, at each Time of Delivery, of the Company and its subsidiaries, taken as a
whole;
(r) The financial statements included in the Registration Statement and
the Prospectus, together with the related schedules and notes, present fairly
the financial position of DonJoy and its consolidated subsidiaries, DePuy
Orthopaedic Technology, Inc. and the Bracing and Soft Supports Business of
Xxxxxxx & Xxxxxxx, respectively, at the dates indicated and the statements of
income, stockholders' or members' equity, as applicable, and cash flows of
DonJoy and its consolidated subsidiaries, DePuy Orthopaedic Technology, Inc. and
the Bracing and Soft Supports Business of Xxxxxxx & Xxxxxxx, respectively, for
the periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The financial statements
included in the Registration Statement and the Prospectus for DePuy Orthopaedic
Technology, Inc. as of and for the six months ended June 30, 1999 and 2000,
together with the related notes, are accurate in all material respects and
represent the Company's best estimates and are based on assumptions that the
Company believes to be reasonable. The selected financial data and the summary
financial information included in the Prospectus present fairly in all material
respects the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The PRO FORMA financial information included in the
Registration Statement and the Prospectus has been prepared on a basis
consistent with the historical financial statements contained in the Prospectus
(except for the PRO FORMA adjustments specified therein), includes all material
adjustments to the historical financial information required by Rule 11-02 of
Regulation S-X under the Act and the Exchange Act to reflect the transactions
6
described in the Prospectus, gives effect to assumptions made on a reasonable
basis and fairly presents the historical and proposed transactions contemplated
by the Prospectus;
(s) As of the date hereof, DonJoy maintains, and at each Time of
Delivery, the Company will maintain, a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences;
(t) Each of the Merger Agreement and the Agreement and Plan of Merger
dated ___, 2001 between DonJoy and the Company (the "Second Merger Agreement")
has been duly authorized, executed and delivered by each of the parties thereto
and constitutes a valid and binding agreement of each of the parties thereto;
and
(u) Other than any rights that have been effectively waived, there are
no persons with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement.
2. Each of the Selling Stockholders severally represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(a) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement and the
Power of Attorney and the Custody Agreement hereinafter referred to, and for the
sale and delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained, except (i) such as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
Shares by the Underwriters, (ii) such as may be required by the NASD and (iii)
such as may be required under the federal or provincial laws of Canada or under
the laws of any other foreign jurisdiction in which the Shares may be offered
and sold; and such Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power-of-Attorney and the Custody Agreement and
to sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder;
(b) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody Agreement
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is bound or
to which any of the property or assets of such Selling Stockholder is subject,
nor will such action result in any violation of the provisions of the charter or
by-laws (or other organizational documents) of such Selling Stockholder or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(c) At the date hereof, such Selling Stockholder has, and through the
effective date of the merger contemplated by the Merger Agreement such Selling
Stockholder will have, good and valid title to the common or preferred
membership interests of DonJoy to be exchanged pursuant to the Merger Agreement
for the Shares to be sold by such Selling Stockholder hereunder, and
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immediately prior to each Time of Delivery such Selling Stockholder will have,
good and valid title to the Shares to be sold by such Selling Stockholder
hereunder, in each case free and clear of all liens, encumbrances, equities or
claims; and, assuming (1) the Underwriters purchase the Shares to be sold by
such Selling Stockholder without notice of any adverse claim (within the meaning
of Section 8-105 of the Uniform Commercial Code of the State of New York (the
"NYUCC")), (2) the Underwriters make payment therefor as provided herein, (3)
such Shares are delivered to the Underwriters in accordance with the provisions
of the Custody Agreement and (4) the Underwriters obtain control of such Shares
(within the meaning of Section 8-106 of the NYUCC), the Underwriters will
acquire all of the Selling Stockholder's rights and interest in the Shares sold
by such Selling Stockholder free of any adverse claim (within the meaning of
Section 8-105 of the NYUCC);
(d) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(e) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity with
written information furnished to the Company by such Selling Stockholder
expressly for use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or supplements to
the Registration Statement and the Prospectus, when they become effective or are
filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(f) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder will deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof);
(g) Certificates in negotiable form representing all of the Shares to
be sold by such Selling Stockholder hereunder have been placed in custody under
a Custody Agreement, in the form heretofore furnished to you (the "Custody
Agreement"), duly executed and delivered by such Selling Stockholder to Mellon
Investor Services LLC, as custodian (the "Custodian"), and such Selling
Stockholder has duly executed and delivered a Power of Attorney, in the form
heretofore furnished to you (the "Power of Attorney"), appointing the persons
indicated in Schedule II hereto, and each of them, as such Selling Stockholder's
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholder, to determine the
purchase price to be paid by the Underwriters to the Selling Stockholders as
provided in Section 3 hereof, to authorize the delivery of the Shares to be sold
by such Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated by this
Agreement and the Custody Agreement; and
(h) The Shares represented by the certificates held in custody for such
Selling Stockholder under the Custody Agreement are subject to the interests of
the Underwriters hereunder; the arrangements made by such Selling Stockholder
for such custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable;
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the obligations of the Selling Stockholders hereunder shall not be terminated by
operation of law, whether by the death or incapacity of any individual Selling
Stockholder or, in the case of an estate or trust, by the death or incapacity of
any executor or trustee or the termination of such estate or trust, or in the
case of a partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event; if any individual Selling
Stockholder or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such partnership
or corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the Custody
Agreements; and actions taken by the Attorneys-in-Fact pursuant to the Powers of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not the
Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of
such death, incapacity, termination, dissolution or other event.
3. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Stockholders,
at a purchase price per share of $_______, the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by the Company and each of the
Selling Stockholders as set forth opposite their respective names in Schedule II
hereto by a fraction, the numerator of which is the aggregate number of Firm
Shares to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all of the Underwriters from
the Company and all of the Selling Stockholders hereunder and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, each of the Selling Stockholders agrees,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from each of the
Selling Stockholders, at the purchase price per share set forth in clause (a) of
this Section 3, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Selling Stockholders, as and to the extent indicated in Schedule II
hereto, hereby grant, severally and not jointly, to the Underwriters the right
to purchase at their election up to ________ Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering sales of shares in excess of the number of Firm Shares. Any such
election to purchase Optional Shares shall be made in proportion to the maximum
number of Optional Shares to be sold by each Selling Stockholder as set forth in
Schedule II hereto. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company and the
Attorneys-in-Fact, given within a period of 30 calendar days after the date of
this Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 5 hereof) or, unless you, the Company and the
Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
9
4. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders, shall be delivered by or on
behalf of the Company and the Selling Stockholders to Xxxxxxx, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company to Xxxxxxx, Xxxxx & Co. at least forty-eight
hours in advance and by each of the Selling Stockholders in the Custody
Agreement, as their interests may appear. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Time of Delivery (as defined
below) with respect thereto at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Shares, 9:30 a.m., New York time, on ________, 2001
or such other time and date as Xxxxxxx, Sachs & Co., the Company and the Selling
Stockholders may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by Xxxxxxx, Xxxxx & Co.
in the written notice given by Xxxxxxx, Sachs & Co. of the Underwriters'
election to purchase such Optional Shares, or such other time and date as
Xxxxxxx, Xxxxx & Co., the Company and the Selling Stockholders may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(o) hereof, will be delivered at the offices
of Xxxxxxx Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
_____ P.M., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 5, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be reasonably disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
10
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its reasonable
best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such U.S. jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with written and electronic copies of the Prospectus in New
York City in such quantities as you may reasonably request, and, if the delivery
of a prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many written and electronic copies as you may
from time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many written and
electronic copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable or exercisable for, or that represent the right to receive, Stock
or any such substantially similar securities (other than (A) the issuance of
Stock in exchange for existing membership interests in DonJoy as provided in the
Merger Agreement, (B) pursuant to employee and director stock incentive plans
existing on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement; or (C) in connection
with any acquisition of another company, the acquisition of any assets of
another company or any joint venture, PROVIDED that with respect to (C), such
securities sold or otherwise disposed of in such acquisitions or
11
joint ventures shall not exceed in the aggregate 10% of the Stock of the Company
to be outstanding immediately following the offering contemplated hereby and
PROVIDED, FURTHER, that the recipients of such securities agree to be bound by
this Section 6(e) for the duration of the 180 day period and shall execute an
agreement substantially to the effect set forth in Annex II hereto), without
your prior written consent
(f) To furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the Company
generally, and to deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as you may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission), PROVIDED that if the Company so requests,
you will agree to keep all such information confidential in accordance with
Regulation FD;
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of issuance, the
Shares on the New York Stock Exchange (the "Exchange");
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
(l) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's corporate
logo for use on the website, if any, operated by such Underwriter for the
purpose of facilitating the on-line offering of the Shares (the "License");
PROVIDED, HOWEVER, that the License shall be used solely for the purpose
described above, is granted without any fee and may not be assigned or
transferred; and
(m) To direct the Company's transfer agent to place a stop transfer
restriction for a period of three months following the date of this Agreement
upon any Firm Shares sold by the Underwriters that were reserved for offer and
sale to directors, officers, employees and friends through a directed share
program that are restricted by the NASD or the rules and regulations of the NASD
from the sale, transfer, assignment, pledge or hypothecation for such period of
three months.
12
7. The Company and each of the Selling Stockholders covenant and agree
with one another and with the several Underwriters that (a) the Company will pay
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
producing any Agreement among Underwriters, this Agreement, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 6(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters not to exceed $7,500 in connection with such qualification and in
connection with the Blue Sky survey; (iv) all fees and expenses in connection
with listing the Shares on the NASDAQ and/or the Exchange; (v) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the NASD of the
terms of the sale of the Shares (other than those counsel fees directly related
to the review by the NASD of any underwriters' compensation issues with respect
to X.X. Xxxxxx Securities Inc. and First Union Securities, Inc.); (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; (viii) the fees and expenses of one counsel for the Selling
Stockholders; (ix) the fees and expenses of the Attorneys-in-Fact and the
Custodian; (x) a fee in the amount of $10,000 payable to Xxxxxxx, Xxxxx & Co. as
Qualified Independent Underwriter ("QIU"); and (xi) all other costs and expenses
incident to the performance of its and each Selling Stockholders' obligations
hereunder which are not otherwise specifically provided for in this Section; and
(b) each of the Selling Stockholders will pay the following: (i) any fees and
expenses of its counsel if it should choose to use separate counsel from the one
referred to in clause (a)(viii) of this Section and (ii) its pro rata share of
all expenses and taxes incident to the sale and delivery of the Shares to be
sold by such Selling Stockholder to the Underwriters hereunder. In connection
with clause (b)(ii) of the preceding sentence, Xxxxxxx, Sachs & Co. agrees to
pay New York State stock transfer tax, and the Selling Stockholder agrees to
reimburse Xxxxxxx, Xxxxx & Co. for associated carrying costs if such tax payment
is not rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the Selling
Stockholders shall not be required to pay or to reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement, and that except as provided in this Section,
and Sections 9 and 13 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 6(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M.,
13
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall
have furnished to you such written opinion or opinions (a draft of each such
opinion is attached as Annex III(a) hereto), dated such Time of Delivery, with
respect to the matters covered in paragraphs (i), (ii), (vi), (x) and (xii) of
subsection (c) below as well as such other related matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) X'Xxxxxxxx LLP, counsel for the Company, shall have furnished to
you their written opinion (a draft of such opinion is attached as Annex III(b)
hereto), dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization of 100 million
shares of common stock, $0.01 par value, and 25 million shares of
preferred stock, $0.01 par value, as set forth in the first paragraph
under "Description of Capital Stock" in the Prospectus, and all of the
issued shares of capital stock of the Company (including the Shares to
be sold by the Selling Stockholders at such Time of Delivery) have
been duly authorized and validly issued and are fully paid and
non-assessable; the Shares to be issued by the Company pursuant to the
terms of this Agreement have been duly authorized and, upon issuance
and delivery against payment therefor in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable;
and the Shares conform to the description of the Stock contained in
the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction set forth on Annex IV hereto;
(iv) Each of dj Ortho, DJ Orthopedics Capital Corporation and dj
Australia has been duly incorporated or organized and is validly
existing as a corporation or limited liability company in good
standing under the laws of its jurisdiction of incorporation or
organization; and all of the issued shares of capital stock or
membership interests of each such subsidiary have been duly authorized
and validly issued, are, in the case of capital stock, fully paid and
non-assessable and, in the case of membership interests of dj Ortho,
not subject to assessment by dj Ortho for additional capital
contributions, PROVIDED, HOWEVER, that each member of dj Ortho will be
liable for the amount of any distribution to such member (or its
predecessor in interest) made in violation of Section 18-607 or
Section 18-804 of the LLC Act to the extent the same is required to be
returned to or for the account of dj Ortho as provided in Section
18-607 or Section 18-804, as applicable, of the LLC Act, potentially
with interest; and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except for those created pursuant to
the Amended Credit Facility referred to in the
14
Prospectus or otherwise described in the Prospectus and except that
the Company owns 60% of the outstanding capital stock of dj Australia
(it being understood that the foregoing opinion with respect to dj
Australia may be delivered by local counsel directly to the
Underwriters);
(v) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The issue and sale of the Shares being sold by the Company
at such Time of Delivery and the compliance by the Company with all of
the provisions of this Agreement and the consummation of the
transactions contemplated herein and in the Prospectus under the
caption "The Reorganization" will not result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of (x) the Amended
and Restated Certificate of Incorporation or Amended By-laws of the
Company or (y) any statute or any order, rule or regulation of the
United States, the State of New York or the General Corporation Law of
the State of Delaware known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court or governmental
agency or body of the United States or the States of New York or
Delaware having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body of the United States or the States of New York or Delaware is
required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except
(i) such as have been obtained under the Act and the Exchange Act,
(ii) such as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Shares by the
Underwriters, (iii) such as may be required by the NASD and (iv) such
as may be required under the federal or provincial laws of Canada or
under the laws of any other foreign jurisdiction in which the Shares
may be offered and sold;
(ix) Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws (or other organizational
documents) or, to such counsel's knowledge, in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound;
(x) The statements set forth in the Prospectus under the captions
"Description of Capital Stock" and "Material Federal Income Tax
Consequences to Non-U.S.
15
Holders of Common Stock", insofar as they purport to constitute a
summary of the terms of the Stock or other legal matters and documents
referred to therein, are accurate, complete and fair in all material
respects;
(xi) The Company is not an "investment company", as such term is
defined in the Investment Company Act;
(xii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein and the other financial information and data
contained therein), as to which such counsel need not express any
belief) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder;
although they do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to
in the opinion in subsection (x) of this Section 8(c), they have no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need not express
any belief) contained an 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 or that, as of
its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein and the other
financial information and data contained therein, as to which such
counsel need not express any belief) contained an untrue statement of
a material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading or that, as of such Time of Delivery,
the Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein and the other financial
information and data contained therein, as to which such counsel need
not express any belief) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed; and
(xiii) To such counsel's knowledge, there are no contracts or
other documents to which the Company or any of its subsidiaries is a
party of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as
required.
(d) Xxxxxx & Xxxxxxx, special health care regulatory counsel for the
Company, shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex III(c) hereto), dated such Time of Delivery, in
form and substance reasonably satisfactory to you, to the effect that the
statements set forth in the Prospectus under the caption "Risk Factors--Risks
Related to Government Regulation--Our failure to receive regulatory clearance or
approval for our products or operations in the United States or abroad would
adversely affect our revenues and potential for future growth," "--Changes in
reimbursement policies for our products by third party payors or reductions in
reimbursement rates for our products could adversely affect our business and
results of operations," "--Healthcare reform, managed care and buying groups
have put downward pressure on the prices of our products," "--Proposed laws that
would limit the types of orthopedic professionals who can fit, sell or seek
reimbursement for our products could, if adopted, adversely affect our business
and results of operations," "--We may need to change our business practices to
comply with health care
16
fraud and abuse regulations," and "--Denied claims from government agencies
could reduce our revenue or profits," under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Overview--Third
Party Reimbursement; Health Care Reform; Managed Care" and under the caption
"Business--Government Regulation" and "--Governmental Audits", insofar as they
purport to constitute summaries of matters of U.S. federal law, the law of the
State of California, and the law of the Republic of Germany, are accurate in all
material respects;
(e) Xxxxxx & Xxxxxxx and Xxxxxx Xxxxxxx Xxxxx & Bear, LLP, special
intellectual property counsel for the Company, shall each have furnished to you
their written opinion (a draft of such opinions are attached as Annexes III(d)
and III(e) hereto, respectively), dated such Time of Delivery, in form and
substance reasonably satisfactory to you;
(f) The respective counsel for each of the Selling Stockholders, as
indicated in Schedule II hereto, each shall have furnished to you their written
opinion with respect to each of the Selling Stockholders for whom they are
acting as counsel (a draft of each such opinion is attached as Annex II(d)
hereto), dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) A Power-of-Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Stockholder and constitute
valid and binding agreements of such Selling Stockholder;
(ii) This Agreement has been duly executed and delivered by or on
behalf of such Selling Stockholder; and the sale of the Shares to be
sold by such Selling Stockholder hereunder and the compliance by such
Selling Stockholder with all of the provisions of this Agreement, the
Power-of-Attorney and the Custody Agreement and the consummation of
the transactions herein and therein contemplated will not result in a
breach or violation of any terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation
of the provisions of the charter or by-laws (or other organizational
documents) of such Selling Stockholder or any statute, order, rule or
regulation of the United States, the State of New York or, as
applicable, the General Corporation Law of the State of Delaware or
the LLC Act known to such counsel or, to such counsel's knowledge, any
order, writ or decree of any court or governmental agency or body of
the United States or the States of New York or Delaware having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) No consent, approval, authorization or order of any court
or governmental agency or body of the United States or the States of
New York or Delaware is required for the consummation of the
transactions contemplated by this Agreement in connection with the
Shares to be sold by such Selling Stockholder hereunder, except (i)
any such consent, approval, authorization or order which has been duly
obtained and is in full force and effect, (ii) such as have been
obtained under the Act and the Exchange Act, (iii) such as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of such Shares by the Underwriters, (iv)
such as may be required by the NASD and (v) such as may be required
under the federal or provincial laws of Canada or under the laws of
any other foreign jurisdiction in which the Shares may be offered and
sold;
17
(iv) Immediately prior to such Time of Delivery, such Selling
Stockholder was the sole registered owner of the Shares to be sold at
such Time of Delivery by such Selling Stockholder under this
Agreement, free and clear of all liens, encumbrances, equities or
claims, and has full corporate, partnership or limited liability
company right, power and authority to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder hereunder;
and
(v) Assuming (1) the Underwriters purchase the Shares to be sold
by such Selling Stockholder without notice of any adverse claim
(within the meaning of Section 8-105 of the NYUCC), (2) the
Underwriters make payment therefor as provided herein, (3) such Shares
are delivered to the Underwriters in accordance with the provisions of
the Custody Agreement and (4) the Underwriters obtain control of such
Shares (within the meaning of Section 8-106 of the NYUCC), the
Underwriters will acquire all of the Selling Stockholder's rights and
interest in the Shares sold by such Selling Stockholder free of any
adverse claim (within the meaning of Section 8-105 of the NYUCC).
(g) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, each of Ernst & Young
LLP and PricewaterhouseCoopers LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto;
(h) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements of DonJoy
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus and except
for the consummation of the Reorganization and the filing of the Amended and
Restated Certificate of Incorporation of the Company there shall not have been
any change in the capital stock or membership interests, as applicable, or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of Xxxxxxx, Xxxxx & Co. so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(i) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(j) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the Exchange; (ii) a suspension or material limitation in trading
in the Company's securities on the Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York or
California State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) the
outbreak or escalation of hostilities involving the
18
United States or the declaration by the United States of a national emergency or
war or the occurrence of any other calamity or crisis; or (v) any change in
national or international financial, political or economic conditions if the
effect of any such event specified in clause (iv) or (v) in the judgment of
Xxxxxxx, Sachs & Co. makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus;
(k) The Shares to be sold at such Time of Delivery shall have been duly
listed, subject to notice of issuance, on the Exchange;
(l) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from all stockholders (including optionholders) of the
Company, substantially to the effect set forth in Annex II hereof in form and
substance satisfactory to you;
(m) The Company shall have complied with the provisions of Section 6(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(n) The Reorganization of the Company shall have been consummated
substantially in the manner described in the Prospectus under "The
Reorganization" and the related certificates of merger shall have been filed
with the Secretary of State of the State of Delaware; and
(o) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of officers
of the Company and of the Selling Stockholders, respectively, satisfactory to
you as to the accuracy of the representations and warranties of the Company and
the Selling Stockholders, respectively, herein at and as of such Time of
Delivery, as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (h) of this
Section.
9. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each of the Selling Stockholders named in Schedule II hereto,
severally and not jointly, will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any
19
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use therein;
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; PROVIDED, HOWEVER, that such
Selling Stockholder shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Xxxxxxx, Sachs &
Co. expressly for use therein; and PROVIDED, FURTHER, that the liability of a
Selling Stockholder pursuant to this subsection (b) shall not exceed the product
of the number of Shares sold by such Selling Stockholder (including any Optional
Shares) and the initial public offering price of the Shares as set forth in the
Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxxx, Xxxxx & Co.
expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or such Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party
(such written consent not to be unreasonably withheld or
20
delayed), effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party. In
the event the indemnifying party does not assume the defense of any action
brought against an indemnified party, the indemnifying party shall not, in
connection with any one such action or proceeding or separate but substantially
similar actions or proceedings arising out of the same general allegations, be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all indemnified persons, except to the extent that local counsel,
in addition to regular counsel, is required in order to effectively defend
against such action or proceeding, unless (i) the indemnifying party has agreed
to pay such fees and expenses or (ii) an indemnified party reasonably determines
that there may be conflicting interests between such indemnified party and other
indemnified parties in conducting the defense of such action, including
situations in which there are one or more legal defenses available to such
indemnified party that are different from or in addition to those available to
other indemnified parties.
(e) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. 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 information supplied by the Company
or the Selling Stockholders on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, each of the
Selling Stockholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it
21
and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such 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 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 9 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 9 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company (including any person
who, with his or her consent, is named in the Registration Statement as about to
become a director of the Company) and to each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company and the Selling Stockholders shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company and the
Selling Stockholders that you have so arranged for the purchase of such Shares,
or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholders shall have the right to postpone a Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
and the opinion of counsel for the Company may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had originally
been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of
22
Delivery, or if the Company and the Selling Stockholders shall not exercise the
right described in subsection (b) above to require non-defaulting Underwriters
to purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to the Second Time of Delivery, the obligations of
the Underwriters to purchase and of the Selling Stockholders to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company and the Selling Stockholders, except
for the expenses to be borne by the Company and the Selling Stockholders and the
Underwriters as provided in Section 7 hereof and the indemnity and contribution
agreements in Section 9 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
11. (a) The Company will indemnify and hold harmless Xxxxxxx, Xxxxx & Co.,
in its capacity as QIU, against any losses, claims, damages or liabilities,
joint or several, to which the QIU may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the QIU for any legal
or other expenses reasonably incurred by the QIU in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(b) Promptly after receipt by the QIU under subsection (a) above of
notice of the commencement of any action, the QIU shall, if a claim in respect
thereof is to be made against the Company under such subsection, notify the
Company in writing of the commencement thereof; but the omission so to notify
the Company shall not relieve it from any liability which it may have to the QIU
otherwise than under such subsection. In case any such action shall be brought
against the QIU and it shall notify the Company of the commencement thereof, the
Company shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to the QIU (who
shall not, except with the consent of the QIU, be counsel to the Company), and,
after notice from the indemnifying party to the QIU of its election so to assume
the defense thereof, the indemnifying party shall not be liable to the QIU under
such subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by the QIU, in connection with the defense
thereof other than reasonable costs of investigation. The Company shall not,
without the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the QIU is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the QIU from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
QIU.
(c) If the indemnification provided for in this Section 11 is
unavailable to or insufficient to hold harmless Xxxxxxx, Sachs & Co., in its
capacity as QIU, under subsection (a) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
the Company shall contribute to the amount paid or payable by the QIU as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the QIU on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the QIU failed to
give the notice required under subsection (b) above, then the Company shall
contribute to such amount paid or payable by the QIU in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
23
fault of the Company on the one hand and the QIU on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the QIU on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company, as set forth in the table on the cover page of the Prospectus,
bear to the fee payable to the QIU pursuant to Section 7 hereof. 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 information supplied by the Company
on the one hand or the QIU on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the QIU agree that it would not be just
and equitable if contributions pursuant to this subsection (c) were determined
by PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(c). The amount paid or payable by the QIU as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (c) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The obligations of the Company under this Section 11 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the QIU
within the meaning of the Act.
12. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Stockholder, and shall survive delivery of and payment for the
Shares.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company in subsection (a) of Section 9 hereof, the
representations and warranties in subsections (b) and (c) of Section 1 hereof
and any representation or warranty as to the accuracy of the Registration
Statement or the Prospectus contained in any certificate furnished by the
Company pursuant to Section 8 hereof, insofar as they may constitute a basis for
indemnification for liabilities (other than payment by the Company of expenses
incurred or paid in the successful defense of any action, suit or proceeding)
arising under the Act, shall not extend to the extent of any interest therein of
a controlling person or partner of an Underwriter who is a director, officer or
controlling person of the Company when the Registration Statement has become
effective or who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company, except in each case to
the extent that an interest of such character shall have been determined by a
court of appropriate jurisdiction as not against public policy as expressed in
the Act. Unless in the opinion of counsel for the Company the matter has been
settled by controlling precedent, the Company will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question of whether such interest is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
24
13. If this Agreement shall be terminated pursuant to Section 10
hereof, neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 7 and 9 hereof; but,
if for any other reason, any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including the fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholders shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 7 and 9
hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
Representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; if to any Selling Stockholder shall be delivered or sent by mail,
telex or facsimile transmission to counsel for such Selling Stockholder at its
address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; PROVIDED,
HOWEVER, that any notice to an Underwriter pursuant to Section 9(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Stockholders and, to the
extent provided in Sections 9 and 12 hereof, the officers and directors of the
Company and each person who controls the Company, any Selling Stockholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
19. The Company and the Selling Stockholders are authorized, subject to
applicable law, to disclose any and all aspects of this potential transaction
that are necessary to support any U.S.
25
federal income tax benefits expected to be claimed with respect to such
transaction, without the Underwriters imposing any limitation of any kind.
20. Until the consummation of the Reorganization, DonJoy hereby assumes any
and all of the obligations of the Company hereunder.
If the foregoing is in accordance with your understanding, please sign
and return to us nine counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Stockholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and the Selling Stockholders for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
26
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so-doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power-of-Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
dj Orthopedics, Inc.
By: .........................................
Name:
Title:
DonJoy L.L.C.
By: .........................................
Name:
Title:
X.X. Xxxxxx DJ Partners, LLC
X.X. Xxxxxx Partners (23A SBIC), LLC
DJ Investment, LLC
First Union Capital Partners, LLC
DJC, Inc.
TCW/Crescent Mezzanine Trust II
TCW Leveraged Income Trust II, L.P.
Crescent Mach I Partners, L.P.
By: .........................................
Name:
Title:
As Attorney-in-Fact acting on behalf
of each of the Selling Stockholders
named in Schedule II to this Agreement
27
Accepted as of the date hereof at Vista, California:
Xxxxxxx, Xxxxx & Co.
X.X. Xxxxxx Securities Inc.
UBS Warburg LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
First Union Securities, Inc.
By:........................................
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
28
SCHEDULE I
NUMBER OF OPTIONAL SHARES
TOTAL NUMBER OF FIRM TO BE PURCHASED IF MAXIMUM
UNDERWRITER SHARES TO BE PURCHASED OPTION EXERCISED
-------------------------------------------------------- --------------------- --------------------------
Xxxxxxx, Sachs & Co.....................................
X.X. Xxxxxx Securities Inc. ............................
UBS Warburg LLC.........................................
U.S. Bancorp Xxxxx Xxxxxxx Inc..........................
First Union Securities, Inc.............................
--------------------- --------------------------
Total........................................... ===================== ==========================
SCHEDULE II
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
-------------------- -----------------------
The Company.............................................
The Selling Stockholders:...............................
X.X. Xxxxxx DJ Partners, LLC (a)..................
X.X. Xxxxxx Partners (23A SBIC), LLC (a)..........
DJ Investment, LLC (b)............................
First Union Capital Partners, LLC (b).............
DJC, Inc. (c).....................................
TCW/Crescent Mezzanine Trust II (c)...............
TCW Leveraged Income Trust II, L.P. (c)...........
Crescent Mach I Partners, L.P. (c)................ -------------------- -----------------------
Total........................................... ==================== =======================
------------------------
(a) This Selling Stockholder is represented by X'Xxxxxxxx LLP and has appointed
____________ and ___________ and each of them, as the Attorneys-in-Fact for
such Selling Stockholder.
(b) This Selling Stockholder is represented by Xxxxxxx Xxxxxxxxx Xxxxxxx &
Xxxxxxx, L.L.P. and has appointed ____________ and ___________ and each of
them, as the Attorneys-in-Fact for such Selling Stockholder.
(c) This Selling Stockholder is represented by O'Melveny & Xxxxx LLP and has
appointed ____________ and ___________ and each of them, as the
Attorneys-in-Fact for such Selling Stockholder.
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