**Exhibit 10.30**

 

**AMENDEDAND RESTATEDSALES REPRESENTATIVE AGREEMENT**

 

THIS AMENDED AND RESTATED SALES REPRESENTATIVEAGREEMENT (“Agreement”) is made effective as of January 24, 2005, by andbetween dj Orthopedics, LLC, a Delaware limited liability company (hereinafterreferred to as “DJO”), with its principal place of business at 2985 ScottStreet, Vista, CA  92081, and DePuySpine, Inc., an Ohio corporation (hereinafter referred to as “DePuy Spine”),with its principal place of business at 325 Paramount Drive, Raynham,Massachusetts 02767.

 

**BACKGROUND**

 

WHEREAS, DePuy Spine, formerly known as DePuy AcroMed, and OrthoLogicCorp., the predecessor to DJO, entered into that certain Sales RepresentativeAgreement dated August 18, 2000, as amended by that certain Amendment to SalesRepresentative Agreement dated August 1, 2001, that certain Amendment to SalesRepresentative Agreement dated March 1, 2002, that certain Amendment No. 3 toSales Representative Agreement dated September 15, 2003 and that certain letterdated March 29, 2004 addressed to Mr. Earl Fender of DePuy Spine from Mr. ShaneKelly of the Regentek division of DJO (hereinafter collectively, the “OriginalAgreement”);

 

WHEREAS, DJO acquired certain assets and operations of OrthoLogic Corp.on November 26, 2003, and is the successor to OrthoLogic Corp.’s rights andobligations under the Original Agreement pursuant to an assignment thereofexecuted in connection with such acquisition of assets and operations;

 

WHEREAS, DJO and DePuy Spine desire to set forth herein a fullyintegrated document reflecting the Original Agreement with all of its prioramendments and reflecting certain additional amendments that have been agreedto by the parties.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants andagreements hereinafter set forth, the parties hereto agree as follows:

 

**1.0**          **DEFINITIONS**

 

The following words shall have the following meanings when used in thisAgreement:

 

1.1           “Affiliate” of a Party shall mean anyentity or person that directly or indirectly controls, is controlled by or isunder common control with such party. For purposes of this definition, “control” shall mean the possession,directly or indirectly, of the power to direct or cause the direction of themanagement and policies of an entity, whether through the ownership of votingsecurities, by contract or otherwise.

 

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1.2           “Agreement” shall mean this Amendedand Restated Sales Representative Agreement, as it may be further amended inwriting by mutual agreement of the parties from time to time.

 

1.3           “Approved Order” shall mean an orderfor which DJO has received a commitment for payment from any patient or thirdparty payer.

 

1.4           “Competing Product” means an externallumbar spinal bone growth stimulation product.

 

1.5           “Customers” shall mean all purchasersof the Products in the Territory.

 

1.6           “Improvement” shall mean anyadaptation, change, redesign, improvement, modification or development to anyProduct, the specifications therefor, the raw materials or the method orprocess of manufacture or production of any Product.

 

1.7           “Patient Placement” shall mean thefollowing activities with respect to any patient who has been prescribed aProduct:  (a) education of such patienton the use of the Product, the treatment protocol and device placement, (b)reviewing with such patient all pertinent documentation, including patientmanuals and the patient bill of rights, (c) informing such patient of contactsfor additional support in case of questions, (d) ensuring that such patient hassigned all necessary documentation in connection with its use of the Productand that DJO has received copies of such documentation.

 

1.8           “Party” and “Parties” mean DePuySpine and DJO, singly and/or collectively.

 

1.9           “Products” mean DJO’s spinal bonegrowth stimulation products for lumbar applications utilizing Combined MagneticField (CMF) technology, along with any Improvements thereto.  All such Products currently in existence areidentified on Exhibit A. Additional Products, including Improvements and variations thereto,shall be added to Exhibit A as they become available.

 

1.10         “NewProducts” means those DJO bone growth electrical stimulation productsdeveloped, designed, intended or sold for the spine market which perform asignificantly different function or perform in a significantly different manneror perform for a significantly different indication from Products.

 

1.11         “SalesQuota” shall mean the targeted annual amount of Product sales to be solicitedby DePuy Spine in the Exclusive Territory as agreed upon by the partiespursuant to Section 9.5 below, expressed in terms of units and gross salesdollars.

 

1.12         “SalesMinimum” shall mean 90% of the Sales Quota.

 

1.13         “Territory” shall mean the spinalmarket in the United States of America.

 

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**2.0          APPOINTMENT**

 

2.1           Subject to the terms and conditionsof this Agreement, DJO hereby appoints DePuy Spine, and DePuy Spine herebyaccepts appointment, as the sales agent of the Products in the Territory for theTerm (as hereinafter defined).  DePuySpine shall be the exclusive sales agent in the portions of the Territory thatare shown as shaded on the maps attached hereto as Exhibit B(collectively, the “Exclusive Territory”) and the non-exclusive salesagent in the remaining portions of the Territory.

 

2.2           DePuy Spine acknowledges that DJO hasan agreement with Vision Quest, a durable medical equipment supplier (“DME”)based in California, and understands that Vision Quest will continue to sellProducts consistent with the terms and provisions of such agreement and solelyoutside the Exclusive Territory, except that Vision Quest may also sellProducts to customers located in San Diego County, California.  DJO shall, at DePuy Spine’s request,terminate, phase out or allow to expire, DJO’s agreement with Vision Questconsistent with the terms of any such agreement, at DePuy Spine’s solediscretion.  In no event shall DJO permitVision Quest to sell or promote Products within the Exclusive Territory (withthe aforementioned exception of San Diego County).

 

2.3           DePuy Spine may appoint one or morethird parties as subagents or subdistributors (individually and collectively, “Distributors”)to act on its behalf, including without limitation, the DePuy Spine sales networknow or as may be established from time to time, provided that DePuy Spine shallremain responsible for all of its obligations under this Agreement. DePuy Spineshall notify DJO in writing of all Distributors appointed pursuant to thisSection, provided that DJO shall treat the identity of DePuy Spine’sDistributors as DePuy Spine Confidential Information pursuant to the provisionsof Article 18.  DePuy Spine shall notknowingly appoint any Distributors to sell the Products that are engaged in themarketing and/or selling of Competing Products. To the extent that any DePuy Spine Distributor either continues tomarket Competing Products or is unable to market the Products, the Partiesshall consult with each other to consider appropriate actions that might betaken to address such circumstances. During the time period when any DePuy Spine Distributor either continuesto market Competing Products or is unable to market the Products and DePuySpine does not cover the affected sales territory (either directly or throughanother Distributor), then DJO may use its employees or other distributors tomarket Products in such DePuy Spine Distributor’s territory; provided that DJOshall terminate or discontinue marketing efforts in such territory (if it iswithin the Exclusive Territory) promptly after DePuy Spine or one of itsDistributors is able to service such territory.

 

2.4           Provided DJO has first offered theNew Products in writing to DePuy Spine and DePuy Spine has declined theopportunity to market the New Products in writing, DJO may freely negotiatewith other parties to market the New Products. DePuy Spine shall have ninety (90) days from receipt of DJO’s writtenoffer within which to accept or reject any such opportunity to market NewProducts.  In the case in which DJO hadfirst offered the New Products to DePuy Spine and the parties were unable tonegotiate mutually acceptable terms, DJO is free to contract with other partiesprovided DJO does not accept terms inferior to DePuy Spine’s last offer.  In the case in which the third party’soffered final terms are equal to or inferior to DePuy Spine’s last offer, DJOwill contract with DePuy Spine under the terms of

 

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DePuy Spine’s last offer.

 

**3.0          EXCLUSIVITY**

 

3.1           During the Term (as hereinafterdefined), DJO shall not, with respect to all or any part of the ExclusiveTerritory, enter into or be party to any distribution, marketing, salesrepresentative or like agreement related to the Products with any person otherthan DePuy Spine or its Affiliates, nor shall DJO give any such other personany rights to sell, promote or otherwise commercially exploit Products in theExclusive Territory, except as provided in Article 9.  Without in any way limiting the foregoing,DJO shall use commercially reasonable efforts to prevent the sale or promotionby DJO’s agents and representatives, wherever located, of Products either inthe Exclusive Territory or to customers in the Exclusive Territory.  In order to better protect DePuy Spine’sexclusive rights hereunder and to preserve the intended economic benefitsthereof, DJO agrees to pay DePuy Spine its commission pursuant to Section 12with respect to each sale of Products in the Exclusive Territory, regardless ofwho makes the sale or solicits the order for the sale.  This Section 3.1 is not intended to prohibitor limit DJO sales management personnel from assisting or supporting DePuySpine’s activities hereunder pursuant to a specific request by DePuy Spine,provided such personnel’s activities are conducted solely in conjunction withDePuy Spine and not independently.

 

**4.0**          **TERM AND TERMINATION**

 

4.1           The term (“Term”) of this Agreementshall continue, unless terminated early as provided in this Article 4, untilAugust 18, 2010.

 

4.2           This Agreement may be terminated byeither Party if the other Party files a voluntary petition for bankruptcy orreorganization, is the subject of an involuntary petition for bankruptcy whichis not dismissed within 60 days, has its affairs placed in the hands of areceiver, enters into a composition for the benefit of creditors, or is deemedinsolvent by a court of competent jurisdiction.

 

4.3           This Agreement may also be terminatedif a Party is in material breach of this Agreement provided the non-breachingParty has provided at least forty-five (45) days prior written noticeidentifying the breach and such breach has not been cured within saidforty-five (45) days.

 

4.4           This Agreement may be terminated byDePuy Spine upon 120 days’ prior written notice to DJO.

 

4.5           This Agreement may be terminated byDJO upon 120 days’ prior written notice to DePuy Spine if the prior three (3)month average Net Sales Price (as defined in Section 12.1) for the Productsever becomes less than $***.

 

4.6           ThisAgreement may be terminated immediately by DePuy Spine upon written notice toDJO if DePuy Spine, its Affiliates or DJO receive a notice that a third partyhas filed suit alleging that any Product infringes in whole or in part anyaspect of any U.S. patent or any

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requestedwith respect to the omitted portions.

 

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reissue or re-examination thereof.

 

4.7           The provisions of this Agreement setforth in Section 4.8 and Articles 14, 17, 18, 19, 20, and any other provisionswhich by their terms survive termination, and any remedies for the breachthereof, shall survive the termination of this Agreement under the termshereof.

 

4.8           Notwithstandingthe termination of this Agreement for any reason, each Party hereto shall beentitled to recover any and all damages (other than punitive, exemplary,multiplied or consequential (including lost sales or lost profits) damages)that such Party shall have sustained by reason of the breach by the other Partyhereto of any of the terms of this Agreement. Termination of this Agreement for any reason shall be without prejudiceto DePuy Spine’s right to receive all payments accrued and unpaid on theeffective date of termination and shall not release either Party hereto fromany liability which at such time has already accrued or which thereafteraccrues from a breach or default prior to such expiration or termination, noraffect in any way the survival of any other right, duty or obligation of eitherParty hereto which is expressly stated elsewhere in this Agreement to survivesuch termination.

 

**5.0**          **OBLIGATIONS OF DJO**

 

5.1           DJOshall use commercially reasonable efforts to supply Products for customerorders on a timely basis.  If Productsbecome unavailable during the Term for any reason, except where demand exceeds125% of the non-binding rolling 12-month forecast updated on a quarterly basis,for more than 15 days (which need not be consecutive) in any period of fourconsecutive weeks, the Sales Quota applicable to that year, pursuant to Article9 below, shall be reduced by an amount equal to (i) the average monthly volumeof orders received by DJO during the preceding six months, multiplied by (ii)the number of consecutive four-week periods during which such Products areunavailable for any 15 days.  If Productsbecome unavailable due, in whole or in part, to a circumstance affecting DJO’sability to manufacture Products, and the Products continue to be unavailabledue to such circumstance for more than any 15 days in a given four consecutiveweeks, the presidents of the Parties or their designated representatives shallmeet to determine the best means to make Products available to the market, andin that regard, will consider, in part, the possibility that DePuy Spine willmanufacture or have manufactured Products until production by DJO hasresumed.  DePuy Spine wants assurance ofcontinued supply of Product.  If DJOcannot supply the Product necessary to meet demand for a continuous period of30 days, then DePuy Spine shall have the right to any and all licenses,manufacturing plans, and technology, etc. that would allow DePuy Spine to findan alternative source for the supply of such Product until DJO can resumeadequate supply of Product.  DJO herebygrants DePuy Spine an irrevocable, perpetual, non-exclusive paid up, royaltyfree license and/or right to all licenses, manufacturing plans, patents and knowhow related to the Products, which DePuy Spine agrees to exercise on the termsset forth in this Section 5.1.

 

5.2           DJOwill be responsible for Product development, manufacturing, testing, qualitycontrol, supply, distribution, regulatory approvals and clearances, customerservice, shipping, Patient Placement and billing, as well as for obtaining thenecessary supporting documents for billing as provided in Section 8.1hereof.  Additionally, at all appropriatetrade shows and conventions where DJO maintains a booth, DJO shall, at no costto DePuy Spine, include a

 

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prominent Product display that is jointly branded with DePuy Spine,including jointly branded signage and promotional brochures.

 

5.3           DJOshall report to DePuy Spine any and all complaints received by DJO and any andall medical device reports prepared by DJO with respect to Products within thetime required by applicable law and regulations, and, in any case, within areasonably prompt time following DJO’s receipt or preparation of the same.  DJO shall maintain a record of all complaintsit receives consistent with guidelines and requirements of the U.S. Food andDrug Administration (“FDA”) or any other governmental agency or instrumentalitythat may have jurisdiction over the Products, including, if a “CE” mark orother European regulatory clearance or approval is obtained for any Product,the applicable guidelines and requirements of the European Union.

 

5.4           AtDePuy Spine’s request and pursuant to a mutually determined training program,DJO shall assist DePuy Spine in providing training in the use and benefits ofthe Product to DePuy Spine’s domestic field sales force (whether such salesrepresentatives are employed by DePuy Spine or by its Distributors).  DJO will supply each of DePuy Spine’s and itsrespective Distributors’ existing and future sales representatives with aninitial Product demonstration unit at no cost to DePuy Spine or suchDistributor.  Replacement or additionalProduct demonstration units will be made available to DePuy Spine for use byits sales representatives or Distributors, at a cost of $*** each.

 

5.5           DJOshall comply with the requirements for DePuy Spine approval set forth inSection 6.3 below, and with the meeting requirements set forth in Section 6.4below.

 

5.6           DJOshall maintain adequate and competent personnel to manufacture, store anddeliver, obtain supporting documents as provided in Section 8.1 hereof, performPatient Placement, and prepare invoices and any other manufacturer-generatedmaterials necessary to enable DJO to invoice purchasers and third-party payorsin connection with the sale of Products, and such manufacture, storage, sales,collection of supporting documents, delivery, Patient Placement and invoicingshall be undertaken and effected in a manner that does not violate anyapplicable federal, state or foreign laws and regulations, and otherwise, in amanner that is in accordance with the provisions of DJO’s Corporate ComplianceProgram.  DJO shall perform PatientPlacement as promptly as is reasonably practicable following the prescribingphysician’s request for same, provided that an Approved Order for the patienthas been received by DJO.

 

5.7           DJOshall use diligent efforts, at its sole cost and expense, to obtain andmaintain patents covering the Products in the United States.  DJO shall keep DePuy Spine informed on acurrent basis of the status of any such effort.

 

5.8           Exceptas provided in Section 6.10, DJO shall pay all expenses, costs, overhead, debtsand obligations incurred by DJO in its fulfillment of its obligations underthis Agreement.  Such expenses shallinclude travel, room and board, and entertainment.  Except as provided in Section 6.10, under nocircumstances shall DePuy Spine be liable to reimburse DJO or any of its salesrepresentatives or distributors for any of such expenditures incurred by DJO orits sales representatives or distributors.

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requestedwith respect to the omitted portions.

 

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5.9           DJOshall, at its expense except as provided in Section 6.10, furnish DePuy Spineand its Distributors with such quantities of Product-related, jointly branded(DJO and DePuy Spine) printed promotional materials, video productions,clinical data, instructions for use, patient guides and such other marketing,promotional and informational materials, as DePuy Spine shall reasonablyrequest from time to time in connection with its activities hereunder; providedthat the content and appearance of such materials shall be subject to DePuySpine’s prior written approval; and provided, further, that DJOshall not be obligated to furnish or pay for any such materials that alsofeature DePuy Spine’s other products, which DePuy Spine shall have the right toprepare and distribute at its own expense.

 

**6.0          OBLIGATIONSOF DEPUY SPINE**

 

6.1           Subject to DJO’s rights pursuant toArticle 9, DePuy Spine may initiate, conduct, suspend or terminate DePuy Spine’sactivities relating to the marketing and sale of Products as DePuy Spine, inits sole and absolute discretion, deems appropriate and adequate, provided thatsuch activities are conducted in a manner that does not violate any applicablefederal or state laws and regulations. Subject to, and without limiting the scope of, DePuy Spine’s discretionpursuant to the foregoing, DePuy Spine may undertake marketing and salesactivities, including conducting advertising, distributing marketing literatureand displaying Products at professional and trade shows, as DePuy Spine deemsdesirable to promote and obtain orders for the Products in the United States soas to achieve or exceed the Sales Minimums set forth in Article 9 below.  In connection with its activities hereunder,DePuy Spine shall not solicit any patients directly with respect to Products.

 

6.2           DePuy Spine, with the assistance ofDJO, shall train DePuy Spine’s domestic field sales force with respect to theuse of the Products.

 

6.3           All written sales, promotion,training, customer education and marketing materials and press releases issuedby DePuy Spine or DJO, to the extent relating to the other party or to Productsor the sale of Products, shall be approved in writing by both DJO and DePuySpine prior to use in the marketplace.

 

6.4           Representatives of DePuy Spine andDJO, respectively, shall meet at least once before October 15 of each year, ona day and at a location mutually convenient, in an effort to develop a mutuallyacceptable marketing plan for Products for the following sales year in theExclusive Territory.  The final marketingplan shall be left solely to the discretion of DePuy Spine.

 

6.5           Subject to Section 6.1, DePuy Spinewill be responsible for representing Products in the marketplace and providingcustomer education and other related services in the Territory.  Additionally, DePuy Spine shall include aProduct display that is jointly branded at all appropriate trade shows andconventions at which DePuy Spine maintains a booth, at no cost to DJO.

 

6.6           DePuySpine shall promptly route directly to DJO all inquiries relating to Products,including medical product inquiries, technical inquiries, product complaints, safetyor

 

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compliance issues, billing issues, adverse reactions and adverseevents.  DePuy Spine shall also routedirectly to DJO any requests received from customers for no-charge ordiscounted Products for indigent patients.

 

6.7           DePuy Spine will report to DJO anyand all complaints from any source and medical device reports received withrespect to Products within the time required by applicable law andregulations.  DePuy Spine will maintain arecord of all complaints it receives consistent with FDA guidelines.

 

6.8           DePuy Spine shall display and deliveronly Products that are marked and packaged by DJO or as otherwise specified inadvance by mutual agreement of the Parties.

 

6.9           DePuySpine or its employees and Distributors shall provide from the treatingphysician, or direct the treating physician or the physician’s staff to providedirectly to DJO, a written prescription order form for the purchase of theProducts.

 

6.10         So long as they are pursuant to abudget capped at 2% of projected sales in the Exclusive Territory for the nextyear and agreed to by the Parties in advance, DePuy Spine and DJO will share,on a 50-50 basis, the direct expenses (excluding direct employees and relatedtravel expenses) of producing, printing or otherwise reproducing such marketingand promotional materials as DePuy Spine or its Distributors may request fromDJO relating to the Products, including printed promotional materials and videoproductions.  DePuy Spine shall not berequired to bear any costs or expenses to the extent related to thedevelopment, production or reproduction of marketing and promotional materialsfor anyone other than DePuy Spine and its Distributors.  DePuy Spine shall have the right to producemarketing and promotional materials for the Products independently of DJO,subject to DJO’s approval (not to be unreasonably withheld) as to the contentof such materials, and DJO shall have no right or license to any copyrightableworks contained therein that are created by or on behalf of DePuy Spine.

 

6.11         Except as provided in Section 6.10,DePuy Spine shall pay all expenses, costs, overhead, debts and obligationsincurred by DePuy Spine in its fulfillment of its obligations under thisAgreement.  Such expenses shall includetravel, room and board, and entertainment. Except as provided in Section 6.10, under no circumstances shall DJO beliable to reimburse DePuy Spine or any of its Distributors for any of suchexpenditures incurred by DePuy Spine or its Distributors.

 

6.12         DePuy Spine shall be responsible forall compensation, payroll taxes, facilities and related expenses for employeesof DePuy Spine.

 

6.13         DePuySpine shall provide a list of all employees and Distributors that will provideservices in connection with this Agreement (collectively, “ProductRepresentatives”).  During the termof this Agreement, DePuy Spine agrees that its current and future ProductRepresentatives shall, upon DJO’s request, receive compliance training on anyDJO compliance policies and procedures which are not encompassed by DePuy Spine’sexisting corporate compliance program. Any such compliance training on DJO compliance policies shall beconducted by DJO.  DJO shall submitcompliance training materials to DePuy Spine’s counsel

 

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for approval prior to presenting same to the DePuy Spine sales force.

 

6.14         DePuySpine understands and acknowledges that, from time to time, DJO may requirechanges to its compliance program to encompass changes in third-party payorrequirements or any other changes required by law.  To the extent such changes are not reflectedin DePuy Spine’s existing compliance program, DePuy Spine shall provide anysupplemental compliance training materials furnished by DJO to DePuy Spine’sProduct Representatives.

 

6.15         IfDJO determines that any Product Representative is (a) acting in a manner inviolation of DJO ‘s compliance program (other than an aspect of the complianceprogram that is not encompassed by DePuy Spine’s compliance program and has notbeen included in materials or training furnished by DJO); or (b) is acting in amanner that is detrimental to the operations of DJO’s customers and patients;then DJO shall notify DePuy Spine in writing, of the name of the ProductRepresentative and the basis for such determination.  Within fifteen (15) business days of suchwritten notice, DePuy Spine shall review the matter, and shall notify DJO ofthe action DePuy Spine proposes to take with respect to such ProductRepresentative.  If following anyremedial action by DePuy Spine such violations or detrimental actions continue,and DJO requests the removal of the Product Representative from providing anyservices under this Agreement, DePuy Spine shall promptly remove the ProductRepresentative from providing any services under this Agreement.

 

**7.0          TECHNICAL, SALES AND PROCESSINGSUPPORT BY DJO**

 

7.1           DJO shall provide such technical,sales, order processing and payment processing support as DePuy Spine and itsDistributors may reasonably request from time to time to facilitate theireffective promotion of, and the fulfillment of orders for, the Products.  Such support and assistance shall be providedin the same manner and with the same priority as DJO provides such support andassistance to its other customers and distributors generally.  DJO shall maintain, at its own expense,field-based personnel in such numbers and locations as shall be reasonablyadequate to provide such support and assistance to DePuy Spine and itsDistributors on a regional or local basis. The support and assistance to be provided pursuant to this Section shallinclude but not be limited to the provision of technical information regardingproduct specifications, features, capabilities and troubleshooting, theprovision of information requested by or concerning third-party payors andreimbursement programs, and communication and cooperation with such payors andreimbursement programs on behalf of customers and DePuy Spine and itsDistributors, as the case may be.

 

**8.0          PATIENT SERVICE AND REIMBURSEMENT**

 

8.1           DJO shall be responsible forprocessing all U.S. orders for Products once a valid prescription order form orcommercial order form is obtained by DePuy Spine.  This processing by DJO includes commerciallyreasonable efforts to obtain all necessary supporting documents, the priorauthorization of the prescription with the patient’s insurance company and thegeneration of any additional paperwork required to process the prescription forpayment.  It is understood that from timeto time DJO may elect to employ one or more independent contractors

 

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to perform portions of its obligations under this Agreement as deemedappropriate by DJO, including any required follow up with prescribingphysicians to obtain supporting documents, and that such independentcontractors shall be acting solely on behalf of DJO when obtaining suchsupporting documents even though such independent contractors may be persons orentities with which or whom DePuy Spine also has an independent contractorrelationship, including Distributors.

 

8.2           DJO shall be responsible for thenegotiation of Product reimbursement pricing for its managed care payorcontracts,  Centers for Medicare andMedicaid Services (CMS) and State Medicaid programs and with any futurethird-party payor identified by DJO.

 

8.3           DJO will also be responsible forPatient Placement of Products in the U.S. once the authorization from thepatient’s insurance company is received.

 

**9.0          SALES MINIMUMS AND SALES QUOTAS**

 

9.1           During the initial period comprisedof 2001 and that portion of 2000 after DePuy Spine has commenced sales, andeach calendar year thereafter (each a “Measurement Period”), insofar as DePuySpine desires that its exclusive rights in the Exclusive Territory grantedhereunder not be subject to conversion to non-exclusive rights, pursuant tothis Section 9.1, DePuy Spine shall obtain, directly or through itsDistributors, customer orders for the Products in quantities that equal orexceed Sales Minimums in either units or dollars applicable to each MeasurementPeriod, or, to the extent of any shortfall, make payment to DJO in accordancewith Section 9.3 below; provided that for purposes of this Article 9,all customer orders for Products in the Exclusive Territory shall count towardthe fulfillment of the Sales Minimums, regardless of who obtains the order ormakes the sale of such Products. Accordingly, if total orders for Products received by DJO during any MeasurementPeriod do not equal or exceed the Sales Minimums in either units or dollarsapplicable to such Measurement Period, and DePuy Spine does not make payment toDJO with respect to the shortfall pursuant to Section 9.3 below, DJO may, atits option, convert DePuy Spine’s exclusive rights in the Exclusive Territoryto non-exclusive rights.  In the eventDJO desires to exercise such option, it shall, within 60 days following the endof the applicable Measurement Period, first deliver to DePuy Spine a writtennotice (each a “Conversion Notice”) which shall (i) include a statement by DJOadvising that the Sales Minimum applicable to the Measurement Period identifiedin such notice has not been achieved, (ii) specify the deficiency in terms ofunits and dollar amount, (iii) state the total amount of DJO Net Profit (asdefined below) applicable to the deficiency, and (iv) communicate DJO’sintention to convert DePuy Spine’s rights in the Exclusive Territory tonon-exclusive rights pursuant to this Article 9.  Unless DePuy Spine makes payment to DJO withrespect to the deficiency pursuant to Section 9.3, DJO shall be entitled toexercise its foregoing option, but any failure by DePuy Spine to achieve SalesMinimums in either units or dollars or make payment to DJO with respect to theshortfall shall not constitute a breach by DePuy Spine of any of itsobligations under this Agreement, and shall not entitle DJO to terminate thisAgreement or to claim or receive payment for any damages or equitable relief.  If DePuy Spine’s rights in the ExclusiveTerritory are converted to non-exclusive rights, DJO may either assign directsales employees or appoint third-party independent distributors, or both, topromote the Products anywhere in the world.

 

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9.2           If, as of November 1 of each year,DePuy Spine is not tracking the Sales Minimums in either units or dollars, thepresidents of each of the Parties, or their designated representatives, shallmeet by November 15 of each applicable year to discuss available options forremedy.

 

9.3           DePuy Spine shall have the option, inits sole and absolute discretion, to retain its exclusive rights in theExclusive Territory notwithstanding a failure to achieve the Sales Minimums ineither units or dollars during any Measurement Period by making payment to DJO,within 45 days of DePuy Spine’s receipt of a Conversion Notice from DJOconcerning such failure, equal to the total of DJO Net Profits applicable tothe volume of Products, or, as the case may be, gross sales dollar volume,deficiency.  For purposes hereof, “DJONet Profits” shall mean the (i) amount by which (a) the average sales priceat which DJO sold the Products to customers within the Exclusive Territoryduring the three months preceding such Conversion Notice exceeds (b) the sum ofthe average direct and indirect manufacturing costs incurred by DJO tomanufacture Products during such three-month period, plus the sales commissionsthat would have been payable to DePuy Spine pursuant to Section 12.2,multiplied by (ii) the number of units comprising the deficiency of achievingthe Sales Minimum or, in the event such deficiency is measured in dollars, thenumber of units, based upon the foregoing average sales price, which are representedby such sales dollar deficiency, whichever is less.

 

9.4           The Sales Quota for calendar year2005 is as set forth on Exhibit C attached hereto.  For purposes of determining whether DePuySpine has met its Sales Minimums and Sales Quotas, for each non-overlapping30-day period in which DJO is unable to supply Products for at least 10 days inamounts consistent with DePuy Spine’s then current forecast pursuant to Section10.1, one month’s quota will be deducted from the Sales Minimum for the currentyear.

 

9.5           DJO and DePuy Spine will agree uponSales Quotas for each calendar year after 2005 by October 15 of the previousyear. If the parties are unable to agree on Sales Quotas by this deadline, theneither Party may send the other Party a written notice invoking the right toarbitrate and, the parties shall engage in arbitration as provided in Section19.2 in order to set Sales Quotas.  Sucharbitration shall take place within 60 days of receipt of such notice.  The parties shall continue to use the previousyear’s Sales Quotas until Sales Quotas are set through arbitration.

 

**10.0        ORDERS,DELIVERIES AND FORECASTS**

 

10.1         DePuy Spine will supply DJO with anon-binding written 12-month rolling Product forecast, in units, updated on aquarterly basis.  Such forecast shall beprovided to DJO  no later than October 1of each year with respect to the next calendar year.  DePuy Spine shall also supply DJO with anon-binding written quarterly update no later than 15 days after the beginningof each quarter with respect to such quarter.

 

10.2         DePuy Spine shall submit requests forquotes, sales inquiries and customer complaints on such forms as may beapproved in advance by DJO for such purpose. All orders are subject to written acceptance by DJO at its principaloffices. DePuy Spine shall have no 

 

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liability for any order cancelled by a customer.

 

10.3         DePuy Spine shall not be entitled toaccept payments on behalf of DJO, nor shall DePuy Spine quote prices tocustomers other than as set forth in DJO’s published price lists or pursuant tosuch discount, rebate or other promotional pricing programs as DJO may makeavailable from time to time (a) for quotation by any of its other salesrepresentatives in the Territory or (b) to DJO’s direct customers (includingbut not limited to both end users and distributors) in the Territory thatqualify for such pricing, it being understood that the prices at which DJO’sdistributors (which, unlike sales agents, take title to and resell Products)resell Products may be lower than the prices that DePuy Spine is permitted toquote hereunder.

 

10.4         DJO shall ship and deliver Productsordered through DePuy Spine to customers. All costs of transportation and shipping shall be paid by DJO, or DJO,at its option, may bill customers for costs of transportation andshipping.  In no event will DePuy Spinebe responsible for costs of transportation and shipping.

 

10.5         DJO shall promptly provide a PatientPlacement date confirmation upon acceptance of any Approved Order.  DJO shall exert commercially reasonableefforts to meet the ship date stated on the customer quotation; provided,however, that shipment of the Products is subject to availability and to DJO’snormal lead times as quoted to DePuy Spine and DJO’s other distributors and/orCustomers from time to time.  In case ofany delay or failure in delivery resulting in order cancellation, in additionto DePuy Spine’s other remedies under this Agreement, a per unit adjustmentwill be made to DePuy Spine’s annual Sales Quotas.

 

**11.0**        **PRODUCT PRICE**

 

11.1         DePuy Spine shall market and promotethe Products in accordance with DJO’s standard price list in effect from timeto time and such discount, rebate and other promotional pricing programs as DJOmay make available from time to time (a) for quotation by any of its othersales representatives in the Territory or (b) to DJO’s direct customers(including but not limited to both end users and distributors) in the Territorythat qualify for such pricing.  DJO shallgive DePuy Spine advance written notice of all such pricing programs with theexpress understanding that DePuy Spine may quote such prices to all customersthat may be eligible for such pricing, pursuant to the terms of such program,through DePuy Spine, DJO or any of DJO’s other sales representatives ordistributors.  Notwithstanding theforegoing, the prices at which DJO’s distributors (which, unlike sales agents,take title to and resell Products) resell Products may be lower than the pricesthat DePuy Spine is permitted to quote hereunder.

 

11.2         Prices established in the DJO pricelist are exclusive of all sales or use taxes, tariffs, customs duties and othergovernment charges, shipping and/or mailing costs and insurance.  DePuy Spine shall not bear any responsibilityfor the expenses listed in the preceding sentence.

 

**12.0        COMMISSIONS**

 

12.1         For all DJO Products, “Net Sales Price”shall be the amount invoiced to the

 

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patient or any other purchaser or any third party payor, less any tradeor cash discounts, returns, taxes, tariffs, customs duties and other governmentcharges, shipping and/or mailing costs and insurance to the extent they areincluded in the invoice price.

 

12.2         For each calendar year hereunder, DJOwill pay to DePuy Spine commissions on all sales of Products anywhere in theTerritory during such year pursuant to orders solicited or submitted by DePuySpine, and on such other sales in the Exclusive Territory as is otherwise requiredby Section 3.1.  All commissions shall bepaid at the rate of ***% of the Net Sales Price on such sales up to andincluding the applicable Sales Quota for such year and at the rate of ***% ofthe Net Sales Price on all such sales in excess of the applicable Sales Quotain such year.

 

12.3         A sale of a Product shall be deemed tohave occurred at the time that DJO has invoiced the patient or any otherpurchaser or the third party payor for the Product. All commissions payablehereunder shall accrue monthly on the last day of each calendar month withrespect to all Products invoiced during such month.  Commissions shall be paid monthly on orbefore the last day of each calendar month with respect to all Products invoicedduring the preceding month.  Commissionpayments shall also reflect any appropriate adjustments in accordance withSection 12.1. Each commission payment shall be accompanied by a statementshowing the commissions accrued and adjustments made for the preceding monthand any other information necessary for the proper determination of the amountof commissions payable hereunder.

 

12.4         DJO shall furnish DePuy Spine with areport by the 20th day of each month, which shall include (i) a list ofaccounts that have placed orders for Products during the prior month with theNet Sales Price and third party payor reimbursement rates for Products; (ii) alist of accounts where Products have been invoiced during the prior month; and(iii) disposition of all orders placed during the prior month.

 

12.5         DJO shall keep accurate books ofaccount containing information which may be necessary for the purpose ofdemonstrating the commissions payable to DePuy Spine. Said books shall beavailable to DePuy Spine during normal business hours upon written request toDJO and may be audited and inspected by an independent public accountantselected by and paid for by DePuy Spine for the purpose of verifying thestatements of DJO and the commissions payable to DePuy Spine.  If the independent public accountantconducting the audit determines that an underpayment in commissions hasoccurred, then DJO shall pay the outstanding amount due to DePuy Spine withinthirty (30) days.  If the underpayment incommissions totals 2% or more of the amount due, then DJO shall also pay the reasonablecosts of the audit.  If the outstandingamount of unpaid commissions is not paid to DePuy Spine within thirty (30)days, then the unpaid amount of commissions shall accrue interest at thegreater of 1-1/2% per month or the legal rate allowed by statute.

 

**13.0        REPRESENTATIONS AND WARRANTIES**

 

13.1         Product Warranties.  DJO represents and warrants to DePuy Spinethat all Products supplied in connection with this Agreement shall be ofmerchantable quality, free from material defects in material and workmanship,and shall be manufactured and provided in

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requestedwith respect to the omitted portions.

 

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accordance and conformity with the specifications for the Products andin compliance with this Agreement.  DJOrepresents and warrants that it shall comply with all material present andfuture statutes, laws, ordinances and regulations relating to the manufacture,assembly, packaging, labeling and supply of the Product, including, but notlimited to, those enforced by the FDA (including compliance with Quality SystemRegulations) and International Standards Organization Rules 9,000 et seq.

 

13.2         Execution and Performance ofAgreement.  DJO and DePuy Spine eachrepresents and warrants to the other that it has full right, power andauthority to enter into and perform its obligations under this Agreement.  DJO and DePuy Spine each further representsand warrants to the other that the performance of its obligations under thisAgreement will not result in a violation or breach of, and will not conflictwith or constitute a default under any agreement, contract, commitment or obligationto which such Party or any of its Affiliates is a party or by which it is boundand that it has not granted and will not grant during the term of thisAgreement or any renewal thereof, any conflicting rights, license, consent orprivilege with respect to the rights granted herein.

 

13.3         Intellectual Property.  DJO represents and warrants to DePuy Spinethat DJO owns all of the rights, title and interest in and to or otherwise hasthe necessary licenses to use the patents, trademarks, know-how and all otherintellectual property that appear on or are otherwise used in connection withthe Products; no academic institution, member of an academic institution,corporation or other entity, or any local, state or federal government holdsany property rights inconsistent with DJO’s property rights in any Product asdescribed above; the manufacture, use and sale of the Products in accordancewith the terms of this Agreement does not infringe any third party’s rightsunder any patent; the use by DePuy Spine hereunder of the trademarks used byDJO in connection with the Products does not and will not infringe the rightsof any third party; the use or reproduction by DePuy Spine of the promotionalmaterials furnished by DJO as contemplated hereunder does not and will notinfringe the copyright of any third party; and DJO has received no notice orclaim with respect to infringement of a third party’s intellectual propertyrights, including but not limited to a notice letter either notifying DJO of athird party’s patent or alleging infringement of a third party patent; and DJOis presently aware of no infringement by any third party of any patent or anytrademark relating to the Products.

 

13.4         Compliance.

 

a.             DePuySpine represents and warrants that neither DePuy Spine nor any of its employeesor Distributors that provide services under this Agreement have been excluded,debarred or otherwise are ineligible for participation in federal healthcareprograms (as defined in 42 U.S.C. Section 1320a-7(i)) or have been convicted ofa criminal act related to healthcare (as defined in 42 U.S.C. Section1320a-7(i)).

 

b.             DePuySpine represents and warrants that neither DePuy Spine nor, to its knowledge,any of its employees or any representatives of any of its distributors engagedto provide services hereunder owns or operates a Medicare Part B durablemedical equipment, prosthetics, orthotics, and medical supply supplier businessor works, in any manner, for any physician or hospital that is in a position torefer or recommend DJO or the Products covered by 

 

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this Agreement.

 

c.             DePuySpine represents and warrants that it has implemented a corporate complianceprogram, a copy of which has been provided to DJO.  On an annual basis, DePuy Spine shall providea written certification to DJO that annual compliance training on the DePuySpine compliance program has been furnished to all relevant DePuy Spineemployees and Distributors providing services under this Agreement.

 

**14.0        INDEMNIFICATION**

 

14.1         Indemnification by DJO.  DJO shall indemnify and hold harmless DePuySpine, its Affiliates and their respective officers, directors, employees,agents and representatives from and against any and all damages, liabilities,claims, costs, charges, judgments and expenses (collectively “Damages”)incurred by such person(s) that arise out of or result from claims by thirdparties:  (a) to the extent caused by thefault or negligence of DJO, its Affiliates or their respective officers,employees or agents; (b) related to any Products as supplied by DJO, or arisingfrom or related to any claimed hazard or defect in any Products whethermanufacturing, design or otherwise, including but not limited to DJO’s failureto warn of hazards, or any breach of express or implied warranties made by DJO;(c) of failure by DJO to comply with the terms of the applicable DJO Productwarranty; (d) of failure by DJO to comply with applicable laws and/orregulations relating to the manufacture, sale and/or transport of any Product;(e) that any Product supplied by DJO infringes any patent, copyright, tradesecret or other proprietary right of a third party; (f) related to any othermatter which is the responsibility of DJO as determined in accordance withapplicable law of the jurisdiction relating to the sale of any Product by DJOwhich is the subject of claim or dispute; (g) related to termination of DJO’ssales representatives, distributors or agents as contemplated in Article 2; or(h) to the extent arising from the action of any independent contractor ofDePuy Spine in the course of performing services on behalf of DJO in connectionwith this Agreement, provided that the indemnity in this clause (h) shall notapply to any Damages arising from any action or inaction of an independentcontractor of DePuy Spine in the course of performing services on behalf ofDePuy Spine or pursuant to any agreement with DePuy Spine.

 

14.2         Indemnification by DePuy Spine.  DePuy Spine shall indemnify and hold harmlessDJO, its Affiliates and their respective officers, directors, employees, agentsand representatives from and against any and all Damages incurred by suchperson(s) that arise out of or result from claims by third parties to theextent caused by the fault or negligence of DePuy Spine or its respectiveofficers, employees or agents.

 

14.3         Claims.   Promptly after receipt by a DePuy Spine orDJO indemnitee of information concerning the commencement of any claim, demand,action, suit or proceeding (collectively, “Action”) which is the subject of theother Party’s indemnification obligations hereunder, the indemnitee shallnotify the other Party of the commencement of the Action.  Any failure to provide such notice shall onlyrelieve the other Party of its indemnification obligations hereunder to theextent it has been materially prejudiced by such failure.  The indemnifying Party shall have sole rightto select and retain attorneys to assert or negotiate, and the sole right to 

 

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control, the defense and any settlement of the Action, to the extent ofsuch Party’s corresponding indemnification and defense obligations, except thatunder no circumstances shall the indemnifying Party, without the prior writtenconsent of the indemnitee, enter into any settlement that involves an admissionof liability, negligence or other culpability by the indemnitee, imposes anyinjunction or other restriction on the indemnitee or requires the indemnitee tocontribute to the settlement. Without limiting the indemnifying Party’sforegoing right to select and retain attorneys and to sole control of thedefense and settlement of such Action, the indemnitee may, at its own expense,participate in the defense of, or otherwise consult with counsel of its ownchoice in connection with, an Action that is the subject of the other Party’sindemnification and defense obligations.

 

14.4         Infringement.  DePuy Spine shall promptly inform DJO of anyinfringement of DJO’s patents or trademarks concerning the Products which maycome to the attention of DePuy Spine.  Insuch event, DJO shall take all necessary action, consistent with prudentbusiness judgment, to restrain such infringement, and to recover damagestherefor.  Any damages awarded because oflosses incurred by DePuy Spine shall be the property of DePuy Spine.  Otherwise, any damages recovered from suchaction shall be the property of DJO. DePuy Spine agrees to cooperate, at DJO’s expense for any reasonableout-of-pocket expenses incurred by DePuy Spine, in all stages of suchaction.  If DJO fails to take action toenforce its patents, trademarks or other intellectual property rights and DePuySpine’s ability to sell the Products is adversely affected, DePuy Spine’s SalesQuota shall be reduced to the extent DePuy Spine’s performance is adverselyaffected by DJO’s failure.

 

**15.0        INSURANCE**

 

15.1         DJO agrees to procure and maintain infull force and effect during the term of this Agreement valid and collectibleinsurance policies in connection with its activities as contemplated hereby,which policies shall provide coverage for product liability relating to use ofthe Products in an amount not less than $1 million per occurrence and $3million in the aggregate and for professional liability and comprehensive generalliability in an amount not less than $1 million per occurrence and $3 millionin the aggregate.  The product liabilityand general liability policies (but not the professional liability policy)shall name DePuy Spine as an additional insured vendor.  Upon DePuy Spine’s request, DJO shall provideto DePuy Spine certificate of coverage or other written evidence reasonablysatisfactory to DePuy Spine of such insurance coverage.  Such insurance policy shall provide that inthe event such insurance coverage should be materially adversely changed orterminated for any reason, the insurer thereunder will give DJO and DePuy Spineten (10) days’ prior notice. The existence of such coverage shall in no waylimit DJO’s liability or obligations hereunder.

 

**16.0        COMPETITION**

 

16.1         During the Term, DePuy Spine shall notsell in the Territory an external lumbar spinal bone growth stimulation productthat competes with the Product.  If aDistributor appointed by DePuy Spine engages in the sale of a CompetingProduct, such activity shall not constitute a breach of this Agreement by DePuySpine.

 

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16.2         If DePuy Spine terminates the Agreementupon 120 days’ written notice to DJO, pursuant to the provisions of Section4.4, or if DJO terminates this Agreement for material breach by DePuy Spinewhich remains uncured by DePuy Spine after receipt of written notice of breach,pursuant to the provisions of Section 4.3, then the obligation set forth inSection 16.1 shall continue for a period of 90 days after termination of theAgreement.

 

16.3         If DJO terminates the Agreement upon120 days’ written notice to DePuy Spine pursuant to the provisions of Section4.5, then DePuy Spine shall be relieved, immediately upon receipt of suchnotice of the obligations set forth in Sections 16.1 and 16.2.

 

**17.0        PATENTS, COPYRIGHTS, TRADEMARKS AND TRADENAMES**

 

17.1         Both DJO and DePuy Spine acknowledgethat neither has any rights in any patents, know-how, copyrights, trademarks,trade names, or insignia owned by the other anywhere in the world.  Both DJO and DePuy Spine undertake that theywill not assert any rights in any such intellectual properties arising byreason of this Agreement or the use of any such intellectual propertieshereunder.  Each Party shall use theother Party’s trademarks and trade names in connection with its activitieshereunder but only as and to the extent expressly authorized by thisAgreement.  Without limiting theforegoing, and subject to Section 17.2 below, DJO shall not use, or allow anyof its other sales representatives or distributors to use, any trademark, tradename, trade dress, service mark or copyrighted work of DePuy Spine or itsAffiliates except (a) in signage and promotional materials displayed or handedout by DJO at trade shows and conventions (as contemplated in Section 5.2) asapproved by DePuy Spine and (b) in promotional materials furnished by DJO toDePuy Spine, which shall be solely for use by DePuy Spine and its Distributors.

 

17.2         If either Party desires to use thetrademark(s), name or copyrighted work of the other Party in an advertisement,marketing materials, or promotional literature, or in connection with anyproduct or service, such Party must first seek the prior written approval ofthe Party owning the rights to such trademark, name or copyrighted work.  Such approval shall be within the solediscretion of the other Party. Nothing in this Agreement shall be construed asconferring any general license right to use any copyrighted work or any name,trade name, trademark, or other designation (including contraction,abbreviation or simulation) of either Party by the other Party in advertising,publicity or other promotional activities, or in connection with a product.

 

17.3         Upon termination or expiration of thisAgreement, each Party shall as soon as practicable deliver to the other Partyor its designee free of charge, or certify destruction of, any and allmaterials, including signs, advertising matter and catalogues, containingcopyrighted materials or trademarks or trade names of such other Party then inits possession or in the possession of its employees or agents and shall ceasefrom making further use of any such materials, trademarks or trade names.

 

17.4         This Article 17 shall survivetermination of this Agreement, however arising.

 

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**18.0        CONFIDENTIALITY**

 

18.1         As used herein, “ConfidentialInformation” shall mean all confidential or proprietary information that isreduced to writing, marked as confidential and given to one Party by the otherParty relating to such other Party or any of its Affiliates, includinginformation regarding any of the products of such other party or any of itsAffiliates, information regarding its advertising, distribution, marketing orstrategic plans or information regarding its costs, productivity ortechnological advances.  Neither Partyshall, for three (3) years after such exchange, use or disclose to thirdparties any Confidential Information of the other (except to the extentreasonably necessary to exercise its rights or comply with its obligationsunder this Agreement) and each Party shall insure that its employees, officersand agents shall not, for three years after such exchange, use or disclose tothird parties any Confidential Information of the other (except to the extentreasonably necessary to exercise its rights or comply with its obligationsunder this Agreement) provided, however, that DePuy Spine may discloseConfidential Information of DJO to DePuy Spine’s Affiliates and consultants ifsuch persons are informed of the confidential nature of such information andare under an obligation to keep such information confidential.  Confidential Information shall not include informationthat (i) was already known to the receiving Party at the time of its receiptthereof, as evidenced by its written records, (ii) is disclosed to thereceiving party after its receipt thereof by a third party who has a right tomake such disclosure without violating any obligation of confidentiality, (iii)is or becomes part of the public domain through no fault of the receiving Partyor (iv) is required to be disclosed to comply with applicable laws orregulations or an order of a court or regulatory body having competentjurisdiction, provided the receiving Party gives sufficient notice to thedisclosing Party in a time period sufficient to contest the requirement.  All Confidential Information shall remain theproperty of the disclosing Party. Neither Party shall make copies of any Confidential Information of theother Party without prior written consent and shall upon request by thedisclosing Party promptly return or, at the receiving party’s option, destroyall Confidential Information along with all copies made thereof and all documentsor things containing any portion of any Confidential Information.

 

18.2         Except as otherwise provided in thisAgreement, each of the Parties agrees that it shall restrict the disseminationof the other Party’s Confidential Information only to those persons whoseknowledge of such information is reasonably necessary to the performance of theobligations of the Parties under this Agreement.  The obligations of this Article 18 shallcontinue for a period of three (3) years from the date of termination of thisAgreement.

 

**19.0        DISPUTE RESOLUTION**

 

19.1         Mediation. (a)  Any dispute, controversy or claim arising outof or related to this Agreement, or the interpretation, application, breach,termination or validity thereof, which claim would, but for this provision, besubmitted to arbitration as provided pursuant to Section 19.2 of this Agreementshall, before submission to arbitration, first be mediated through non-bindingmediation in accordance with the Model Procedures for the Mediation of BusinessDisputes promulgated by the CPR Institute for Dispute Resolution, or successor(“CPR”) then in effect, except where those rules conflict with theseprovisions, in which case these provisions control.  A mediation can be initiated upon eitherParty sending a written notice to the other Party stating an intent to initiatemediation.  The mediation shall beconducted in Chicago, Illinois and shall be attended by a senior executive withauthority to resolve the dispute from each Party.

 

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(b) The mediator shall beneutral, independent, disinterested and impartial and shall be selected from aprofessional mediation firm such as ADR Associates for JAMS/ENDISPUTE or DPR.

 

(c)  The Parties shall promptly confer in an effortto select a mediator by agreement.  Inthe absence of such an agreement within 10 days of initiation of the mediation,the mediator shall be selected by CPR in accordance with this Agreement asfollows:  CPR shall provide the Partieswith a list of at least 15 names.  EachParty shall exercise challenges for cause, two peremptory challenges, and rankthe remaining candidates within 5 working days of receiving the CPR list.  The Parties may together interview the threetop-ranked candidates for no more than one hour each and, after the interviews,may each exercise one peremptory challenge. The mediator shall be the remaining candidate with the highest aggregateranking.

 

(d)           The mediator shall confer with theParties to design procedures to conclude the mediation within no more than 45days after initiation.  Under nocircumstances may the commencement of arbitration under Section 19.2 below bedelayed more than 45 days by the mediation process specified herein absentcontrary agreement of the Parties.

 

(e)  Each Party agrees not to use the period orpendency of the mediation to disadvantage the other Party procedurally orotherwise.  No statements made by eitherside during the mediation may be used by the other or referred to during anysubsequent proceedings.

 

(f)  Each Party has the right to pursueprovisional relief from any court, such as attachment, preliminary injunction,replevin, etc., to avoid irreparable harm, maintain status quo, or preserve thesubject matter of the arbitration, even though mediation has not been commencedor completed.

 

19.2         Arbitration/Dispute Resolution.(a)  Any controversy or claim arising outof or relating to this Agreement or the validity, inducement, or breachthereof, shall be settled by arbitration before a single arbitrator inaccordance with the Commercial Arbitration Rules of the American ArbitrationAssociation (“AAA”) then pertaining, except where those rules conflict withthis provision, in which case this provision controls.  The Parties hereby consent to the jurisdictionof the federal district court for the district in which the arbitration is heldfor the enforcement of this provision and entry of judgment on any awardrendered hereunder.  Should such courtfor any reason lack jurisdiction, any court with jurisdiction shall enforcethis clause and enter judgment on any award.

 

(b)  The arbitrator shall be an attorney who hasat least 15 years of experience with a law firm or corporate law department ofover 25 lawyers or was a judge of a court of general jurisdiction for at least10 years.  The arbitration shall be heldin Chicago, Illinois and in rendering the award the arbitrator must apply thesubstantive law of Illinois (except where that law conflicts with this clause),except that the interpretation and enforcement of this arbitration provisionshall be governed by the Federal Arbitration Act.  The arbitrator shall be neutral, independent,disinterested, and impartial and shall abide by The Code of Ethics for Arbitratorsin Commercial Disputes approved by the AAA. Within 45 days of the initiation of arbitration, the

 

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Parties shall reach agreement upon and thereafter follow proceduresassuring that the arbitration will be concluded and the award rendered withinno more than eight months from the selection of the arbitrator.  Failing such agreement, the AAA will designand the Parties will follow procedures that meet such a time schedule.

 

(c)  Each Party has the right before, or if thearbitrator cannot hear the matter within an acceptable period, during thearbitration, to seek and obtain from the appropriate court provisional remediessuch as attachment, preliminary injunction, replevin, etc., to avoidirreparable harm, maintain the status quo or preserve the subject matter of thearbitration.

 

(d)  EACH PARTY HERETO WAIVES ITS RIGHT TO TRIALOF ANY ISSUE BY JURY.  THE DECISION OFTHE ARBITRATOR SHALL BE BINDING UPON THE PARTIES.  THE ARBITRATOR SHALL NOT AWARD ANY PARTYPUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL (INCLUDING LOST SALES OR LOSTPROFITS) DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEKSUCH DAMAGES.  NO PARTY MAY SEEK OROBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS.

 

**20.0        MISCELLANEOUS**

 

20.1         Publicity.  Neither Party hereto shall originate anypublicity, news release, or other announcement, written or oral, whether to thepublic press, the trade, DePuy Spine’s or DJO’s customers or otherwise,relating to this Agreement, or to performance hereunder or the existence of anarrangement between the Parties without the prior written approval of the otherParty hereto, save only such announcements as in the opinion of counsel for theparty making such announcement are required by law to be made.  In the event disclosure is required byapplicable law, then the Party required to so disclose such information shall,to the extent possible, provide to the other Party for its approval a writtencopy of such public disclosure at least two (2) business days prior to disclosure.  Notwithstanding the foregoing, DJO may issuea press release with respect to its entering into this Agreement, provided thatDJO shall provide to DePuy Spine a copy of the proposed press release no lessthan five (5) business days prior to its proposed release.  The contents of such press release shall besubject to DePuy Spine’s consent, such consent not to be unreasonably withheldor delayed.  Neither Party shall use thename of the other Party or any of its Affiliates for advertising or promotionalpurposes without the prior written consent of such Party.

 

20.2         Headings.  The Article and Section headings contained inthis Agreement are for reference purposes only and shall not affect in any waythe meaning and interpretation of this Agreement.

 

20.3         Notices.  All notices and other communications requiredor permitted to be given under this Agreement shall be in writing and shall beconsidered given and delivered when personally delivered to the party to whomsuch notice or communication is addressed or one (1) business day afterposting with an overnight courier or when confirmation is received if sent byfacsimile or five (5) business days after deposit in the United States mail,postage prepaid, return receipt requested, properly addressed to a party at theaddress set forth below, or at such other

 

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address as such party shall have specified by notice given inaccordance with this Section:

 
| If to DJO:         |   | dj Orthopedics, LLC                   |
|--------------------|--------|---------------------------------------|
|               |   | 2985 Scott Street                     |
|               |   | Vista, CA 92081                       |
|               |   | Attention: General  Counsel           |
|               |   | Facsimile No. (760)  734-3536         |
|               |   |                                  |
| If to DePuy Spine: |   | DePuy Spine, Inc.                     |
|               |   | 325 Paramount Drive                   |
|               |   | Raynham, Massachusetts  02767         |
|               |   | Attention: President                  |
|               |   | Facsimile No.:  508-828-3400          |
|               |   |                                  |
| with a copy to:    |   | Johnson & Johnson                 |
|               |   | One Johnson &  Johnson Plaza      |
|               |   | New Brunswick, NJ 08933               |
|               |   | Attention: Office of  General Counsel |
|               |   | Facsimile No.:  732-524-2788          |

 

20.4         Failure to Exercise.  The failure of either Party to enforce at anytime for any period any provision hereof shall not be construed to be a waiverof such provision or of the right of such Party thereafter to enforce each suchprovision. The waiver of any term or condition hereof must be in writing, andany such waiver shall not be construed as a waiver of any other term orcondition of this Agreement.

 

20.5         Assignment.  This Agreement, or any of the rights andobligations created herein, shall not be assigned or transferred, in whole orin part, by either Party hereto without the prior written consent of the other Party;provided, however, that either Party shall have the right to assign any or allof its rights or obligations under this Agreement to any Affiliate, or asuccessor to that part of its business to which this Agreement relates, withoutsuch prior written consent.

 

20.6         Severability.   In theevent that any one or more of the provisions (or any part thereof) contained inthis Agreement or in any other instrument referred to herein, shall, for anyreason, be held to be invalid, illegal or unenforceable in any respect, then tothe maximum extent permitted by law, such invalidity, illegality orunenforceability shall not affect any other provision of this Agreement or anyother such instrument.  Any term orprovision of this Agreement which is invalid, illegal or unenforceable in anyjurisdiction shall, to the extent the economic benefits conferred by thisAgreement to both Parties remain substantially unimpaired, not affect thevalidity, legality or enforceability of any of the terms or provisions of thisAgreement in any other jurisdiction.

 

20.7         Relationship of the Parties.  The relationship of DePuy Spine and DJOestablished by this Agreement is that of independent contractors, and nothingcontained herein shall be construed to (i) give either Party any right orauthority to create or assume any obligation of any

 

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kind on behalf of the other or (ii) constitute the Parties as partners,joint venturers, co-owners or otherwise as participants in a joint or commonundertaking.

 

20.8         Entire Agreement.  It is the desire and intent of the Parties toprovide certainty as to their future rights and remedies against each other bydefining the extent of their undertakings herein.  This Agreement constitutes and sets forth theentire agreement and understanding between the Parties with respect to thesubject matter hereof and is intended to define the full extent of the legallyenforceable undertakings of the Parties hereto, and no promise, agreement orrepresentation, written or oral, which is not set forth explicitly in thisAgreement is intended by either Party to be legally binding.  Each Party acknowledges that in deciding toenter into this Agreement and to consummate the transactions contemplatedhereby it has not relied upon any statements, promises or representations,written or oral, express or implied, other than those explicitly set forth inthis Agreement.  This Agreementsupersedes all previous understandings, agreements and representations betweenthe Parties, written or oral, with respect to the subject matter hereof.

 

20.9         Counterparts.  ThisAgreement may be executed in one or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameinstrument.

 

20.10       Compliance with Law.  Each Party in the performance of thisAgreement, warrants that it and all its directors, officers or employees shallcomply with all applicable local, state, federal and international laws,executive orders, regulations, ordinances, or similar requirements of thenational government or government entity which may now or hereafter govern theperformance of the parties hereunder. This includes, but is not limited to, the laws of the United Statespertaining to procurement integrity, anti-kickback procedures, and otherstandards of ethical conduct pertaining to gratuities, gifts, entertainment,and employment of government officials and other requirements.  Such required conduct also includes, withoutlimitation, compliance at that Party’s expense with all applicable importand/or export control laws and regulations and any other laws and regulationspertaining to export, import, sale and resale or other distribution of theProducts.

 

20.11       Debarment.  By signing this Agreement, either Party shallhave the right to automatically terminate this Agreement in the event that theother Party is debarred, excluded, suspended or otherwise determined to beineligible to participate in federal health care programs (collectively, “Debarred”or “Debarment”).  Accordingly, each Partyshall provide the other Party with immediate notice if it (i) receives noticeof action or threat of action with respect to its Debarment during the term ofthis Agreement; or (ii) becomes Debarred. Upon receipt of such notice, this Agreement shall automaticallyterminate without further action or notice.

 

20.12       Expenses.  Each Party shall pay all of its own fees andexpenses (including all legal, accounting and other advisory fees) incurred inconnection with the negotiation and execution of this Agreement and thearrangements contemplated hereby.

 

20.13       Modifications and Amendments.  This Agreement shall not be modified orotherwise amended except pursuant to an instrument in writing executed anddelivered by each

 

22

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of the Parties hereto.

 

20.14       Construction.  The Parties have participated jointly in thenegotiation and drafting of this Agreement. In the event an ambiguity orquestion of intent or interpretation arises, this Agreement shall be construedas if drafted jointly by the Parties and no presumption or burden of proofshall arise favoring or disfavoring any Party by virtue of the authorship ofany of the provisions of this Agreement.

 

20.15       Governing Law.  This Agreement and its performance shall begoverned by and construed in accordance with the laws of the State of Illinois,without regard to conflict of laws principles, except that the arbitrationprovisions set forth in Article 19 shall be governed by the provisions of theFederal Arbitration Act.

 

20.16       Incorporation of Exhibits.  The Exhibits identified in this Agreement areincorporated herein by reference and made a part hereof.

 

20.17       Binding Agreement.  This Agreement is not binding on either Partyunless and until signed by both Parties.

 

IN WITNESS WHEREOF, the Parties hereto intendinglegally to be bound hereby, have each caused this Agreement to be duly executedas of the date first above written.

 
|   | DJ ORTHOPEDICS,  LLC |
|--------|----------------------|
|   |                 |
|   | By:                  |   /s/  Les Cross |   |
|   |                 | Name: Les Cross |   |
|   |                 | Title: President |
|   |                 |
|   | DEPUY SPINE, INC.    |
|   |                 |
|   | By:                  |   /s/ Earl R.  Fender |   |
|   |                 | Name: Earl R. Fender |
|   |                 | Title: President |

 

23

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**Exhibit A**

 

**Products**

 

SpinaLogic

An external lumbar spinal bone growth stimulator.

 

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**Exhibit B**

 

**Maps of Exclusive Territories**

 

[Seeattached 19 pages of maps]

 

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**Exhibit C**

 

**2005 Sales Quota**

 

| Dollars: |   | $20,930,000 |
|----------|--------|-------------|
|     |   |        |
| Units:   |   | 6,454       |

 

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