Exhibit 10.30


 


AMENDED
AND RESTATED

SALES REPRESENTATIVE AGREEMENT


 


THIS AMENDED AND RESTATED SALES REPRESENTATIVE
AGREEMENT (“Agreement”) is made effective as of January 24, 2005, by and
between dj Orthopedics, LLC, a Delaware limited liability company (hereinafter
referred to as “DJO”), with its principal place of business at 2985 Scott
Street, Vista, CA  92081, and DePuy
Spine, 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 OrthoLogic
Corp., the predecessor to DJO, entered into that certain Sales Representative
Agreement dated August 18, 2000, as amended by that certain Amendment to Sales
Representative Agreement dated August 1, 2001, that certain Amendment to Sales
Representative Agreement dated March 1, 2002, that certain Amendment No. 3 to
Sales Representative Agreement dated September 15, 2003 and that certain letter
dated March 29, 2004 addressed to Mr. Earl Fender of DePuy Spine from Mr. Shane
Kelly of the Regentek division of DJO (hereinafter collectively, the “Original
Agreement”);


 


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


 


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


 


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


 


1.0          DEFINITIONS


 


The following words shall have the following meanings when used in this
Agreement:


 


1.1           “Affiliate” of a Party shall mean any
entity or person that directly or indirectly controls, is controlled by or is
under 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 the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.


 





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1.10         “New
Products” means those DJO bone growth electrical stimulation products
developed, designed, intended or sold for the spine market which perform a
significantly different function or perform in a significantly different manner
or perform for a significantly different indication from Products.


 


1.11         “Sales
Quota” shall mean the targeted annual amount of Product sales to be solicited
by DePuy Spine in the Exclusive Territory as agreed upon by the parties
pursuant to Section 9.5 below, expressed in terms of units and gross sales
dollars.


 


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


 


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


 


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2.0          APPOINTMENT


 


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


 


2.2           DePuy Spine acknowledges that DJO has
an agreement with Vision Quest, a durable medical equipment supplier (“DME”)
based in California, and understands that Vision Quest will continue to sell
Products consistent with the terms and provisions of such agreement and solely
outside the Exclusive Territory, except that Vision Quest may also sell
Products 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 Quest
consistent with the terms of any such agreement, at DePuy Spine’s sole
discretion.  In no event shall DJO permit
Vision Quest to sell or promote Products within the Exclusive Territory (with
the aforementioned exception of San Diego County).


 


2.3           DePuy Spine may appoint one or more
third parties as subagents or subdistributors (individually and collectively, “Distributors”)
to act on its behalf, including without limitation, the DePuy Spine sales network
now or as may be established from time to time, provided that DePuy Spine shall
remain responsible for all of its obligations under this Agreement. DePuy Spine
shall notify DJO in writing of all Distributors appointed pursuant to this
Section, provided that DJO shall treat the identity of DePuy Spine’s
Distributors as DePuy Spine Confidential Information pursuant to the provisions
of Article 18.  DePuy Spine shall not
knowingly appoint any Distributors to sell the Products that are engaged in the
marketing and/or selling of Competing Products. 
To the extent that any DePuy Spine Distributor either continues to
market Competing Products or is unable to market the Products, the Parties
shall consult with each other to consider appropriate actions that might be
taken to address such circumstances. 
During the time period when any DePuy Spine Distributor either continues
to market Competing Products or is unable to market the Products and DePuy
Spine does not cover the affected sales territory (either directly or through
another Distributor), then DJO may use its employees or other distributors to
market Products in such DePuy Spine Distributor’s territory; provided that DJO
shall terminate or discontinue marketing efforts in such territory (if it is
within the Exclusive Territory) promptly after DePuy Spine or one of its
Distributors is able to service such territory.


 


2.4           Provided DJO has first offered the
New Products in writing to DePuy Spine and DePuy Spine has declined the
opportunity to market the New Products in writing, DJO may freely negotiate
with other parties to market the New Products. 
DePuy Spine shall have ninety (90) days from receipt of DJO’s written
offer within which to accept or reject any such opportunity to market New
Products.  In the case in which DJO had
first offered the New Products to DePuy Spine and the parties were unable to
negotiate mutually acceptable terms, DJO is free to contract with other parties
provided DJO does not accept terms inferior to DePuy Spine’s last offer.  In the case in which the third party’s
offered final terms are equal to or inferior to DePuy Spine’s last offer, DJO
will 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 hereinafter
defined), DJO shall not, with respect to all or any part of the Exclusive
Territory, enter into or be party to any distribution, marketing, sales
representative or like agreement related to the Products with any person other
than DePuy Spine or its Affiliates, nor shall DJO give any such other person
any rights to sell, promote or otherwise commercially exploit Products in the
Exclusive 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 promotion
by DJO’s agents and representatives, wherever located, of Products either in
the Exclusive Territory or to customers in the Exclusive Territory.  In order to better protect DePuy Spine’s
exclusive rights hereunder and to preserve the intended economic benefits
thereof, DJO agrees to pay DePuy Spine its commission pursuant to Section 12
with respect to each sale of Products in the Exclusive Territory, regardless of
who makes the sale or solicits the order for the sale.  This Section 3.1 is not intended to prohibit
or limit DJO sales management personnel from assisting or supporting DePuy
Spine’s activities hereunder pursuant to a specific request by DePuy Spine,
provided such personnel’s activities are conducted solely in conjunction with
DePuy Spine and not independently.


 


4.0          TERM AND TERMINATION


 


4.1           The term (“Term”) of this Agreement
shall continue, unless terminated early as provided in this Article 4, until
August 18, 2010.


 


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


 


4.3           This Agreement may also be terminated
if a Party is in material breach of this Agreement provided the non-breaching
Party has provided at least forty-five (45) days prior written notice
identifying the breach and such breach has not been cured within said
forty-five (45) days.


 


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


 


4.5           This Agreement may be terminated by
DJO 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 Products
ever becomes less than $***.


 


4.6           This
Agreement may be terminated immediately by DePuy Spine upon written notice to
DJO if DePuy Spine, its Affiliates or DJO receive a notice that a third party
has filed suit alleging that any Product infringes in whole or in part any
aspect of any U.S. patent or any


 










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


 


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reissue or re-examination thereof.


 


4.7           The provisions of this Agreement set
forth in Section 4.8 and Articles 14, 17, 18, 19, 20, and any other provisions
which by their terms survive termination, and any remedies for the breach
thereof, shall survive the termination of this Agreement under the terms
hereof.


 


4.8           Notwithstanding
the termination of this Agreement for any reason, each Party hereto shall be
entitled 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 Party
hereto of any of the terms of this Agreement. 
Termination of this Agreement for any reason shall be without prejudice
to DePuy Spine’s right to receive all payments accrued and unpaid on the
effective date of termination and shall not release either Party hereto from
any liability which at such time has already accrued or which thereafter
accrues from a breach or default prior to such expiration or termination, nor
affect in any way the survival of any other right, duty or obligation of either
Party hereto which is expressly stated elsewhere in this Agreement to survive
such termination.


 


5.0          OBLIGATIONS OF DJO


 


5.1           DJO
shall use commercially reasonable efforts to supply Products for customer
orders on a timely basis.  If Products
become unavailable during the Term for any reason, except where demand exceeds
125% 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 four
consecutive weeks, the Sales Quota applicable to that year, pursuant to Article
9 below, shall be reduced by an amount equal to (i) the average monthly volume
of orders received by DJO during the preceding six months, multiplied by (ii)
the number of consecutive four-week periods during which such Products are
unavailable for any 15 days.  If Products
become unavailable due, in whole or in part, to a circumstance affecting DJO’s
ability to manufacture Products, and the Products continue to be unavailable
due to such circumstance for more than any 15 days in a given four consecutive
weeks, the presidents of the Parties or their designated representatives shall
meet to determine the best means to make Products available to the market, and
in that regard, will consider, in part, the possibility that DePuy Spine will
manufacture or have manufactured Products until production by DJO has
resumed.  DePuy Spine wants assurance of
continued supply of Product.  If DJO
cannot supply the Product necessary to meet demand for a continuous period of
30 days, then DePuy Spine shall have the right to any and all licenses,
manufacturing plans, and technology, etc. that would allow DePuy Spine to find
an alternative source for the supply of such Product until DJO can resume
adequate supply of Product.  DJO hereby
grants DePuy Spine an irrevocable, perpetual, non-exclusive paid up, royalty
free license and/or right to all licenses, manufacturing plans, patents and know
how related to the Products, which DePuy Spine agrees to exercise on the terms
set forth in this Section 5.1.


 


5.2           DJO
will be responsible for Product development, manufacturing, testing, quality
control, supply, distribution, regulatory approvals and clearances, customer
service, shipping, Patient Placement and billing, as well as for obtaining the
necessary supporting documents for billing as provided in Section 8.1
hereof.  Additionally, at all appropriate
trade shows and conventions where DJO maintains a booth, DJO shall, at no cost
to 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           DJO
shall report to DePuy Spine any and all complaints received by DJO and any and
all medical device reports prepared by DJO with respect to Products within the
time required by applicable law and regulations, and, in any case, within a
reasonably prompt time following DJO’s receipt or preparation of the same.  DJO shall maintain a record of all complaints
it receives consistent with guidelines and requirements of the U.S. Food and
Drug Administration (“FDA”) or any other governmental agency or instrumentality
that may have jurisdiction over the Products, including, if a “CE” mark or
other European regulatory clearance or approval is obtained for any Product,
the applicable guidelines and requirements of the European Union.


 


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


 


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


 


5.6           DJO
shall maintain adequate and competent personnel to manufacture, store and
deliver, obtain supporting documents as provided in Section 8.1 hereof, perform
Patient Placement, and prepare invoices and any other manufacturer-generated
materials necessary to enable DJO to invoice purchasers and third-party payors
in connection with the sale of Products, and such manufacture, storage, sales,
collection of supporting documents, delivery, Patient Placement and invoicing
shall be undertaken and effected in a manner that does not violate any
applicable federal, state or foreign laws and regulations, and otherwise, in a
manner that is in accordance with the provisions of DJO’s Corporate Compliance
Program.  DJO shall perform Patient
Placement as promptly as is reasonably practicable following the prescribing
physician’s request for same, provided that an Approved Order for the patient
has been received by DJO.


 


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


 


5.8           Except
as provided in Section 6.10, DJO shall pay all expenses, costs, overhead, debts
and obligations incurred by DJO in its fulfillment of its obligations under
this Agreement.  Such expenses shall
include travel, room and board, and entertainment.  Except as provided in Section 6.10, under no
circumstances shall DePuy Spine be liable to reimburse DJO or any of its sales
representatives or distributors for any of such expenditures incurred by DJO or
its sales representatives or distributors.


 










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


 


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5.9           DJO
shall, at its expense except as provided in Section 6.10, furnish DePuy Spine
and 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 reasonably
request from time to time in connection with its activities hereunder; provided
that the content and appearance of such materials shall be subject to DePuy
Spine’s prior written approval; and provided, further, that DJO
shall not be obligated to furnish or pay for any such materials that also
feature DePuy Spine’s other products, which DePuy Spine shall have the right to
prepare and distribute at its own expense.


 


6.0          OBLIGATIONS
OF DEPUY SPINE


 


6.1           Subject to DJO’s rights pursuant to
Article 9, DePuy Spine may initiate, conduct, suspend or terminate DePuy Spine’s
activities relating to the marketing and sale of Products as DePuy Spine, in
its sole and absolute discretion, deems appropriate and adequate, provided that
such activities are conducted in a manner that does not violate any applicable
federal or state laws and regulations. 
Subject to, and without limiting the scope of, DePuy Spine’s discretion
pursuant to the foregoing, DePuy Spine may undertake marketing and sales
activities, including conducting advertising, distributing marketing literature
and displaying Products at professional and trade shows, as DePuy Spine deems
desirable to promote and obtain orders for the Products in the United States so
as 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 of
DJO, shall train DePuy Spine’s domestic field sales force with respect to the
use of the Products.


 


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


 


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


 


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


 


6.6           DePuy
Spine shall promptly route directly to DJO all inquiries relating to Products,
including medical product inquiries, technical inquiries, product complaints, safety
or


 


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compliance issues, billing issues, adverse reactions and adverse
events.  DePuy Spine shall also route
directly to DJO any requests received from customers for no-charge or
discounted Products for indigent patients.


 


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


 


6.8           DePuy Spine shall display and deliver
only Products that are marked and packaged by DJO or as otherwise specified in
advance by mutual agreement of the Parties.


 


6.9           DePuy
Spine or its employees and Distributors shall provide from the treating
physician, or direct the treating physician or the physician’s staff to provide
directly to DJO, a written prescription order form for the purchase of the
Products.


 


6.10         So long as they are pursuant to a
budget capped at 2% of projected sales in the Exclusive Territory for the next
year 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 related
travel expenses) of producing, printing or otherwise reproducing such marketing
and promotional materials as DePuy Spine or its Distributors may request from
DJO relating to the Products, including printed promotional materials and video
productions.  DePuy Spine shall not be
required to bear any costs or expenses to the extent related to the
development, production or reproduction of marketing and promotional materials
for anyone other than DePuy Spine and its Distributors.  DePuy Spine shall have the right to produce
marketing and promotional materials for the Products independently of DJO,
subject to DJO’s approval (not to be unreasonably withheld) as to the content
of such materials, and DJO shall have no right or license to any copyrightable
works 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 obligations
incurred by DePuy Spine in its fulfillment of its obligations under this
Agreement.  Such expenses shall include
travel, room and board, and entertainment. 
Except as provided in Section 6.10, under no circumstances shall DJO be
liable to reimburse DePuy Spine or any of its Distributors for any of such
expenditures incurred by DePuy Spine or its Distributors.


 


6.12         DePuy Spine shall be responsible for
all compensation, payroll taxes, facilities and related expenses for employees
of DePuy Spine.


 


6.13         DePuy
Spine shall provide a list of all employees and Distributors that will provide
services in connection with this Agreement (collectively, “Product
Representatives”).  During the term
of this Agreement, DePuy Spine agrees that its current and future Product
Representatives shall, upon DJO’s request, receive compliance training on any
DJO compliance policies and procedures which are not encompassed by DePuy Spine’s
existing corporate compliance program. 
Any such compliance training on DJO compliance policies shall be
conducted by DJO.  DJO shall submit
compliance 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         DePuy
Spine understands and acknowledges that, from time to time, DJO may require
changes to its compliance program to encompass changes in third-party payor
requirements or any other changes required by law.  To the extent such changes are not reflected
in DePuy Spine’s existing compliance program, DePuy Spine shall provide any
supplemental compliance training materials furnished by DJO to DePuy Spine’s
Product Representatives.


 


6.15         If
DJO determines that any Product Representative is (a) acting in a manner in
violation of DJO ‘s compliance program (other than an aspect of the compliance
program that is not encompassed by DePuy Spine’s compliance program and has not
been included in materials or training furnished by DJO); or (b) is acting in a
manner 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 Product
Representative and the basis for such determination.  Within fifteen (15) business days of such
written notice, DePuy Spine shall review the matter, and shall notify DJO of
the action DePuy Spine proposes to take with respect to such Product
Representative.  If following any
remedial action by DePuy Spine such violations or detrimental actions continue,
and DJO requests the removal of the Product Representative from providing any
services under this Agreement, DePuy Spine shall promptly remove the Product
Representative from providing any services under this Agreement.


 


7.0          TECHNICAL, SALES AND PROCESSING
SUPPORT BY DJO 


 


7.1           DJO shall provide such technical,
sales, order processing and payment processing support as DePuy Spine and its
Distributors may reasonably request from time to time to facilitate their
effective promotion of, and the fulfillment of orders for, the Products.  Such support and assistance shall be provided
in the same manner and with the same priority as DJO provides such support and
assistance 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 reasonably
adequate to provide such support and assistance to DePuy Spine and its
Distributors on a regional or local basis. 
The support and assistance to be provided pursuant to this Section shall
include but not be limited to the provision of technical information regarding
product specifications, features, capabilities and troubleshooting, the
provision of information requested by or concerning third-party payors and
reimbursement programs, and communication and cooperation with such payors and
reimbursement programs on behalf of customers and DePuy Spine and its
Distributors, as the case may be.


 


8.0          PATIENT SERVICE AND REIMBURSEMENT


 


8.1           DJO shall be responsible for
processing all U.S. orders for Products once a valid prescription order form or
commercial order form is obtained by DePuy Spine.  This processing by DJO includes commercially
reasonable efforts to obtain all necessary supporting documents, the prior
authorization of the prescription with the patient’s insurance company and the
generation of any additional paperwork required to process the prescription for
payment.  It is understood that from time
to 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 deemed
appropriate by DJO, including any required follow up with prescribing
physicians to obtain supporting documents, and that such independent
contractors shall be acting solely on behalf of DJO when obtaining such
supporting documents even though such independent contractors may be persons or
entities with which or whom DePuy Spine also has an independent contractor
relationship, including Distributors.


 


8.2           DJO shall be responsible for the
negotiation of Product reimbursement pricing for its managed care payor
contracts,  Centers for Medicare and
Medicaid Services (CMS) and State Medicaid programs and with any future
third-party payor identified by DJO.


 


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


 


9.0          SALES MINIMUMS AND SALES QUOTAS


 


9.1           During the initial period comprised
of 2001 and that portion of 2000 after DePuy Spine has commenced sales, and
each calendar year thereafter (each a “Measurement Period”), insofar as DePuy
Spine desires that its exclusive rights in the Exclusive Territory granted
hereunder not be subject to conversion to non-exclusive rights, pursuant to
this Section 9.1, DePuy Spine shall obtain, directly or through its
Distributors, customer orders for the Products in quantities that equal or
exceed Sales Minimums in either units or dollars applicable to each Measurement
Period, or, to the extent of any shortfall, make payment to DJO in accordance
with Section 9.3 below; provided that for purposes of this Article 9,
all customer orders for Products in the Exclusive Territory shall count toward
the fulfillment of the Sales Minimums, regardless of who obtains the order or
makes the sale of such Products. 
Accordingly, if total orders for Products received by DJO during any Measurement
Period do not equal or exceed the Sales Minimums in either units or dollars
applicable to such Measurement Period, and DePuy Spine does not make payment to
DJO with respect to the shortfall pursuant to Section 9.3 below, DJO may, at
its option, convert DePuy Spine’s exclusive rights in the Exclusive Territory
to non-exclusive rights.  In the event
DJO desires to exercise such option, it shall, within 60 days following the end
of the applicable Measurement Period, first deliver to DePuy Spine a written
notice (each a “Conversion Notice”) which shall (i) include a statement by DJO
advising that the Sales Minimum applicable to the Measurement Period identified
in such notice has not been achieved, (ii) specify the deficiency in terms of
units and dollar amount, (iii) state the total amount of DJO Net Profit (as
defined below) applicable to the deficiency, and (iv) communicate DJO’s
intention to convert DePuy Spine’s rights in the Exclusive Territory to
non-exclusive rights pursuant to this Article 9.  Unless DePuy Spine makes payment to DJO with
respect to the deficiency pursuant to Section 9.3, DJO shall be entitled to
exercise its foregoing option, but any failure by DePuy Spine to achieve Sales
Minimums in either units or dollars or make payment to DJO with respect to the
shortfall shall not constitute a breach by DePuy Spine of any of its
obligations under this Agreement, and shall not entitle DJO to terminate this
Agreement or to claim or receive payment for any damages or equitable relief.  If DePuy Spine’s rights in the Exclusive
Territory are converted to non-exclusive rights, DJO may either assign direct
sales employees or appoint third-party independent distributors, or both, to
promote 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, the
presidents of each of the Parties, or their designated representatives, shall
meet by November 15 of each applicable year to discuss available options for
remedy.


 


9.3           DePuy Spine shall have the option, in
its sole and absolute discretion, to retain its exclusive rights in the
Exclusive Territory notwithstanding a failure to achieve the Sales Minimums in
either 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 DJO
concerning such failure, equal to the total of DJO Net Profits applicable to
the volume of Products, or, as the case may be, gross sales dollar volume,
deficiency.  For purposes hereof, “DJO
Net Profits” shall mean the (i) amount by which (a) the average sales price
at which DJO sold the Products to customers within the Exclusive Territory
during the three months preceding such Conversion Notice exceeds (b) the sum of
the average direct and indirect manufacturing costs incurred by DJO to
manufacture Products during such three-month period, plus the sales commissions
that would have been payable to DePuy Spine pursuant to Section 12.2,
multiplied by (ii) the number of units comprising the deficiency of achieving
the Sales Minimum or, in the event such deficiency is measured in dollars, the
number of units, based upon the foregoing average sales price, which are represented
by such sales dollar deficiency, whichever is less.


 


9.4           The Sales Quota for calendar year
2005 is as set forth on Exhibit C attached hereto.  For purposes of determining whether DePuy
Spine has met its Sales Minimums and Sales Quotas, for each non-overlapping
30-day period in which DJO is unable to supply Products for at least 10 days in
amounts consistent with DePuy Spine’s then current forecast pursuant to Section
10.1, one month’s quota will be deducted from the Sales Minimum for the current
year.


 


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


 


10.0        ORDERS,
DELIVERIES AND FORECASTS


 


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


 


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


 


11





















 


liability for any order cancelled by a customer.


 


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


 


10.4         DJO shall ship and deliver Products
ordered 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 and
shipping.  In no event will DePuy Spine
be responsible for costs of transportation and shipping.


 


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


 


11.0        PRODUCT PRICE


 


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


 


11.2         Prices established in the DJO price
list are exclusive of all sales or use taxes, tariffs, customs duties and other
government charges, shipping and/or mailing costs and insurance.  DePuy Spine shall not bear any responsibility
for 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


 


12





















 


patient or any other purchaser or any third party payor, less any trade
or cash discounts, returns, taxes, tariffs, customs duties and other government
charges, shipping and/or mailing costs and insurance to the extent they are
included in the invoice price.


 


12.2         For each calendar year hereunder, DJO
will pay to DePuy Spine commissions on all sales of Products anywhere in the
Territory during such year pursuant to orders solicited or submitted by DePuy
Spine, and on such other sales in the Exclusive Territory as is otherwise required
by Section 3.1.  All commissions shall be
paid at the rate of ***% of the Net Sales Price on such sales up to and
including the applicable Sales Quota for such year and at the rate of ***% of
the Net Sales Price on all such sales in excess of the applicable Sales Quota
in such year.


 


12.3         A sale of a Product shall be deemed to
have occurred at the time that DJO has invoiced the patient or any other
purchaser or the third party payor for the Product. All commissions payable
hereunder shall accrue monthly on the last day of each calendar month with
respect to all Products invoiced during such month.  Commissions shall be paid monthly on or
before the last day of each calendar month with respect to all Products invoiced
during the preceding month.  Commission
payments shall also reflect any appropriate adjustments in accordance with
Section 12.1. Each commission payment shall be accompanied by a statement
showing the commissions accrued and adjustments made for the preceding month
and any other information necessary for the proper determination of the amount
of commissions payable hereunder.


 


12.4         DJO shall furnish DePuy Spine with a
report by the 20th day of each month, which shall include (i) a list of
accounts that have placed orders for Products during the prior month with the
Net Sales Price and third party payor reimbursement rates for Products; (ii) a
list 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 of
account containing information which may be necessary for the purpose of
demonstrating the commissions payable to DePuy Spine. Said books shall be
available to DePuy Spine during normal business hours upon written request to
DJO and may be audited and inspected by an independent public accountant
selected by and paid for by DePuy Spine for the purpose of verifying the
statements of DJO and the commissions payable to DePuy Spine.  If the independent public accountant
conducting the audit determines that an underpayment in commissions has
occurred, then DJO shall pay the outstanding amount due to DePuy Spine within
thirty (30) days.  If the underpayment in
commissions totals 2% or more of the amount due, then DJO shall also pay the reasonable
costs of the audit.  If the outstanding
amount of unpaid commissions is not paid to DePuy Spine within thirty (30)
days, then the unpaid amount of commissions shall accrue interest at the
greater 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 Spine
that all Products supplied in connection with this Agreement shall be of
merchantable quality, free from material defects in material and workmanship,
and shall be manufactured and provided in


 










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


 


13





















 


accordance and conformity with the specifications for the Products and
in compliance with this Agreement.  DJO
represents and warrants that it shall comply with all material present and
future statutes, laws, ordinances and regulations relating to the manufacture,
assembly, packaging, labeling and supply of the Product, including, but not
limited to, those enforced by the FDA (including compliance with Quality System
Regulations) and International Standards Organization Rules 9,000 et seq.


 


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


 


13.3         Intellectual Property.  DJO represents and warrants to DePuy Spine
that DJO owns all of the rights, title and interest in and to or otherwise has
the necessary licenses to use the patents, trademarks, know-how and all other
intellectual property that appear on or are otherwise used in connection with
the Products; no academic institution, member of an academic institution,
corporation or other entity, or any local, state or federal government holds
any property rights inconsistent with DJO’s property rights in any Product as
described above; the manufacture, use and sale of the Products in accordance
with the terms of this Agreement does not infringe any third party’s rights
under any patent; the use by DePuy Spine hereunder of the trademarks used by
DJO in connection with the Products does not and will not infringe the rights
of any third party; the use or reproduction by DePuy Spine of the promotional
materials furnished by DJO as contemplated hereunder does not and will not
infringe the copyright of any third party; and DJO has received no notice or
claim with respect to infringement of a third party’s intellectual property
rights, including but not limited to a notice letter either notifying DJO of a
third party’s patent or alleging infringement of a third party patent; and DJO
is presently aware of no infringement by any third party of any patent or any
trademark relating to the Products.


 


13.4         Compliance.


 


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


 


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


 


14





















 


this Agreement.


 


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


 


14.0        INDEMNIFICATION


 


14.1         Indemnification by DJO.  DJO shall indemnify and hold harmless DePuy
Spine, 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 third
parties:  (a) to the extent caused by the
fault or negligence of DJO, its Affiliates or their respective officers,
employees or agents; (b) related to any Products as supplied by DJO, or arising
from or related to any claimed hazard or defect in any Products whether
manufacturing, design or otherwise, including but not limited to DJO’s failure
to 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 Product
warranty; (d) of failure by DJO to comply with applicable laws and/or
regulations relating to the manufacture, sale and/or transport of any Product;
(e) that any Product supplied by DJO infringes any patent, copyright, trade
secret or other proprietary right of a third party; (f) related to any other
matter which is the responsibility of DJO as determined in accordance with
applicable law of the jurisdiction relating to the sale of any Product by DJO
which is the subject of claim or dispute; (g) related to termination of DJO’s
sales representatives, distributors or agents as contemplated in Article 2; or
(h) to the extent arising from the action of any independent contractor of
DePuy Spine in the course of performing services on behalf of DJO in connection
with this Agreement, provided that the indemnity in this clause (h) shall not
apply to any Damages arising from any action or inaction of an independent
contractor of DePuy Spine in the course of performing services on behalf of
DePuy Spine or pursuant to any agreement with DePuy Spine.


 


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


 


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


 


15





















 


control, the defense and any settlement of the Action, to the extent of
such Party’s corresponding indemnification and defense obligations, except that
under no circumstances shall the indemnifying Party, without the prior written
consent of the indemnitee, enter into any settlement that involves an admission
of liability, negligence or other culpability by the indemnitee, imposes any
injunction or other restriction on the indemnitee or requires the indemnitee to
contribute to the settlement. Without limiting the indemnifying Party’s
foregoing right to select and retain attorneys and to sole control of the
defense and settlement of such Action, the indemnitee may, at its own expense,
participate in the defense of, or otherwise consult with counsel of its own
choice in connection with, an Action that is the subject of the other Party’s
indemnification and defense obligations.


 


14.4         Infringement.  DePuy Spine shall promptly inform DJO of any
infringement of DJO’s patents or trademarks concerning the Products which may
come to the attention of DePuy Spine.  In
such event, DJO shall take all necessary action, consistent with prudent
business judgment, to restrain such infringement, and to recover damages
therefor.  Any damages awarded because of
losses incurred by DePuy Spine shall be the property of DePuy Spine.  Otherwise, any damages recovered from such
action shall be the property of DJO. 
DePuy Spine agrees to cooperate, at DJO’s expense for any reasonable
out-of-pocket expenses incurred by DePuy Spine, in all stages of such
action.  If DJO fails to take action to
enforce its patents, trademarks or other intellectual property rights and DePuy
Spine’s ability to sell the Products is adversely affected, DePuy Spine’s Sales
Quota shall be reduced to the extent DePuy Spine’s performance is adversely
affected by DJO’s failure.


 


15.0        INSURANCE


 


15.1         DJO agrees to procure and maintain in
full force and effect during the term of this Agreement valid and collectible
insurance policies in connection with its activities as contemplated hereby,
which policies shall provide coverage for product liability relating to use of
the Products in an amount not less than $1 million per occurrence and $3
million in the aggregate and for professional liability and comprehensive general
liability in an amount not less than $1 million per occurrence and $3 million
in the aggregate.  The product liability
and 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 provide
to DePuy Spine certificate of coverage or other written evidence reasonably
satisfactory to DePuy Spine of such insurance coverage.  Such insurance policy shall provide that in
the event such insurance coverage should be materially adversely changed or
terminated for any reason, the insurer thereunder will give DJO and DePuy Spine
ten (10) days’ prior notice. The existence of such coverage shall in no way
limit DJO’s liability or obligations hereunder.


 


16.0        COMPETITION


 


16.1         During the Term, DePuy Spine shall not
sell in the Territory an external lumbar spinal bone growth stimulation product
that competes with the Product.  If a
Distributor appointed by DePuy Spine engages in the sale of a Competing
Product, such activity shall not constitute a breach of this Agreement by DePuy
Spine.


 


16





















 


16.2         If DePuy Spine terminates the Agreement
upon 120 days’ written notice to DJO, pursuant to the provisions of Section
4.4, or if DJO terminates this Agreement for material breach by DePuy Spine
which 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 in
Section 16.1 shall continue for a period of 90 days after termination of the
Agreement.


 


16.3         If DJO terminates the Agreement upon
120 days’ written notice to DePuy Spine pursuant to the provisions of Section
4.5, then DePuy Spine shall be relieved, immediately upon receipt of such
notice 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 acknowledge
that 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 they
will not assert any rights in any such intellectual properties arising by
reason of this Agreement or the use of any such intellectual properties
hereunder.  Each Party shall use the
other Party’s trademarks and trade names in connection with its activities
hereunder but only as and to the extent expressly authorized by this
Agreement.  Without limiting the
foregoing, and subject to Section 17.2 below, DJO shall not use, or allow any
of its other sales representatives or distributors to use, any trademark, trade
name, trade dress, service mark or copyrighted work of DePuy Spine or its
Affiliates except (a) in signage and promotional materials displayed or handed
out by DJO at trade shows and conventions (as contemplated in Section 5.2) as
approved by DePuy Spine and (b) in promotional materials furnished by DJO to
DePuy Spine, which shall be solely for use by DePuy Spine and its Distributors.


 


17.2         If either Party desires to use the
trademark(s), name or copyrighted work of the other Party in an advertisement,
marketing materials, or promotional literature, or in connection with any
product or service, such Party must first seek the prior written approval of
the Party owning the rights to such trademark, name or copyrighted work.  Such approval shall be within the sole
discretion of the other Party. Nothing in this Agreement shall be construed as
conferring 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 this
Agreement, each Party shall as soon as practicable deliver to the other Party
or its designee free of charge, or certify destruction of, any and all
materials, including signs, advertising matter and catalogues, containing
copyrighted materials or trademarks or trade names of such other Party then in
its possession or in the possession of its employees or agents and shall cease
from making further use of any such materials, trademarks or trade names.


 


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


 


17





















 


18.0        CONFIDENTIALITY


 


18.1         As used herein, “Confidential
Information” shall mean all confidential or proprietary information that is
reduced to writing, marked as confidential and given to one Party by the other
Party relating to such other Party or any of its Affiliates, including
information regarding any of the products of such other party or any of its
Affiliates, information regarding its advertising, distribution, marketing or
strategic plans or information regarding its costs, productivity or
technological advances.  Neither Party
shall, for three (3) years after such exchange, use or disclose to third
parties any Confidential Information of the other (except to the extent
reasonably necessary to exercise its rights or comply with its obligations
under this Agreement) and each Party shall insure that its employees, officers
and agents shall not, for three years after such exchange, use or disclose to
third parties any Confidential Information of the other (except to the extent
reasonably necessary to exercise its rights or comply with its obligations
under this Agreement) provided, however, that DePuy Spine may disclose
Confidential Information of DJO to DePuy Spine’s Affiliates and consultants if
such persons are informed of the confidential nature of such information and
are under an obligation to keep such information confidential.  Confidential Information shall not include information
that (i) was already known to the receiving Party at the time of its receipt
thereof, as evidenced by its written records, (ii) is disclosed to the
receiving party after its receipt thereof by a third party who has a right to
make such disclosure without violating any obligation of confidentiality, (iii)
is or becomes part of the public domain through no fault of the receiving Party
or (iv) is required to be disclosed to comply with applicable laws or
regulations or an order of a court or regulatory body having competent
jurisdiction, provided the receiving Party gives sufficient notice to the
disclosing Party in a time period sufficient to contest the requirement.  All Confidential Information shall remain the
property of the disclosing Party. 
Neither Party shall make copies of any Confidential Information of the
other Party without prior written consent and shall upon request by the
disclosing Party promptly return or, at the receiving party’s option, destroy
all Confidential Information along with all copies made thereof and all documents
or things containing any portion of any Confidential Information.


 


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


 


19.0        DISPUTE RESOLUTION


 


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


 


18





















 


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


 


(c)  The Parties shall promptly confer in an effort
to select a mediator by agreement.  In
the 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 as
follows:  CPR shall provide the Parties
with a list of at least 15 names.  Each
Party shall exercise challenges for cause, two peremptory challenges, and rank
the remaining candidates within 5 working days of receiving the CPR list.  The Parties may together interview the three
top-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 aggregate
ranking.


 


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


 


(e)  Each Party agrees not to use the period or
pendency of the mediation to disadvantage the other Party procedurally or
otherwise.  No statements made by either
side during the mediation may be used by the other or referred to during any
subsequent proceedings.


 


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


 


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


 


(b)  The arbitrator shall be an attorney who has
at least 15 years of experience with a law firm or corporate law department of
over 25 lawyers or was a judge of a court of general jurisdiction for at least
10 years.  The arbitration shall be held
in Chicago, Illinois and in rendering the award the arbitrator must apply the
substantive law of Illinois (except where that law conflicts with this clause),
except that the interpretation and enforcement of this arbitration provision
shall 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 Arbitrators
in Commercial Disputes approved by the AAA. 
Within 45 days of the initiation of arbitration, the


 


19





















 


Parties shall reach agreement upon and thereafter follow procedures
assuring that the arbitration will be concluded and the award rendered within
no more than eight months from the selection of the arbitrator.  Failing such agreement, the AAA will design
and the Parties will follow procedures that meet such a time schedule.


 


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


 


(d)  EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL
OF ANY ISSUE BY JURY.  THE DECISION OF
THE ARBITRATOR SHALL BE BINDING UPON THE PARTIES.  THE ARBITRATOR SHALL NOT AWARD ANY PARTY
PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL (INCLUDING LOST SALES OR LOST
PROFITS) DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK
SUCH DAMAGES.  NO PARTY MAY SEEK OR
OBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS.


 


20.0        MISCELLANEOUS


 


20.1         Publicity.  Neither Party hereto shall originate any
publicity, news release, or other announcement, written or oral, whether to the
public press, the trade, DePuy Spine’s or DJO’s customers or otherwise,
relating to this Agreement, or to performance hereunder or the existence of an
arrangement between the Parties without the prior written approval of the other
Party hereto, save only such announcements as in the opinion of counsel for the
party making such announcement are required by law to be made.  In the event disclosure is required by
applicable law, then the Party required to so disclose such information shall,
to the extent possible, provide to the other Party for its approval a written
copy of such public disclosure at least two (2) business days prior to disclosure.  Notwithstanding the foregoing, DJO may issue
a press release with respect to its entering into this Agreement, provided that
DJO shall provide to DePuy Spine a copy of the proposed press release no less
than five (5) business days prior to its proposed release.  The contents of such press release shall be
subject to DePuy Spine’s consent, such consent not to be unreasonably withheld
or delayed.  Neither Party shall use the
name of the other Party or any of its Affiliates for advertising or promotional
purposes without the prior written consent of such Party.


 


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


 


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


 


20





















 


address as such party shall have specified by notice given in
accordance 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 any
time for any period any provision hereof shall not be construed to be a waiver
of such provision or of the right of such Party thereafter to enforce each such
provision. The waiver of any term or condition hereof must be in writing, and
any such waiver shall not be construed as a waiver of any other term or
condition of this Agreement.


 


20.5         Assignment.  This Agreement, or any of the rights and
obligations created herein, shall not be assigned or transferred, in whole or
in 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 all
of its rights or obligations under this Agreement to any Affiliate, or a
successor to that part of its business to which this Agreement relates, without
such prior written consent.


 


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


 


20.7         Relationship of the Parties.  The relationship of DePuy Spine and DJO
established by this Agreement is that of independent contractors, and nothing
contained herein shall be construed to (i) give either Party any right or
authority to create or assume any obligation of any


 


21





















 


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 common
undertaking.


 


20.8         Entire Agreement.  It is the desire and intent of the Parties to
provide certainty as to their future rights and remedies against each other by
defining the extent of their undertakings herein.  This Agreement constitutes and sets forth the
entire agreement and understanding between the Parties with respect to the
subject matter hereof and is intended to define the full extent of the legally
enforceable undertakings of the Parties hereto, and no promise, agreement or
representation, written or oral, which is not set forth explicitly in this
Agreement is intended by either Party to be legally binding.  Each Party acknowledges that in deciding to
enter into this Agreement and to consummate the transactions contemplated
hereby it has not relied upon any statements, promises or representations,
written or oral, express or implied, other than those explicitly set forth in
this Agreement.  This Agreement
supersedes all previous understandings, agreements and representations between
the Parties, written or oral, with respect to the subject matter hereof.


 


20.9         Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


20.10       Compliance with Law.  Each Party in the performance of this
Agreement, warrants that it and all its directors, officers or employees shall
comply with all applicable local, state, federal and international laws,
executive orders, regulations, ordinances, or similar requirements of the
national government or government entity which may now or hereafter govern the
performance of the parties hereunder. 
This includes, but is not limited to, the laws of the United States
pertaining to procurement integrity, anti-kickback procedures, and other
standards of ethical conduct pertaining to gratuities, gifts, entertainment,
and employment of government officials and other requirements.  Such required conduct also includes, without
limitation, compliance at that Party’s expense with all applicable import
and/or export control laws and regulations and any other laws and regulations
pertaining to export, import, sale and resale or other distribution of the
Products.


 


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


 


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


 


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


 


22





















 


of the Parties hereto.


 


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


 


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


 


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


 


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


 


IN WITNESS WHEREOF, the Parties hereto intending
legally to be bound hereby, have each caused this Agreement to be duly executed
as 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





















 


Exhibit A


 


Products


 


SpinaLogic


An external lumbar spinal bone growth stimulator.


 





















 


Exhibit B


 


Maps of Exclusive Territories


 


[See
attached 19 pages of maps]


 





















 


Exhibit C


 


2005 Sales Quota


 




	
  Dollars:

  	
   

  	
  $20,930,000

  
	
   

  	
   

  	
   

  
	
  Units:

  	
   

  	
  6,454