DJO Djo Incorporated

Projected Financial Information

DJO-Prepared Projected Financial Information

        While we generally provide revenue and earnings guidance early in each calendar year for that fiscal year, we do not, as a matter of course, publicly disclose projections of future financial performance, earnings or other results for periods beyond such period and are especially wary of making projections for extended periods due to the unpredictability of the underlying assumptions and estimates. However, our senior management did provide projected financial information to Blackstone and other interested parties that executed confidentiality agreements as well as to our board of directors and the transaction committee and their respective advisors in connection with a possible transaction with respect to our company. We have included what we believe to be the material portion of that projected financial information in this proxy statement to provide our stockholders access to certain nonpublic information considered by Blackstone, Parent, Merger Sub, other interested parties that signed confidentiality agreements, our board of directors and the transaction committee and their respective advisors for purposes of considering and evaluating a possible transaction with respect to our company. We refer to these as the "DJO-Prepared Projected Financial Information." The inclusion of the DJO-Prepared Projected Financial Information in this proxy statement should not be regarded as an indication that Blackstone, Parent, Merger Sub, our board of directors or transaction committee or their respective advisors or any other recipient of the DJO-Prepared Projected Financial Information considered, or now considers, it to be necessarily predictive of actual future results.

        The projected financial information was prepared for internal use and for the use of Blackstone and the other interested parties who signed confidentiality agreements, our board of directors and the transaction committee of our board of directors and their respective advisors in connection with a potential transaction and was not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants regarding forward-looking information or generally accepted accounting principles. Neither our independent registered public accounting firm nor any other independent accountants have compiled, examined or performed any procedures with respect to the projected financial information, nor have they expressed any opinion or any form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the projected financial information. Because the

36

projected financial information covers multiple years, such information by its nature becomes more difficult to predict with each successive year. Furthermore, the projections:

•

necessarily make numerous assumptions (as discussed below), many of which are beyond the control of our company and may not prove to have been, or may no longer be, reflective of actual future results;



•

do not reflect revised prospects for our business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the projections were prepared;



•

are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than as set forth below; and



•

should not be regarded as a representation to our stockholders that they will be achieved.

        Readers of this proxy statement are cautioned not to rely on the projected financial information. The projected financial information is not a guarantee of future performance. The information involves risks, uncertainties and assumptions. The future financial results and stockholder value of our company may materially differ from those expressed in the projected financial information due to factors that are beyond our ability to control or predict. We cannot assure you that the projections will be realized or that our future financial results will not materially vary from the projections. The projected financial information does not take into account the merger or any of the transactions contemplated by the merger agreement. We do not intend to update or revise the projections.

        We have filed a Quarterly Report on Form 10-Q for the three months ended June 30, 2007 which contains our actual results for such period. You should review this Quarterly Report and all other financial information we make publicly available. The projections are forward-looking statements. For information on factors which may cause our future financial results to materially vary, see "Cautionary Statement Regarding Forward-Looking Statements" on page 14.

        We prepared two scenarios of DJO-Prepared Projected Financial Information that covered the period from 2007 through 2012. The first scenario, referred to as the base case, was prepared for use by our management team and our board of directors at a meeting of the board of directors held on April 18 and 19, 2007 to discuss various alternatives to enhance stockholder value. The base case was prepared as a reasonable, but relatively conservative, estimate of our future financial performance. The base case was derived from our 2007 Operating Plan, as approved by our board of directors, and assumed certain future revenue growth rates and costs of goods sold and operating expense levels that remained relatively consistent throughout the projection period. Our view is that the base case projections, while still subject to a number of risks, are the more likely case to be achieved. The second scenario, referred to as the growth case, was prepared to provide to Blackstone and other interested parties, to reflect possible, but less conservative, assumptions regarding our future operations. The growth case used the same projected results for 2007 as the base case, but assumed more aggressive revenue growth assumptions for 2008 through 2012 and assumed more scalability in our cost structure during that time frame, resulting in lower ratios of costs of goods sold and operating expenses to revenue. The growth case therefore reflects higher revenue, EBITDA and net income in 2008 through 2012 than the base case. We believe that the growth case is less likely to be achieved than the base case and is subject to greater risks than the base case. Neither the base case scenario nor the growth case scenario of the DJO-Prepared Projected Financial Information include the impact of future acquisitions that we may consider, or divestitures of any businesses or product lines we currently own. Both scenarios of the DJO-Prepared Projected Financial Information exclude, for 2007, the impact of certain charges and expenses related to acquisitions and certain other charges and expenses not deemed to be reflective of our ongoing operations and for all years presented, exclude the impact of stock-based

37

compensation expense. A number of assumptions were made in preparing the DJO-Prepared Projected Financial Information, as follows:

Base Case Scenario Assumptions

•

Compounded annual growth rate in consolidated net revenues for the period from 2007 to 2012 is 8.6%, with annual growth rates projected to increase from 8.5% to 8.8% during the period from 2008 to 2012.



•

Gross profit margins are projected to increase from 62.7% in 2007 to 68.1% in 2012. Projected gross profit margin improvement through 2009 is based upon the expected full impact of the Aircast integration, the completion of certain vertical integration projects and the favorable impact of an expected increase in the proportion of our higher margin products in our total product mix. After 2009, projected gross profit improvement is generated solely from the favorable impact of an expected increase in the proportion of our higher margin products in our total product mix.



•

Operating expenses are projected to decrease from 43.0% of consolidated net revenues in 2007 to 41.6% of consolidated net revenues in 2012. The decrease in operating expenses as a percentage of consolidated net revenues is due solely to the fixed nature of our amortization expense related to acquired intangible assets. All other categories of expense are projected to grow at the same rate that consolidated net revenues are projected to grow.



•

EBITDA, as defined, is projected to grow from an estimated 26.1% of consolidated net revenues in 2007 to 30.8% of consolidated net revenues in 2012. Growth in the projected EBITDA margin is driven primarily by the gross margin improvements discussed above. EBITDA is defined as earnings before interest expense, income tax expense, depreciation expense, amortization expense, non-cash stock-based compensation expense, certain charges and expenses related to acquisitions and certain other charges and expenses not deemed to be reflective of the ongoing operations of the company.



•

Net income is projected to grow from $44.1 million in 2007, or $1.81 per share, to $114.0 million in 2012, or $4.68 per share.



•

The projections assume no change to our projected 2007 fully diluted share count of 24.3 million.



•

Capital expenditures are projected to increase from $11.1 million in 2007 to $13.0 million in 2012 and are assumed to reflect both maintenance and growth capital spending requirements.



•

Cash flow from operating activities is projected to increase from $78.4 million in 2007 to $143.4 million in 2012, reflecting incremental cash from the annual increases in operating results, partially offset by working capital required to fund our operations.



•

All excess cash flow is assumed to be used to repay our outstanding debt balances until those balances reach zero, at which time the projections assume that cash balances will be accumulated and invested.



•

The projections assume the weighted average interest rate on our borrowings and our cash balances will be 7.0% and 2.0%, respectively.



•

Our tax rate is projected to remain between 40% and 42% during the projections period.

38

Note: 2007P amounts shown above exclude certain charges and expenses related to acquisitions and certain other charges and expenses not deemed to be reflective of our ongoing operations and all years exclude stock-based compensation expense.

Growth Case Scenario Assumptions

•

Compounded annual growth rate in consolidated net revenues for the period from 2007 to 2012 is 9.9%, with annual growth rates projected to range from 9.8% to 10.1% during the period from 2008 to 2012.



•

Gross profit margins are projected to increase from 62.7% in 2007 to 69.3% in 2012. Projected gross profit margin improvement through 2010 is based upon the expected full impact of the Aircast integration, the completion of certain vertical integration projects and the favorable impact of an expected increase in the proportion of our higher margin products in our total product mix. After 2010, projected gross profit improvement is generated solely from the favorable impact of an expected increase in the proportion of our higher margin products in our total product mix.



•

Operating expenses are projected to decrease from 43.0% of consolidated net revenues in 2007 to 36.4% of consolidated net revenues in 2012. The decrease in operating expenses as a percentage of consolidated net revenues is due partly to the fixed nature of our amortization expense related to acquired intangible assets. Commissions expense is projected to grow at the same rate that consolidated net revenues grow in each year. All other categories of expense are projected to grow at a slower rate than consolidated net revenues are projected to grow, based on an assumed scalability in our operating expense infrastructure. Sales and marketing expenses are expected to grow at 6% per year, while general and administrative and research and development expenses are expected to grow at 4% per year.



•

EBITDA, as defined, is projected to grow from an estimated 26.1% of consolidated net revenues in 2007 to 37.0% of consolidated net revenues in 2012. Growth in the projected EBITDA margin is driven primarily by the gross margin improvements and operating expense scalability discussed above. EBITDA is defined as earnings before interest expense, income tax expense, depreciation expense, amortization expense, non-cash stock-based compensation expense, purchase accounting adjustments to write up acquired inventories to fair value, certain charges and expenses related to acquisitions and certain other charges and expenses not deemed to be reflective of our ongoing operations.



•

Net income is projected to grow from $44.1 million in 2007, or $1.81 per share, to $151.2 million in 2012, or $6.21 per share.

39

•

The projections assume no change to our projected 2007 fully diluted share count of 24.3 million.



•

Capital expenditures are projected to increase from $11.1 million in 2007 to $13.0 million in 2012 and are assumed to reflect both maintenance and growth capital spending requirements.



•

Cash flow from operating activities is projected to increase from $78.4 million in 2007 to $178.9 million in 2012, reflecting incremental cash from the annual increases in operating results, partially offset by working capital required to fund our operations.



•

All excess cash flow is assumed to be used to repay our outstanding debt balances until those balances reach zero, at which time the projections assume that cash balances will be accumulated and invested.



•

The projections assume the weighted average interest rate on our borrowings and our cash balances will be 7.0% and 2.0%, respectively.



•

Our tax rate is projected to remain between 40% and 42% during the projections period.

Note: 2007P amounts shown above exclude certain charges and expenses related to acquisitions and certain other charges and expenses not deemed to be reflective of our ongoing operations and all years exclude stock-based compensation expense.

Financing of the Merger

        Parent has informed us that it estimates that the total amount of funds necessary to complete the merger and the related transactions is approximately $1.63 billion, which includes approximately $1.25 billion to be paid to our stockholders and holders of other equity-based interests in us, with the remaining funds being used to refinance certain existing indebtedness and to pay customary fees and expenses in connection with the proposed merger, the financing arrangements and the related transactions.

        Parent or Merger Sub has obtained equity and debt financing commitments for the transactions contemplated by the merger agreement. The following arrangements are intended to provide the necessary financing for the merger and related transactions.

Equity Financing

        Parent has received an equity commitment letter, dated as of July 15, 2007, pursuant to which Blackstone Capital Partners V L.P., an affiliate of Blackstone, has committed to contribute up to

40

$408.4 million in the aggregate to ReAble Therapeutics, Inc., which will contribute the funds to ReAble Therapeutics Holdings LLC, which will contribute the funds to Parent immediately prior to the closing of the merger. Blackstone may assign portions of its investment to its other related co-investor or alternative investment vehicles provided that such allocations do not reduce Blackstone's commitment to Parent.

        The equity commitment is subject to the terms of the commitment letter as well as satisfaction or waiver of all of the conditions to the obligations of Parent and Merger Sub to effect the closing of the merger under the merger agreement. The equity commitment letter will terminate automatically and immediately on March 15, 2008 or, if earlier, the date on which the merger agreement is terminated.

Debt Financing

        Parent has received a debt commitment letter, dated as of July 15, 2007, from Credit Suisse Securities (USA) LLC, Credit Suisse, Bank of America, N.A., Banc of America Securities LLC and Banc of America Bridge LLC, which we refer to collectively as the debt financing sources, pursuant to which, subject to the conditions set forth therein:

•

the debt financing sources have committed to provide Parent, up to $1.155 billion of senior secured credit facilities, consisting of a $1.055 billion senior secured term loan facility and a $100 million senior secured revolving credit facility for the purpose of financing the merger, repaying or refinancing certain existing indebtedness of Parent and its subsidiaries and certain existing indebtedness of our company and its subsidiaries, paying fees and expenses incurred in connection with the merger and the financing thereof and providing ongoing working capital and for other general corporate purposes of Parent and its subsidiaries; and



•

the debt financing sources have committed to provide Parent up to $575 million of senior unsecured increasing rate loans under a bridge facility if less than $575 million of senior unsecured notes are issued on or prior to the closing date of the merger, for the purpose of financing the merger, repaying or refinancing certain existing indebtedness of Parent and its subsidiaries and certain existing indebtedness of our company and its subsidiaries and paying fees and expenses incurred in connection with the merger and the financing thereof.

        The debt commitments expire on either March 15, 2008 (provided that the initial borrowing under the senior secured credit facilities does not occur before that date) or, if earlier, the date on which the merger agreement terminates.

        Parent has agreed to use its reasonable best efforts to arrange the debt financing on the terms and conditions described in the debt commitment letter. The merger agreement does not contain any condition to the receipt of financing by Parent or Merger Sub; provided, however, that Parent is not required to consummate the merger until the completion of the marketing period (as described in "The Merger Agreement—Effective Time; Closing; Marketing Period").

        Although the debt financing described in this proxy statement is not subject to a due diligence or "market out," such financing may not be considered assured. As of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event the debt financing described herein is not available as anticipated.

Conditions Precedent to the Debt Commitments

        The availability of the facilities contemplated by the debt commitment letter is subject, among other things, to satisfaction that since December 31, 2006, there shall not have occurred any event, change, effect, development, condition or occurrence, that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect, which term shall have the same meaning as defined in the merger agreement, on our company; consummation of the merger in

41

accordance with the merger agreement (without giving effect to any amendments or waivers by Parent or Merger Sub that are materially adverse to the lenders without the consent of Credit Suisse Securities (USA) LLC and Banc of America Securities LLC, which consent shall not be unreasonably withheld or delayed); the funding of the equity financing; delivery of audited, unaudited and pro forma financial statements; the creation of security interests (subject to certain limitations); and the negotiation, execution and delivery of definitive documentation and, with respect to the bridge loan facilities, the delivery of customary marketing materials for a 144A offering of high yield securities and the completion of the marketing period.

Limited Guaranty

        In connection with the merger agreement, Blackstone Capital Partners V L.P., an affiliate of Blackstone, has absolutely, irrevocably and unconditionally guaranteed all payment obligations of Parent and Merger Sub under certain provisions of the merger agreement up to an aggregate amount of $100 million.

        The guaranty will terminate on the earliest of the effective time of the merger or the second anniversary of any termination of the merger agreement in accordance with its terms, if we have not presented a claim for payment of any of the obligations under the guaranty to either Parent or Merger Sub.

Interests of Our Directors and Executive Officers in the Merger

        In considering the recommendation of our board of directors to approve the merger agreement, you should be aware that certain of our directors and executive officers have interests in the transaction that are different from, or are in addition to, your interests as a stockholder. Our board of directors and the transaction committee were aware of these interests. These interests include the following:

Change in Control Severance Agreements

        On September 19, 2007, we entered into change in control severance agreements with the executive officers listed in the table below. The change in control severance agreements are intended to provide for continuity of management in the context of a prospective change in control of our company. Following a change in control, as will occur in connection with the merger and related transactions, the change in control severance agreements will remain in effect for a period of two years.

        If an executive's employment is terminated by us without "cause" (as defined below) or if such executive officer terminates employment for "good reason" (as defined below), in each case within three months prior to or two years after the merger, the executive is entitled to the following benefits:

•

A lump sum cash payment in an amount equal to the sum of (i) the executive's base salary through the termination date, (ii) any unpaid bonus amounts which have become payable, and (iii) unreimbursed business expenses and accrued vacation pay.



•

A lump sum payment equal to the sum of the executive's highest annual rate of base salary during the 12 month period preceding the termination date multiplied by 1.5 (or 2 in the case of our chief executive officer), plus:



•

the executive's aggregate annual target bonus for the year of termination; and



•

a pro rata portion of the executive's aggregate annual target bonus for the portion of the year of termination during which the executive served as an employee, less any amounts paid from our annual incentive plan for the year of termination.



•

A lump sum cash payment of an amount equal to (i) 18 (or 24 in the case of our chief executive officer), multiplied by (ii) the amount by which the monthly premium the executive would be

42

required to pay for continued coverage pursuant to COBRA, for such executive and his or her eligible dependents covered under our health plans as of the termination date, exceeds the contributions required by the executive immediately prior to the termination date.

•

A lump sum cash payment of an amount equal to (i) 18 (or 24 in the case of our chief executive officer), multiplied by (ii) the amount by which the total monthly premium paid for accidental death and dismemberment and life insurance coverage as of the termination date exceeds the contributions required by the executive immediately prior to the termination date.



•

The full vesting and ability to exercise all outstanding awards of stock options granted to the executive prior to the closing of the merger.

        As a condition to receiving the severance benefits under the change in control severance agreements, an executive must execute a waiver and release of claims in favor of our company.

        If the payments an executive would receive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, then such payments shall be either (i) the full amount of such payments or (ii) such lesser amount (with cash payments being reduced before stock option compensation) as would result in no portion of the payments being subject to the excise tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes, results in the executive's receipt, on an after-tax basis, of the greater amount.

        The following table shows the amount of potential cash payments and the value of other severance benefits each executive officer would be entitled to if his or her employment were terminated "without cause" or he or she resigned for "good reason" as of September 30, 2007 (assuming the merger had closed on or before such date):

        Under the agreements, "cause" is defined as an executive's:

•

conviction of, or plea of guilty or nolo contendere to, a felony or misdemeanor involving moral turpitude;



•

indictment for violation of the federal securities laws;



•

willful misconduct or gross negligence resulting in material harm to our company;



•

willful breach of his or her duties or responsibilities under the agreement;



•

fraud, embezzlement, theft or dishonesty against our company or any of our subsidiaries; or



•

willful violation of a policy or procedure of our company or any of our subsidiaries resulting in material harm to that party.

        Under the agreements, "good reason" is defined as the occurrence of any one of the following:

•

a material diminution in an executive's authority, duties or responsibilities (except if such diminution is solely a result of no longer being publicly held);

43

•

a material diminution in an executive's base compensation, other than any reduction that applies to all executives of the company generally;



•

a material change in the geographic location where an executive must work; or



•

any other action or inaction that constitutes a material breach by our company or any successor of our obligations to the executive under the agreement.

Treatment of Stock Options

        Upon consummation of the merger, the outstanding stock options to purchase our common stock, whether vested or unvested, will be cancelled in exchange for an amount of cash equal to the product of (i) the number of shares of our common stock subject to such option and (ii) the excess, if any, of $50.25 over the exercise price per share of such option, less applicable taxes. The merger agreement provides that Parent and each holder of a DJO stock option may agree that such holder's stock options will be treated in a different manner.

        The table set forth below shows information for the aggregate number of our stock options held by our directors and executive officers as of September 30, 2007, as well as the number of our stock options as of such date that will become vested upon the closing of the merger (in each case assuming the merger had closed as of such date).

(1)

Of the cash payment to be received by our directors and executive officers for all DJO stock options, the amount to be received for unvested stock options is as follows: Jack R. Blair, $238,300; Mitchell J. Blutt, $238,300; Kirby L. Cramer, $238,300; Lesley H. Howe, $238,300; W. Thomas Mitchell, $238,300; Charles T. Orsatti, $238,300; Lewis Parker, $238,300; Leslie H.

44

Cross, $2,259,970; Vickie L. Capps, $1,198,500; Luke T. Faulstick, $1,119,538; Louis T. Ruggiero, $974,600; and Donald M. Roberts, $1,137,675.

(2)

Thomas A. Capizzi joined our company as senior vice president, human resources in July 2007 and has not been granted any stock options to date.

Employee Stock Purchase Plan

        We intend to terminate our employee stock purchase plan immediately prior to the effective time of the merger. The offering currently in progress will be terminated and all outstanding options to purchase shares of our common stock will be exercised immediately prior to the effective time of the merger. To the extent an executive officer is a participant in our employee stock purchase plan, any shares purchased by him or her will be cancelled at the effective time in exchange for the merger consideration.

Indemnification Under the Merger Agreement

        The merger agreement provides that Parent will cause the surviving corporation, to the maximum extent permitted by law, to indemnify and advance expenses to each of our present and former directors and officers and our subsidiaries for costs and liabilities incurred in connection with such person's service as a director or officer at or prior to the effective time of the merger.

        The merger agreement requires that the surviving corporation maintain, for six years from the effective time of the merger, for the benefit of our current directors and officers, liability insurance policies covering acts or omissions occurring at or prior to the effective time with respect to those persons who are currently indemnified parties (as defined in the merger agreement), provided that the premium costs for such policies does not exceed 200% of the annual premiums currently paid by us.

        For a description of the indemnification and insurance of the officers, directors, employees and agents, see "The Merger Agreement—Indemnification; Directors' and Officers' Insurance." This directors' and officers' liability insurance must have terms that are at least as favorable as the policy in effect as of the date of the merger agreement.

Continuation of Benefits Under Employee Benefit Plans

        The merger agreement provides that during the period commencing at the effective time of the merger and ending on the later of December 31, 2008 and the first anniversary of the effective time, our employees as of the effective time will be provided with:

•

base salary and bonus opportunities no less than the base salary and bonus opportunities provided by us and our subsidiaries immediately prior to the effective time;



•

pension and welfare benefits and perquisites no less favorable in the aggregate than those provided by us and our subsidiaries immediately prior to the effective time; and



•

severance benefits no less favorable than those set forth in our separation pay plan in effect on the date of the merger agreement and provided to Parent.

        See "The Merger Agreement—Employee Benefits" for a more complete description of the terms of the Merger Agreement relating to employee benefit matters.

Management Arrangements

        Based on discussions to date between our company, Blackstone and Parent, it is expected that, subject to the consummation of the merger, our current officers that will participate in the management team of the combined company following the merger will be as follows: Leslie H. Cross, currently our president and CEO, will become the CEO; Vickie L. Capps, currently our executive vice president and

45

chief financial officer, will continue to hold that same position; Luke T. Faulstick, currently our chief operating officer, will become a division president with responsibility for global operations; Louis T. Ruggiero, currently our chief sales and marketing officer, will become a division president with responsibility for the current DJO domestic business; Donald M. Roberts, currently our senior vice president, general counsel and secretary, will become executive vice president, general counsel and secretary; and Thomas A. Capizzi, currently our senior vice president, human resources, will become executive vice president, global human resources. However, as of the date of this proxy statement, none of the foregoing individuals has entered into any agreements with Parent, Merger Sub or Blackstone with respect to such employment, nor have such individuals entered into any agreement, arrangement or understanding regarding the right to purchase or participate in the equity of the surviving corporation, Parent, or any of their affiliates. Although no such agreement, arrangement, or understanding currently exists, such individuals may in the future enter into definitive agreements with Parent or its affiliates regarding such employment and the right to purchase or participate in the equity of Parent or its affiliates after the closing of the merger. If definitive employment agreements are entered into between our current executive officers listed above and the combined company, it is expected that such officers will not receive any payouts under their respective change in control severance agreements at the time of the closing of the merger.

Regulatory Matters

        In connection with the merger, we are required to make certain filings with, and comply with certain laws of, various federal and state governmental agencies, including:

•

filing a certificate of merger with the Secretary of State of the State of Delaware in accordance with the DGCL after the approval of the merger agreement by our stockholders; and



•

complying with U.S. federal securities laws.

        The following regulatory approvals are also required in order to complete the merger:

•

the expiration or termination of the waiting period applicable to the consummation of the merger under the HSR Act; on July 27, 2007, we and Parent each filed a pre-merger notifications and report form under the HSR Act with the Federal Trade Commission and the Department of Justice and requested an early termination of the waiting period; on August 9, 2007, such early termination under the HSR Act was granted; and



•

the expiration or termination of the waiting period applicable to the consummation of the merger under the German Act Against Restraints of Competition; on September 20, 2007, the waiting period was terminated.

Litigation Relating to the Merger

In re DJO Shareholder Litigation , Master File No: 37-2007-00074195-CU-BT-CTL.

        On August 31, 2007 and September 6, 2007, two purported shareholder class action lawsuits were filed in California Superior Court, in the County of San Diego, on behalf of our public stockholders, challenging our proposed merger with ReAble. The court ordered the two lawsuits consolidated for all purposes on September 21, 2007. The court further ordered that plaintiffs shall file a consolidated amended complaint as soon as practicable, and that the defendants need not respond to either of the two original complaints.

        The two original complaints named us, ReAble Therapeutics, Inc., an affiliate of Parent, and the current members of our board of directors as defendants. One of the original complaints also named Blackstone as a defendant. The two substantially similar original complaints alleged, among other things, that the individual defendants breached their fiduciary duties of care, good faith and loyalty by approving the proposed merger with an allegedly inadequate price, without adequately informing

46

themselves of the company's highest transactional value, and without adequately marketing the company to other potential buyers. The original complaints also alleged that the individual defendants and the company failed to make full and adequate disclosures in the preliminary proxy statement regarding the proposed merger. The original complaints pray for, among other things, class certification, declaratory relief, an injunction of the proposed merger or a rescission order, corrective disclosures to this proxy statement, damages, interest, attorneys' fees, expert fees and other costs; and such other relief as the court may find just and proper.

        On September 21, 2007, the court ordered the appointment of The Weiser Law Firm, PC, and The Brualdi Law Firm, P.C. as plaintiffs' co-lead counsel. Discovery is ongoing and the parties have stipulated to a November 2, 2007 hearing on plaintiffs' anticipated preliminary injunction motion, and a related briefing schedule.

        We believe that the lawsuit is without merit and intend to vigorously oppose it.

Accounting Treatment

        We expect that the merger will be accounted for as a business combination using the purchase method of accounting for financial accounting purposes, whereby the purchase price would be allocated to our assets and liabilities based on their relative fair values following Financial Accounting Standards Board Statement of Financial Accounting Standards No. 141, Business Combinations .

Material U.S. Federal Income Tax Consequences

        The following discussion describes the material U.S. federal income tax consequences of the merger to U.S. holders and non-U.S. holders (as such terms are defined below) of our common stock. This discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, the Treasury Regulations promulgated thereunder, which we refer to as the Treasury Regulations, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service, which we refer to as the IRS, all as in effect on the date of this proxy statement. These authorities may change at any time, possibly retroactively, and any such change could affect the continuing validity of this discussion. We have not requested a ruling from the IRS with respect to the U.S. federal income tax consequences described in this proxy statement and, accordingly, we cannot assure you that the IRS will not take a contrary position regarding the tax consequences of the merger. The statements in this discussion are not binding on the IRS or any court and, accordingly, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS, or if challenged, will be sustained by a court. This discussion does not address any tax consequences arising under the laws of any state, locality or foreign jurisdiction or the U.S. federal estate or gift tax laws. Accordingly, this discussion is not a comprehensive description of all of the tax consequences that may be relevant to any particular holder of our common stock.

        This discussion assumes that holders hold shares of our common stock as capital assets within the meaning of Section 1221 of the Code and does not address the tax consequences that may be relevant to a particular holder subject to special treatment under U.S. federal income tax law, including but not limited to:

•

U.S. expatriates;



•

banks of other financial institutions;



•

tax-exempt organizations;



•

tax-qualified retirement plans;



•

regulated investment companies;



•

passive foreign investment companies;

47

•

insurance companies;



•

persons that have a functional currency other than the U.S. dollar;



•

traders in securities that elect mark-to-market;



•

dealers in securities of foreign currencies;



•

brokers or dealers in securities or foreign currencies;



•

persons subject to the alternative minimum tax;



•

persons who hold shares of our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; and



•

partnerships or other entities treated as partnerships or other pass-through entities for U.S. federal income tax purposes and partners in such partnerships.

        This discussion does not address the U.S. federal income tax consequences of the merger to holders who acquired our common stock through stock option or stock purchase plan programs or in other compensatory arrangements, nor does it address the receipt of cash in connection with the cancellation of any stock options, restricted stock units, deferred stock and performance awards or other compensatory stock-based awards, or any other matters relating to equity compensation or benefit plans. Except as expressly set forth below, this discussion does not address the U.S. federal income tax consequences of the merger to holders who actually or constructively hold an equity interest in the surviving corporation following the merger. This discussion also does not address the U.S. federal income tax consequences to holders who exercise statutory appraisal rights under Delaware law.

        As used in this discussion, a U.S. holder is any beneficial owner of our common stock who is treated for U.S. federal income tax purposes as:

•

an individual citizen or resident of the United States;



•

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;



•

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or



•

a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons or (2) has validly elected under the applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.

        A non-U.S. holder is a beneficial owner (other than a partnership) of our common stock other than a U.S. holder.

        If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of its partners will depend on a partner's status and the activities of the partnership. Partnerships and their partners should consult their tax advisors regarding the particular U.S. federal income tax consequences to them of the merger.

U.S. Holders

Consequences of the Merger

        The receipt of cash in exchange for shares of our common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder who receives cash in exchange for our shares of common stock pursuant to the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and the holder's adjusted tax basis in the shares of our common stock exchanged for cash pursuant to the

48

merger. Gain or loss recognized on a sale of our common stock must be determined separately for each identifiable block of common stock ( i.e ., shares of common stock acquired at the same cost in a single transaction). Any such gain or loss will be long-term capital gain or loss if the U.S. holder has held the common stock for more than one year as of the effective date of the merger. Long-term capital gains of non-corporate U.S. holders will be subject to U.S. federal income tax at a maximum rate of 15%. Capital gains of corporate U.S. holders will be subject to U.S. federal income tax at the regular tax rates applicable to corporations. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding

        Payments made to certain U.S. holders in the merger will be subject to information reporting and may be subject to backup withholding (currently at a rate of 28%). Certain holders (including corporations) are not subject to backup withholding. To avoid backup withholding, U.S. holders that do not otherwise establish an exemption should complete and return the substitute Form W-9 that each holder will receive with the letter of transmittal following completion of the merger. The substitute Form W-9 will require a U.S. holder to provide its taxpayer identification number and certify that such holder is a U.S. person, the taxpayer identification number provided is correct and that such holder is not subject to backup withholding. A U.S. holder who fails to provide its correct taxpayer identification number or falsely certifies that it is not subject to backup withholding may be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. Taxpayers may use amounts withheld as a credit against their U.S. federal income tax liability or may claim a refund of any excess amounts withheld by timely filing a claim for refund with the IRS.

Non-U.S. Holders

Consequences of the Merger

        Any gain realized on the receipt of cash in the merger by a non-U.S. holder generally will not be subject to United States federal income tax unless:

•

the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder);



•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or



•

we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes and the non-U.S. holder owned more than 5% of the Company's common stock at any time during the five years preceding the merger.

        An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the merger under regular graduated U.S. federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the merger, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.

        We believe we are not and have not been a "United States real property holding corporation" for U.S. federal income tax purposes.

49

Information Reporting and Backup Withholding

        Information reporting and, depending on the circumstances, backup withholding (currently at a rate of 28%) will apply to the cash received in the merger (or pursuant to the exercise of dissenters' rights), unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code) or such owner otherwise establishes an exemption. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder's U.S. federal income tax liability, if any, provided that such non-U.S. holder furnishes the required information to the IRS in a timely manner.

        THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT APPLY TO A PARTICULAR HOLDER DEPENDING ON THE PARTICULAR HOLDER'S PARTICULAR SITUATION. THIS DISCUSSION DOES NOT ADDRESS EVERY U.S. FEDERAL INCOME TAX CONSIDERATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF OUR COMMON STOCK. YOU SHOULD CONSULT YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, OF THE DISPOSITION OF OUR COMMON STOCK PURSUANT TO THE MERGER, INCLUDING ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.

Delisting and Deregistration of Our Common Stock

        If the merger is completed, our common stock will no longer be traded on the NYSE and will be deregistered under the Exchange Act.

50

THE MERGER AGREEMENT

         The following is a summary of the material terms of the merger agreement. This summary does not purport to describe all the terms of the merger agreement and is qualified by reference to the complete merger agreement which is attached as Annex A to this proxy statement. We urge you to read the merger agreement carefully and in its entirety because it, and not this proxy statement, is the legal document that governs the merger.

         The text of the merger agreement has been included to provide you with information regarding its terms. The merger agreement contains representations and warranties by our company, on the one hand, and by Parent and Merger Sub, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in a company disclosure letter delivered in connection with the signing of the merger agreement, which letter we refer to as the disclosure letter. The disclosure letter contains information that has been included in our general prior public disclosures, as well as potential additional non-public information. While we do not believe that the disclosure letter contains information required to be publicly disclosed under the securities laws other than information that has already been so disclosed, the disclosure letter contains information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the merger agreement. Moreover, certain representations and warranties in the merger agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between our company, on the one hand, and Parent and Merger Sub, on the other hand. In addition, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in our public disclosures.

General; The Merger

        At the effective time of the merger, upon the terms and subject to the conditions of the merger agreement and in accordance with the DGCL, Merger Sub will merge with and into DJO and the separate corporate existence of Merger Sub will end. We will be the surviving corporation in the merger and become a wholly-owned subsidiary of Parent, possessing all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub. The certificate of incorporation of Merger Sub in effect immediately prior to the effective time of the merger will become the certificate of incorporation of the surviving corporation, except that the name of the surviving corporation will be "DJO Incorporated". The by-laws of Merger Sub in effect immediately prior to the effective time of the merger will be the by-laws of the surviving corporation.

        The directors of Merger Sub immediately prior to the effective time of the merger will become the directors of the surviving corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal. Our officers immediately prior to the effective time of the merger will become the officers of the surviving corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.

Effective Time; Closing; Marketing Period

        The merger will become effective upon the filing of the certificate of merger with the Secretary of State of the State of Delaware or such later time as is agreed upon between the parties and specified in the certificate of merger. The filing of the certificate of merger and the closing will occur on the second business day after all of the conditions to the merger set forth in the merger agreement have been satisfied or waived (or such other date as the parties may agree). Notwithstanding the foregoing, the parties are not required to effect the closing until the earliest of:

•

a date during the marketing period specified by Parent on no less than three business days' notice to us (which notice may be conditioned upon the closing of debt financing);

51

•

the final day of the marketing period; and



•

11:59 p.m. New York City time on March 15, 2008.

For purposes of the merger agreement, marketing period means the first period of 25 consecutive days after the latest to occur of the date Parent and its financing sources have received from us certain information required to be delivered pursuant to the third bullet point under "Cooperation of DJO" beginning on page 65 and the business day after the date we file with the SEC our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007 throughout and on the last day of which:

•

Parent and its financing sources have certain required information from us;



•

nothing has occurred and no condition exists that would cause any of the conditions to the obligations of Parent and Merger Sub (other than receipt of the certificates referred to in those closing conditions) to complete the merger to fail to be satisfied if the closing were to occur during the marketing period; and



•

the closing conditions relating to obtaining stockholder approval and relevant governmental consents and approvals and absence of injunctions have been satisfied.

        Notwithstanding the foregoing, (1) the marketing period will end on any earlier date on which Parent consummates its debt financing, (2) August 17 through September 3, 2007, November 16 through November 26, 2007 and December 20, 2007 through January 2, 2008 will not be counted or taken into account for purposes of calculating such 25-consecutive-day period and (3) the marketing period will not be deemed to have commenced if, prior to the completion of the marketing period:

•

Ernst & Young LLP withdraws its audit opinion with respect to any financial statements contained in the required information provided by us to Parent, in which case the marketing period will not be deemed to commence at the earliest unless and until a new unqualified audit opinion is issued with respect to the consolidated financial statements for the applicable periods by Ernst & Young LLP or another independent registered accounting firm reasonably acceptable to Parent;



•

we announce any intention to restate any of our financial information included in the required information provided by us to Parent or any such restatement is under consideration or may be a possibility, in which case the marketing period will not be deemed to commence at the earliest unless and until such restatement has been completed and our SEC reports have been amended or we have announced that we have concluded that no restatement will be required in accordance with GAAP; or



•

we are delinquent in filing any report with the SEC, in which case the marketing period will not be deemed to commence at the earliest unless and until all such delinquencies have been cured.

        If the financial statements included in the required information provided by us to Parent that is available to Parent on the first day of any such 25-consecutive-day period would not be sufficiently current on any day during such 25-consecutive-day period to permit (1) a registration statement using such financial statements to be declared effective by the SEC on the last day of the 25-consecutive-day period or (2) our independent registered accounting firm to issue a customary comfort letter to purchasers (in accordance with its normal practices and procedures) on the last day of the 25-consecutive-day period, then a new 25-consecutive-day period will commence upon Parent receiving updated required information from us that would be sufficiently current to permit the actions described in (1) and (2) on the last day of such 25-consecutive-day period.

        In the event that prior to February 15, 2008:

•

all or any portion of Parent's debt financing structured as high yield financing has not been consummated;

52

•

all closing conditions contained in the merger agreement, other than the delivery of officers' certificates, have been satisfied or waived;



•

the closing shall not have occurred; and



•

the bridge facilities contemplated by Parent's debt commitment letter (or alternative bridge financing obtained in accordance with the merger agreement) are available in all material respects on the terms and conditions described in such debt commitment letter (or described in replacements thereof on terms and conditions no less favorable to Parent and Merger Sub or alternative financing therefor),

then Parent:

•

shall use its reasonable best efforts to cause the lenders under such bridge facility to fund proceeds of such bridge financing (or replacement or alternative financing) to be used to replace such privately offered note financing no later than the final day of the marketing period.

Merger Consideration and Conversion of Shares

        Each share of common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $50.25 in cash, without interest and less any applicable withholding taxes, other than the following shares:

•

shares held by holders who have properly demanded and perfected their appraisal rights; and



•

shares owned by Parent, Merger Sub or any of their direct or any other direct or indirect wholly owned subsidiaries and shares owned by us or any of our direct or indirect wholly owned subsidiaries.

        After the merger is effective, each holder of a certificate representing any shares of common stock (other than shares for which appraisal rights have been properly demanded and perfected) will no longer have any rights with respect to the shares, except for the right to receive the merger consideration without interest. See "Appraisal Rights" beginning on page 71. In addition, each share of common stock:

•

owned by Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent and shares owned by us or any of our direct or indirect wholly-owned subsidiaries, will automatically cease to be outstanding, will be cancelled without payment of any consideration and will cease to exist, except for shares owned by any direct or indirect wholly-owned subsidiary of Parent (other than Merger Sub or the surviving corporation) or us, which shares shall remain outstanding and no payment shall be made in respect thereof; and



•

of Merger Sub issued and outstanding immediately prior to the effective time of the merger, will be converted into one share of common stock of the surviving corporation.

Treatment of Stock Options

        At the effective time of the merger, each outstanding option to purchase common stock under our stock option plans, vested or unvested, will be cancelled and only entitle the holder to receive a cash payment equal to the excess, if any, of the per share merger consideration over the per share exercise price of the applicable stock option, multiplied by the number of shares subject to the stock option, less any applicable taxes required to be withheld.

        The effect of the Merger upon our employee stock purchase plan and on our other employee benefit plans is described under "—Employee Benefits" and "—Employee Stock Purchase Plan" beginning on page 63.

53

Payment for DJO Common Stock in the Merger

        At the effective time of the merger, Parent will deposit with the paying agent in the transactions, for the benefit of the holders of common stock, sufficient funds to pay the aggregate per share merger consideration, which we refer to as the exchange fund. Promptly after the effective time of the merger (and in any event within five business days), the surviving corporation will cause the paying agent to mail to each holder of record of our common stock immediately prior to the effective time of the merger, a form of letter of transmittal and instructions to effect the surrender of their stock certificate(s) (or, in the case of book entry shares, how to surrender such shares) in exchange for payment of the per share merger consideration. You should not send in your stock certificates until you receive the letter of transmittal. The letter of transmittal and instructions will tell you what to do if you have lost a certificate, or if it has been stolen or destroyed. You will have to provide an affidavit to that fact and, if required by Parent, post a bond in a reasonable amount as Parent directs as indemnity against any claim that may be made against Parent or the surviving corporation with respect to that certificate.

        The paying agent will promptly pay you your merger consideration after you have surrendered your certificates (or book entry shares) to the paying agent and provided to the paying agent any other items specified by the letter of transmittal and instructions. The surrendered certificates (or book entry shares) will be cancelled upon delivery of the merger consideration. Interest will not be paid or accrued in respect of cash payments of merger consideration. Parent, Merger Sub, the surviving corporation or the paying agent may reduce the amount of any merger consideration paid to you by any applicable withholding taxes.

        Any portion of the exchange fund (including the proceeds of any investments thereof) that remains unclaimed for one year after the effective time of the merger will be delivered to the surviving corporation. Holders of shares outstanding before the effective time of the merger will thereafter be entitled to look only to the surviving corporation for payment of any claims for merger consideration to which they may be entitled. None of the surviving corporation, Parent, the paying agent or any other person will be liable to any person in respect of any merger consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar laws.

Representations and Warranties

        In the merger agreement, we, Parent and Merger Sub each made representations and warranties relating to, among other things:

•

due organization, good standing and qualification;



•

corporate power and authority to enter into and perform obligations under, and enforceability of, the merger agreement;



•

required regulatory filings and consents and approvals of governmental entities;



•

the absence of conflicts with or defaults under organizational documents, other contracts and applicable laws;



•

litigation; and



•

information supplied for inclusion in this proxy statement.

        In the merger agreement, Parent and Merger Sub also each made representations and warranties relating to capitalization, the availability of the funds necessary to perform their obligations under the merger agreement, the solvency of Parent and the surviving corporation, guarantees and ownership of shares.

54

        We also made representations and warranties relating to, among other things:

•

capital structure, including indebtedness;



•

opinion of our financial advisor;



•

company reports filed with the SEC and financial statements;



•

absence of certain changes or events since December 31, 2006;



•

absence of undisclosed liabilities;



•

compliance with the Employee Retirement Income Security Act of 1974, as amended, and other employee benefit matters;



•

compliance with applicable laws, including regulatory laws;



•

state takeover statutes;



•

environmental matters;



•

taxes;



•

labor matters;



•

intellectual property;



•

insurance;



•

the absence of undisclosed broker's fees;



•

material contracts;



•

regulatory compliance;



•

properties;



•

affiliate transactions;



•

compliance with the Foreign Corrupt Practices Act;



•

matters with respect to material payors and the lack of exclusion from any healthcare program run by any governmental entity; and



•

claims related to our products and services.

        Many of our representations and warranties are qualified by a material adverse effect standard. For purposes of the merger agreement, material adverse effect for our company is defined to mean an event, change, effect, development, condition or occurrence (each of which we refer to as a Change) that, when considered individually or in the aggregate with all other Changes, is or would reasonably be expected to be materially adverse to (x) our ability to timely perform our obligations under and consummate the transactions contemplated by the merger agreement or (y) the condition (financial or otherwise), business, assets, liabilities or results of our and our subsidiaries' operations taken as a whole; provided that no Change to the extent resulting from the following shall constitute or be taken into account in determining whether there has been a material adverse effect under clause (x) or (y):

•

changes in the economy or financial markets generally in the United States or other countries in which we or any of our subsidiaries conduct operations or that are the result of acts of war or terrorism;



•

general changes or developments in any industry in which we and our subsidiaries operate;

55

•

any loss or threatened loss of, or adverse change or threatened adverse change in, our or any of our subsidiaries' relationship with our customers, partners, employees, financing sources or suppliers, or any change in our credit ratings, caused by the pendency or the announcement of the transactions contemplated by the merger agreement;



•

any action or omission expressly required pursuant to the terms of the merger agreement (other than the consummation of the merger itself), or pursuant to the express written request of Parent;



•

changes in GAAP and any foreign equivalents thereof or any law after July 15, 2007;



•

any failure by us to meet any estimates of revenues or earnings for any period ending on or after the date of the merger agreement in and of itself; provided that this exception in this bullet point shall not prevent or otherwise affect a determination that any Change underlying or contributing to such failure has resulted in, or contributed to, a material adverse effect;



•

a decline in the price or trading volume of our common stock on the NYSE in and of itself; provided that the exception in this bullet point shall not prevent or otherwise affect a determination that any Change underlying or contributing to such decline has resulted in, or contributed to, a material adverse effect; and



•

reductions in regulatory reimbursement rates affecting us taking effect after the date of the merger agreement and the Changes resulting therefrom;

unless, in the case of the first, second, fifth and eighth bullet points above, such changes have a disproportionate effect on us and our subsidiaries, taken as a whole, when compared to other companies operating in the same industries in which we or our subsidiaries operate.

Agreements Relating to Our Interim Operations

        We are subject to restrictions on our conduct and operations until the merger is completed. We have agreed that, prior to the effective time of the merger, we will conduct our business in the ordinary and usual course consistent with past practice and use reasonable best efforts to maintain and preserve our business organizations intact and maintain existing relations and goodwill with governmental entities, customers, suppliers, employees and business associates. We have also agreed, with some exceptions, that we will not do any of the following without the prior written consent of Parent:

•

adopt or propose any change in our certificate of incorporation or by-laws or other applicable governing instruments or other similar organizational documents of any of our subsidiaries;



•

merge or consolidate our company or any of our subsidiaries with any other person, except for any such transactions among our wholly-owned subsidiaries, or restructure, reorganize or completely or partially liquidate;



•

acquire assets outside of the ordinary course of business from any other person or with a value or purchase price in the aggregate in excess of $5 million in any transaction or series of related transactions;



•

issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of our or our subsidiaries' capital stock (other than (1) the issuance of shares upon the exercise of stock options set forth in our disclosure letter in accordance with the terms of our stock plans or (2) the issuance of shares by a wholly-owned subsidiary of our company to our company or another wholly-owned subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options (including stock options), warrants or other

56

rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;

•

make any loans, advances or capital contributions to or investments in any person (other than ourselves or any of our direct or indirect wholly-owned subsidiaries) in excess of $4 million in the aggregate;



•

declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of our capital stock (except for dividends or other distributions by any direct or indirect wholly-owned subsidiary to us or to any of our wholly-owned subsidiaries) or enter into any agreement with respect to the voting of our capital stock;



•

reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of our capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (other than the acquisition of any shares tendered by employees in connection with the exercise of our stock options set forth in our disclosure letter in accordance with the terms of our stock plans);



•

incur any indebtedness for borrowed money or guarantee such indebtedness of another person (other than a wholly-owned subsidiary of ours), or issue or sell any debt securities or warrants or other rights to acquire any of our or our subsidiaries' debt securities, except for borrowings and letter of credits issued under our existing revolving credit facility with Wachovia Bank, National Association;



•

except as set forth in the capital budgets set forth in our disclosure letter, make or authorize any capital expenditure in excess of $2 million in the aggregate;



•

make any material changes with respect to accounting policies or procedures, except as required by changes in GAAP (or any foreign equivalent thereof) or law or by a governmental entity;



•

settle, release, waive or compromise any pending or threatened suit, action, claim, arbitration, investigation or litigation or other proceedings (i) for an amount in excess of $1 million or any obligation or liability of ours in excess of such amount, (ii) entailing obligations that would impose any material restrictions on our or our subsidiaries' business or operations or (iii) that is brought by any current, former or purported holder of any of our or our subsidiaries' capital stock or debt securities relating to the transactions contemplated by the merger agreement;



•

make or change any material tax election or tax accounting method, settle or compromise any material tax liability other than in the ordinary course of business consistent with past practice, or agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of taxes other than ordinary course state and local tax inquiries;



•

transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or otherwise dispose of any assets, product lines or businesses of ours or our subsidiaries, other than inventory, supplies and other assets in the ordinary course of business consistent with past practice;



•

except as expressly contemplated by the merger agreement, required pursuant to our benefit plans in effect prior to the date of the merger agreement and listed on our disclosure letter, or as otherwise required by applicable law:



•

grant or provide for any severance or termination payments or benefits to any of our directors or officers (who we refer to as the elected officers), or employees, except, in the case of employees who are not elected officers, in the ordinary course of business consistent with past practice;

57

•

increase the compensation, perquisites or benefits payable to any employee, except, in the case of employees who are not our elected officers, increases in the ordinary course of business consistent with past practice;



•

grant any equity or equity-based awards that may be settled in shares of common stock, preferred shares or any other of our or our subsidiaries' securities or the value of which is linked directly or indirectly, in whole or in part, to the price or value of any shares of common stock, preferred shares or any other of our securities or subsidiary securities;



•

accelerate the vesting or payment of any compensation payable or benefits provided or to become payable or provided to any employee; or



•

terminate or materially amend any existing, or adopt any new, benefit plan (other than changes made in the ordinary course of business consistent with past practice or as may be necessary to comply with applicable laws, in either case that do not materially increase the costs of any such benefit plans);



•

except as required by applicable laws, enter into, amend or extend any material collective bargaining agreement or other labor agreement;



•

except to the extent necessary to take any actions contemplated by the merger agreement, take any action to render inapplicable, or to exempt any third party from, any standstill arrangements or the provisions of any takeover statutes;



•

enter into, amend, cancel or modify any material contract or any contract that would be a material contract if in effect on the date of the merger agreement;



•

cancel any debts or waive any claims or rights of substantial value (including the cancellation, compromise, release or assignment of any indebtedness owed to, or claims held by, us or any of our subsidiaries), except for cancellations made or waivers granted with respect to claims other than indebtedness in the ordinary course of business consistent with past practice which, in the aggregate, are not material or for claims other than indebtedness which are cancelled or waived in connection with the settlement of the actions referred to in, and to the extent permitted by the eleventh bullet above;



•

fail to maintain in full force and effect the material insurance policies covering us and our subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practices;



•

enter into any agreement with a New Jersey governmental entity pursuant to the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. that could reasonably be expected to (i) require us to establish a financial assurance exceeding $1 million or (ii) otherwise result in investigation or remediation liabilities exceeding $1 million in the aggregate; or



•

except as provided in the merger agreement, agree, authorize or commit to do any of the foregoing or any action which would result in any of the closing conditions to the merger not being satisfied or that would reasonably be expected to result in a material adverse effect.

        In addition, notwithstanding anything to the contrary in the foregoing, we are required to:

•

consult with Parent reasonably in advance of any decision to (1) hire any "Executive Officer" (as such term is defined in Rule 3b-7 promulgated under the Exchange Act), promote any existing Executive Officer to a more senior position or otherwise appoint or promote any current director, employee, independent contractor or consultant to an Executive Officer position or (2) adopt any material modification or material deviation from our annual operating plan, as previously provided to Parent; and in each case shall consider in good faith the reasonable recommendations of Parent in connection therewith; and

58

•

except as prohibited by applicable law or as would jeopardize attorney-client privilege (but in such event, use our commercially reasonable efforts to keep Parent fully informed), keep Parent informed, on a current basis, of any material events, discussions, notices or changes with respect to any criminal or material regulatory investigation or action involving us or any of our subsidiaries.

Solicitation Period

        The merger agreement provides that from the date of the merger agreement until 12:01 a.m. New York City time on September 4, 2007 (which September 4, 2007 date we refer to as the no-shop period start date), we and our subsidiaries and our respective officers, directors, employees, agents, advisors and other representatives (which we collectively refer to as our representatives) had the right to:

•

initiate, solicit, facilitate and encourage takeover proposals (as defined below), including by way of providing access to non-public information to any other person or group of persons pursuant to a confidentiality agreement that contains terms that are no less favorable in the aggregate to us than the confidentiality agreement signed by Blackstone; provided that we promptly made available to Parent and Merger Sub any material non-public information concerning us or our subsidiaries that was made available to any person given such access which was not previously made available to Parent and Merger Sub; and



•

enter into and maintain or continue discussions or negotiations with respect to takeover proposals or otherwise cooperate with or assist or participate in, or facilitate any inquiries, proposals, discussions or negotiations regarding a takeover proposal.

        Within two business days after the no-shop period start date, we were required to advise Parent of the number (but not identity) of excluded parties (as defined below) and provide to Parent a written summary of the material terms of any takeover proposal (as defined below) from an excluded party. We have notified Parent that there are no excluded parties.

        For purposes of the merger agreement, a takeover proposal means any proposal or offer, on its most recently amended and modified terms, from any person or group of persons other than Parent and its affiliates relating to:

•

any direct or indirect acquisition or purchase of 15% or more of our or our subsidiaries' consolidated assets or consolidated revenues;



•

any direct or indirect acquisition or purchase of 15% or more of our outstanding common stock;



•

any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more of our outstanding common stock; or



•

any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving us that if consummated would result in holders of our shares of common stock immediately prior to such transaction owning less than 85% of our outstanding voting power or our resulting parent entity immediately following such transaction, other than the transactions contemplated by the merger agreement.

        For purposes of the merger agreement, an excluded party refers to any person, group of persons or group that includes any person (so long as such person and the other members of such group, if any, who were members of such group immediately prior to the no-shop period start date constitute at least 50% of the equity financing of such group at all times following the no-shop period start date and prior to the termination of the merger agreement) from whom we received after July 15, 2007 and prior to the no-shop period start date a written takeover proposal that the board determined in good faith is bona fide and constituted or could reasonably be expected to result in a superior proposal (as defined under "—No Solicitation of Competing Proposals After the Solicitation Period" below); provided that

59

any excluded party would cease to be an excluded party at such time as the takeover proposal made by such excluded party failed to constitute either a superior proposal or, in the good faith judgment of the board, a takeover proposal that could reasonably be expected to result in a superior proposal.

No Solicitation of Competing Proposals After the Solicitation Period

        The merger agreement provides that, except as may relate to any excluded party and subject to certain other exceptions described below, we and our subsidiaries and our respective directors and officers will, and we will use our reasonable best efforts to cause our other representatives to:

•

on the no-shop period start date, immediately cease any discussions or negotiations with any persons that may be ongoing with respect to a takeover proposal; and



•

from the no-shop period start date until the effective time of the merger or, if earlier, the termination of the merger agreement, not (A) solicit, initiate or knowingly facilitate or encourage (including by way of furnishing non-public information other than in the ordinary course of business) any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to result in, a takeover proposal or (B) engage in, continue or otherwise participate in any discussions or negotiations regarding a takeover proposal.

        Notwithstanding the restrictions on solicitation described above, if at any time following the no-shop period start date and prior to obtaining stockholder approval of the merger agreement, we receive a written takeover proposal by any person or group of persons made after the no-shop period start date and which did not arise from or in connection with a breach by us of our non-solicitation covenants, we and our representatives may contact such person or group of persons to clarify the terms and conditions of such takeover proposal. Additionally, we may:

•

pursuant to a confidentiality agreement that contains terms that are no less favorable in the aggregate to us than the confidentiality agreement signed by Blackstone, furnish information (including non-public information) with respect to us and our subsidiaries to the person or group of persons who made such takeover proposal; and



•

engage in or otherwise participate in discussions and negotiations regarding such takeover proposal;

        if our board of directors or any committee thereof determines in good faith:

•

after consultation with a financial advisor and outside legal counsel that such takeover proposal constitutes or could reasonably be expected to lead to a superior proposal; and



•

after consultation with outside legal counsel, that failure to take such action would reasonably be expected to result in a breach of its fiduciary duties under applicable law.

        The merger agreement requires us to advise Parent of the receipt by us of any takeover proposal made on or after the no-shop period start date within 48 hours of receipt by us, and during such 48 hour period, we shall provide Parent the number of persons or group of persons making such takeover proposals and a written summary of the material terms of such takeover proposal.

        For purposes of the merger agreement, a superior proposal means any bona fide takeover proposal made in writing and not solicited in violation of our covenants, on its most recently amended and modified terms, with all thresholds in the definition of takeover proposal changed to 50%, that is on terms that our board determines, in its good faith judgment, after consultation with a financial advisor and outside legal counsel, would, if consummated, be more favorable from a financial point of view to our stockholders than the transactions contemplated by the merger agreement after taking into account

60

the likelihood and timing of consummation and all material legal, financial (including the financing terms of any such proposal), regulatory and other aspects of such takeover proposal.

Special Meeting of DJO Stockholders; Recommendation of Our Board of Directors

        Requirement to Make Recommendation.     The merger agreement provides that we will take, subject to applicable law and our certificate of incorporation and bylaws, all reasonable action necessary to convene a special meeting of our stockholders as promptly as reasonably practicable to consider and vote upon the approval of the merger agreement. Except in certain limited circumstances described below, our board must recommend, and use its reasonable best efforts to solicit, approval of the merger agreement by our stockholders.

        Subject to certain exceptions, the merger agreement prohibits our board from:

•

withdrawing, qualifying or modifying, or proposing publicly to withdraw, qualify or modify, such recommendation in a manner adverse to Parent;



•

approving or recommending, or proposing publicly to approve or recommend, any takeover proposal; or



•

causing or allowing us or any of our subsidiaries to enter into any letter of intent, acquisition agreement or any similar agreement or understanding (other than certain confidentiality agreements) relating to a takeover proposal.

        We refer to the actions described in the first two bullet points as an adverse recommendation change.

        Change of Recommendation Other than in Response to Takeover Proposal.     Other than in response to a takeover proposal, our board of directors may make an adverse recommendation change at any time prior to the adoption of the merger agreement by the stockholders, if our board of directors determines in good faith, after consultation with its outside counsel, that failure to do so (for reasons other than those relating to our then-current operating or financial performance, unless such operating or financial performance has been materially impacted by an event or result outside the ordinary course of our business and not contemplated by the financial projections provided by us to Parent) would be a breach of its fiduciary duties under applicable law; provided that before taking the foregoing action, we must provide Parent with the opportunity to adjust the terms and conditions of the merger agreement such that the adverse recommendation change is no longer required.

        Change of Recommendation/Termination in Response to Superior Proposal.     Further, at any time prior to obtaining stockholder approval of the merger agreement, if we have received a bona fide written takeover proposal that has not been withdrawn or abandoned and that our board of directors concludes in good faith constitutes a superior proposal after giving effect to the match rights described below, if applicable, our board of directors may:

•

make an adverse recommendation change; and/or



•

terminate the merger agreement to concurrently enter into a definitive agreement with respect to such superior proposal, provided we concurrently with such termination pay the $18.7 million or $37.4 million termination fee as described in further detail below in "—Effects of Terminating the Merger Agreement."

        Our board of directors may only take the actions described in the immediately preceding paragraph if it has concluded in good faith, after consultation with its outside counsel, that failure to do so would reasonably be expected to result in a breach of its fiduciary duties under applicable law.

61

        Furthermore, our board of directors may not take either of the foregoing actions unless we have:

•

provided Parent and Merger Sub with written notice of the superior proposal at least five calendar days in advance of the intent to effect an adverse recommendation change; and



•

negotiated in good faith with Parent and Merger Sub in the five calendar days following Parent's and Merger Sub's receipt of notice of the superior proposal to make such adjustments to the terms and conditions of the merger agreement so that the takeover proposal ceases to constitute a superior proposal.

        If during such period any revisions are made to the superior proposal that our board of directors in its good faith judgment determines are material (which would include an adjustment to the purchase price), we will be required to deliver a new written notice to Parent and Merger Sub and restart the match period but the notice period will be reduced to two business days.

        Nothing in the merger agreement will prohibit us or our board from complying with Rules 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any disclosure to our stockholders if, in the good faith judgment of the board or any committee thereof, after consultation with outside counsel, the failure to do so would reasonably be expected to violate its obligations under applicable law or is otherwise required under applicable law; provided, however, that neither we nor our board of directors (or any committee thereof) will be permitted to recommend that our stockholders tender any securities in connection with any tender or exchange offer (or otherwise approve, endorse or recommend any takeover proposal), unless our board of directors makes an adverse recommendation change (any such disclosure (other than a "stop, look and listen" communication or similar type contemplated by Rule 14d-9(f) under the Exchange Act) will be considered an adverse recommendation change unless our board of directors expressly reaffirms its recommendation at least two business days prior to our stockholders' meeting if Parent has delivered to us a written request to do so).

Filings and Other Actions

        In the merger agreement, we and Parent have agreed to cooperate with each other and to use our respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things reasonably necessary, proper or advisable under the merger agreement and applicable laws to consummate and make effective the merger and the other transactions contemplated by the merger agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental entity in order to consummate the merger or any of the other transactions contemplated by the merger agreement. This includes Parent's willingness to sell or otherwise dispose of, or hold separate pending such disposition, and promptly to effect the sale, disposal and holding separate of, such assets, categories of assets or businesses or other segments of our company after the occurrence of the effective time of the merger and/or Parent or either's respective subsidiaries (in the case of our company, after the occurrence of the effective time of the merger), if such action should be necessary to avoid, prevent, eliminate or remove the actual, anticipated or threatened (1) commencement of any administrative, judicial or other proceeding in any forum by any government antitrust entity or (2) issuance of any order, decree, decision, determination or judgment that would restrain, prevent, enjoin or otherwise prohibit consummation of the merger by any government antitrust entity.

        However, Parent shall not be required to take any action which (A) is reasonably likely to have a material adverse effect on the condition (financial or otherwise), business, assets, liabilities or results of operations of either Parent (or any of its subsidiaries) or us, taken individually or in the aggregate, or (B) is not conditioned on the consummation of the merger. A sale, divestiture, holding separate or other extraordinary action with respect to any assets of the business or Parent and its subsidiaries or us

62

that generated revenues in excess of $200 million in the aggregate in fiscal year 2006 will be deemed to have a material adverse effect for purposes of this paragraph.

Employee Benefits

        Parent has agreed that, during the period commencing at the effective time of the merger and ending on the later of December 31, 2008 and the first anniversary of the effective time of the merger, our employees as of the effective time of the merger (which we refer to as the current employees) will be provided with:

•

base salary and bonus opportunities (including annual and quarterly bonus opportunities and long-term incentive opportunities, but excluding equity and equity- based benefits), which are no less than the base salary and bonus opportunities provided by us and our subsidiaries immediately prior to the effective time of the merger;



•

pension and welfare benefits and perquisites (excluding equity and equity-based benefits) that are no less favorable in the aggregate than those provided by us and our subsidiaries immediately prior to the effective time of the merger; and



•

severance benefits that are no less favorable than those set forth in our separation pay plan in effect on the date of the merger agreement and provided to Parent.

        Parent will cause any employee benefit plans of Parent or the surviving corporation which the current employees are entitled to participate in from and after the effective time of the merger to take into account for purposes of eligibility, vesting and benefit accrual, service by the current employees with us or any of our subsidiaries prior to the effective time of the merger as if such service were with Parent, to the same extent such service was credited under a comparable plan of us or any of our subsidiaries prior to the effective time of the merger (except to the extent it would result in a duplication of benefits or benefit accruals under any defined benefit pension plan).

Employee Stock Purchase Plan

        The merger agreement provides that prior to the effective time of the merger, the then-current offering period under the dj Orthopedics, Inc. 2001 Employee Stock Purchase Plan (which we refer to as the DJO ESPP) will be terminated and all funds in each participant's account shall be applied toward the purchase of shares of common stock on the terms and conditions set forth under the DJO ESPP. Thereafter, such shares will be entitled to receive the merger consideration on the same basis as other shares of common stock. The merger agreement also requires that we ensure that no new offering periods under the DJO ESPP commence after July 15, 2007.

Indemnification and Insurance of Our Directors and Officers

        The merger agreement provides that, from and after the effective date of the merger, Parent will cause the surviving corporation to indemnify each of our and our subsidiaries' present and former directors and officers against any costs, expenses, judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, arising out of or related to such person's service as a director or officer at or prior to the effective time of the merger, to the fullest extent permitted under applicable law.

        Prior to the effective time of the merger, we will and, if we are unable to, Parent will cause the surviving corporation as of the effective time of the merger, to obtain and fully pay the premium for "tail" insurance policies with a claims period of at least six years from and after the effective time of the merger from a carrier with the same or better credit rating as our current insurance carrier with respect to directors' and officers' liability insurance, as well as the existing separate Side A policy for our directors and officers, and fiduciary liability insurance, with benefits and levels of coverage that are

63

at least as favorable, in the aggregate, as our existing policies with respect to matters existing or occurring at or prior to the effective time of the merger. If we and the surviving corporation for any reason fail to obtain such "tail" insurance policies as of the effective time of the merger, the surviving corporation of the merger will, and Parent will cause the surviving corporation to, either (1) continue to maintain in effect for a period of at least six years from and after the effective time of the merger the directors' and officers' liability insurance and fiduciary liability insurance in place as of the date of the merger agreement with benefits and levels of coverage at least as favorable as provided in our existing policies as of the date of the merger agreement or (2) use reasonable best efforts to purchase comparable directors' and officers' liability insurance and fiduciary liability insurance for such six-year period with benefits and levels of coverage at least as favorable as provided in our existing policies as of the date of the merger agreement (although neither the surviving corporation nor Parent will be required to expend more than an amount per year equal to 200% of the current annual premiums paid by us for such insurance).

Financing

        Parent has agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable to arrange its debt financing as promptly as practicable on the terms and conditions described in its debt financing commitment, including using reasonable best efforts to:

•

maintain in effect the debt financing commitment, subject to Parent's replacement and amendment rights;



•

satisfy on a timely basis all conditions applicable to Parent and Merger Sub to obtaining the debt financing set forth in the debt financing commitment that are within their control (including by consummating the financing pursuant to the terms of the equity financing commitment and by assisting in the syndication or marketing of the financing contemplated by the debt financing commitment); and



•

enter into definitive financing agreements on the terms and conditions contemplated by the financing commitment or on other terms reasonably acceptable to Parent that would not adversely impact in any material respect the ability of Parent or Merger Sub to consummate the transactions contemplated by the merger agreement.

        If any portion of the debt financing becomes unavailable on the terms and conditions contemplated in the debt financing commitment, Parent has agreed to use its reasonable best efforts to arrange to obtain alternative financing from alternative sources on terms not materially less beneficial to Parent and Merger Sub in an amount sufficient to consummate the transactions contemplated by the merger agreement as promptly as practicable following the occurrence of such event but in no event later than March 15, 2008.

        Parent is required to give us prompt notice of any material breach by any party to the financing commitments of which Parent or Merger Sub becomes aware, or any termination of the financing commitments. Parent is also required to keep us informed on a reasonably current basis of the status of its efforts to arrange the debt financing and provide copies of all documents related to the debt financing (other than any ancillary documents subject to confidentiality agreements) to us.

        See "—Effective Time; Closing; Marketing Period" beginning on page 51 for information on when Parent may become required to borrow funds under its bridge financings and to use the proceeds thereof to effectuate the closing. Notwithstanding the foregoing financing requirements, Parent's compliance with such requirements shall not relieve Parent of its obligation to consummate the transactions contemplated by the merger agreement whether or not the debt financing is available.

64

Cooperation of DJO

        Prior to the closing of the merger, we are required to provide to Parent and Merger Sub, and shall cause our subsidiaries to, and to use our reasonable best efforts to cause the respective officers, employees and advisors, including legal and accounting, of our company and our subsidiaries to, provide to Parent and Merger Sub all cooperation reasonably requested by Parent that is reasonably necessary or customary in connection with the Parent's financing (provided that such requested cooperation does not unreasonably interfere with the business or operations of our company and our subsidiaries), including:

•

participating in a reasonable or customary number of meetings, presentations, road shows, due diligence sessions and sessions with rating agencies;



•

using commercially reasonable efforts to assist with the preparation of materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents necessary or customary in connection with Parent's financing;



•

using commercially reasonable best efforts to furnish Parent and Merger Sub as promptly as reasonably practicable with financial and other pertinent information regarding our company and our subsidiaries as may be reasonably requested by Parent in connection with the debt financing, including information customarily included in private placement memoranda relating to private placements under Rule 144A promulgated under the Securities Act of 1933, as amended, which we refer to as the Securities Act, to consummate the offering(s) of debt securities contemplated by Parent's debt financing commitment at the time during our fiscal year such offering(s) will be made as soon as such financial and other information becomes available, including all financial statements and financial data of the type required by Regulation S-X and Regulation S-K under the Securities Act (other than Rule 3-10 of Regulation S-X, but including pro forma financial information and summary guarantor/non-guarantor financial information of the type customarily included in offering documents used in private placements under Rule 144A, and summary quarterly financial information and without giving effect to the executive compensation and related person disclosure rules related to SEC Release Nos. 33-8732A; 34-54302A; IC-27444A), including audits thereof to the extent so required (which audits need to be unqualified);



•

cooperating with and using reasonable best efforts to assist Parent in procuring accountants' comfort letters and consents, legal opinions, surveys and title insurance and other customary documentation required by the debt financing commitment, in each case as reasonably requested by Parent and, if reasonably requested by Parent or Merger Sub, to cooperate with and assist Parent or Merger Sub in obtaining such documentation and items;



•

using commercially reasonable efforts to provide monthly financial statements (excluding footnotes) within the time frame, and to the extent, we prepare such financial statements in the ordinary course of business;



•

using reasonable best efforts to assist Parent in procuring the execution and delivery, as of the effective time of the merger, by the officers of the surviving corporation and its subsidiaries of any customary pledge and security documents, other definitive financing documents, or other certificates, legal opinions or documents as may be reasonably requested by Parent (including a certificate of the chief financial officer of the surviving corporation or any subsidiary with respect to solvency matters) and otherwise reasonably facilitating, to the extent reasonably requested by Parent, the pledging of collateral (including cooperation, to the extent reasonably requested by Parent, in connection with the pay-off of existing indebtedness and the release of related liens);



•

taking all actions to the extent reasonably requested by Parent necessary to (A) permit the prospective lenders involved in the financing to evaluate our current assets, cash management

65

and accounting systems, policies and procedures relating thereto for the purposes of establishing collateral arrangements and (B) establish bank and other accounts and blocked account agreements and lock box arrangements in connection with the foregoing; and

•

taking all corporate actions, subject to the occurrence of the closing of the merger, reasonably requested by Parent in connection with the consummation of the debt financing by the surviving corporation and its subsidiaries immediately following the effective time of the merger;

provided that neither we nor any of our subsidiaries shall be required to pay any commitment or other similar fee or incur any other cost or expense that is not reimbursed by Parent in connection with the debt financing prior to the effective time of the merger.

Conditions to the Merger

Conditions to Each Party's Obligations

        Each party's obligation to effect the merger is subject to the satisfaction or waiver of the following conditions:

•

the merger agreement must have been approved by the affirmative vote of at least a majority of the votes entitled to be cast by the holders of our outstanding shares of common stock;



•

all necessary consents and approvals of any governmental entity required for the consummation of the transactions contemplated by the merger agreement shall have been obtained, any waiting period (and any extension thereof) applicable to the consummation of the merger under the HSR Act and the German Act Against Restraints of Competition shall have expired or been terminated; and



•

no temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court or agency of competent jurisdiction or other law, rule, legal restraint or prohibition shall be in effect preventing, restraining or rendering illegal the consummation of the merger.

Conditions to Obligations of Parent and Merger Sub

        The obligations of Parent and Merger Sub to effect the merger are subject to the satisfaction or waiver by Parent of the following additional conditions:

•

our representation and warranty that since December 31, 2006 there has not been a change that, individually or in the aggregate, has had, or would be reasonably expected to have, a material adverse effect must be true and correct in all respects as of the date of the merger agreement and as of the closing date as though made on and as of such date and time;



•

our representations and warranties with respect to our capital structure, our authority to enter into and complete the merger, state takeover statutes and brokers and finders must each be true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct in all respects as of such earlier date);



•

all other representations and warranties made by us in the merger agreement, with the exception of those listed above (disregarding all qualifications and exceptions contained therein regarding materiality or material adverse effect), must each be true and correct as of the date of the merger agreement and as of the closing date of the merger as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as

66

of such earlier date), except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a material adverse effect;

•

we must have performed in all material respects all obligations required to be performed by us under the merger agreement at or prior to the closing date of the merger; and



•

we must deliver to Parent and Merger Sub at closing an officer's certificate signed on behalf of our company by a senior executive officer of our company with respect to the satisfaction of the foregoing conditions relating to representations, warranties, obligations, covenants and agreements.

Conditions to DJO's Obligations

        Our obligation to effect the merger is subject to the satisfaction or waiver of the following additional conditions:

•

the representations and warranties made by Parent in the merger agreement must be true and correct as of the date of the merger agreement and as of the closing date of the merger as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not prevent Parent from consummating the merger and performing its obligations under the merger agreement;



•

Parent and Merger Sub must have performed in all material respects all obligations required to be performed by them under the merger agreement at or prior to the closing date of the merger; and



•

Parent and Merger Sub must deliver to us at closing a certificate with respect to the satisfaction of the foregoing conditions relating to representations, warranties, obligations, covenants and agreements.

Termination of the Merger Agreement

        The merger agreement may be terminated at any time prior to the consummation of the merger, whether before or after stockholder approval has been obtained:

•

by mutual written consent of us and Parent;



•

by either us or Parent if:



•

the merger is not consummated by 11:59 p.m., New York City time, March 15, 2008, which we refer to as the termination date, whether the termination date is before or after the date of approval by the stockholders;



•

our stockholders, at the stockholders' meeting or at any adjournment or postponement thereof at which the merger agreement was voted on, fail to approve the merger agreement; or



•

any legal restraints permanently restraining, enjoining or otherwise prohibiting consummation of the merger become final and non-appealable (whether before or after the approval of our stockholders);

provided that in each case the right to terminate the merger agreement pursuant to the foregoing provisions is not available to any party that has breached in any material respect its obligations under

67

the merger agreement and such breach proximately contributed to the occurrence of the failure of a condition to the consummation of the merger;

•

by us:



•

prior to obtaining stockholder approval, pursuant to the provisions of the merger agreement described under "—Special Meeting of DJO Stockholders; Recommendation of Our Board of Directors—Change of Recommendation/Termination in Response to Superior Proposal" and provided that concurrently with doing so we pay the termination fee as described below;



•

if Parent or Merger Sub has breached any of its representations, warranties, covenants or agreements under the merger agreement in a manner that would give rise to the failure of certain conditions to closing and the breach is not curable or, if curable, is not cured prior to the earlier of (i) 30 days after written notice is given by us to Parent or (ii) two business days prior to the termination date; provided that we are not then in breach of the merger agreement so as to cause the closing conditions relating to Parent and Merger Sub's obligations to consummate the merger not to be satisfied; or



•

if (1) all of the conditions to the obligations of Parent and Merger Sub (other than the delivery of officers' certificates) have been satisfied and (2) on the earlier of (A) 5:00 p.m., New York City time on the termination date or (B) 5:00 p.m., New York City time on the last day of the marketing period (or, if earlier, such date designated by Parent), Parent and Merger Sub shall have failed to consummate the merger at such time, including because none of Parent, Merger Sub or the surviving corporation shall have obtained the proceeds pursuant to the debt financing (or alternative debt financing as permitted by the merger agreement) sufficient to consummate the transactions contemplated by the merger agreement;



•

by Parent if:



•

our board of directors or any committee thereof shall have made, or resolved to make, an adverse recommendation change or we have failed to include in the proxy statement the recommendation of the board of directors in favor of the adoption of the merger agreement; or



•

we have breached any of our representations, warranties, covenants or agreements under the merger agreement in a manner that would give rise to the failure of certain conditions to closing and the breach is not curable or, if curable, is not cured prior to the earlier of (i) 30 days after written notice is given by Parent to us or (ii) two business days prior to the termination date; provided that neither Parent nor Merger Sub is then in breach of the merger agreement so as to cause certain conditions to closing to not be satisfied.

Effects of Terminating the Merger Agreement

        If the merger agreement is terminated, the merger agreement becomes void and there shall be no liability or obligation on the part of DJO, Parent or Merger Sub or their respective officers, directors, stockholders or affiliates except with respect to the limited guaranty, certain expense reimbursement and indemnification provisions and the termination and general provisions of the agreement and liability for any willful and knowing breach of the merger agreement, and as provided under "—Fees and Expenses."

        Under certain circumstances we have agreed to pay Parent a termination fee which will be (i) $18.7 million if the fee becomes payable in connection with a takeover proposal from an excluded party or (ii) $37.4 million in all other circumstances. Because we did not receive any takeover proposals

68

during the go-shop period and there are no excluded parties, any termination fee payable by us would be in the amount of $37.4 million. We also have agreed to pay all of Parent's documented expenses up to $5.0 million under specified circumstances.

        We will:

•

pay the termination fee if Parent terminates the merger agreement because our board of directors has made, or resolved to make, an adverse recommendation change or we failed to include the recommendation of our board of directors or any committee thereof in favor of the adoption of the merger agreement in this proxy statement;



•

pay the termination fee if we terminate the merger agreement pursuant to the provisions of the merger agreement described under "—Special Meeting of DJO Stockholders; Recommendation of Our Board of Directors—Change of Recommendation/Termination in Response to Superior Proposal;"



•

pay the termination fee if we or Parent terminates the merger agreement because the merger is not consummated by the termination date, provided that the reason the merger has not been consummated by the termination date is not attributable to a breach by Parent of its obligations under the merger agreement, and:



•

prior to the termination a takeover proposal had been made to us, publicly announced or publicly made known and not publicly withdrawn; and



•

within 12 months after such termination, we or any of our subsidiaries enter into a definitive agreement with respect to, or consummate, any takeover proposal;



•

pay the termination fee, less the amount of any expenses previously paid to Parent, if we or Parent terminate the merger agreement because our stockholders, at the stockholders' meeting or any adjournment thereof at which the merger agreement was voted on, fail to approve the merger agreement, and:



•

prior to the stockholders' meeting a takeover proposal had been made to us, publicly announced or publicly made known and not publicly withdrawn; and



•

within 12 months after such termination, we or any of our subsidiaries enter into a definitive agreement with respect to, or consummate, any takeover proposal;



•

pay the termination fee, less the amount of any expenses previously paid to Parent, if Parent terminates the merger agreement due to a breach of our representations, warranties, covenants or agreements such that certain closing conditions would not be satisfied and such breach is incapable of being cured by the termination date, and:



•

prior to the breach giving rise to Parent's termination right, a takeover proposal had been made to us, publicly announced or publicly made known and not publicly withdrawn; and



•

within 12 months after such termination, we or any of our subsidiaries enter into a definitive agreement with respect to, or consummate, any takeover proposal;

        For purposes of the preceding three bullet points, all references to "15%" in the definition of takeover proposal shall be deemed to be references to "more than 50%."

•

pay Parent's expenses up to a total maximum payment by us of $5 million if we or Parent terminate the merger agreement because our stockholders, at the stockholders' meeting or any adjournment thereof at which the merger agreement was voted on, fail to approve the merger agreement, provided that if at the time of the stockholder's meeting there shall have been an adverse recommendation change unrelated to a superior proposal we shall pay Parent (in lieu of its expenses) the termination fee.

69

Parent has agreed to pay us a parent termination fee of $37.4 million if we terminate the merger agreement because of a failure by Parent to obtain the debt financing and at the time of such termination and failure the closing conditions have then been satisfied (other than the delivery of officers' certificates).

Limited Remedies; Maximum Recovery

        Payment of the termination fee by us is not to be in lieu of damages incurred by Parent and Merger Sub as a result of our willful or intentional material breach of the merger agreement or alter the rights of Parent and Merger Sub for specific performance as set forth in the merger agreement, but is otherwise the sole and exclusive remedy of Parent and Merger Sub in connection with any termination of the merger agreement by Parent or Merger Sub that entitles Parent or Merger Sub to a termination fee.

        Payment of the termination fee by Parent is not to be in lieu of damages incurred by us as a result of Parent's or Merger Sub's willful or intentional material breach of the merger agreement but is otherwise our sole and exclusive remedy in connection with any termination of the merger agreement by us that entitles us to a termination fee. To the extent that we have incurred damages in connection with the merger agreement to which we are entitled to recover, the maximum aggregate liability of Parent and Merger Sub and their respective representatives and affiliates for those losses or damages will be limited to $100 million in the aggregate and in no event can we seek to recover damages in excess of such amount from Parent, Merger Sub, Blackstone or any of their respective representatives or affiliates. In addition, we cannot seek specific performance against Parent or Merger Sub, except with respect to confidentiality.

Fees and Expenses

        Except as otherwise described under "—Effects of Terminating the Merger Agreement," and subject to certain limited exceptions, all costs and expenses incurred in connection with the merger agreement and the merger will be paid by the party incurring such expenses whether or not the merger is consummated.

Modification or Amendment

        Subject to the provisions of applicable law, at any time prior to the effective time of the merger, the parties may modify or amend the merger agreement by written agreement among the parties.

General Provisions

        The merger agreement is to be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

        The general provisions section of the merger agreement also contains additional provisions regarding the non-survival of representations and warranties and agreements, waiver of conditions, notices, counterparts, third-party beneficiaries, waiver of jury trial, assignment, severability, enforcement of the merger agreement, obligations of subsidiaries and the surviving corporation and the interpretation and construction of the merger agreement.

70

APPRAISAL RIGHTS

        The following discussion is not a complete statement of appraisal rights under Delaware law and is qualified in its entirety by the full text of Section 262 of the DGCL, which explains the procedures and requirements for exercising statutory appraisal rights and which is attached as Annex C to this proxy statement and incorporated herein by reference. All references in Section 262 of the DGCL and in this summary to a "stockholder" are to the record holder of the shares of our common stock as to which appraisal rights are asserted. Stockholders intending to exercise appraisal rights should carefully review Annex C . This proxy statement constitutes notice to our stockholders concerning the availability of appraisal rights under Section 262 of the DGCL.

         A stockholder who wishes to exercise appraisal rights should carefully review the following discussion and Annex C, as failure to timely and fully comply with the procedures required by Section 262 of the DGCL will result in the loss of appraisal rights.

        Under the DGCL, our stockholders who do not wish to accept the $50.25 per share merger consideration have the right, subject to compliance with the requirements summarized below, to dissent and demand an appraisal by the Delaware Court of Chancery of the "fair value" of their shares of our common stock and to be paid in cash such amount in lieu of the merger consideration that they would otherwise be entitled to receive if the merger is consummated. For this purpose, the fair value of our shares of common stock will be their fair value, excluding any element of value arising from the consummation or expectation of consummation of the merger, and including a fair rate of interest, if any, as determined by that court.

        Stockholders who desire to exercise their appraisal rights must satisfy all of the conditions of Section 262 of the DGCL, including:

•

Written Demand for Appraisal Prior to the Vote at the Special Meeting.     A stockholder must deliver to us a written demand for appraisal, meeting the requirements of Section 262 of the DGCL, before the taking of the stockholders' vote on the adoption of the merger agreement at the special meeting. Voting against or abstaining with respect to the adoption of the merger agreement, failing to return a proxy or returning a proxy voting against or abstaining with respect to the proposal to adopt the merger agreement will not constitute the making of a written demand for appraisal. The written demand for appraisal must be separate from any proxy, abstention from the vote on the merger agreement or vote against the merger agreement. The written demand must reasonably inform us of the identity of the stockholder and of the stockholder's intent thereby to demand appraisal of their shares. Failure to timely deliver a written demand for appraisal will cause a stockholder to lose his, her or its appraisal rights.



•

Refrain from Voting For the Proposal to Adopt the Merger Agreement.     In addition to making a written demand for appraisal, a stockholder must not vote his, her or its shares of our common stock for the proposal to adopt the merger agreement. A submitted proxy not marked "AGAINST" or "ABSTAIN" will be voted in favor of the proposal to adopt the merger agreement and will result in the waiver of appraisal rights. A stockholder that has not submitted a proxy will not waive his, her or its appraisal rights solely by failing to vote if the stockholder satisfies all other provisions of Section 262 of the DGCL.



•

Continuous Ownership of DJO Common Stock.     A stockholder must also continuously hold his, her or its shares of our common stock from the date the stockholder makes the written demand for appraisal through the effective time of the merger. Accordingly, a stockholder who is the record holder of shares of our common stock on the date the written demand for appraisal is made but who thereafter transfers the shares prior to the effective time of the merger will lose any right to appraisal with respect to such shares.

71

•

Petition with the Chancery Court.     Within 120 days after the effective time of the merger (but not thereafter), either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL, which are briefly summarized above, must file a petition in the Delaware Court of Chancery demanding a judicial determination of the value of the shares of our common stock held by all stockholders who are entitled to appraisal rights. This petition in effect initiates a court proceeding in Delaware. We, as the surviving corporation, do not have any intention at this time to file such a petition if a demand for appraisal is made and stockholders seeking to exercise appraisal rights should not assume that we will file such a petition or that we will initiate any negotiations with respect to the fair value of such shares. Accordingly, because we have no obligation to file such a petition, if no stockholder files such a petition with the Delaware Court of Chancery within 120 days after the effective time of the merger, appraisal rights will be lost, even if a stockholder has fulfilled all other requirements to exercise appraisal rights. If such a petition is filed, the Delaware Court of Chancery could determine that the fair value of shares of our common stock is more than, the same as, or less than the merger consideration.

         Neither voting (in person or by proxy) against, abstaining from voting on or failing to vote on the proposal to adopt the merger agreement will constitute a written demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote.

        A demand for appraisal must be executed by or on behalf of the stockholder of record, fully and correctly, as such stockholder's name appears on the stock certificate. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, this demand must be executed by or for the fiduciary. If the shares are owned by or for more than one person, as in a joint tenancy or tenancy in common, such demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record. However, the agent must identify the record owner and expressly disclose the fact that, in exercising the demand, he is acting as agent for the record owner. A person having a beneficial interest in DJO common stock held of record in the name of another person, such as a broker or nominee, must act promptly to cause the record holder to follow the steps summarized below in a timely manner to perfect whatever appraisal rights the beneficial owners may have.

        A stockholder who elects to exercise appraisal rights should mail or deliver his, her or its written demand to us at our principal executive offices at DJO Incorporated, 1430 Decision Street, Vista, California 92081, Attention: Corporate Secretary. The written demand for appraisal should state the stockholder's name and mailing address, the number of shares of our common stock owned by the stockholder and must reasonably inform us that the stockholder intends thereby to demand appraisal of his, her or its shares of our common stock. Within ten days after the effective time of the merger, we will provide notice of the effective time to all of our stockholders who have complied with Section 262 of the DGCL and have not voted to adopt the merger agreement.

        A record holder, such as a broker, fiduciary, depositary or other nominee, who holds shares of our common stock as a nominee for others, may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares as to which such person is the record owner. In such case, the written demand must set forth the number of shares covered by such demand. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares of common stock outstanding in the name of such record owner.

        Within 120 days after the effective time of the merger (but not thereafter), any stockholder who has satisfied the requirements of Section 262 of the DGCL may deliver to us a written demand for a statement listing the aggregate number of shares not voted in favor of adoption of the merger agreement and with respect to which demands for appraisal have been received and the aggregate

72

number of holders of such shares. We, as the surviving corporation in the merger, must mail such written statement to the stockholder within ten days after the stockholders' request is received by us or within ten days after the latest date for delivery of a demand for appraisal under Section 262 of the DGCL, whichever is later.

        Upon the filing of a petition in the Court of Chancery of the State of Delaware within 120 days after the effective time of the merger as set forth above, by a stockholder demanding a determination of the fair value of our common stock, service of a copy of the petition must be made upon us. We must then, within 20 days after service, file in the office of the Register in Chancery in which the petition was filed, a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached with us. If we file a petition, the petition must be accompanied by the duly verified list. The Register in Chancery, if so ordered by the court, will give notice of the time and place fixed for the hearing of such petition by registered or certified mail to us and to the stockholders shown on the list at the addresses therein stated, and notice also will be given by publishing a notice at least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware, or such publication as the court deems advisable. The court must approve the forms of the notices by mail and by publication, and we must bear the costs of the notices.

        At the hearing on the petition, the Court of Chancery of the State of Delaware will determine which stockholders have become entitled to appraisal rights. The court may require the stockholders who have demanded an appraisal for their shares (and who hold stock represented by certificates) to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings and the Court of Chancery of the State of Delaware may dismiss the proceedings as to any stockholder that fails to comply with such direction.

        After determining which stockholders are entitled to appraisal rights, the court will appraise the shares owned by these stockholders, determining the "fair value" of such shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest to be paid, if any, upon the amount determined to be the fair value. In determining such fair value, the court shall take into account all relevant factors. Our stockholders considering seeking appraisal of their shares should note that the fair value of their shares determined under Section 262 of the DGCL could be more than, the same as or less than the consideration they would receive pursuant to the merger agreement if they did not seek appraisal of their shares. Stockholders should also note that investment banking opinions as to the fairness from a financial point of view of the consideration payable in a merger are not opinions as to fair value under Section 262 of the DGCL.

        The costs of the appraisal proceeding may be determined by the court and taxed against the parties as the court deems equitable under the circumstances. Upon application of a stockholder who has perfected appraisal rights, the court may order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, be charged pro rata against the value of all shares entitled to appraisal.

        If a stockholder demands appraisal rights in compliance with the requirements of Section 262 of the DGCL, then, after the effective time of the merger, such stockholder will not be entitled to: (i) vote such stockholder's shares of common stock for any purpose; (ii) receive payment of dividends or other distributions on such stockholder's shares that are payable to stockholders of record at a date after the effective time; or (iii) receive payment of any consideration provided for in the merger agreement.

        A stockholder may withdraw his, her or its demand for appraisal rights by a writing withdrawing his, her or its demand for appraisal and accepting the merger consideration at any time within 60 days

73

after the effective time of the merger, or at any time thereafter with our written approval. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery shall be dismissed as to any stockholder without the approval of the court, and such approval may be conditioned upon such terms as the court deems just. If any stockholder withdraws his, her or its demand for appraisal rights, then his, her or its shares of our common stock will be automatically converted into the right to receive $50.25 per share in cash pursuant to the merger agreement, without interest.

         Any stockholder wishing to exercise appraisal rights is urged to consult legal counsel before attempting to exercise appraisal rights. Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the loss of a stockholder's statutory appraisal rights.

74