Exhibit 10.7

 

DJO INCORPORATED DIRECTORS’

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

This DJO INCORPORATED DIRECTORS’ NONSTATUTORY STOCK OPTION AGREEMENT (this
“Agreement”), dated as of March [      ], 2008 (the “Effective Date”), is made
by and between DJO Incorporated, a Delaware corporation (the “Company”), and
[                        ] (the “Optionee”).

 

WHEREAS, the Optionee serves as a member of the Company’s Board of Directors
(the “Board”); and

 

WHEREAS, the Company desires to grant the Optionee a nonqualified stock option
in recognition of the Optionee’s service to the Company and to further align the
Optionee’s interests with those of the Company’s stockholders.

 

NOW THEREFORE, the parties to this Agreement hereby agree as follows:

 

1.             CERTAIN DEFINITIONS.  CAPITALIZED TERMS USED, BUT NOT OTHERWISE
DEFINED, IN THIS AGREEMENT WILL HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE
COMPANY’S 2007 INCENTIVE STOCK PLAN (THE “PLAN”).  AS USED IN THIS AGREEMENT:

 

(A)           “BLACKSTONE” MEANS EACH OF BLACKSTONE CAPITAL PARTNERS V L.P. A
CAYMAN ISLANDS LIMITED PARTNERSHIP, BLACKSTONE FAMILY INVESTMENT PARTNERSHIP V
L.P., A CAYMAN ISLANDS LIMITED PARTNERSHIP, BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP V-A L.P., A CAYMAN ISLANDS LIMITED PARTNERSHIP, BLACKSTONE
PARTICIPATION PARTNERSHIP V L.P., A CAYMAN ISLANDS LIMITED PARTNERSHIP AND EACH
OF THEIR RESPECTIVE AFFILIATES.

 

(B)           “CAUSE” SHALL MEAN THE REMOVAL OF THE OPTIONEE FROM THE BOARD IN
CONNECTION WITH (I) THE OPTIONEE’S INDICTMENT FOR, CONVICTION OF, OR PLEA OF
NOLO CONTENDERE TO, (A) A FELONY (OTHER THAN TRAFFIC-RELATED) UNDER THE LAWS OF
THE UNITED STATES OR ANY STATE THEREOF OR ANY SIMILAR CRIMINAL ACT IN A
JURISDICTION OUTSIDE THE UNITED STATES OR (B) A CRIME INVOLVING MORAL TURPITUDE
THAT COULD BE INJURIOUS TO THE COMPANY OR ITS REPUTATION, OR (II) ANY ACT OF
FRAUD BY THE OPTIONEE IN THE PERFORMANCE OF THE OPTIONEE’S DUTIES.

 

(C)           “CHANGE IN CONTROL” MEANS (I) THE SALE OR DISPOSITION, IN ONE OR A
SERIES OF RELATED TRANSACTIONS, OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
COMPANY TO ANY “PERSON” OR “GROUP” (AS SUCH TERMS ARE DEFINED IN SECTIONS
13(D)(3) AND 14(D)(2) OF THE EXCHANGE ACT) OTHER THAN A SALE OR DISPOSITION
WHERE BLACKSTONE RETAINS ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY,
OR (II) ANY PERSON OR GROUP, OTHER THAN BLACKSTONE, IS OR BECOMES THE
‘BENEFICIAL OWNER” (AS DEFINED IN RULES 13D-3 AND 13D-5 UNDER THE EXCHANGE ACT),
DIRECTLY OR INDIRECTLY, OF MORE THAN 50% OF THE TOTAL VOTING POWER OF THE VOTING
STOCK OF THE COMPANY, INCLUDING BY WAY OF MERGER, CONSOLIDATION OR OTHERWISE
(OTHER THAN AN OFFERING OF STOCK TO THE GENERAL PUBLIC THROUGH A REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION); OR (III) THE
APPROVAL BY THE STOCKHOLDERS OF THE COMPANY OF A PLAN OF COMPLETE LIQUIDATION OF
THE COMPANY.

 

(D)           “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

(E)           “COMPANY” HAS THE MEANING SPECIFIED IN THE INTRODUCTORY PARAGRAPH
OF THIS AGREEMENT OR ITS SUCCESSORS; PROVIDED, THAT TO THE EXTENT THAT ANY CLASS
OF EQUITY SECURITIES OF A MEMBER OF THE COMPANY’S CONTROLLED GROUP BECOMES
PUBLICLY TRADED ON AN ESTABLISHED SECURITIES MARKET, THE TERM “COMPANY” SHALL BE
DEEMED TO REFER TO SUCH PUBLICLY TRADED ENTITY.

 

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(F)            “COMPENSATION COMMITTEE” MEANS THE EXECUTIVE COMPENSATION
COMMITTEE OF THE BOARD.

 

(G)           “DISABILITY” SHALL MEAN THE OPTIONEE IS DISABLED AS DETERMINED
UNDER SECTION 409A(A)(2)(C) OF THE CODE.

 

(H)           “FAIR MARKET VALUE” HAS THE MEANING SPECIFIED IN THE PLAN, EXCEPT
AS EXPRESSLY SET FORTH HEREIN.

 

(I)            “OPTION” HAS THE MEANING SPECIFIED IN SECTION 2 OF THIS
AGREEMENT.

 

(J)            “OPTION PRICE” HAS THE MEANING SPECIFIED IN SECTION 2 OF THIS
AGREEMENT.

 

(K)           “OPTION SHARES” HAS THE MEANING SPECIFIED IN SECTION 2 OF THIS
AGREEMENT.

 

(L)            “STOCKHOLDERS AGREEMENT” SHALL MEAN THAT CERTAIN STOCKHOLDERS
AGREEMENT APPLICABLE TO THE OPTIONEE, AS AMENDED FROM TIME TO TIME.

 

2.             GRANT OF STOCK OPTION.  SUBJECT TO AND UPON THE TERMS,
CONDITIONS, AND RESTRICTIONS SET FORTH IN THIS AGREEMENT AND IN THE PLAN, THE
COMPANY HAS GRANTED TO THE OPTIONEE AN OPTION (THE “OPTION”) TO PURCHASE
[        ] SHARES OF THE COMPANY’S COMMON STOCK (THE “OPTION SHARES”) AT A PRICE
(THE “OPTION PRICE”) OF $[        ] PER SHARE, WHICH IS THE FAIR MARKET VALUE
PER SHARE ON THE EFFECTIVE DATE.  THE OPTION MAY BE EXERCISED FROM TIME TO TIME
IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

 

3.             TERM OF OPTION.  THE TERM OF THE OPTION SHALL COMMENCE ON THE
EFFECTIVE DATE AND, UNLESS EARLIER TERMINATED IN ACCORDANCE WITH SECTION 7
HEREOF, SHALL EXPIRE TEN (10) YEARS FROM THE EFFECTIVE DATE.

 

4.             RIGHT TO EXERCISE.

 

(A)           UNLESS TERMINATED AS HEREINAFTER PROVIDED, OPTION SHARES SHALL
BECOME VESTED AND EXERCISABLE IN ACCORDANCE WITH THE SCHEDULE SET FORTH
IMMEDIATELY BELOW, PROVIDED THE OPTIONEE CONTINUES SERVE AS A MEMBER OF THE
BOARD AS OF EACH SUCH DATE.

 

Vesting Date

 

Percentage of the Option Shares that Vest

 

1st Anniversary of the Effective Date

 

33

%

2nd Anniversary of the Effective Date

 

33

%

3rd Anniversary of the Effective Date

 

34

%

 

(B)           NOTWITHSTANDING THE FOREGOING, THE OPTION SHARES SHALL BECOME
IMMEDIATELY EXERCISABLE UPON THE OCCURRENCE OF A CHANGE IN CONTROL IF THE
OPTIONEE IS A BOARD MEMBER ON THE DATE OF THE CONSUMMATION OF SUCH CHANGE IN
CONTROL.

 

(C)           THE OPTIONEE SHALL BE ENTITLED TO THE PRIVILEGES OF OWNERSHIP WITH
RESPECT TO OPTION SHARES PURCHASED AND DELIVERED TO THE OPTIONEE UPON THE
EXERCISE OF ALL OR PART OF THIS OPTION, SUBJECT TO SECTION 8 HEREOF.

 

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5.             OPTION NONTRANSFERABLE.  THE OPTIONEE MAY NOT TRANSFER OR ASSIGN
ALL OR ANY PART OF THE OPTION OTHER THAN BY WILL OR BY THE LAWS OF DESCENT AND
DISTRIBUTION.  THIS OPTION MAY BE EXERCISED, DURING THE LIFETIME OF THE
OPTIONEE, ONLY BY THE OPTIONEE, OR IN THE EVENT OF THE OPTIONEE’S LEGAL
INCAPACITY, BY THE OPTIONEE’S GUARDIAN OR LEGAL REPRESENTATIVE ACTING ON BEHALF
OF THE OPTIONEE IN A FIDUCIARY CAPACITY UNDER STATE LAW AND COURT SUPERVISION. 
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE OPTIONEE MAY TRANSFER OR
ASSIGN ALL OR ANY PART OF THE OPTION TO “FAMILY MEMBERS” (AS DEFINED IN THE
GENERAL INSTRUCTIONS TO FORM S-8 OF THE SECURITIES ACT OF 1933) OR TRUSTS,
PARTNERSHIPS OR SIMILAR ENTITIES FOR THE BENEFIT OF SUCH FAMILY MEMBERS, FOR
ESTATE PLANNING PURPOSES OR IN CONNECTION WITH THE DISPOSITION OF THE OPTIONEE’S
ESTATE.

 

6.             NOTICE OF EXERCISE; PAYMENT.

 

(A)           TO THE EXTENT THEN EXERCISABLE, THE OPTION MAY BE EXERCISED IN
WHOLE OR IN PART BY WRITTEN NOTICE TO THE COMPANY STATING THE NUMBER OF OPTION
SHARES FOR WHICH THE OPTION IS BEING EXERCISED AND THE INTENDED MANNER OF
PAYMENT.  THE DATE OF SUCH NOTICE SHALL BE THE EXERCISE DATE.  PAYMENT EQUAL TO
THE AGGREGATE OPTION PRICE OF THE OPTION SHARES BEING PURCHASED PURSUANT TO AN
EXERCISE OF THE OPTION MUST BE TENDERED IN FULL WITH THE NOTICE OF EXERCISE TO
THE COMPANY IN ONE OR A COMBINATION OF THE FOLLOWING METHODS AS SPECIFIED BY THE
OPTIONEE IN THE NOTICE OF EXERCISE:  (I) CASH IN THE FORM OF CURRENCY OR CHECK
OR BY WIRE TRANSFER AS DIRECTED BY THE COMPANY, (II) SOLELY FOLLOWING AN IPO IN
SHARES OTHERWISE BEING TRADED ON AN ESTABLISHED SECURITIES MARKET, THROUGH THE
SURRENDER TO THE COMPANY OF SHARES OWNED BY THE OPTIONEE FOR AT LEAST SIX MONTHS
AS VALUED AT THEIR FAIR MARKET VALUE ON THE DATE OF EXERCISE, (III) THROUGH NET
EXERCISE, USING SHARES TO BE ACQUIRED UPON EXERCISE OF THE OPTION, SUCH SHARES
BEING VALUED AT THEIR FAIR MARKET VALUE (WHICH FOR SUCH PURPOSE SHALL HAVE THE
MEANING SET FORTH IN THE STOCKHOLDERS AGREEMENT) ON THE DATE OF EXERCISE, OR
(IV) THROUGH SUCH OTHER FORM OF CONSIDERATION AS IS DEEMED ACCEPTABLE BY THE
BOARD.

 

(B)           AS SOON AS PRACTICABLE UPON THE COMPANY’S RECEIPT OF THE
OPTIONEE’S NOTICE OF EXERCISE AND PAYMENT, THE COMPANY SHALL DIRECT THE DUE
ISSUANCE OF THE OPTION SHARES SO PURCHASED.

 

(C)           AS A FURTHER CONDITION PRECEDENT TO THE EXERCISE OF THIS OPTION IN
WHOLE OR IN PART, THE OPTIONEE SHALL COMPLY WITH ALL REGULATIONS AND THE
REQUIREMENTS OF ANY REGULATORY AUTHORITY HAVING CONTROL OF, OR SUPERVISION OVER,
THE ISSUANCE OF THE SHARES OF COMMON STOCK AND IN CONNECTION THEREWITH SHALL
EXECUTE ANY DOCUMENTS WHICH THE BOARD SHALL IN ITS SOLE DISCRETION DEEM
NECESSARY OR ADVISABLE.

 

7.             TERMINATION OF AGREEMENT.  THE AGREEMENT AND THE OPTION GRANTED
HEREBY SHALL TERMINATE AUTOMATICALLY AND WITHOUT FURTHER NOTICE ON THE EARLIEST
OF THE FOLLOWING DATES:

 

(A)           ONE (1) YEAR FOLLOWING THE DATE THAT THE OPTIONEE IS NO LONGER
SERVING AS A BOARD MEMBER AS A RESULT OF THE OPTIONEE’S DEATH OR DISABILITY OR,
IF EARLIER, THE EXPIRATION DATE OF THE TERM OF THE OPTION; PROVIDED, HOWEVER,
THAT IT SHALL BE A CONDITION TO THE EXERCISE OF THE OPTION IN THE EVENT OF THE
OPTIONEE’S DEATH THAT THE PERSON EXERCISING THE OPTION SHALL (I) HAVE AGREED IN
A FORM SATISFACTORY TO THE COMPANY TO BE BOUND BY THE PROVISIONS OF THIS
AGREEMENT AND THE STOCKHOLDERS AGREEMENT AND (II) COMPLY WITH ALL REGULATIONS
AND THE REQUIREMENTS OF ANY REGULATORY AUTHORITY HAVING CONTROL OF, OR
SUPERVISION OVER, THE ISSUANCE OF THE SHARES OF COMMON STOCK AND IN CONNECTION
THEREWITH SHALL EXECUTE ANY DOCUMENTS WHICH THE BOARD SHALL IN ITS SOLE
DISCRETION DEEM NECESSARY OR ADVISABLE;

 

(B)           THE DATE THAT THE OPTIONEE IS REMOVED FROM THE BOARD BY THE
COMPANY WITHOUT CAUSE OR RESIGNS FROM THE BOARD, UPON WHICH ALL UNVESTED OPTION
SHARES WILL BE

 

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FORFEITED IMMEDIATELY AND TERMINATE AND ALL VESTED OPTION SHARES SHALL REMAIN
EXERCISABLE UNTIL THE LESSER OF (I) NINETY (90) CALENDAR DAYS FOLLOWING THE
OPTIONEE’S DATE OF REMOVAL OR (II) THE REMAINING TERM OF THE OPTION;

 

(C)           THE DATE THAT THE OPTIONEE IS REMOVED FROM THE BOARD BY THE
COMPANY FOR CAUSE, UPON WHICH ALL VESTED AND UNVESTED OPTIONS WILL BE FORFEITED
IMMEDIATELY AND TERMINATE; AND

 

(D)           TEN (10) YEARS FROM THE EFFECTIVE DATE.

 

Notwithstanding the foregoing, upon the Optionee no longer serving as a member
of the Board for any reason other than the termination of the Optionee’s service
for Cause, if the last day to exercise vested Options occurs after the date on
which the Company’s common stock is publicly traded on a national stock exchange
and during a lock-up period or securities law blackout period, the otherwise
applicable post-service Option exercise period shall continue, but not beyond
the remaining term of the Option, until thirty (30) calendar days after the
first day when the Optionee is no longer precluded from selling stock acquired
upon exercise of the Option for either of such reasons.  Notwithstanding
anything to the contrary herein, nothing herein shall prohibit the Optionee from
exercising his or her vested Options through net exercise, using Shares to be
acquired upon exercise of the Option, during any lock-up or securities law
blackout period to the extent not prohibited by law.

 

In the event that the Optionee no longer serves as a Board member due to the
circumstances described in Section 7(c) hereof, this Agreement shall terminate
at the time of such termination notwithstanding any other provision of this
Agreement and the Optionee’s Option will cease to be exercisable to the extent
exercisable as of such cessation of service and will not be or become
exercisable after such cessation of service.

 

8.             STOCKHOLDERS AGREEMENT.  THE OPTIONEE AGREES THAT ANY OPTION
SHARES THAT THE OPTIONEE RECEIVES PURSUANT TO THIS AGREEMENT OR UNDER THE PLAN
ARE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT.

 

9.             DIVIDEND EQUIVALENTS.  UPON THE PAYMENT OF ANY ORDINARY OR
EXTRAORDINARY CASH DIVIDEND (OR SIMILAR DISTRIBUTIONS) TO HOLDERS OF COMPANY
COMMON STOCK, THE OPTIONEE WILL BE CREDITED WITH DIVIDEND EQUIVALENT RIGHTS WITH
RESPECT TO THE OPTIONS AS FOLLOWS.  DIVIDEND EQUIVALENTS RELATING TO VESTED
OPTIONS SHALL BE PAID TO THE OPTIONEE IN CASH AT THE SAME TIME DIVIDENDS ARE
PAID TO HOLDERS OF COMPANY COMMON STOCK.  DIVIDEND EQUIVALENTS RELATING TO
UNVESTED OPTIONS WILL BE CREDITED TO A NOTIONAL ACCOUNT MAINTAINED ON THE BOOKS
OF THE COMPANY FOR THE BENEFIT OF THE OPTIONEE, WHICH ACCOUNT SHALL NOT ACCRUE
INTEREST.  THE OPTIONEE WILL BECOME VESTED IN SUCH ACCOUNT AT THE SAME TIME AS
THE OPTIONS TO WHICH THE DIVIDEND EQUIVALENTS RELATE VEST AND BECOME
EXERCISABLE, AND SUCH VESTED AMOUNTS SHALL BE PAYABLE IN CASH UPON THE
APPLICABLE VESTING DATE, AND IN NO EVENT LATER THAN 2½ MONTHS FOLLOWING THE END
OF THE CALENDAR YEAR IN WHICH THE APPLICABLE VESTING DATE OCCURS.  UNVESTED
AMOUNTS HELD IN SUCH ACCOUNT SHALL BE FORFEITED BY THE OPTIONEE UPON THE DATE
THE OPTIONEE CEASES TO BE A MEMBER OF THE BOARD; PROVIDED, HOWEVER, THAT IF SUCH
CESSATION RESULTS IN THE CONTINUATION OF UNVESTED OPTIONS AS PROVIDED IN
SECTION 7(A) ABOVE, FORFEITURE OF DIVIDEND EQUIVALENTS SHALL BE DELAYED UNTIL
THE 1ST ANNIVERSARY OF SUCH CESSATION.

 

10.           TAXES AND WITHHOLDING.  THE COMPANY OR ANY SUBSIDIARY MAY
WITHHOLD, OR REQUIRE THE OPTIONEE TO REMIT TO THE COMPANY OR ANY SUBSIDIARY, AN
AMOUNT SUFFICIENT TO SATISFY FEDERAL, STATE, LOCAL OR FOREIGN TAXES (INCLUDING
THE OPTIONEE’S FICA OBLIGATION) IN CONNECTION WITH ANY PAYMENT MADE OR BENEFIT
REALIZED BY THE OPTIONEE OR OTHER PERSON UNDER THIS AGREEMENT

 

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OR OTHERWISE, AND IF THE AMOUNTS AVAILABLE TO THE COMPANY OR ANY SUBSIDIARY FOR
SUCH WITHHOLDING ARE INSUFFICIENT, IT SHALL BE A CONDITION TO THE RECEIPT OF
SUCH PAYMENT OR THE REALIZATION OF SUCH BENEFIT THAT THE OPTIONEE OR SUCH OTHER
PERSON MAKE ARRANGEMENTS SATISFACTORY TO THE COMPANY OR ANY SUBSIDIARY FOR
PAYMENT OF THE BALANCE OF SUCH TAXES REQUIRED TO BE WITHHELD.  THE OPTIONEE MAY
ELECT TO HAVE SUCH WITHHOLDING OBLIGATION SATISFIED BY SURRENDERING TO THE
COMPANY OR ANY SUBSIDIARY A PORTION OF THE OPTION SHARES THAT ARE ISSUED OR
TRANSFERRED TO THE OPTIONEE UPON THE EXERCISE OF AN OPTION (BUT ONLY TO THE
EXTENT OF THE MINIMUM WITHHOLDING REQUIRED BY LAW), AND THE OPTION SHARES SO
SURRENDERED BY THE OPTIONEE SHALL BE CREDITED AGAINST ANY SUCH WITHHOLDING
OBLIGATION AT THE FAIR MARKET VALUE (WHICH FOR SUCH PURPOSE SHALL HAVE THE
MEANING SET FORTH IN THE STOCKHOLDERS AGREEMENT) OF SUCH SHARES ON THE DATE OF
SUCH SURRENDER.

 

11.           COMPLIANCE WITH LAW.  THE COMPANY SHALL MAKE REASONABLE EFFORTS TO
COMPLY WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS; PROVIDED, HOWEVER,
THAT NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE OPTION SHALL NOT
BE EXERCISABLE IF THE EXERCISE THEREOF WOULD RESULT IN A VIOLATION OF ANY SUCH
LAW.

 

12.           ADJUSTMENTS.

 

(A)           THE BOARD SHALL MAKE OR PROVIDE FOR SUCH SUBSTITUTION OR
ADJUSTMENTS IN THE NUMBER OF OPTION SHARES COVERED BY THIS OPTION, IN THE OPTION
PRICE APPLICABLE TO SUCH OPTION, AND IN THE KIND OF SHARES COVERED THEREBY
AND/OR SUCH OTHER EQUITABLE SUBSTITUTION OR ADJUSTMENTS AS THE BOARD MAY
DETERMINE TO PREVENT DILUTION OR ENLARGEMENT OF THE OPTIONEE’S RIGHTS THAT
OTHERWISE WOULD RESULT FROM (I) ANY STOCK DIVIDEND, EXTRAORDINARY CASH-DIVIDEND,
STOCK SPLIT, COMBINATION OF SHARES, RECAPITALIZATION, OR OTHER CHANGE IN THE
CAPITAL STRUCTURE OF THE COMPANY, (II) ANY MERGER, CONSOLIDATION, SPIN-OFF,
SPLIT-OFF, SPIN-OUT, SPLIT-UP, RECLASSIFICATION, REORGANIZATION, PARTIAL OR
COMPLETE LIQUIDATION, OR OTHER DISTRIBUTION OF ASSETS OR ISSUANCE OF RIGHTS OR
WARRANTS TO PURCHASE SECURITIES, OR (III) ANY OTHER CORPORATE TRANSACTION OR
EVENT HAVING AN EFFECT SIMILAR TO ANY OF THE FOREGOING.  IN THE CASE OF A CHANGE
IN CONTROL, SUCH SUBSTITUTIONS AND ADJUSTMENTS INCLUDE, WITHOUT LIMITATION,
CANCELING ANY AND ALL OPTIONS IN EXCHANGE FOR CASH PAYMENTS EQUAL TO THE EXCESS,
IF ANY, OF THE VALUE OF THE CONSIDERATION PAID TO A SHAREHOLDER OF AN OPTION
SHARE OVER THE OPTION PRICE PER SHARE SUBJECT TO SUCH OPTION IN CONNECTION WITH
SUCH AN ADJUSTMENT EVENT.

 

(B)           TO THE EXTENT THAT ANY EQUITY SECURITIES OF ANY MEMBER OF THE
COMPANY’S CONTROLLED GROUP BECOME PUBLICLY TRADED, AT SUCH TIME ALL OPTIONS
SHALL BE EXCHANGED, IN A MANNER CONSISTENT WITH SECTIONS 409A AND 424 OF THE
CODE, FOR OPTIONS WITH THE SAME INTRINSIC VALUE IN THE PUBLICLY-TRADED ENTITY,
AND ALL SHARES SHALL BE EXCHANGED FOR SHARES OF COMMON STOCK WITH THE SAME
AGGREGATE VALUE OF THE PUBLICLY-TRADED ENTITY.

 

13.           RELATION TO OTHER BENEFITS.  ANY ECONOMIC OR OTHER BENEFIT TO THE
OPTIONEE UNDER THIS AGREEMENT SHALL NOT BE TAKEN INTO ACCOUNT IN DETERMINING ANY
BENEFITS TO WHICH THE OPTIONEE MAY BE ENTITLED UNDER ANY PROFIT-SHARING,
RETIREMENT OR OTHER BENEFIT OR COMPENSATION PLAN MAINTAINED BY THE COMPANY OR
ANY SUBSIDIARY AND SHALL NOT AFFECT THE AMOUNT OF ANY LIFE INSURANCE COVERAGE
AVAILABLE TO ANY BENEFICIARY UNDER ANY LIFE INSURANCE PLAN COVERING EMPLOYEES OR
NONEMPLOYEE DIRECTORS OF THE COMPANY OR ANY SUBSIDIARY.

 

14.           AMENDMENTS.  ANY AMENDMENT TO THE PLAN SHALL BE DEEMED TO BE AN
AMENDMENT TO THIS AGREEMENT TO THE EXTENT THAT THE AMENDMENT IS APPLICABLE
HERETO.

 

15.           SEVERABILITY.  IF ONE OR MORE OF THE PROVISIONS OF THIS AGREEMENT
IS INVALIDATED FOR ANY REASON BY A COURT OF COMPETENT JURISDICTION, ANY
PROVISION SO INVALIDATED SHALL BE DEEMED

 

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TO BE SEPARABLE FROM THE OTHER PROVISIONS HEREOF, AND THE REMAINING PROVISIONS
HEREOF SHALL CONTINUE TO BE VALID AND FULLY ENFORCEABLE.

 

16.           RELATION TO PLAN.  THIS AGREEMENT IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE PLAN.  IN THE EVENT OF ANY INCONSISTENT PROVISIONS BETWEEN
THIS AGREEMENT AND THE PLAN, THE PLAN SHALL GOVERN.  THE BOARD ACTING PURSUANT
TO THE PLAN, AS CONSTITUTED FROM TIME TO TIME, SHALL, EXCEPT AS EXPRESSLY
PROVIDED OTHERWISE HEREIN, HAVE THE RIGHT TO DETERMINE ANY QUESTIONS WHICH ARISE
IN CONNECTION WITH THE OPTION OR ITS EXERCISE.

 

17.           SUCCESSORS AND ASSIGNS.  THE PROVISIONS OF THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF, AND BE BINDING UPON, THE SUCCESSORS, ADMINISTRATORS,
HEIRS, LEGAL REPRESENTATIVES AND ASSIGNS OF THE OPTIONEE, AND THE SUCCESSORS AND
ASSIGNS OF THE COMPANY.

 

18.           GOVERNING LAW.  THE INTERPRETATION, PERFORMANCE, AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF AND ALL
PARTIES, INCLUDING THEIR SUCCESSORS AND ASSIGNS, CONSENT TO THE JURISDICTION OF
THE STATE AND FEDERAL COURTS OF NEW YORK.

 

19.           PRIOR AGREEMENT.  AS OF THE EFFECTIVE DATE, THIS AGREEMENT
SUPERSEDES ANY AND ALL PRIOR AND/OR CONTEMPORANEOUS AGREEMENTS, EITHER ORAL OR
IN WRITING, BETWEEN THE PARTIES HERETO, OR BETWEEN EITHER OR BOTH OF THE PARTIES
HERETO AND THE COMPANY, WITH RESPECT TO THE SUBJECT MATTER HEREOF.  EACH PARTY
TO THIS AGREEMENT ACKNOWLEDGES THAT NO REPRESENTATIONS, INDUCEMENTS, PROMISES,
OR OTHER AGREEMENTS, ORALLY OR OTHERWISE, HAVE BEEN MADE BY ANY PARTY, OR ANYONE
ACTING ON BEHALF OF ANY PARTY, PERTAINING TO THE SUBJECT MATTER HEREOF, WHICH
ARE NOT EMBODIED HEREIN, AND THAT NO PRIOR AND/OR CONTEMPORANEOUS AGREEMENT,
STATEMENT OR PROMISE PERTAINING TO THE SUBJECT MATTER HEREOF THAT IS NOT
CONTAINED IN THIS AGREEMENT SHALL BE VALID OR BINDING ON EITHER PARTY.

 

20.           NOTICES.  FOR ALL PURPOSES OF THIS AGREEMENT, ALL COMMUNICATIONS,
INCLUDING WITHOUT LIMITATION NOTICES, CONSENTS, REQUESTS OR APPROVALS, REQUIRED
OR PERMITTED TO BE GIVEN HEREUNDER WILL BE IN WRITING AND WILL BE DEEMED TO HAVE
BEEN DULY GIVEN WHEN HAND DELIVERED OR DISPATCHED BY ELECTRONIC FACSIMILE
TRANSMISSION (WITH RECEIPT THEREOF CONFIRMED), OR FIVE BUSINESS DAYS AFTER
HAVING BEEN MAILED BY UNITED STATES REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, OR THREE BUSINESS DAYS AFTER HAVING BEEN SENT BY A
NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE SUCH AS FEDERAL EXPRESS, UPS, OR
PUROLATOR, ADDRESSED TO THE COMPANY (TO THE ATTENTION OF THE SECRETARY OF THE
COMPANY) AT ITS PRINCIPAL EXECUTIVE OFFICES AND TO THE OPTIONEE AT HIS PRINCIPAL
RESIDENCE, OR TO SUCH OTHER ADDRESS AS ANY PARTY MAY HAVE FURNISHED TO THE OTHER
IN WRITING AND IN ACCORDANCE HEREWITH, EXCEPT THAT NOTICES OF CHANGES OF ADDRESS
SHALL BE EFFECTIVE ONLY UPON RECEIPT.

 

21.           COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL BUT ALL OF WHICH
TOGETHER WILL CONSTITUTE ONE AND THE SAME AGREEMENT.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and the Optionee has executed this
Agreement, as of the day and year first above written.

 

 

 

DJO INCORPORATED:

 

 

 

 

 

DONALD ROBERTS

 

Executive Vice President, General Counsel and Secretary

 

 

I hereby agree to be bound by the terms of the Plan, this Agreement and the
Stockholder’s Agreement.  I hereby further agree that all the decisions and
determinations of the Board shall be final and binding.

 

 

 

OPTIONEE:

 

 

 

 

 

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