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                                                                   EXHIBIT 10.16


                               SEVERANCE AGREEMENT

         THIS SEVERANCE AGREEMENT (this "AGREEMENT"), is made this 19th day of
September, 1995, by and between ENCORE(R) ORTHOPEDICS, INC., a Texas
corporation, with its principal office located at 8920 Business Park Drive,
Suite 380, Austin, Texas 78759, (the "COMPANY"), and HARRY L. ZIMMERMAN, an
individual resident at 2628 Barton Hills Drive, Austin, Texas 78704 (the
"EMPLOYEE" or the "EXECUTIVE").

                                   WITNESSETH

         WHEREAS, the Employee is employed by the Company as its Vice President
- General Counsel pursuant to an employment agreement dated August 26, 1994
(such employment agreement as it may be amended or supplemented from time to
time and any successor agreement being referred to as the "EMPLOYMENT
AGREEMENT"); and

         WHEREAS, the Board of Directors of the Company (the "BOARD") has
approved the Chief Executive Officer of the Company entering into severance
agreements with key executives of the Company; and

         WHEREAS, the Employee is a key executive of the Company and has been
selected by the Chief Executive Officer of the Company to be offered a severance
agreement; and

         WHEREAS, the Board believes that if the Company should receive or learn
of any proposal from a third person concerning a possible business combination
with the Company, or an acquisition of equity securities or a substantial
portion of the assets of the Company, it is important that the Company should be
able to rely upon the Executive to continue in his position and that the Board
and the Chief Executive Officer should be able to receive and rely upon his
advice as to the best interests of the Company and its shareholders, without
concern that the Executive might be distracted by any personal uncertainties and
risks created by such a proposal; and

         WHEREAS, should the Company receive any such proposals, in addition to
the Executive's regular duties, he may be called upon to assist in the
assessment of such proposal, to advise management and the Board whether such
proposals would be in the best interests of the Company and its shareholders,
and to take such other actions as the Board may determine to be appropriate; and

         WHEREAS, the Company wishes to be assured that it will have the
continued dedication of the Executive and the availability of his advice and
counsel despite the possibility, threat or occurrence of a bid to take over
control of the Company; and

         WHEREAS, the Company wishes to induce the Executive to remain in the
employment of the Company under such circumstances; and


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         WHEREAS, the Executive is willing to give the Company such assurances
and to enter into the other covenants contained in this Agreement; and

         NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

         1.       DEFINITIONS.

         As used in this Agreement, the following terms shall have the meanings
set forth below:

                  (a) "CAUSE" shall have the same meaning as "discharge for
         cause" as defined in Section 1.5.2 of the Employment Agreement as well
         as include the repeated violation by the Executive of his obligations
         under this Agreement which are demonstrably willful and deliberate on
         the part of the Executive and which are not redeemed in a reasonable
         period of time after receipt of written notice from the Company.

                  (b) "CHANGE IN CONTROL" means any of the following events:

                           (i) the acquisition by any person, including a
                  "group" as defined in Section 13(d)(3) of the Securities
                  Exchange Act of 1934, of beneficial ownership of shares of
                  capital stock or other voting securities of the Company that
                  have thirty-three and one third percent (33 1/3%) or more of
                  either (A) the then outstanding shares of the Company's common
                  stock or (B) the combined voting power of the Company's then
                  outstanding voting securities that are entitled to vote
                  generally for the election of the Board;

                           (ii) the sale or other disposition by the Company to
                  an unrelated third party of all or substantially all of the
                  Company's assets;

                           (iii) the consummation of a reorganization, merger,
                  or consolidation involving the Company if as a result of such
                  transaction persons who were shareholders of the Company
                  immediately before the reorganization, merger or consolidation
                  do not immediately thereafter own, directly or indirectly,
                  more than fifty percent (50%) of the combined voting power of
                  the then outstanding voting securities of the reorganized,
                  merged or consolidated Company that are entitled to vote
                  generally for the election of the board of such entity; or

                           (iv) the failure for any reason of individuals who
                  constitute the Incumbent Board to continue to constitute at
                  least a majority of the Board.

                  (d) "DISABILITY" means the total and permanent inability of
         the Executive due to illness, accident or other physical or mental
         incapacity to perform the usual duties of his employment under the
         Employment Agreement for a substantially continuous period of one
         hundred eighty (180) days, as determined by a physician selected by the
         Company and


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         acceptable to the Executive or the Executive's legal representative
         (which agreement as to acceptability will not be unreasonably
         withheld).

                  (e)      "GOOD REASON" means any of the following:

                           (i) the assignment to the Executive of any duties
                  inconsistent in any respect with the Executive's position
                  (including status, offices, titles and reporting
                  requirements), authority, duties or responsibilities
                  contemplated by the Employment Agreement, or any other action
                  by the Company which results in a diminution in such position,
                  authority, duties or responsibilities, excluding for this
                  purpose an isolated, insubstantial and inadvertent action that
                  is not taken in bad faith and that is remedied by the Company
                  promptly after receipt of notice thereof from the Executive;

                           (ii)  the reduction in the overall level of the
                  Executive's compensation or benefits;

                           (iii) the Company's requiring the Executive to be
                  based at any office or location other than the Company's
                  executive offices in the Austin, Texas SMSA, except for travel
                  reasonably required in the performance of the Executive's
                  responsibilities;

                           (iv) any significant increase in the travel
                  requirements of the Executive's position; for the purposes of
                  this clause (iv) a "significant" increase would include any
                  circumstances under which the Executive is or will be
                  required, during any six-month period, to spend more than
                  twice the number of nights away from home as were necessary
                  during the previous six-month period; or

                           (v) an inability on the part of the Executive to
                  carry out the duties of his position in good faith as a result
                  of a major disagreement between the Executive and other
                  executives of the Company who have been appointed after a
                  Change of Control concerning strategic or policy issues
                  affecting the Company or its business as a whole.

                  (f) "INCUMBENT BOARD" means those individuals who are members
         of the Board on the date of this Agreement and any person who
         subsequently becomes a member of the Board and whose election, or whose
         nomination for election by the Company shareholders, was approved by a
         vote of at least a majority of the directors then comprising the
         Incumbent Board.

         2. TERMINATION PAYMENTS.

                  (a) Termination of employment. If any Change of Control of the
         Company occurs after the date of this Agreement and subsequently, on or
         before the third


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         anniversary of such Change of Control, the Executive's employment by
         the Company or its successor in interest is terminated

                           (i) by the Company or its successor in interest for
                  any reason other than (A) for Cause, or (B) because of the
                  Executive's death or Disability, or

                           (ii) by the Executive for Good Reason,

         (a "TERMINATION EVENT") then the Executive will be entitled to receive,
         and the Company will pay or provide, the benefits set forth in
         subsection (b) below.

                  (b) Severance benefits. Upon the occurrence of a Termination
         Event described in subsection (a) above then, in addition to the
         performance of its obligations under the Employment Agreement but in
         the case of amounts payable under clauses (i) and (ii) without
         duplication of any similar payments then due and payable under the
         Employment Agreement:

                           (i) The Company will pay to the Executive within
                  thirty (30) days after the Termination Event an amount equal
                  to the sum of:

                                    (A)     his highest full base annual salary
                                            in effect within one (1) year of the
                                            Termination Event, plus

                                    (B)     the amount of any bonus, payable in
                                            cash only notwithstanding the terms
                                            of any bonus plan, with respect to
                                            any year that has then ended which
                                            was or would have accrued to the
                                            Executive under any bonus plan then
                                            in effect but which has not yet been
                                            paid to him, plus

                                    (C)     an amount, payable in cash only
                                            notwithstanding the terms of any
                                            bonus plan, equal to the product of
                                            (aa) the average of the bonus paid
                                            or payable to the Executive for the
                                            two preceding years (whether same
                                            was paid in cash or its equivalent
                                            value) multiplied by (bb) a fraction
                                            of which the numerator is the number
                                            of weeks that have elapsed in the
                                            then current year through the date
                                            of termination and the denominator
                                            is 52, plus

                                    (D)     an amount equal to the product of
                                            (aa) the number of unused vacation
                                            days accrued by the Executive
                                            through the date of termination
                                            multiplied by (bb) a fraction the
                                            numerator of which is the
                                            Executive's highest base salary in
                                            effect within one (1) year of the
                                            Termination Event and the
                                            denominator of which is 250;


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                           (ii) The Company will contribute in cash to any
                  retirement or saving plan in which the Executive is
                  participating, within thirty (30) days after the date of
                  termination, the maximum amount which the Company is permitted
                  to contribute based on the payments made pursuant to paragraph
                  (i) above and, at the Executive's election, will buy back the
                  stock held by the Executive in any such plan at its then fair
                  market value, depositing said value in cash into said plan;

                           (iii) The Company will pay in cash to the Executive
                  within thirty (30) days after the date of termination a
                  severance payment in an amount equal to the sum of

                                    (A)     three hundred percent (300%) of his
                                            full base annual salary at the
                                            highest rate in effect within one
                                            (1) year of the Termination Event,
                                            plus

                                    (B)     three hundred percent (300%) of the
                                            average bonus paid or payable to him
                                            for the two (2) preceding years
                                            (whether same was paid in cash or
                                            its equivalent value);

                  provided that if the amount payable by the Company to the
                  Executive under this clause (iii), without regard to any other
                  payments or benefits payable to the Executive under this
                  Agreement or the Employment Agreement, would constitute an
                  "excess parachute payment" for the purposes of Sections 280G
                  and 4999 of the Internal Revenue Code then the amount payable
                  by the Company under this Section 2b as a severance benefit
                  will be "grossed up" by the amount necessary in order to
                  reimburse Executive for any taxes due as a result of such an
                  "excess parachute payment" as per section 6 hereof.

                           (iv) The Company will amend or revise all stock
                  option plans and restricted stock awards to which the
                  Executive is a party, or grant appropriate waivers of any
                  restrictions contained in such plans and awards, so as to
                  remove all restrictions upon the exercise by the Executive of
                  such options or upon the ability of the Executive to sell any
                  shares of stock that are subject to any such options or
                  awards. As part of such amendments or revisions, the Company
                  will accelerate the vesting period for Executive to an
                  immediate one hundred (100%) and shall allow the Executive the
                  option to exercise his options or stock awards either within
                  ninety (90) days of his effective termination date and such
                  option remain as an incentive stock option or before the
                  termination of the original option or stock award period and
                  have such options be converted automatically into
                  non-qualified stock options for purposes of the Internal
                  Revenue Code.

                           (v) The Company will prepay in full if at all
                  possible, and if not possible, ensure to the satisfaction of
                  Executive maintenance in full force and effect for the benefit
                  of the Executive and his spouse and dependents (if covered
                  prior to the date of termination) in each case for a period
                  from the date of termination until


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                  the later of the death of the Executive or his spouse, during
                  their period of their eligibility, all employee life, health,
                  accident, disability, medical and other employee welfare
                  benefits plans provided by the Company in which the Executive
                  or his spouse or his dependents are participating at the time
                  of the Executive's termination under the same terms and
                  conditions as then in effect; provided, that if the
                  Executive's or his spouse's or his dependents continued
                  participation is not permitted under the general terms of such
                  plans, the Company shall arrange to provide substantially
                  similar benefits;

                           (vi) The Company will maintain for the benefit of the
                  Executive such policy of liability insurance, providing
                  protection to him as an officer, director, agent or employee
                  of the Company or its subsidiaries, as may from time to time
                  be purchased by the Company for officers and directors
                  generally as authorized by or in furtherance of the
                  indemnification provisions contained in the Company's bylaws.
                  Neither the insurance nor the Executive's right to
                  indemnification thereunder may be canceled by the Company
                  without his permission for a period of five years following
                  the date of termination under this Agreement; provided,
                  however, that the Company may obtain a substitute insurance
                  policy as long as the rights of indemnity to the Executive are
                  at least equivalent to the most favorable rights provided
                  under the policy in effect immediately prior to the date of
                  termination.

                  (b) The Executive shall have no duty to mitigate, whether by
         seeking other employment or otherwise, any loss or damage suffered by
         him as a result of any failure by the Company to make any payment, or
         provide any benefit, to him under this Section 2.

3.       AGREEMENTS OF EXECUTIVE.

         The Executive covenants and agrees as follows:

                  (a) Provision of services when Change of Control is
         threatened. If any person begins a tender or exchange offer for voting
         securities of the Company, or circulates a proxy to shareholders of the
         Company or takes any other action for the purposes of effecting a
         Change of Control of the Company, then notwithstanding the terms of the
         Employment Agreement or any other agreement between the Executive and
         the Company the Executive will not voluntarily leave the employment of
         the Company and will render the services contemplated in the recitals
         to this Agreement until either (i) such person has abandoned or
         terminated his efforts to effect a Change of Control or (ii) three
         months have elapsed since the date on which a Change of Control has
         occurred.

                  (b) Noncompetition. Without limiting the terms of any similar
         provision in the Employment Agreement or any other agreement between
         the Executive and the Company, if the Executive's employment with the
         Company is terminated under any circumstances that entitle the
         Executive to receive the payments and other benefits provided in
         Section 2, then for a period of one year (or six (6) months should
         Executive make the election in the


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         last sentence of Section 2.1 of the Employment Agreement) from the
         Termination Event the Executive will not:

                           (i)   have any interest in, whether as proprietor,
                  officer, director or otherwise (but excluding an interest by
                  way of employment only),

                           (ii)  act as an agent, broker or distributor for, or
                  as an adviser or consultant to,

                           (iii) be employed in any senior managerial or
                  executive position by any corporation, partnership, limited
                  liability company or other business organization in which he
                  has responsibility for,

         any business (regardless of the form in which such business is
         conducted) which is engaged, or which he reasonably expects to become
         engaged, in the business of designing, manufacturing, distributing or
         selling artificial joints and limbs and other orthopedic implant
         devices in the United States; provided that the ownership by the
         Executive of not more than two percent (2%) of the shares of any
         publicly traded corporation or twenty percent (20%) of a privately held
         company shall not constitute a violation of this subsection (b).

                  (c) Publications by Executive. Without limiting the terms of
         any similar provision in the Employment Agreement or any other
         agreement between the Executive and the Company, if the Executive's
         employment with the Company is terminated under any circumstances that
         entitle the Executive to receive the payments and other benefits
         provided in Section 2, then

                           (i)  the Executive will refrain from making any
                  disparaging comments about the Company or any of its
                  affiliates, and

                           (ii) for a period of one (1) year from the
                  Termination Event the Executive will not without the prior
                  written permission of the Company write or publish, or assist
                  in the writing or publication of, any books, articles or other
                  materials that would adversely affect the interests of the
                  Company or its affiliates.

                  (d) Remedies. The Executive acknowledges that any violation of
         this Section may cause irreparable harm to the Company, and that
         damages are not an adequate remedy, and the Executive therefore agrees
         that the Company shall be entitled to an injunction by any appropriate
         court in the appropriate jurisdiction, enjoining, prohibiting and
         restraining the Executive from the continuance of any such violation,
         in addition to any monetary damages which might occur by reason of the
         violation of this Agreement.

                  (e) Independent. The covenants set forth in the foregoing
         subsections (a), (b), (c), and (d) shall be deemed and shall be
         construed as separate and independent covenants, and should any part or
         provision of such covenants be held invalid, void or unenforceable


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<PAGE>   8

         by any court of competent jurisdiction, such invalidity, voidness, or
         unenforceability shall in no way render invalid, void, or unenforceable
         any other part or provision thereof or any separate covenant not
         declared invalid, void, or unenforceable. This Agreement shall in that
         case be construed as if the void, invalid or unenforceable provisions
         were omitted.

4.       NOTICE OF TERMINATION.

         Any termination of the Executive's employment by the Company or its
successor in interest or by the Executive shall be communicated by a written
notice of termination to the other party, and shall specify the provision of
this Agreement relied upon and shall set forth in reasonable detail the
circumstances claimed to provide a basis for termination. The date of
termination shall be the date on which the notice of termination is delivered if
by the Executive or thirty (30) days after the date of the notice of termination
if given by the Company. All applicable benefits to Executive hereunder shall be
triggered if said notice of termination is given within the three (3)-year
period specified in Section 2(a) hereof.

5.       LITIGATION EXPENSES.

         The Company shall pay reasonable legal fees and expenses incurred by
the Executive as a result of his seeking to obtain or enforce any right or
benefit provided by this Agreement, promptly and from time to time, at his
request as such fees and expenses are incurred.

6.       EXCESS PARACHUTE PAYMENTS.

                  (a) If any federal excise tax is imposed under Section 4999 of
         the Internal Revenue Code of 1986, as amended (an "EXCISE TAX") on the
         Executive with respect to any payments or benefits provided under
         Section 2, the Company hereby agrees, subject to the exceptions and
         limitations set forth below, to pay the Executive such additional
         amount (the "ADDITIONAL AMOUNT") as is necessary to cause the Executive
         to realize the same net amount after the imposition of all federal
         income tax, estate tax and Excise Tax imposed on payments and benefits
         under Section 2 (and on such Additional Amount payable under this
         Section 6) that he would have realized had such federal income tax,
         estate tax, and Excise Tax not been imposed upon him with respect to
         such payments and benefits under Section 2 and this Section 6;
         provided, however, that no such Additional Amount shall be due with
         respect to

                           (i) any penalties, interest, or similar charges, if
                  any, assessed with respect to or arising out of any income
                  tax, estate tax, or Excise Tax due unless the Company delays
                  the payment contemplated herein to the Executive or

                           (ii) any income tax or estate tax which would be
                  owing by the Executive in the absence of the imposition of the
                  Excise Tax.

                  (b) The Company shall have the right to contest, but the
         Executive shall have no duty to contest, the assessment of any such
         taxes, but in any event, the Executive


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         agrees to cooperate in any contest the Company chooses to make provided
         the Company shall pay the costs of any such contest.

7.       ASSIGNMENT; SUCCESSORS IN INTEREST.

                  (a)      General. Except with the prior written consent of the
         Executive,

                           (i) no assignment by operation of law or otherwise by
                  the Company of any of its rights and obligations under this
                  Agreement may be made other than to an entity in common
                  control with or a successor to all or a substantial portion of
                  the business of the Company (but then only if such entity
                  assumes by operation of law or by specific assumption executed
                  by the transferee and delivered to the Executive all
                  obligations and liabilities of the Company under this
                  Agreement);

                           (ii) no transfer by operation of law or otherwise by
                  the Company of all or a substantial part of its business or
                  assets shall be made unless the obligations and liabilities of
                  the Company under this Agreement are assumed in connection
                  with such transfer either by operation of law or by specific
                  assumption executed by the transferee and delivered to the
                  Executive; and

                           (iii) in any such event the Company shall remain
                  liable for the performance of all of its obligations under
                  this Agreement (which liability shall be a primary obligation
                  for full and prompt performance rather than a secondary
                  guarantee of collectibility of damages).

         Except for any transfer or assignment of rights under this Agreement,
         in whole or in part, upon the death of the Executive to his heirs,
         devisees, legatees or beneficiaries or except with the prior written
         consent of the Company, no assignment or transfer by operation of law
         or otherwise may be made by the Executive of any of his rights under
         this Agreement.

                  (b) Binding Nature. This Agreement shall be binding upon the
         parties to this Agreement and their respective legal representatives,
         heirs, devisees, legatees, beneficiaries and successors and assigns;
         shall inure to the benefit of the parties to this Agreement and their
         respective permitted legal representatives, heirs, devisees, legatees,
         beneficiaries and other permitted successors and assigns (and to or for
         the benefit of no other person or entity, whether an employee or
         otherwise, whatsoever); and any reference to a party to this Agreement
         shall also be a reference to a permitted successor or assign.

8.       MISCELLANEOUS.

                  (a) This Agreement may not be varied, altered, or changed
         except by instrument in writing executed by the parties hereto. The
         failure of any party to this Agreement at any time or times to require
         performance of any provision of this Agreement shall in no manner
         affect the right to enforce the same. No waiver by any party to this
         Agreement of any provision (or of a breach of any provision) of this
         Agreement, whether


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         by conduct or otherwise, in any one or more instances shall be deemed
         or construed either as a further or continuing waiver of any such
         provision or breach or as a waiver of any other provision (or of a
         breach of any other provision) of this Agreement.

                  (b) Wherever possible each provision of this Agreement shall
         be interpreted in such manner as to be effective and valid but if any
         one or more of the provisions of this Agreement shall be invalid,
         illegal or unenforceable in any respect for any reason, the validity,
         legality or enforceability of any such provisions in every other
         respect and of the remaining provisions of this Agreement shall not be
         impaired.

                  (c) This Agreement shall be governed by and interpreted in
         accordance with the laws of the State of Texas (without giving effect
         to any choice of law provisions) and enforceable in a court of
         competent jurisdiction in Travis County, Texas.

                  (d) This Agreement and any benefits accruing to Executive
         hereunder shall be supplemental and additional to any and all benefits
         accruing to Executive pursuant to the Employment Agreement and any and
         all Stock Option or Stock Award Plans applicable to Executive.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has hereunto set his
hand as of the date and year first written above.

                            COMPANY

                            ENCORE ORTHOPEDICS, INC.


                            By: /s/ Nick Cindrich
                             ---------------------------------------------------
                              Nick Cindrich, Chief Executive Officer

                            EXECUTIVE

                             /s/ HARRY L. ZIMMERMAN
                            -----------------------------
                            HARRY L. ZIMMERMAN


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<PAGE>   11


                        AMENDMENT TO SEVERANCE AGREEMENT


         THIS AMENDMENT TO SEVERANCE AGREEMENT (this "Amendment") is made this
17th day of March, 1997, by and between ENCORE ORTHOPEDICS, INC., a Texas
corporation, with its principal office located at 9800 Metric Blvd., Austin,
Texas 78758 (the "Company") and HARRY L. ZIMMERMAN, an individual resident at
2628 Barton Hills Drive, Austin, Texas 78704 (the "Employee").

         WHEREAS, the Employee and the Company entered into a Severance
Agreement dated September 19, 1995 (the "Agreement") which provided, inter alia,
for certain payments to be made in the event that certain events occurred with
respect to the Employee's employment relationship with the Company;

         WHEREAS, the Employee and the Company desire that there be certain
changes made with respect to the Agreement as a result of the Company's pending
merger with Healthcare Acquisition, Inc., a Texas corporation ("Acquisition"), a
wholly owned subsidiary of Healthcare Acquisition Corp., a Delaware corporation
("HCAC"); and

         WHEREAS, the Company and the Employee want to memorialize in this
Amendment their agreements regarding such changes to the Agreement.

         NOW THEREFORE, in consideration of the premises and other mutual
promises and covenants contained in this Amendment and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties, intending legally to be bound, agree as follows:

         1. In the event that the Company completes its merger with Acquisition
(the "Merger") then, and only then, shall the following changes be made in the
Agreement, such changes to take effect on that date which is two (2) years from
the effective date of the Merger:

                  (a) the provisions of Section 2(b) (iii) shall be amended so
         that the language "three hundred percent (300%)" shall read "one
         hundred percent (100%)" in each place where such language appears in
         that Section;

                  (b) the provisions of Section 2(b) (v) shall be amended to
         provide that the insurance coverage to be provided to Employee,
         Employee's spouse and to Employee's dependents (if covered prior to the
         date of termination) under such provision shall be for coverage from a
         period from the date of the termination until five (5) years after the
         date of termination; and

                  (c) the provisions of Section 2(b) (vi) shall be amended to
         provide that the liability insurance to be provided under such
         provision shall be provided for the benefit of the Employee for a
         period of five (5) years from the date of the termination of the
         Employee's relationship with the Company.


<PAGE>   12




         2. Except as specifically changed by the Amendment, all other terms and
provisions of the Agreement shall remain in full force and effect.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Employee has hereunto set its
hand as of the date and year first written above.

                                     ENCORE:

                                     ENCORE ORTHOPEDICS, INC.



                                     By:  /s/ NICK CINDRICH
                                    -----------------------------------
                                         Nick Cindrich, CEO

                                    EMPLOYEE:

                                    /s/ HARRY L. ZIMMERMAN
                                    -----------------------------------
                                    HARRY L. ZIMMERMAN