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Exhibit 10.7 ENCORE MEDICAL CORPORATION
2000 NON-EMPLOYEE DIRECTORS OPTION PLAN ARTICLE 1. PURPOSE OF THE PLAN The Plan is intended to promote the interests of the Corporation by providing the non-employee
members of the Board with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to remain in the service of
the Corporation. ARTICLE 2. ADMINISTRATION The terms and conditions of each automatic option grant (including the timing and pricing of
the option grant) shall be determined by the express terms and conditions of the Plan, and neither
the Board nor any committee of the Board shall exercise any discretionary functions with respect to
option grants made pursuant to the Plan. ARTICLE 3. STOCK SUBJECT TO THE PLAN A. Shares of Common Stock shall be available for issuance under the Plan and shall be drawn
from either the Corporations authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the open market. The
number of shares of Common Stock reserved for issuance over the term of the Plan shall be fixed at
seven hundred fifty thousand (750,000) shares. B. Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full, then the shares subject to the portion of each option not so exercised
shall be available for subsequent option grant under the Plan. In addition, should the exercise
price of an outstanding option under the Plan be paid with shares of Common Stock, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced by the net number
of shares of Common Stock actually issued to the holder of such option. C. Should any change be made to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Corporations receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities for which automatic
option grants are to be subsequently made to each newly- elected or continuing non-employee Board
member under the Plan, and (iii) the number and/or class of securities and price per share in
effect under each option outstanding under the Plan. The adjustments to the outstanding options
shall be made by the Board in a manner which shall preclude the enlargement or dilution of rights
and benefits under such options and shall be final, binding and conclusive. As amended May 16, 2002 - 1 -




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ARTICLE 4. ELIGIBILITY The individuals eligible to receive automatic option grants pursuant to the provisions of this
Plan shall be limited to (i) those individuals serving as non-employee Board members on the
Effective Date and (ii) those individuals who are first elected or appointed as non-employee Board
members after the Effective Date, whether through appointment by the Board or election by the
Corporations stockholders. A non-employee Board member shall not be eligible to receive the
initial automatic option grant if such individual has previously been in the employ of the
Corporation (or any parent or subsidiary). However, a non-employee Board member shall be eligible
to receive one or more annual option grants, whether or not he or she has previously been in the
employ of the Corporation (or any parent or subsidiary). Each non-employee Board member eligible
to participate in the Plan pursuant to the foregoing criteria is hereby designated an Eligible
Director. ARTICLE 5. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS A. Grant Date. Option grants shall be made on the date of each Annual Meeting,
beginning with the 2000 Annual Meeting. Each Eligible Director who serves on the Board at the time
of that Annual Meeting, whether or not standing for re-election, shall automatically be granted a
non-statutory option to purchase 15,000 shares of Common Stock. An Eligible Director who resigns
effective at an Annual Meeting shall not be eligible to be granted a non-statutory option at that
time. There shall be no limit on the number of such annual 15,000-share option grants any one
Eligible Director may receive over his or her period of continued Board service.
In addition to the annual 15,000-share option grant, the Chairperson of the Audit Committee shall be
granted an additional non-statutory option to purchase 5,000 shares of Common Stock under the same
terms and conditions as the annual 15,000-share option grant. B. Exercise Price. The exercise price per share of Common Stock subject to each
automatic option grant shall be equal to one hundred percent (100%) of the Fair Market Value per
share of Common Stock on the automatic grant date. C. Payment. The exercise price shall become immediately due upon exercise of the
option and shall be payable in one of the alternative forms specified below: (i) full payment in
cash or check made payable to the Corporations order; or (ii) full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the Corporations earnings for
financial-reporting purposes and valued at Fair Market Value on the Exercise Date (as such term is
defined below); or (iii) full payment in a combination of shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporations earnings for financial-reporting
purposes and valued at Fair Market Value on the Exercise Date and cash or check payable to the
Corporations order; or (iv) full payment through a broker-dealer sale and remittance procedure
pursuant to which the non-employee Board member (a) shall provide irrevocable written instructions
to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the purchased shares and (b) shall
concurrently provide written directives to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale transaction. For
purposes of this Section 5.C, the Exercise Date shall be the date on which written notice of the
option exercise is delivered to the Corporation. Except to the extent the sale and remittance
procedure specified above is used, payment of the exercise price for the purchased shares must
accompany the exercise notice. As amended May 16, 2002 - 2 -




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D. Exercisability/Vesting. Each automatic grant shall become exercisable for one
hundred percent (100%) of the option shares upon the optionees completion of one year of Board
service. Exercisability of the option shall be subject to acceleration as provided in Article 6.
In no event, however, shall the option become exercisable for any additional option shares after
the Optionees cessation of Board service. E. Option Term. Each automatic grant under the Plan shall have a maximum term of ten
(10) years measured from the automatic grant date. F. Non-Transferability. During the lifetime of the Optionee, each automatic option
grant shall be exercisable only by the Optionee and shall not be assignable or transferable by the
Optionee other than a transfer of the option effected by will or by the laws of descent and
distribution following Optionees death. G. Effect of Termination of Board Service. 1. Should the Optionee cease to serve as a Board member for any reason (other than
death) while holding one or more automatic option grants under the Plan, then such
individual shall have a twelve (12)-month period following the date of such cessation of
Board service in which to exercise each such option for any or all of the option shares for
which the option is exercisable at the time of his or her cessation of Board service. Each
such option shall immediately terminate and cease to be outstanding, at the time of such
cessation of Board service, with respect to any option shares for which the option is not
otherwise at that time exercisable. 2. Should the Optionee die while serving as a Board member or within twelve (12) months
after cessation of Board service, then any automatic option grant held by the Optionee at
the time of death may subsequently be exercised, for the option shares for which the option
is exercisable at the time of his or her cessation of Board service (less any option shares
purchased by the Optionee prior to death), by the personal representative of the Optionees
estate or by the person or persons to whom the option is transferred pursuant to the
Optionees will or in accordance with the laws of descent and distribution. The right to
exercise each such option shall lapse upon the expiration of the twelve (12)-month period
measured from the date of the Optionees cessation of service. 3. In no event shall any automatic grant under this Plan remain exercisable after the
expiration date of the maximum ten (10)-year option term. Upon the expiration of the
applicable post-service exercise period under subparagraphs 1 through 2 above or (if
earlier) upon the expiration of the maximum ten (10)-year option term, the automatic grant
shall terminate and cease to be outstanding for any option shares for which the option was
not exercisable at the time of the Optionees cessation of Board service. H. Stockholder Rights. The holder of an automatic option grant shall have none of the
rights of a stockholder with respect to any shares subject to such option until such individual
shall have exercised the option and paid the exercise price for the purchased shares. I. Remaining Terms. The remaining terms and conditions of each automatic option grant
shall be as set forth in the form Stock Option Agreement approved for use under the Plan. As amended May 16, 2002 - 3 -




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ARTICLE 6. SPECIAL ACCELERATION EVENTS A. In the event of any Change in Control, the shares of Common Stock at the time subject to
each outstanding option but not otherwise fully exercisable shall automatically accelerate in full
so that each such option shall, immediately prior to the specified effective date for the Change in
Control, become fully exercisable for all of the shares of Common Stock at the time subject to that
option. Immediately following the consummation of the Change in Control, each automatic option
grant under the Plan shall terminate and cease to be outstanding, except to the extent assumed by
the successor corporation or its parent company. B. The automatic option grants outstanding under the Plan shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. ARTICLE 7. AMENDMENT OF THE PLAN AND AWARDS The Board has complete and exclusive power and authority to amend or modify the Plan (or any
component thereof) in any or all respects whatsoever. However, no such amendment or modification
shall adversely affect rights and obligations with respect to options at the time outstanding under
the Plan, unless the affected Optionees consent to such amendment. Stockholder approval shall be
obtained to the extent required by applicable law. ARTICLE 8. EFFECTIVE DATE AND TERM OF PLAN A. The Plan shall become effective on the Effective Date. One or more automatic option grants
may be made under the Plan at any time on or after the Effective Date. B. The Plan shall terminate upon the earlier of (i) April 30, 2010 or (ii) the date on which
all shares available for issuance under the Plan shall have been issued pursuant to the exercise of
the options granted under the Plan. If the date of termination is determined under clause (i)
above, then all option grants outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the agreements evidencing those option grants. ARTICLE 9. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares pursuant to option
grants under the Plan shall be used for general corporate purposes. ARTICLE 10. REGULATORY APPROVALS A. The implementation of the Plan, the granting of any option under the Plan and the issuance
of Common Stock upon the exercise of the option grants made hereunder shall be subject to the
Corporations procurement of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the Common Stock issued pursuant to
it. As amended May 16, 2002 - 4 -




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B. No shares of Common Stock or other assets shall be issued or delivered under this Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of the Nasdaq National Market or any Stock Exchange on which the Common Stock is then
listed for trading. ARTICLE 11. NO IMPAIRMENT OF RIGHTS Neither the action of the Corporation in establishing the Plan nor any provision of the Plan
shall be construed or interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove any individual from the Board at any time in accordance
with the provisions of applicable law. ARTICLE 12. MISCELLANEOUS PROVISIONS A. The right to acquire Common Stock or other assets under the Plan may not be assigned,
encumbered or otherwise transferred by any Optionee. B. The provisions of the Plan relating to the exercise of options shall be governed by the
laws of the State of Delaware, as such laws are applied to contracts entered into and performed in
such State. C. The provisions of the Plan shall inure to the benefit of, and be binding upon, the
Corporation and its successors or assigns, whether by Change in Control or otherwise, and the
Optionees, the legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees. ARTICLE 13. DEFINITIONS A. Annual Meeting: the annual meeting of the Corporations stockholders. B. Board: the Corporations Board of Directors. C. Code: the Internal Revenue Code of 1986, as amended. D. Common Stock: shares of the Corporations common stock. E. Corporation: Encore Medical Corporation, a Delaware corporation. F. Change in Control: a change in ownership or control of the Corporation effected
through either of the following transactions: (a) the consummation of a merger or consolidation of the Corporation with or into
another entity or any other corporate reorganization, if more than fifty percent (50%) of
the combined voting power of the continuing or surviving entitys securities outstanding
immediately after such merger, consolidation or other reorganization is owned by persons who
were not stockholders of the Corporation immediately prior to such merger, consolidation or
other reorganization; As amended May 16, 2002 - 5 -




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(b) the sale, transfer or other disposition of all or substantially all of the
Corporations assets; (c) a change in the composition of the Board, as a result of which fewer than one-third
of the incumbent directors are directors who either (i) had been directors of the
Corporation on the date twenty-four (24) months prior to the date of the event that may
constitute a Change in Control (the original directors) or (ii) were elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of the
aggregate of the original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so approved; (d) any transaction as a result of which any person is the beneficial owner (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the
Corporation representing at least 50% of the total voting power represented by the
Corporations then outstanding voting securities. For purposes of this Paragraph (d), the
term person shall have the same meaning as when used in sections 13(d) and 14(d) of the
1934 Act but shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or of a parent or subsidiary and (ii) a corporation
owned directly or indirectly by the stockholders of the Corporation in substantially the
same proportions as their ownership of the Common Stock of the Corporation; or (e) a transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Corporations incorporation or to create a holding company that will
be owned in substantially the same proportions by the persons who held the Corporations
securities immediately before such transaction. G. Effective Date: May 25, 2000. H. Fair Market Value: the Fair Market Value per share of Common Stock determined in
accordance with the following provisions: 1. If the Common Stock is at the time traded on the Nasdaq National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock on the date
in question, as such price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation exists. 2. If the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists. As amended May 16, 2002 - 6 -




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I. 1934 Act: the Securities Exchange Act of 1934, as amended. J. Optionee: any person to whom an option is granted under the Plan. K. Plan: this Encore Medical Corporation 2000 Non-Employee Directors Option Plan. L. Stock Exchange: either the American Stock Exchange or the New York Stock Exchange. As amended May 16, 2002 - 7 -