Exhibit 10.1


 


ENCORE
MEDICAL CORPORATION

2006 STOCK INCENTIVE PLAN


 


1.                                       Purpose
of the Plan


 


The purpose of the Plan (as defined below) is
to aid the Company (as defined below) and its Affiliates (as defined below) in
recruiting and retaining key employees, directors or consultants of outstanding
ability and to motivate such employees, directors or consultants to exert their
best efforts on behalf of the Company and its Affiliates by providing
incentives through the granting of Awards (as defined below). The Company
expects that it will benefit from the added interest which such key employees,
directors or consultants will have in the welfare of the Company as a result of
their proprietary interest in the Company’s success.


 


2.                                       Definitions


 


The following capitalized terms used in the
Plan have the respective meanings set forth in this Section:


 


(a) Affiliate:  With respect to any Person, any other Person,
directly or indirectly, controlling, controlled by or under common control with
such Person or any other Person designated by the Committee in which any Person
has an interest.


 


(b) Award:  Any Option or Other Stock-Based Award granted
pursuant to the Plan.


 


(c) Award
Agreement:  Any written agreement,
contract, or other instrument or document evidencing any Award, which may, but
need not, be executed or acknowledged by a Participant.


 


(d) Blackstone:  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.


 


(e) Board:  The Board of Directors of the Company.


 


(f) Change
in Control:  (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 pursuant to which Blackstone retains more than fifty
percent (50%) of the total voting power of the voting stock of the Company); or
(iii) the approval by the stockholders of the Company of a plan of complete
liquidation of the Company.


 


 

















 


(g) Code:  The Internal Revenue Code of 1986, as
amended, or any successor thereto.


 


(h) Committee:  A committee of the Board designated by the
Board.


 


(i) Company:  Encore Medical Corporation, a Delaware
corporation.


 


(j) Effective
Date:  The date the Board adopts the
Plan.


 


(k) Employment:
(i) a Participant’s employment if the Participant is an employee of the Company
or any of its Affiliates, (ii) a Participant’s services as a consultant, if the
Participant is a consultant to the Company or any of its Affiliates and (iii) a
Participant’s services as a non-employee director, if the Participant is a
non-employee member of the Board or the board of directors of an Affiliate;
provided however that unless otherwise determined by the Committee, a change in
a Participant’s status from employee to non-employee (other than a director of
the Company or an Affiliate) shall constitute a termination of employment
hereunder.


 


(l) Exchange
Act:  The Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, or any
successor statute thereto.


 


(m) Fair
Market Value:  On a given date, (a)
if there is a public market for the Shares on such date, the average of the
high and low closing bid prices of the Shares on such stock exchange on which
the Shares are principally trading on the date in question, or, if there were
no sales on such date, on the closest preceding date on which there were sales
of Shares or (ii) if there is no public market for the Shares on such date, the
fair market value of the Shares as determined in good faith by the Board and in
a manner consistent with Section 409A of the Code.


 


(n) Option:  A stock option granted pursuant to Section 6
of the Plan.


 


(o) Option
Price:  The purchase price per Share
of an Option, as determined pursuant to Section 6(a) of the Plan.


 


(p) Other
Stock-Based Award:  Any award granted
under Section 7 of the Plan.


 


(q) Participant:  An employee, director or consultant of the
Company or its Affiliates who is selected by the Committee to participate in
the Plan.


 


(r) Person:  Any individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental body or other
entity of any kind.


 


(s) Plan:  Encore Medical Corporation 2006 Stock
Incentive Plan.


 


(t) Shares:  Shares of common stock of the Company.


 


(u) Subsidiary:  A subsidiary corporation, as defined in
Section 424(f) of the Code.


 


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3.                                       Shares
Subject to the Plan


 


The total number of Shares which may be
issued under the Plan is 100,000, subject to adjustment pursuant to Section 8
of the Plan. The Shares may consist, in whole or in part, of unissued Shares or
treasury Shares. The issuance of Shares or the payment of cash upon the
exercise of an Award shall reduce the total number of Shares available under
the Plan, as applicable. Shares which are subject to Awards (or portion
thereof) that terminate or lapse may be granted again under the Plan.


 


4.                                       Administration


 


(a) The Plan
shall be administered by the Committee, which may delegate its duties and
powers in whole or in part as it determines; provided, however,
that the Board may, in its sole discretion, take any action designated to the
Committee under this Plan as it may deem necessary.


 


(b) The Committee shall have the full power
and authority to make, and establish the terms and conditions of, any Award to
any person eligible to be a Participant, consistent with the provisions of the
Plan and to waive any such terms and conditions at any time (including, without
limitation, accelerating or waiving any vesting conditions). Awards may, in the
discretion of the Committee, be made under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by the Company or its
Affiliates or a company acquired by the Company or with which the Company
combines; provided, that such Awards shall contain terms and conditions no less
favorable to the Participant than the terms and conditions of such outstanding
awards. The number of Shares underlying such substitute awards shall be counted
against the aggregate number of Shares available for Awards under the Plan.


 


(c) The Committee is authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to
the Plan, and to make any other determinations that it deems necessary or
desirable for the administration of the Plan, and may delegate such authority,
as it deems appropriate. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the
Committee in the interpretation and administration of the Plan, as described
herein, shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors).


 


(d) The Committee shall require payment of
any amount it may determine to be necessary to withhold for federal, state,
local, or other taxes as a result of the exercise, grant or vesting of an Award.
Unless the Committee specifies otherwise in a Participant’s Award Agreement,
the Participant may elect to pay a portion or all of such withholding taxes by
having Shares withheld by the Company with a Fair Market Value equal to the
minimum statutory withholding rate from any Shares that would have otherwise
been received by the Participant in connection with (i) the exercise of an
Option or (ii) the delivery of Shares pursuant to an Other Stock-Based
Award.


 


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5.                                       Limitations


 


No Awards may be granted under the Plan after
the tenth anniversary of the Effective Date, but Awards theretofore granted may
extend beyond that date.


 


6.                                       Options


 


Options granted under the Plan shall be
nonstatutory stock options and evidenced by the related Award Agreements, and
shall be subject to the following terms and conditions as well as the terms and
conditions set forth in the applicable Award Agreement:


 


(a) Option Price. The Option Price
shall be determined by the Committee, but shall not be less than 100% of the
Fair Market Value of the Shares on the date an Option is granted.


 


(b) Exercisability. Options granted
under the Plan shall be exercisable at such time and upon such terms and
conditions as may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is granted.


 


(c) Exercise of Options. Except as
otherwise provided in the Plan or in an Award Agreement, an Option may be
exercised for all, or from time to time any part, of the Shares for which it is
then exercisable. For purposes of this Section 6, the exercise date of an
Option shall be the date a notice of exercise is received by the Company,
together with payment (or to the extent permitted by applicable law, provision
for payment) of the full purchase price in accordance with this Section 6(c). The
purchase price for the Shares as to which an Option is exercised shall be paid
to the Company as designated by the Committee, pursuant to one or more of the
following methods: (i) in cash, or its equivalent (e.g., by check), (ii) in
Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased to the Company; provided that such Shares have
been held by the Participant for no less than six months (or such other period
as established from time to time by the Committee or generally accepted
accounting principles); (iii) partly in cash and partly in such Shares; (iv) if
there is a public market for the Shares at such time, subject to compliance
with laws, and Company policies, through delivery of irrevocable instructions
to a broker to sell the Shares otherwise deliverable upon the exercise of the
Option and to deliver upon the date of exercise to the Company an amount equal
to the aggregate Option Price for the shares being purchased; (v) cashless
exercise or (vi) such other method as approved by the Committee. Except as set
forth in a separate agreement between a Participant and the Company, no
Participant shall have any rights to dividends or other rights of a stockholder
with respect to Shares subject to an Option until the Participant has given
written notice of exercise of the Option, paid in full for such Shares and, if
applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.


 


(d) Attestation. Wherever in this Plan
or any Award Agreement a Participant is permitted to pay the Option Price or
taxes relating to the exercise of an Option by delivering Shares, the
Participant may, subject to procedures satisfactory to the Committee, satisfy
such delivery requirement by presenting proof of beneficial ownership of such
Shares, in which case the Company shall treat the Option as exercised without
further payment and shall withhold such number of Shares from the Shares
acquired by the exercise of the Option.


 


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7.                                       Other
Stock-Based Awards.


 


The Committee, in its sole discretion, may
grant the right to purchase Shares, Awards of Shares, Awards of restricted
Shares, Awards of phantom stock units and other Awards that are valued in whole
or in part by reference to, or are otherwise based on the Fair Market Value of,
Shares (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more Shares (or the
equivalent cash value of such Shares) upon the completion of a specified period
of service, the occurrence of an event and/or the attainment of performance
objectives. Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan. Subject to the provisions of the Plan, the
Committee shall determine: (a) the number of Shares to be awarded under (or
otherwise related to) such Other Stock-Based Awards; (b) whether such Other
Stock-Based Awards shall be settled in cash, Shares or a combination of cash
and Shares; and (c) all other terms and conditions of such Other Stock-Based
Awards (including, without limitation, the vesting provisions thereof and
provisions ensuring that all Shares so awarded and issued shall be fully paid
and non-assessable).


 


8.                                       Adjustments
Upon Certain Events


 


Notwithstanding any other provisions in the
Plan to the contrary, the following provisions shall apply to all Awards
granted under the Plan:


 


(a) Generally. In the event of any
change in the outstanding Shares after the Effective Date by reason of any
Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination or transaction or exchange of Shares or
other corporate exchange, or any distribution to shareholders of Shares other
than regular cash dividends or any transaction similar to the foregoing or the
issuance of equity (or rights to acquire equity) for consideration less than
Fair Market Value, the Committee shall, without liability to any person, make
such substitution or adjustment, if any, as it deems to be equitable, as to
(i) the number or kind of Shares or other securities issued or reserved
for issuance pursuant to the Plan or pursuant to outstanding Awards,
(ii) the Option Price and/or (iii) any other affected terms of such
Awards.


 


(b) Change in Control. In the event of
a Change of Control after the Effective Date, the Committee may, in its sole
discretion, provide for the (i) termination of an Award upon the consummation
of the Change of Control, but only if such Award has vested and been paid out
or the Participant has been permitted to exercise the Option in full for a
period of not less than 15 days prior to the Change of Control, (ii)
acceleration of all or any portion of an Award, (iii) payment of an amount (in
cash or, in the discretion of the Committee, in the form of consideration paid
to shareholders of the Company in connection with such Change of Control) in
exchange for the cancellation of an Award, which, in the case of Options, shall
equal the excess, if any, of the Fair Market Value of the Shares subject to
such Options over the aggregate Option Price or grant price of such Option, and/or
(iv) issuance of substitute Awards that will substantially preserve the
otherwise applicable terms of any affected Awards previously granted hereunder.


 


(c) 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 


 


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publicly-traded
entity, and all Shares shall be exchanged for shares of common stock with the
same aggregate value of the publicly-traded entity. Following such conversion,
all references in this Plan and in any Award Agreement to the “Company” shall
be deemed to refer to the publicly-traded entity.


 


9.                                       No
Right to Employment or Awards


 


The granting of an Award under the Plan shall
impose no obligation on the Company or any of its Affiliates to continue the
Employment of a Participant and shall not lessen or affect the Company’s or its
Affiliates’ rights to terminate the Employment of such Participant. No
Participant or other Person shall have any claim to be granted any Award, and
there is no obligation for uniformity of treatment of Participants or holders
or beneficiaries of Awards. The terms and conditions of Awards and the
Committee’s determinations and interpretations with respect thereto need not be
the same with respect to each Participant (whether or not such Participants are
similarly situated).


 


10.                                 Successors
and Assigns


 


The Plan shall be binding on all successors
and assigns of the Company and a Participant, including without limitation, the
estate of such Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
Participant’s creditors.


 


11.                                 Nontransferability
of Awards


 


Unless otherwise determined by the Committee,
an Award shall not be transferable or assignable by the Participant other than
by will or by the laws of descent and distribution. An Award exercisable after
the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Notwithstanding anything
here in to the contrary, a Participant may transfer or assign all or any part
of an Award 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 Participant’s estate.


 


12.                                 Awards
Subject to the Plan.


 


In the event of a conflict between any term
or provision contained in the Plan and a term or provision in any Award
Agreement, the applicable terms and provisions of the Plan will govern and prevail.


 


13.                                 Severability.


 


If any provision of the Plan or any Award is,
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of 


 


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the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.


 


14.                                 Amendments
or Termination


 


(a) Amendments or Termination of the Plan.
The Committee may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made, without the written consent of a
Participant, if such action would diminish any of the rights of the Participant
under any Award theretofore granted to such Participant under the Plan; provided,
however, that the Committee may amend the Plan in such manner as it
deems necessary to comply with the Code or other applicable laws.


 


(b) Amendments to Awards. The
Committee may waive any conditions or rights under, amend any terms of, or
alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that no waiver,
amendment, alteration, suspension, discontinuation, cancellation or termination
shall impair the rights of any Participant or any holder or beneficiary of any
Award theretofore granted without the prior written consent of the affected
Participant, holder or beneficiary.


 


15.                                 Other
Benefit Plans


 


All Awards shall
constitute a special incentive payment to the Participant and shall not be
taken into account in computing the amount of salary or compensation of the
Participant for the purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other benefit plan of the
Company or under any agreement between the Company and the Participant, unless
such plan or agreement specifically provides otherwise.


 


16.                                 Choice
of Law


 


The Plan shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
conflicts of laws.


 


17.                                 Effectiveness
of the Plan


 


The Plan shall be effective as of the
Effective Date.


 


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