Exhibit 10.22


 


EXECUTION COPY




 





 


 


MANAGEMENT STOCKHOLDERS AGREEMENT


 


BY AND AMONG


 


ENCORE MEDICAL CORPORATION


 


AND


 


THE OTHER PARTIES NAMED HEREIN


 






 


Dated as of November 3, 2006


 






 




 





 

















 


Annex I


 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions of Words and
  Phrases

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Limitations on Transfer

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Drag-Along Rights; Sponsor
  Call Right

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Tag-Along Rights

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Management Stockholder Put
  Right

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  First-Refusal Rights

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Call Option

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  “Piggyback” Registration
  Rights

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Representations,
  Warranties and Covenants

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Confidentiality

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Employment by the Company

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Taxes

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  After-Acquired Securities

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Recapitalization,
  Exchange, Etc.

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Notices

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Successors, Assigns and
  Transferees

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Amendment and Waiver

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Counterparts

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Specific Performance;
  Injunctive Relief

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Headings; Interpretation

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  Severability

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  Entire Agreement

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  Further Assurances

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  Governing Law

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  Consent to Jurisdiction;
  No Jury Trial

  	
   

  	
  33

  



 


2

















 


	
  26.

  	
  Additional Management Stockholders.

  	
   

  	
  33

  



 


	
  Annex I

  	
  Form of
  Consent of Spouse

  
	
  Annex II

  	
  Form of
  Acknowledgment and Agreement

  



 


3

















 


MANAGEMENT STOCKHOLDERS AGREEMENT


 


This MANAGEMENT STOCKHOLDERS AGREEMENT (this “Agreement”) is dated as of November
3, 2006, by and among Encore Medical Corporation, a Delaware corporation (the “Company”), Blackstone Capital
Partners V L.P., a Cayman Islands limited partnership (“BCP V”),
Blackstone Family Investment Partnership V L.P., a Cayman Islands limited
partnership (“BFIP V”), Blackstone Family
Investment Partnership V-A L.P., a Cayman Islands limited partnership (“BFIP V-A”), Blackstone
Participation Partnership V L.P., a Cayman Islands limited partnership (“BPP V” and, together with BCP V,
BFIPV, BFIP V-A and any of Blackstone L.P. or its Affiliates that may from time
to time hold Sponsor Interests (as hereinafter defined), collectively, the “Sponsors” and each, a “Sponsor”), Grand Slam Holdings,
LLC, a Delaware limited liability company (“Holdco”
and, together with any of Blackstone L.P. or its Affiliates that may from time
to time directly hold shares of Common Stock, the “Blackstone
Encore Stockholders”), and the parties identified on the
signature pages hereto as Management Stockholders and the Permitted Transferees
of such parties (and their respective Permitted Transferees) identified on the
signature pages to the supplementary agreements or documents referred to in Sections
16 and 26 hereof (the “Management Stockholders”
and, together with the Company, the Sponsors and Holdco, the “Parties”).


 


RECITALS:


 


WHEREAS, pursuant to the Company’s 2006 Stock
Incentive Plan (as the same may be amended, supplemented or modified from time
to time, including any successor or similar stock incentive plan, the “Plan”), the Company may from time
to time grant Awards (as defined in the Plan) to the Management Stockholders;
and


 


WHEREAS, the Parties wish to enter into
certain agreements with respect to the holdings by the Sponsor and the
Management Stockholders and their respective Permitted Transferees of Common
Stock and Common Stock Equivalents each as hereinafter defined.


 


NOW, THEREFORE, in consideration of the
mutual covenants and agreements contained in this Agreement, the receipt and
sufficiency of which are hereby acknowledged, the Parties further acknowledge
and agree to the following:


 


1.                                       Definitions
of Words and Phrases.  As used in
this Agreement:


 


“Affiliate”
or “Affiliates” means, with respect to
any Person, any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with such first Person or any other
Person that holds directly or indirectly more than a fifty percent (50%)
economic interest in such first person. For the purpose of this definition, “control”
will mean, as to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or membership on the board of managers or directors, by contract
(including, without limitation, a limited partnership agreement or general
partnership agreement) or otherwise.  Any
trust or nominee directly or indirectly holding securities principally for the
benefit of employees of a Party hereto or its Affiliates shall be deemed to be
an Affiliate of such Party hereto.  The
term “Affiliate” shall, in any event, include BCP V, BFIP V, BFIP V-A and BPP V
and any other Sponsors when used with respect to Blackstone.


 


“Agreement”
has the meaning set forth in the Preamble.


 


“Appraiser”
means an independent, nationally recognized investment banking or valuation
firm experienced in valuing private companies similar to the Company, selected
by the


 


4

















 


Board of
Directors and reasonably acceptable to an applicable Call Option Management
Stockholder (taking into account the fees and expenses of such Appraiser).


 


“BCP V” has
the meaning set forth in the Preamble.


 


“BFIP V” has
the meaning set forth in the Preamble.


 


“BFIP V-A”
has the meaning set forth in the Preamble.


 


“Blackstone”
means the Blackstone Group L.P. or any of its Affiliates (other than the
Company).


 


“Blackstone Encore
Stockholders” has the meaning set forth in the Preamble.


 


“Blackstone Shares”
means those 867,794 shares of Common Stock held by Holdco on the date hereof (but
subject to subsequent adjustment for any stock dividend, stock split, reverse
stock split or other similar event).


 


“Board of Directors”
means the board of directors of the Company.


 


“BPP V” has
the meaning set forth in the Preamble.


 


“Business Day”
means a day other than a Saturday, Sunday, federal or New York State holiday or
other day on which commercial banks in New York City are authorized or required
by law to close.


 


“Callable Shares”
has the meaning set forth in Section 7(a) hereof.


 


“Call Event”
has the meaning set forth in Section 7(a) hereof.


 


“Call Option”
has the meaning set forth in Section 7(a) hereof.


 


“Call Option Management
Stockholder” has the meaning set forth in Section 7(a)
hereof.


 


“Call Option Notice”
has the meaning set forth in Section 7(a) hereof.


 


“Call Right Sale”
means any sale of Shares by Management Stockholders to a Call Right Selling
Sponsor as provided for in Section 3(b) hereof.


 


“Call Right Sale Notice”
has the meaning set forth in Section 3(b) hereof.


 


“Call Right Sale Notice
Date” has the meaning set forth in Section 3(b) hereof.


 


“Call Right Selling Sponsor”
has the meaning set forth in Section 3(b) hereof.


 


“Cause”
means, with respect to any Management Stockholder, the termination by the
Company of such Management Stockholder’s employment with the Company for “cause”,
as defined in the employment agreement (“Employment Agreement”)
between the Company and such Management Stockholder, or, if there is no
employment agreement, the termination by the Company of such Management
Stockholder’s employment as a result of: 
(i) the commission by the Management Stockholder of an act of gross
negligence, willful misconduct, fraud, embezzlement, misappropriation or breach
of fiduciary duty against the Company or any of its Affiliates, or the
conviction of the Management Stockholder by a court of competent jurisdiction


 


5

















 


of, or a plea
of guilty or nolo contendere to, any felony or
any crime involving moral turpitude or any crime which reasonably could
negatively affect the reputation of the Company, or the Management Stockholder’s
ability to perform the duties required of his employment; (ii) the commission
by the Management Stockholder of a material breach of any of the covenants in this
Agreement, which breach has not been remedied within thirty (30) days of the
delivery to the Management Stockholder by the Board of Directors of written
notice of the facts constituting the breach; or (iii) the habitual and willful
neglect by the Management Stockholder of his or her obligations and duties as
an employee of the Company or any of its Subsidiary.


 


“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
other than Blackstone or (ii) if 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 fifty percent (50%) of
the total voting power of the voting stock of the Company or a successor to 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 Commission or pursuant to which Blackstone retains, directly or indirectly,
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.


 


“Commission”
means the U.S. Securities and Exchange Commission.


 


“Common Stock”
means the Common Stock, par value $0.01 per share, of the Company.


 


“Common Stock Equivalent”
means any stock, warrants, rights, calls, options or other securities
exchangeable or exercisable for, or convertible into, Common Stock, including,
but not limited to, the Rollover Options and any options or other securities
issued under the Plan that are exchangeable or exercisable for, or convertible
into, Common Stock.


 


“Company”
has the meaning set forth in the Preamble.


 


“Confidential Information”
has the meaning set forth in Section 10 hereof.


 


“Determination Date”
has the meaning set forth in Section 2(c) hereof.


 


“Disability”
means, with respect to any Management Stockholder, “Disability” as defined in
such Management Stockholder’s Employment Agreement or, if not defined therein
or if there is no such agreement, “Disability” means that such Management
Stockholder shall be unable to perform his or her duties and responsibilities
in connection with the conduct of the business and affairs of the Company (or
its Subsidiary, if its Subsidiary employs the Management Stockholder) and such
inability lasts for (i) a period of at least one hundred eighty (180) consecutive
days, or (ii) periods aggregating at least two hundred forty (240) days during
any twelve-month period, by reason of such Management Stockholder’s physical or
mental disability, whether by reason of injury, illness or similar cause.


 


“Drag-Along Notice Date”
has the meaning set forth in Section 3(a) hereof.


 


“Drag-Along Sale”
means any sale of Common Stock by the Blackstone Encore Stockholders as
provided for in Section 3(a) hereof.


 


“Drag-Along Sale Notice”
has the meaning set forth in Section 3(a) hereof.


 


6

















 


“Drag-Along Selling
Blackstone Encore Stockholder” has the meaning set forth in Section
3(a) hereof.


 


“Employment Agreement”
shall have the meaning set forth in the definition of the term “Cause”.


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, or any successor statute thereto.


 


“Exercise Date”
has the meaning set forth in Section 7(a) hereof.


 


“Fair Market Value”
means (i) if there is a public market for the Common Stock on such date, the
average of the high and low closing bid prices of the Common Stock of the
Company 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 Common Stock on such date, the fair market value of the
Common Stock as determined in good faith by the Board of Directors, assuming
the Company is valued on a going-concern basis as though it were a publicly
traded company with reasonable liquidity and without a controlling shareholder;
provided, however, that if a Management Stockholder or Permitted
Transferee, as applicable, disagrees with the Board of Directors’ determination
of Fair Market Value, the Board of Directors shall retain an Appraiser to
determine the Fair Market Value, acting reasonably and in good faith in
accordance with the previous sentence, at the Company’s expense; provided,
further, however, that if the Appraiser determines that Fair
Market Value is less than 105% of the amount determined by the Board of
Directors, then the challenging Management Stockholder or Permitted Transferee,
as applicable, shall pay the fees and expenses of such Appraiser.  The determination of Fair Market Value by the
Appraiser shall be binding and conclusive on the Company and such Management
Stockholder or Permitted Transferee, as applicable.


 


“Good Reason”
means, with respect to any Management Stockholder, “Good Reason” as defined in
such Management Stockholder’s Employment Agreement or, if not defined therein
or if there is no such agreement, “Good Reason” means, without a Management
Stockholder’s consent, (i) a material reduction in the Management Stockholder’s
compensation below the amount of compensation in effect on the date of this
Agreement, or (ii) a material reduction in the Management Stockholder’s duties
or authority, in each case which is not cured within thirty (30) days following
the Company’s or its Subsidiary’s, as applicable, receipt of written notice
from such Management Stockholder describing the event constituting Good Reason.


 


“Good Termination”
means the termination of a Management Stockholder’s employment with the Company
or a Subsidiary of the Company, as the case may be (i) by the Company (or
Subsidiary) without Cause, (ii) by the Management Stockholder for Good Reason
or (iii) due to death or Disability.


 


“Group”
means any syndicate or group that would be considered a “person” for purposes
of Section 13(d) of the Exchange Act.


 


“Holdco” has
the meaning set forth in the Preamble.


 


“Initial Public Offering”
means the closing of the first sale of common equity or equivalent securities
of the Company to the public pursuant to an effective registration statement
(other than a registration statement on Form S-4 or S-8 or any similar or
successor form) filed under the Securities Act after the date hereof.


 


7

















 


“IPO Effectiveness Date”
means the date upon which the Company closes its Initial Public Offering.


 


“Lapse Date”
has the meaning set forth in Section 2(a) hereof.


 


“Management Stockholder”
has the meaning set forth in the Preamble.


 


“Management Stockholder’s
Estate” means, with respect to any Management Stockholder, the
conservators, guardians, executors, administrators, testamentary trustees,
legatees, or beneficiaries of such Management Stockholder’s estate.


 


“Management Stockholder’s
Family Members” means, with respect to any Management
Stockholder, the spouse (or ex-spouse) or lineal descendants (including adopted
children) of such Management Stockholder.


 


“Management Stockholder’s
Trust” means, with respect to any Management Stockholder, a
limited partnership, limited liability company, trust or custodianship, the
beneficiaries of which may include only such Management Stockholder, his or her
spouse (or ex-spouse) or his or her lineal descendants (including lineal
descendants that have even adopted) or, if at any time after any transfer of
Shares to such Management Stockholder’s Trust there shall be no then-living
spouse or lineal descendants, such beneficiaries may include the estate of a
deceased beneficiary.


 


“Merger”
means the transactions contemplated by the Agreement and Plan of Merger
Agreement, dated as of June 30, 2006, among Holdco, Grand Slam Acquisition
Corp. and the Company.


 


“Outside Offer”
has the meaning set forth in Section 6(a) hereof.


 


“Parties”
has the meaning set forth in the Preamble.


 


“Permitted Transferee”
means, with respect to a Management Stockholder, any Management Stockholder’s
Estate, Management Stockholder’s Family Members or the Management Stockholder’s
Trust of such Management Stockholder or any other transferee that acquires
Shares in accordance with, and as permitted by, the terms of this Agreement,
and, with respect to Blackstone, any transferee that acquires shares of Common
Stock or Sponsor Interests in accordance with the terms of this Agreement;
provided, in any such event, that such transferee becomes a Party to, and is
bound to the same extent as its transferor by the terms of, this Agreement
(except as otherwise expressly provided in this Agreement).


 


“Person”
means any individual, corporation, limited liability company, partnership,
trust, joint stock company, business trust, unincorporated association, joint
venture, governmental authority or other legal entity of any nature whatsoever.


 


“Piggyback
Pro-Rata Portion” has the meaning set forth in Section
8(a) hereof.


 


“Piggyback
Right” has the meaning set forth in Section
8(a) hereof.


 


“Plan” has
the meaning set forth in the Recitals hereto.


 


“Prospective Purchaser”
has the meaning set forth in Section 6(a) hereof.


 


“Public Company Merger”
means any merger of the Company with or into any other entity, the result of
which shares of Common Stock, or equity securities of the surviving


 


8

















 


company
received by the stockholders in exchange for Common Stock pursuant to such
merger, are listed on the New York Stock Exchange or the Nasdaq Global Market
or other internationally recognized stock exchange or listing system.


 


“Public Offering”
means a sale of shares of Common Stock to the public in a firm commitment or
best efforts underwritten public offering pursuant to an effective registration
statement (other than a registration statement on Form S-4, S-8 or any
successor to such forms) filed under the Securities Act.


 


“Put Right Allotment”
has the meaning set forth in Section 5(a) hereof.


 


“Put Right Notice”
has the meaning set forth in Section 5(c) hereof.


 


“Put Right Notice Date”
has the meaning set forth in Section 5(b) hereof.


 


“Put Right Sale”
has the meaning set forth in Section 5(a) hereof.


 


“Put Right Sale Date”
has the meaning set forth in Section 5(b) hereof.


 


“Put Right Sale Notice”
has the meaning set forth in Section 5(b) hereof.


 


“Put Right Selling Sponsor”
has the meaning set forth in Section 5(a) hereof.


 


“Put Right Stockholder”
or “Put Right Stockholders” has the meaning
set forth in Section 5(a) hereof.


 


“Qualified Public Offering”
means (i) the Initial Public Offering or (ii) any Public Company Merger, in
either case, after which at least 20% of the Company’s outstanding Common
Stock, or any Affiliate’s (which Affiliate is a holding company of the Company)
outstanding common stock, or equity securities of the surviving company
received by the stockholders in exchange for Common Stock pursuant to such
Public Company Merger, are listed on the New York Stock Exchange or the Nasdaq
Global Market or other internationally recognized stock exchange or listing
system.


 


“Register”, “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the automatic
effectiveness or the declaration or ordering of effectiveness by the Commission
of such registration statement or document.


 


“Registrable Shares” means the
Shares, provided that such Shares shall cease to be Registrable Shares if and
when (i) a registration statement with respect to the disposition of such
Shares shall have become effective under the Securities Act and such Shares
shall have been disposed of pursuant to such effective registration statement,
(ii) such Shares shall have been sold under circumstances in which all
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met, (iii) such Shares shall have been otherwise
transferred, new certificates not bearing restrictive legends shall have been
delivered by the Company in lieu thereof and further disposition thereof shall
not require registration or qualification of them under the Securities Act or
any state securities or blue sky laws, (iv) such Shares may be sold pursuant to
Rule 144(k) under the Securities Act or (v) such Shares shall have ceased to be
outstanding.


 


“Regulation S”
has the meaning set forth in Section 9(b)(iv) hereof.


 


“Restricted Period”
has the meaning set forth in Section 9(c)(vi) hereof.


 


9

















 


“Rollover Option”
means any option to purchase Common Stock held by a Management Stockholder
immediately prior to the effective time of the Merger, which such option was
not exercised prior to the effective time of the Merger.


 


“Same Effective Price”
means the price per share of Common Stock calculated by dividing (i) the total
consideration (whether in cash, debt or equity, except as such consideration
may be adjusted pursuant to the terms of any agreement relating to the
applicable sale) received by a Call Right Selling Sponsor or Put Right Selling
Sponsor, as the case may be, for the Sponsor Interests to be transferred in
connection with a Call Right Sale or a Put Right Sale, respectively, by (ii) the
number of shares of Common Stock that is equal to (A) the percentage of
aggregate Sponsor Interests in the applicable Blackstone Encore Stockholder
represented by the Sponsor Interest in such Blackstone Encore Stockholder to be
transferred in connection with such Call Right Sale or Put Right Sale,
respectively, multiplied by (B) the number of shares of Common Stock held by
such Blackstone Encore Stockholder immediately prior to the consummation of
such Call Right Sale or Put Right Sale, as the case may be.


 


“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, or any successor statute thereto.


 


“Selling Stockholder”
has the meaning set forth in Section 6(a) hereof.


 


“Shares”
means, with respect to each Management Stockholder, any and all shares of
Common Stock granted to such Management Stockholder pursuant to the Plan or
issued to such Management Stockholder upon exercise of any Rollover Option or
any option or other award granted pursuant to the Plan.


 


“Sponsor”
has the meaning set forth in the Preamble.


 


“Sponsor Call Right Sale”
means any sale of Sponsor Interests by a Sponsor as provided for in Section
3(b) hereof.


 


“Sponsor Interests”
has the meaning set forth in Section 3(b) hereof.


 


“Subsidiary”
means, with respect to any Person, any corporation, partnership, association or
other business entity of which fifty percent (50%) or more of the total voting
power of shares of capital stock or equity interests thereof entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof, is at the time owned or controlled,
directly or indirectly, by any Person or one or more of the other Subsidiaries
of such Person or a combination thereof.


 


“Tag-Along Allotment”
has the meaning set forth in Section 4(a) hereof.


 


“Tag-Along Notice”
has the meaning set forth in Section 4(c) hereof.


 


“Tag-Along Notice Date”
has the meaning set forth in Section 4(b) hereof.


 


“Tag-Along Sale”
has the meaning set forth in Section 4(a) hereof.


 


“Tag-Along Sale Date”
has the meaning set forth in Section 4(b) hereof.


 


“Tag-Along Sale Notice”
has the meaning set forth in Section 4(b) hereof.


 


“Tag-Along Selling
Blackstone Encore Stockholder” has the meaning set forth in Section
4(a) hereof.


 


10

















 


“Tag-Along Stockholder”
or “Tag-Along Stockholders” has the
meaning set forth in Section 4(a) hereof.


 


“Third Party”
means any Person other than the Company, the Management Stockholders and their
respective Affiliates.


“Transfer”
or “transfer” means a transfer, sale,
assignment, pledge, incurrence or assumption of any encumbrance, hypothecation
or other disposition, whether directly or indirectly, and whether pursuant to
the creation of a derivative security, the grant of an option or other right,
the imposition of a restriction on disposition or voting by operation of law or
otherwise.  When used as a verb, “transfer” shall have the
correlative meaning. In addition, “transferred”
and “transferee” shall have the
correlative meanings.


 


“Transferor”
has the meaning set forth in Annex I hereof.


 


2.                                       Limitations
on Transfer.


 


(a)           Until the earliest to occur of (i)
the date on which a Change in Control occurs, (ii) the date that is two years
and one day after the expiration of any Company or underwriter “lock-up” period
applicable to a Management Stockholder following an Initial Public Offering or
Public Company Merger (provided that any “lock-up” period imposed by the
Company shall not exceed one hundred eighty (180) days, for purposes of
calculating the time period in this paragraph (a)) or (iii) subject to the
prior expiration of any such Company or underwriter “lock-up” period, the date
that is seven years from the date hereof (the period ending on the earlier of
(i), (ii) or (iii), the “Lapse Date”),
except as required by law, no Management Stockholder shall transfer any Shares
(other than a transfer pursuant to Section 2 through Section 7
hereof, or any transfer to the Company or a Sponsor or its Affiliates) without
the prior written consent of Blackstone L.P.


 


(i)            After the Lapse Date, any Management
Stockholder may transfer all or a portion of his or her Shares in accordance
with and subject to the provisions of this Agreement (including, without
limitation, Section 2(d) hereof).


 


(ii)           Any attempt to transfer any Shares or
any rights hereunder in violation of this Section 2 shall be null and
void ab initio.  The Company shall not record on its stock
transfer books or otherwise any transfer of Shares in violation of the terms
and conditions set forth herein.


 


(b)           Permitted Transfers.  Notwithstanding anything to the contrary
contained in this Agreement, but subject to Section 2(d) hereof, at any
time, each Management Stockholder may transfer all or a portion of his or her
Shares to any of his or her Permitted Transferees and such transfer shall not
be subject to Section 6 hereof. A Permitted Transferee of Shares
pursuant to this Section 2(b) may transfer its Shares pursuant to this Section
2(b) only to the transferor Management Stockholder or to a Person that is a
Permitted Transferee of such transferor Management Stockholder.


 


(c)           Good Termination of Management
Stockholders.  Notwithstanding
anything to the contrary contained in this Agreement, but subject to Sections
2(d), Section 6 and Section 7 hereof, at any time, each
Management Stockholder whose employment with the Company is terminated due to a
Good Termination may transfer all or a portion of his or her Shares, and such
Management Stockholder’s Permitted Transferees may transfer Shares they hold
that were previously transferred by such Management Stockholder, beginning on
the date that is three (3) months and one day following the date of such Good
Termination (the “Determination Date”);
provided, that, after the date of such Good Termination (the “Termination Date”), in no event


 


11

















 


shall any
Management Stockholder or any of his or her Permitted Transferees transfer any
of his, her or its Shares prior to the Determination Date; provided, further,
that in no event shall any Management Stockholder or any of his or her
Permitted Transferees transfer a number of his, her or its Shares in excess of
(i) with respect to the three-month period beginning on the Determination Date,
33 1/3 % of the number of Shares owned by such Management Stockholder or
Permitted Transferee, as applicable, on the Determination Date, (ii) for the
three months following the period described in clause (i), the sum of (x) 33
1/3 % of the number of Shares owned by such Management Stockholder or Permitted
Transferee, as applicable, on the Determination Date and (y) any Shares which
were eligible for sale during the period described in clause (i) above, but
were not transferred and (iii) for the three months following the period
described in clause (ii), the sum of (x) 33 1/3 % of the number of Shares owned
by such Management Stockholder or Permitted Transferee, as applicable, on the
Determination Date and (y) any Shares which were eligible for sale during the
periods described in clauses (i) and (ii) above, but were not transferred.


 


(d)           Transfers in Compliance with Law;
Substitution of Transferee.  No
transfer by any Management Stockholder may be made pursuant to this Agreement
unless (i) the transferee has agreed in writing to be bound by the terms and
conditions of this Agreement pursuant to an instrument substantially in the
form attached hereto as Annex II (other than if (x) the transfer is
conducted pursuant to and in accordance with Sections 3, 4, 5, 6 or 7
hereof or (y) the transfer is conducted following the IPO Effectiveness Date
pursuant to and in accordance with Rule 144 under the Securities Act), (ii) the
transfer complies in all respects with the applicable provisions of this
Agreement, (iii) the transfer complies in all respects with applicable federal,
state and foreign securities laws, including, without limitation, the
Securities Act and (iv) the transfer complies with all applicable Company
policies and restrictions (including any trading “window periods” or other
policies regulating insider trading).  No
transfer by any Management Stockholder may be made during the term of this
Agreement (except pursuant to an effective registration statement under the Securities
Act) unless and until such Management Stockholder has first delivered to the
Company an opinion of counsel (reasonably acceptable as to counsel and as to an
opinion, in form and substance, to the Company) that neither registration nor
qualification under the Securities Act and applicable state securities laws is
required in connection with such transfer.


 


3.                                       Drag-Along
Rights; Sponsor Call Right.


 


(a)           If at any time a Blackstone Encore
Stockholder or a Sponsor receives an offer from a Third Party to purchase
Blackstone Shares then owned by a Blackstone Encore Stockholder and such offer
is accepted by such Blackstone Encore Stockholder (in such capacity, the “Drag-Along Selling Blackstone Encore Stockholder”),
then each Management Stockholder hereby agrees that, upon the request of the
Drag-Along Selling Blackstone Encore Stockholder pursuant to a notice (the “Drag-Along Sale Notice”) provided
by the Drag-Along Selling Blackstone Encore Stockholder at least ten (10)
Business Days prior to the proposed consummation of such sale (the “Drag-Along Notice Date”), it shall
sell a number of Shares owned by it to such Third Party in an amount (which
amount shall be determined in the sole and absolute discretion of the
Drag-Along Selling Blackstone Encore Stockholder) up to the product (rounded up
to the nearest whole number) of (i) the quotient determined by dividing (A) the
total number of Blackstone Shares that are proposed to be sold by the
Drag-Along Selling Blackstone Encore Stockholder to the Third Party purchaser
in the contemplated sale by (B) the Blackstone Shares and (ii) the total number
of Shares owned, or issuable upon exercise of any vested Common Stock
Equivalents that are exercisable (or would become vested and exercisable as a
result of the underlying transaction), by such Management Stockholder as of the
close of business on the day immediately prior to the Drag-Along Notice Date,
at the same price per share of Common Stock and upon substantially the same
terms and conditions of the offer so accepted by the Drag-Along Selling
Blackstone Encore Stockholder, including representations,


 


12

















 


warranties,
covenants, indemnities and agreements substantially similar to those to be made
by the Drag-Along Selling Blackstone Encore Stockholder (except that, in the
case of representations and warranties pertaining specifically to the
Drag-Along Selling Blackstone Encore Stockholder, each Management Stockholder
shall make comparable representations and warranties pertaining specifically to
itself); provided, that all representations, warranties and indemnities
shall be made by the Drag-Along Selling Blackstone Encore Stockholder and the
Management Stockholders severally and not jointly; provided, further,
that the maximum liability a Management Stockholder shall have with respect to
breaches of such representations and warranties shall not exceed the value (at
such time) of the aggregate proceeds received by such Management Stockholder in
connection with the underlying transaction; provided, further
that any such liability of the Management Stockholder shall be satisfied first
by the return of any cash proceeds received by the Management Stockholder
(including the cash proceeds from the sale of any securities or other non-cash
consideration received by the Management Stockholder) and second by the return
of any non-cash consideration (including securities) received by the Management
Stockholder.  Upon the Drag-Along
Blackstone Encore Stockholder providing the Drag-Along Sale Notice, in the
event that a Management Stockholder does not hold a sufficient number of Shares
to meet its obligations under this Section 3(a), then a sufficient
number of Common Stock Equivalents (that are vested and exercisable at any time
up to and including the date immediately prior to the underlying transaction or
that become exercisable as a result of a Change in Control that is the subject
of the Drag-Along Sale Notice) shall be exercised by such Management
Stockholder to cover any such shortfall and the Shares issued upon such
exercise shall be subject to the drag-along rights set forth in this Section
3(a).  Any such Common Stock
Equivalents that are required to be exercised to cover such shortfall but are
not so exercised pursuant to this Section 3(a) shall automatically be
cancelled without any consideration paid therefor.  In the event that the Management Stockholder
does not have a sufficient number of such Common Stock Equivalents to cover
such shortfall, the Management Stockholder shall exercise all such Common Stock
Equivalents then held by the Management Stockholder in full satisfaction of its
obligations with respect to the underlying transaction.


 


(b)           If at any time a Sponsor receives an
offer from a Third Party to purchase units of membership interest in Holdco or
units of membership interest or any similar form of direct equity interest in a
Blackstone Encore Stockholder then held by a Sponsor (such units of membership
interest or equity interest, “Sponsor Interests”)
and such offer is accepted by such Sponsor (in such capacity, the “Call Right Selling Sponsor”), then
each Management Stockholder hereby agrees that, upon the request of the Call
Right Selling Sponsor (in the Call Right Selling Sponsor’s sole discretion)
pursuant to a notice (the “Call Right Sale Notice”)
provided by the Call Right Selling Sponsor at least ten (10) Business Days
prior to the proposed consummation of such sale (the “Call
Right Sale Notice Date”), each Management Stockholder shall sell
a number of Shares owned by it to the Call Right Selling Sponsor (or such Third
Party purchaser) in an amount (which amount shall be determined in the sole and
absolute discretion of the Call Right Selling Sponsor) up to the product
(rounded up to the nearest whole number) of (i) the quotient determined by
dividing (A) the number of shares of Common Stock that is equal to (I) the
percentage of aggregate Sponsor Interests in the applicable Blackstone Encore
Stockholder represented by the Sponsor Interest in such Blackstone Encore
Stockholder to be transferred in connection with the proposed Sponsor Call
Right Sale multiplied by (II) the number of Blackstone Shares held by such
Blackstone Encore Stockholder immediately prior to such Sponsor Call Right Sale
by (B) the Blackstone Shares and (ii) the total number of Shares owned, or
issuable upon exercise of any vested Common Stock Equivalents that are
exercisable (or would become vested and exercisable as a result of the
underlying transaction), by such Management Stockholder as of the close of
business on the day immediately prior to the Call Right Sale Notice Date, at a
price per share equal to the Same Effective Price per share (immediately prior
to the Call Right Sale Notice Date) and upon substantially the same terms and
conditions of the offer so accepted by the Call Right Selling Sponsor,
including representations, warranties, covenants, indemnities and agreements
substantially similar to those to be made by


 


13

















 


the Call Right
Selling Sponsor (except that, in the case of representations and warranties
pertaining specifically to the Call Right Selling Sponsor, each Management
Stockholder shall make comparable representations and warranties pertaining
specifically to itself); provided, that all representations, warranties
and indemnities shall be made by the Call Right Selling Sponsor and the
Management Stockholders transferring Shares pursuant to this Section 3(b)
severally and not jointly; provided, further, that the maximum
liability a Management Stockholder shall have with respect to breaches of such
representations and warranties shall not exceed the value (at such time) of the
aggregate proceeds received by such Management Stockholder in connection with
the underlying transaction; provided, further that any such
liability of the Management Stockholder shall be satisfied first by the return
of any cash proceeds received by the Management Stockholder (including the cash
proceeds from the sale of any securities or other non-cash consideration
received by the Management Stockholder) and second by the return of any
non-cash consideration (including securities) received by the Management
Stockholder.  Upon the Call Right Selling
Sponsor providing the Call Right Sale Notice, in the event that a Management
Stockholder does not hold a sufficient number of Shares to meet its obligations
under this Section 3(b), then a sufficient number of Common Stock
Equivalents (that are vested and exercisable at any time up to and including
the date immediately prior to the underlying transaction or that become
exercisable as a result of a Change in Control that is the subject of the Call
Right Sale Notice) shall be exercised by such Management Stockholder to cover
any such shortfall and the Shares issued upon such exercise shall be subject to
the call rights set forth in this Section 3(b).  Any such Common Stock Equivalents that are
required to be exercised to cover such shortfall pursuant to this Section
3(b) shall automatically be cancelled without any consideration paid
therefor.  In the event that the
Management Stockholder does not have a sufficient number of such Common Stock
Equivalents to cover such shortfall, the Management Stockholder shall exercise
all such Common Stock Equivalents then held by the Management Stockholder in
full satisfaction of its obligations with respect to the underlying
transaction.


 


(c)           The
provisions of this Section 3 shall apply regardless of the form of
consideration received in the Drag-Along Sale or the Sponsor Call Right Sale,
as the case may be, provided for in Section 3(a) or (b) hereof,
respectively; provided, that, in the event the consideration to be paid in exchange for shares of
Common Stock in a proposed Drag-Along Sale or Sponsor Call Right Sale, as the
case may be, includes any securities, and the receipt thereof by a Management
Stockholder required to sell Shares pursuant to Section 3(a) or (b)
hereof, respectively, would require (as determined by the Drag-Along Selling
Blackstone Encore Stockholder or Call Right Selling Sponsor, respectively, upon
the advice of its counsel) under applicable law (x) the registration or
qualification of such securities or of any Person as a broker or dealer or
agent with respect to such securities where such registration or qualification
is not otherwise required by the receipt of such securities by the Drag-Along
Selling Blackstone Encore Stockholder or Call Right Selling Sponsor,
respectively, or (y) the provision to any such Management Stockholder of any
specified information regarding such securities or the issuer thereof that is
not otherwise required to be provided for in connection with the Drag-Along
Sale or Sponsor Call Right Sale, respectively, then, in either case of (x) or
(y), in lieu of receiving such securities (as may be required by the Drag-Along
Selling Blackstone Encore Stockholder or Call Right Selling Sponsor,
respectively, in its sole discretion), such Management Stockholder shall
receive cash consideration equal to the fair market value of such securities.


 


(d)           The required Management Stockholders
shall cooperate in good faith with the Drag-Along Selling Blackstone Encore
Stockholder or the Call Right Selling Sponsor, as the case may be, in
connection with the consummation of the transactions contemplated by Section
3(a) hereof and Section 3(b) hereof, respectively, and, in the event
that a Blackstone Encore Stockholder or a Sponsor receives a bona fide offer
from a Third Party to (i) effect a business combination of the Company with
such Third Party (or an Affiliate thereof) or (ii) purchase all or
substantially all of the assets of the Company (and/or its Subsidiaries), then,
upon the demand of the Blackstone Encore Stockholders holding a majority in
interest of all shares of Common Stock


 


14

















 


then outstanding,
the Management Stockholders shall be required to vote all Shares they hold in
favor of (and not otherwise dissent to or oppose) the business combination or
sale of all or substantially all of the assets of the Company (and/or its
Subsidiaries) as described in such offer, and otherwise to take all actions
reasonably necessary or appropriate to facilitate the consummation of the
proposed transaction.


 


(e)           Any Permitted Transferee of a
Management Stockholder holding Shares shall be obligated under this Section
3 to the same extent as such Management Stockholder.


 


(f)            The rights set forth in this Section
3 shall terminate immediately prior to the closing of a Qualified Public
Offering.


 


(g)           Notwithstanding anything to the
contrary herein, the rights provided for in this Section 3 shall apply,
if at all, only in the case of transfers of Common Stock or Sponsor Interests
pursuant to a transaction contemplated by Section 3(a) hereof and Section
3(b) hereof, respectively, that are beneficially owned by Blackstone
immediately prior to such transfer.


 


4.                                       Tag-Along
Rights.


 


(a)           If at any time a Blackstone Encore
Stockholder (a “Tag-Along Selling
Blackstone Encore Stockholder”) proposes to enter into an
agreement to sell or otherwise dispose of for value any Blackstone Shares,
other than (i) a sale or disposition that would trigger piggy-back registration
rights under Section 8 hereof, (ii) any transfer of Common Stock to the
Company, Blackstone or an Affiliate of the Tag-Along Selling Blackstone Encore
Stockholder or (iii) any transfer of Common Stock to one or more private equity
funds to permit syndication, provided that Blackstone collectively remains the
largest beneficial holder of Common Stock (such sale or other disposition for
value being referred to as “Tag-Along Sale”),
then the Tag-Along Selling Blackstone Encore Stockholder shall afford each of
the Management Stockholders who holds Shares or vested Common Stock Equivalents
(each, individually, a “Tag-Along Stockholder”
and, collectively, the “Tag-Along Stockholders”)
the opportunity to participate proportionately on substantially the same terms
as the Tag-Along Selling Blackstone Encore Stockholder as set forth in the
Tag-Along Notice (as defined in Section 4(c) hereof) in such Tag-Along
Sale in accordance with this Section 4. 
The maximum number of Shares that each Tag-Along Stockholder will be
entitled to include in such Tag-Along Sale (such Tag-Along Stockholder’s “Tag-Along Allotment”) shall be
equal to the product (rounded up to the nearest whole number) of (x) the number
of Shares owned, or issuable upon exercise of any vested Common Stock
Equivalents that are exercisable (or would become vested and exercisable as a
result of the Tag-Along Sale), by such Tag-Along Stockholder as of the close of
business on the day immediately prior to the Tag-Along Notice Date (as defined
in Section 4(b) hereof) and (y) a fraction, the numerator of which is
the number of Blackstone Shares proposed by the Tag-Along Selling Blackstone
Encore Stockholder to be transferred pursuant to the Tag-Along Sale and the
denominator of which is the Blackstone Shares.


 


(b)           The Tag-Along Selling Blackstone
Encore Stockholder shall provide each Tag-Along Stockholder with written notice
(the “Tag-Along Sale Notice”) not more
than sixty (60) days nor less than thirty (30) days prior to the proposed date
of the Tag-Along Sale (the “Tag-Along Sale Date”).  Each Tag-Along Sale Notice shall be
accompanied by a copy of any written agreement relating to the Tag-Along Sale
and shall set forth: (i) the name and address of each proposed transferee in
the Tag-Along Sale; (ii) the number of Blackstone Shares that are proposed to
be transferred by the Tag-Along Selling Blackstone Encore Stockholder pursuant
to the Tag-Along Sale; (iii) the proposed amount and form of consideration to
be paid for such shares and the terms and conditions of payment offered by each
proposed transferee; (iv) the aggregate number of Blackstone Shares held of
record by the Tag-Along Selling Blackstone Encore Stockholder as of the close
of business on the day immediately prior to the date of the


 


15

















 


Tag-Along Sale
Notice (the “Tag-Along Notice Date”); (v)
the Tag-Along Stockholder’s Tag-Along Allotment, assuming the Tag-Along
Stockholder elected to sell the maximum number of Shares permissible; (vi)
confirmation that the proposed transferee has been informed of the “Tag-Along
Rights” provided for herein and has agreed to purchase Shares from any
Tag-Along Stockholder in accordance with the terms hereof; and (vii) the
proposed Tag-Along Sale Date. For the avoidance of doubt, a Tag-Along
Stockholder shall participate in the Tag-Along Sale at the same price per share
of Common Stock and upon the same terms and conditions of the offer so accepted
by the Tag-Along Selling Blackstone Encore Stockholder, including
representations, warranties, covenants, indemnities and agreements
substantially similar to those to be made by the Tag-Along Selling Blackstone
Encore Stockholder (except that, in the case of representations and warranties
pertaining specifically to the Tag-Along Selling Blackstone Encore Stockholder,
each Management Stockholder shall make comparable representations and
warranties pertaining specifically to itself); provided, that all
representations, warranties and indemnities shall be made by the Tag-Along
Selling Blackstone Encore Stockholder and the Management Stockholders
transferring Shares pursuant to this Section 4 severally and not
jointly; provided, further, that the maximum liability a
Management Stockholder shall have with respect to breaches of such
representations and warranties shall not exceed the value (at such time) of the
aggregate proceeds received by such Management Stockholder in connection with
the underlying transaction; provided, further that any such
liability of the Management Stockholder shall be satisfied first by the return
of any cash proceeds received by the Management Stockholder (including the cash
proceeds from the sale of any securities or other non-cash consideration
received by the Management Stockholder) and second by the return of any
non-cash consideration (including securities) received by the Management
Stockholder.


 


(c)           Any Tag-Along Stockholder wishing to
participate in the Tag-Along Sale shall provide written notice (the “Tag-Along Notice”) to the Tag-Along
Selling Blackstone Encore Stockholder no less than fifteen (15) days prior to
the proposed Tag-Along Sale Date.  The
Tag-Along Notice shall set forth the number of Shares that such Tag-Along
Stockholder elects to include in the Tag-Along Sale, which may be less than,
but which shall not exceed, such Tag-Along Stockholder’s Tag-Along
Allotment.  The Tag-Along Notice given by
any Tag-Along Stockholder shall constitute such Tag-Along Stockholder’s binding
agreement to sell the Shares specified in the Tag-Along Notice on the terms and
conditions applicable to the Tag-Along Sale; provided, however, that in
the event that there is any material change in the terms and conditions of such
Tag-Along Sale applicable to the Tag-Along Stockholder (including, but not
limited to, any decrease in the purchase price that occurs other than pursuant
to an adjustment mechanism set forth in the agreement relating to the Tag-Along
Sale, a written copy of which was previously provided to the Tag-Along
Stockholder as part of the Tag-Along Sale Notice) after such Tag-Along
Stockholder gives its Tag-Along Notice, then the Tag-Along Stockholder shall
have the right to withdraw from participation in the Tag-Along Sale with
respect to all of its Shares affected thereby. 
If the proposed transferee does not consummate the purchase of all of
the Shares requested to be included in the Tag-Along Sale by any Tag-Along
Stockholder on substantially identical material terms and conditions applicable
to the Tag-Along Selling Blackstone Encore Stockholder (and, in any event, at a
per share price not less than that received by the Tag-Along Selling Blackstone
Encore Stockholder, except as the purchase price may be adjusted pursuant to
any agreement relating to the relevant Tag-Along Sale, a written copy of which
was previously provided to the Tag-Along Stockholder as part of the Tag-Along
Sale Notice), then the Tag-Along Selling Blackstone Encore Stockholder shall
not consummate the Tag-Along Sale of any of its shares of Common Stock to such
transferee, unless the shares of Common Stock of the Tag-Along Selling
Blackstone Encore Stockholder and the Tag-Along Stockholders to be transferred
are reduced or limited pro rata in proportion to the respective number of
shares of Common Stock actually held, directly or indirectly, by the Tag-Along
Selling Blackstone Encore Stockholder and the Tag-Along Stockholders and all
other material terms and conditions of the Tag-Along Sale are substantially
identical for the Tag-Along Selling Blackstone Encore Stockholder and the
Tag-Along Stockholders (including the same price per


 


16

















 


share received by
both the Tag-Along Selling Blackstone Encore Stockholder and the Tag-Along
Stockholders).


 


(d)           If a Tag-Along Notice from any
Tag-Along Stockholder is not received by the Tag-Along Selling Blackstone
Encore Stockholder prior to the lapse of the fifteen-day (15-day) period
specified above, the Tag-Along Selling Blackstone Encore Stockholder shall have
the right to consummate the Tag-Along Sale without the participation of such
Tag-Along Stockholder, who shall be deemed to have waived his or her rights
hereunder, but only on terms and conditions which are no more favorable in any
material respect to the Tag-Along Selling Blackstone Encore Stockholder (and,
in any event, at no greater a per share purchase price, except as the purchase
price may be adjusted pursuant to any agreement relating to the relevant
Tag-Along Sale, a written copy of which was previously provided to the
Tag-Along Stockholder as part of the Tag-Along Sale Notice) than as stated in
the Tag-Along Sale Notice, and only if such Tag-Along Sale occurs on a date
within ninety (90) days after the proposed Tag-Along Sale Date.  If such Tag-Along Sale does not occur within
such ninety -day (90-day) period, the shares or interests that were to be
subject to such Tag-Along Sale thereafter shall continue to be subject to all
of the restrictions contained in this Section 4.


 


(e)           On the Tag-Along Sale Date, each
Tag-Along Stockholder shall deliver a certificate or certificates for the
Shares to be sold by such Tag-Along Stockholder in connection with the
Tag-Along Sale, duly endorsed for transfer with signatures guaranteed, to the
transferee free and clear of all liens, encumbrances and restrictions, in the
manner and at the address indicated in the Tag-Along Sale Notice, against
delivery of the purchase price for such Shares. 
Each Tag-Along Stockholder shall reimburse the Tag-Along Selling
Blackstone Encore Stockholder for its proportionate share (based on the
consideration received) of the reasonable out-of-pocket costs and expenses
incurred by the Tag-Along Selling Blackstone Encore Stockholder in connection
with any such Tag-Along Sale.


 


(f)            The provisions of this Section 4 shall
apply regardless of the form of consideration received in the Tag-Along Sale; provided,
that, in the event the consideration to be paid in exchange for shares of
Common Stock in a proposed Tag-Along Sale includes any securities, and the
receipt thereof by a Tag-Along Stockholder would require (as determined by the
Tag-Along Selling Blackstone Encore Stockholder upon the advice of its counsel)
under applicable law (x) the registration or qualification of such securities
or of any Person as a broker or dealer or agent with respect to such securities
where such registration or qualification is not otherwise required by the
receipt of such securities by the Tag-Along Selling Blackstone Encore
Stockholder or (y) the provision to any such Tag-Along Stockholder of any
specified information regarding such securities or the issuer thereof that is
not otherwise required to be provided for in connection with the Tag-Along
Sale, then, in either case of (x) or (y), in lieu of receiving such securities
(as may be required by the Tag-Along Selling Blackstone Encore Stockholder, in
its sole discretion), such Management Stockholder shall receive cash consideration
equal to the fair market value of such securities.


 


(g)           The rights set forth in this Section
4 shall terminate immediately prior to the closing of a Qualified Public
Offering.


 


(h)           Notwithstanding anything to the
contrary herein, the rights provided for in this Section 4 shall apply,
if at all, only in the case of transfers of Common Stock that are beneficially
owned by Blackstone immediately prior to such transfer.


 


5.                                       Management
Stockholder Put Right.


 


(a)           If at any time a Sponsor (such
Sponsor, a “Put Right Selling Sponsor”)
proposes to enter into an agreement to sell or otherwise dispose of for value
any Sponsor Interests, other


 


17

















 


than (i) any
transfer of Sponsor Interests to an Affiliate of such Put Right Selling Sponsor
or (ii) any transfer of Sponsor Interests to one or more private equity funds
to permit syndication, provided that Blackstone remains the largest single
holder of Sponsor Interests (such sale or other disposition for value being referred
to as the “Put Right Sale”), then the Put
Right Selling Sponsor shall afford each of the Management Stockholders who
holds Shares (each individually, a “Put Right Stockholder”
and, collectively, the “Put Right Stockholders”)
the opportunity to sell to the Put Right Selling Sponsor or its designee a
proportional number of their Shares at a price per share equal to the Same
Effective Price (as of the date of the Put Right Sale Notice (as defined in Section
5(b) hereof)) and upon substantially the same terms and conditions as the
Put Right Selling Sponsor as set forth in the Put Right Notice (as defined in Section
5(c) hereof) in such proposed Put Right Sale in accordance with this Section
5.  The maximum number of Shares that
each Put Right Stockholder will be entitled to sell to the Put Right Selling
Sponsor pursuant to this Section 5 (such Put Right Stockholder’s “Put Right Allotment”) shall be
equal to the product (rounded up to the nearest whole number) of (x) the total
number of Shares held, or issuable upon exercise of any vested Common Stock
Equivalents that are then exercisable (or would become vested and exercisable
as a result of the underlying transaction), by such Put Right Stockholder as of
the close of business on the day immediately prior to the Put Right Notice Date
(as defined in Section 5(b) hereof) and (y) the quotient determined by
dividing (A) the number of shares of Common Stock that is equal to (I) the
percentage of aggregate Sponsor Interests in the applicable Blackstone Encore
Stockholder represented by the Sponsor Interest in such Blackstone Encore
Stockholder to be transferred in connection with the proposed Put Right Sale
multiplied by (II) the number of Blackstone Shares held by such Blackstone
Encore Stockholder immediately prior to such Put Right Sale by (B) the
Blackstone Shares.


 


(b)           The Put Right Selling Sponsor shall
provide each Put Right Stockholder with written notice (the “Put Right Sale Notice”) not more
than sixty (60) days nor less than thirty (30) days prior to the proposed date
of the Put Right Sale (the “Put Right Sale Date”).  Each Put Right Sale Notice shall be
accompanied by a copy of any written agreement relating to the Put Right Sale
and shall set forth:  (i) the name and
address of each proposed transferee in the Put Right Sale; (ii) the number of
shares of Common Stock that is equal to (A) the percentage of Sponsor Interests
in the applicable Blackstone Encore Stockholder to be transferred in connection
with the proposed Put Right Sale multiplied by (B) the number of Blackstone
Shares held by such Blackstone Encore Stockholder immediately prior to such Put
Right Sale; (iii) the aggregate number of Blackstone Shares beneficially held
by the Put Right Selling Sponsor as of the close of business on the day immediately
prior to the date of the Put Right Sale Notice (the “Put Right
Notice Date”); (iv) the Put Right Stockholder’s Put Right
Allotment, assuming the Put Right Stockholder elected to sell the maximum
number of Shares permissible; and (v) the proposed Put Right Sale Date.  For the avoidance of doubt, a Put Right
Stockholder shall be permitted to sell Shares pursuant to this Section 5
at the Same Effective Price per share of Common Stock and upon substantially
the same terms and conditions of the offer so accepted by the Put Right Selling
Sponsor, including representations, warranties, covenants, indemnities and
agreements substantially similar to those to be made by the Put Right Selling
Sponsor (except that, in the case of representations and warranties pertaining
specifically to the Put Right Selling Sponsor, each Management Stockholder
shall make comparable representations and warranties pertaining specifically to
itself); provided, that all representations, warranties and indemnities
shall be made by the Put Right Selling Sponsor and the Management Stockholders
transferring Shares pursuant to this Section 5 severally and not
jointly; provided, further, that the maximum liability a
Management Stockholder shall have with respect to breaches of such representations
and warranties shall not exceed the value (at such time) of the aggregate
proceeds received by such Management Stockholder in connection with the
underlying transaction; provided, further, that any such
liability of the Management Stockholder shall be satisfied first by the return
of any cash proceeds received by the Management Stockholder (including the cash
proceeds from the sale of any securities or other non-cash consideration
received by the Management Stockholder)


 


18

















 


and second by the return of any
non-cash consideration (including securities) received by the Management
Stockholder


 


(c)           Any Put Right Stockholder wishing to
sell Shares to the Put Right Selling Sponsor or its designee pursuant to this Section
5 shall provide written notice (the “Put Right Notice”)
to the Put Right Selling Sponsor no less than fifteen (15) days prior to the
proposed Put Right Sale Date.  The Put
Right Notice shall set forth the number of Shares that such Put Right Stockholder
elects to sell to the Put Right Selling Sponsor or its designee pursuant to
this Section 5, which may be less than, but which shall not exceed, such
Put Right Stockholder’s Put Right Allotment. 
The Put Right Notice given by any Put Right Stockholder shall constitute
such Put Right Stockholder’s binding agreement to sell the Shares specified in
the Put Right Notice on substantially the same the terms and conditions
applicable to the Put Right Sale; provided, however, that in the
event that there is any material change in the terms and conditions of such Put
Right Sale applicable to such Put Right Stockholder (including, but not limited
to, any decrease in the purchase price that occurs other than pursuant to an
adjustment mechanism set forth in the agreement relating to the Put Right Sale,
a written copy of which was previously provided to the Put Right Stockholder as
part of the Put Right Sale Notice) after such Put Right Stockholder gives its
Put Right Notice, then, notwithstanding anything herein to the contrary, such
Put Right Stockholder shall have the right to withdraw from its obligation to
sell its Shares to the Put Right Selling Sponsor pursuant to this Section 5
with respect to all of its Shares affected thereby.


 


(d)           If a Put Right Notice from any Put
Right Stockholder is not received by the Put Right Selling Sponsor prior to the
lapse of the fifteen-day (15-day) period specified above, the Put Right Selling
Sponsor shall have the right to consummate the Put Right Sale without the
participation of such Put Right Stockholder, who shall be deemed to have waived
his or her rights hereunder, but only on terms and conditions which are
substantially identical in all material respects to those stated in the Put
Right Sale Notice (and, in any event, at the Same Effective Price, except as
the purchase price may be adjusted pursuant to any agreement relating to the
relevant Put Right Sale, a written copy of which was previously provided to the
Put Right Stockholder as part of the Put Right Sale Notice), and only if such
Put Right Sale occurs on a date within ninety (90) days after the proposed Put
Right Sale Date.  If such Put Right Sale
does not occur within such ninety-day (90-day) period, the shares or interests
that were to be subject to such Put Right Sale thereafter shall continue to be
subject to all of the restrictions contained in this Section 5.


 


(e)           On the Put Right Sale Date, each Put
Right Stockholder shall deliver a certificate or certificates for the Shares to
be sold by such Put Right Stockholder in connection with the Put Right Sale,
duly endorsed for transfer with signatures guaranteed, to the Put Right Selling
Sponsor or its designee free and clear of all liens, encumbrances and
restrictions, in the manner and at the address indicated in the Put Right Sale
Notice, against delivery of the purchase price for such Shares. Each Put Right
Stockholder shall reimburse the Put Right Selling Sponsor or its designee for
its proportionate share (based on the consideration received) of the out-of-pocket
costs and expenses incurred by the Put Right Selling Sponsor or its designee in
connection with any such Put Right Sale.


 


(f)            The provisions of this Section 5 shall
apply regardless of the form of consideration received in the Put Right Sale; provided,
that, in the event the consideration to be paid in exchange for shares of
Common Stock in a proposed Put Right Sale includes any securities, and the
receipt thereof by a Put Right Stockholder would require (as determined by the
Put Right Selling Sponsor upon the advice of its counsel) under applicable law
(x) the registration or qualification of such securities or of any Person as a
broker or dealer or agent with respect to such securities where such
registration or qualification is not otherwise required by the receipt of such
securities by the Put Right Selling Sponsor or (y) the provision to any such
Put


 


19

















 


Right Stockholder of any specified information regarding such
securities or the issuer thereof that is not otherwise required to be provided
for in connection with the Put Right Sale, then, in either case of (x) or (y),
in lieu of receiving such securities (as may be required by the Put Right
Selling Sponsor, in its sole discretion), such Management Stockholder shall
receive cash consideration equal to the fair market value of such securities.


 


(g)           The rights set forth in this Section
5 shall terminate immediately prior to the closing of a Qualified Public
Offering.


 


(h)           Notwithstanding anything to the
contrary herein, the rights provided for in this Section 5 shall apply,
if at all, only in the case of transfers of Sponsor Interests that are
beneficially owned by Blackstone immediately prior to such transfer.


 


6.                                       First-Refusal
Rights.


 


(a)           Except as provided in Sections 3,
4 and 5 hereof or for transfers to Permitted Transferees, if any
Management Stockholder shall at any time desire to transfer all or any part of
his or her Shares, as permitted under the terms of this Agreement, such
Management Stockholder (the “Selling Stockholder”)
shall first obtain a bona fide written offer which such Selling Stockholder
desires to accept (the “Outside Offer”)
to purchase all or any portion of such Selling Stockholder’s Shares for a fixed
cash price payable in full at the closing of such transaction.  The Outside Offer shall set forth its date,
the proposed purchase price, the number of Shares that are proposed to be
purchased and the other terms and conditions upon which the purchase is
proposed to be made, as well as the name and address of the Prospective
Purchaser.  “Prospective
Purchaser”, as used herein, shall mean the prospective record
owner or owners of the Shares which are the subject of the Outside Offer and
all other Persons proposed to have a beneficial interest in such Shares.  The Selling Stockholder shall transmit a copy
of the Outside Offer to the Company and the Blackstone Encore Stockholders
within fifteen (15) Business Days after the Selling Stockholder’s receipt of
the Outside Offer.


 


(b)           As a result of the foregoing
transmittal of the Outside Offer, the Selling Stockholder shall be deemed to
have offered in writing to sell all, but not less than all, of such Selling
Stockholder’s Shares to the Company and the Blackstone Encore Stockholders that
are proposed to be purchased in the Outside Offer at the price and upon the
terms set forth in the Outside Offer. 
For a period of fifteen (15) Business Days after such deemed offer by
the Selling Stockholder to the Company, the Company shall have the option,
exercisable by written notice to the Selling Stockholder, to accept the Selling
Stockholder’s offer, in whole and not in part, as to the Selling Stockholder’s
Shares.  If, at the expiration of the
aforesaid fifteen (15) Business Day period, the Company has not exercised the
option granted to it hereunder, then the Blackstone Encore Stockholders shall
collectively have an option for a period of fifteen (15) Business Days after
the expiration of the aforesaid fifteen (15) Business Day period to accept the Selling
Stockholder’s offer, in whole and not in part, exercisable by written notice to
the Selling Stockholder.


 


(c)           If, at the end of the option period
described in Section 6(b) hereof, neither the Company nor the Blackstone
Encore Stockholders has exercised its respective option to purchase all of the
Selling Stockholder’s Shares that are proposed to be purchased in the Outside
Offer, the Selling Stockholder shall be free for a period of forty-five (45)
Business Days thereafter to transfer up to the number of Shares that are
proposed to be purchased in the Outside Offer to the Prospective Purchaser at
the price and upon the terms and conditions set forth in the Outside
Offer.  If such Shares are not so
transferred within the aforementioned forty-five (45) Business Day period, the
Selling Stockholder shall not be permitted to sell such Shares without again
complying with this Section 6.


 


20

















 


(d)           The right set forth in this Section
6 shall terminate immediately prior to the closing of a Qualified Public
Offering.


 


7.                                       Call
Option.


 


(a)           Each Management Stockholder agrees
that the Company and the Blackstone Encore Stockholders, collectively, will
each have a call right (the “Call Option”),
solely for cash consideration, on his or her Shares, including but not limited
to any Shares acquired by such Management Stockholder upon the exercise of
stock options after the termination of such Management Stockholder’s employment
(the “Callable Shares”).  Upon the termination of a Management
Stockholder’s employment with the Company or any of its Subsidiaries for any
reason including, without limitation, the voluntary termination or resignation,
dismissal, involuntary termination, death, retirement or Disability of such
Management Stockholder (or, with respect to Shares acquired upon the exercise
of options following such termination of such Management Stockholder’s
employment, upon the exercise by a Management Stockholder of such options
following such termination) (each, a “Call Event”),
the Company may exercise the Call Option by written notice (a “Call Option Notice”) delivered to
the Management Stockholder and any applicable Permitted Transferees (a “Call Option Management Stockholder”)
within one year after such Call Event (the “Exercise
Date”). Upon the giving of a Call Option Notice, the Company
will be obligated to purchase and the Call Option Management Stockholder will
be obligated to sell all or any lesser portion indicated in the Call Option
Notice of the Callable Shares owned at the time of the Call Event by the Call
Option Management Stockholder for the consideration calculated as set forth
below.  If the Company fails to exercise
the Call Option, then any Blackstone Encore Stockholder may exercise the Call
Option on behalf of any and all Blackstone Encore Stockholders within thirty
(30) days after the expiration of the aforesaid one-year period by giving
written notice to the Call Option Management Stockholder that it is exercising
the Call Option.  Upon the giving of such
notice, the applicable Blackstone Encore Stockholder will be obligated to
purchase and the Call Option Management Stockholder will be obligated to sell
all or any lesser portion indicated in the aforesaid notice of the Callable
Shares owned at the time of the Call Event by the Call Option Management
Stockholder for the consideration calculated as set forth below.  Notwithstanding anything herein to the
contrary, the applicable Blackstone Encore Stockholder shall not have any right
to purchase any Callable Shares prior to the first day following the six-month
anniversary of their acquisition by a Management Stockholder.


 


(i)            In the case of termination of
employment of such Call Option Management Stockholder for Cause or a voluntary
termination of employment of such Call Option Management Stockholder that is
not a Good Termination, the consideration will be the lesser of (A) the
purchase price of such Callable Shares paid by the Call Option Management
Stockholder provided, however, that in the case of any Callable
Shares acquired by the Call Option Management Stockholder, pursuant to a
Rollover Option, the price paid therefor shall be deemed to be the price paid
by the applicable Blackstone Encore Stockholder for each share of Common Stock
purchased by it in connection with the Merger, or, if such Shares were granted
to such Call Option Management Stockholder in exchange for services, the fair
market value of such services at the time of grant, and (B) Fair Market Value
of such Callable Shares on the Exercise Date or the Sponsor Exercise Date, as
the case may be.


 


(ii)           In the case of any other termination
of such Call Option Management Stockholder (including dismissal, death,
retirement or Disability) or in the case of a Good Termination of such
Management Stockholder, the consideration will be Fair Market Value of such
Callable Shares on the Exercise Date or the Sponsor Exercise Date, as the case
may be.


 


21

















 


(b)           The closing for all purchases and
sales of Callable Shares pursuant to this Section 7 will be at the
principal executive offices of the Company within thirty (30) days after the
Exercise Date or the Sponsor Exercise Date, as the case may be.  The purchase price for the Callable Shares
will be paid in cash, by cashier’s check or by wire transfer of funds.  The Call Option Management Stockholder will
cause the Callable Shares to be delivered to the Company or the Sponsor, as the
case may be, at the closing free and clear of all liens, claims, charges or encumbrances
of any kind, other than those which continue to apply pursuant to the terms of
this Agreement.  The Call Option
Management Stockholder will take all such actions as the Company or the
Sponsor, as the case may be, reasonably requests to vest in the Company or the
Sponsor, respectively, title to the Callable Shares free of any lien, claim,
charge, restriction or encumbrance incurred by or through the Call Option
Management Stockholder.


 


(c)           The rights set forth in this Section
7 shall terminate upon the earlier to occur of (i) the Lapse Date or (ii)
immediately prior to the closing of a Qualified Public Offering.


 


8.                                       “Piggyback”
Registration Rights.


 


(a)           Incidental Registration.  After the closing of a Qualified Public
Offering, if the Company files a registration statement under the Securities
Act in connection with a proposed Public Offering and any of the Blackstone
Encore Stockholders are registering shares of Common Stock in such proposed
Public Offering, then each Management Stockholder shall have the right (the “Piggyback Right”) to include in
such proposed Public Offering up to the number of Registrable Shares equal to
(i) the aggregate number of Registrable Shares owned by the Management
Stockholder multiplied by (ii) a fraction (A) the numerator of which is equal
to the aggregate number of Blackstone Shares held by Blackstone Encore
Stockholders to be included in such proposed Public Offering and (B) the
denominator of which is the Blackstone Shares (the “Piggyback
Pro-Rata Portion”).  In
the event that a proposed Public Offering gives rise to a Piggyback Right, the
Company will give written notice to the Management Stockholders.  Upon written request of any Management
Stockholder given within ten (10) Business Days after mailing of any such notice
from the Company, the Company will, except as herein provided, cause all of the
Piggyback Pro-Rata Portion of such Management Stockholder’s Registrable Shares
that have been requested by such Management Stockholder to be included in the
registration to be included in such registration statement; provided, however,
that nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration for any reason or no reason.


 


If any Public
Offering pursuant to this Section 8(a) shall be underwritten on a firm
commitment basis, in whole or in part, the Company may require that the
Registrable Shares requested for inclusion pursuant to this Section 8(a)
be included in such Public Offering on the same terms and conditions as the
securities otherwise being sold through the underwriters.  If, upon the written advice of the managing
underwriter of such Public Offering, the Company determines in good faith that
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Shares) exceeds
the maximum number of securities which can be sold in such offering without
having an adverse effect on the offering of securities (including the price at
which such securities could be offered), the Company will include in such
registration such maximum number of shares of Common Stock as follows: (i) if
such registration has been initiated by one or more of the Company’s
stockholders holding demand registration rights with the Company pursuant to
any registration rights agreement or any similar agreements, then (A) first,
the number of shares of Common Stock requested to be registered by such
initiating stockholder(s) and any other holder(s) of the Company’s securities
which are entitled to sell pro rata with
such initiating stockholder(s), pro rata in
accordance with the number of shares of Common Stock owned by each such
initiating stockholder(s) and any such other holder(s), (B) second, the number
of Registrable Shares requested to be registered by each Management Stockholder
and the number of shares of


 


22

















 


Common Stock
requested to be registered by any other holders of Common Stock having
equivalent rights under similar agreements (which shall include all Blackstone
Encore Stockholders), pro rata in
accordance with the number of shares owned by each such Management Stockholder
and such other holders and (C) third, the number of shares of Common Stock that
are proposed to be sold by the Company for its own account; or (ii) if such
registration has been initiated by the Company, then (A) first, the number of
shares of Common Stock that are proposed to be sold by the Company for its own
account, and (B) second, the number of Registrable Shares requested to be
included in such registration by each Management Stockholder and number of
shares of Common Stock requested to be registered by any other holders of
Common Stock having equivalent rights under any registration rights agreement
or any similar agreements (which shall include all Blackstone Encore
Stockholders), pro rata in accordance with the
number of shares of Common Stock owned by each such Management Stockholder and
such other holders.


 


(b)           Registration Procedures.  If and whenever the Company is required by
the provisions of Section 8(a) hereof to effect the registration of
Registrable Shares under the Securities Act, the Company will:


 


(i)            prepare and file with the Commission
a registration statement with respect to such Registrable Shares, and use its
commercially reasonable efforts to cause such registration statement to become
and remain effective for such period as may be reasonably necessary to effect
the sale of such Registrable Shares, not to exceed one hundred eighty (180)
days; provided, however, that the Company may discontinue any
registration of its securities that is being effected pursuant to Section
8(a) hereof at any time prior to the effective date of such registration
statement (in which case, the Company shall reimburse the Management
Stockholders for the reasonable fees and expenses of one (1) counsel to the
Management Stockholders, collectively (not to exceed $25,000 in the aggregate);


 


(ii)           prepare and file with the Commission
such amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably necessary to effect
the sale of such Registrable Shares, not to exceed one hundred eighty (180)
days; provided, however, that the Company may discontinue any
registration of its securities that is being effected pursuant to Section 8(a)
hereof at any time prior to the effective date of such amendment or supplement
(in which case, the Company shall reimburse the Management Stockholders for the
reasonable fees and expenses of one (1) counsel to the Management Stockholders,
collectively (not to exceed $25,000 in the aggregate);


 


(iii)          furnish to the Management Stockholders
participating in such registration and to the underwriters of the securities
being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such Management Stockholders and underwriters may reasonably request in order
to facilitate the public offering of such Registrable Shares;


 


(iv)          use its commercially reasonable
efforts to register or qualify the securities covered by such registration
statement under such state securities or blue sky laws of such jurisdictions as
such participating Management Stockholders may reasonably request (which
request must be within twenty (20) days following the original filing of such
registration statement), except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;


 


23

















 


(v)           notify such participating Management
Stockholders, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;


 


(vi)          notify such participating Management
Stockholders in the event that the Company becomes aware that any prospectus
required to be delivered by Management Stockholders pursuant to the Securities
Act contains an untrue statement of a material fact or fails to state a
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading and, at the request of
any such Management Stockholder, prepare, promptly file with the Commission and
deliver to such Management Stockholder such amendments or supplements to the
prospectus as may be necessary so that the prospectus, as so amended or
supplemented, shall not contain an untrue statement of a material fact or fail
to state a material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and


 


(vii)         if such registration statement includes
an underwritten public offering, enter into a customary underwriting agreement
and, at the closing provided for in such underwriting agreement, provide such
of the following documents as are required thereunder: (A) an opinion or
opinions of counsel to the Company; and (B) a “cold comfort” letter or letters
from the independent certified public accountants of the Company covering such
matters as are customarily covered by such letters.


 


It shall be a
condition precedent to the obligation of the Company to take any action
pursuant to this Agreement in respect of the Registrable Shares which are to be
registered at the request of any Management Stockholder that such Management
Stockholder shall furnish to the Company such information regarding the
Registrable Shares held by such Management Stockholder and the intended method
of disposition thereof, and shall enter into such underwriting agreements
(including customary representations, warranties, covenants, indemnities and
other agreements) and execute such other documents, in each case as the Company
shall reasonably request in connection with such registration.


 


Each
Management Stockholder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 8(b)(vi)
hereof, such Management Stockholder will forthwith discontinue disposition of
Registrable Shares pursuant to the registration statement covering such
Registrable Shares until such Management Stockholder receives the copies of the
prospectus supplement or amendment contemplated by Section 8(b)(vi)
hereof, and, if so directed by the Company, such Management Stockholder will
deliver to the Company all copies, other than permanent file copies, then in
such Management Stockholder’s possession, of the prospectus covering such
Registrable Shares current at the time of receipt of such notice.  In the event the Company shall give any such
notice, the period mentioned in Sections 8(b)(i) or 8(b)(ii) hereof
shall be extended by the greater of (x) thirty (30) days or (y) the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 8(b)(vi) hereof to and including the date when such
Management Stockholder shall have received the copies of the prospectus
supplement or amendment contemplated by Section 8(b)(vi) hereof.


 


(c)           Expenses.  With respect to each inclusion of Registrable
Shares in a registration statement pursuant to Section 8(a) hereof, the
Company shall bear the following fees, costs and expenses: all registration,
filing and listing fees, printing expenses, fees and disbursements of counsel
for the Company, fees and disbursements of accountants for the Company,
reasonable fees and expenses of one (1) counsel to the Management Stockholders,
collectively (not to exceed $25,000 in the aggregate) and all legal fees and
disbursements and other expenses of


 


24

















 


complying with
state securities or blue sky laws of any jurisdictions in which the securities
to be offered are to be registered or qualified and any fees and expenses for
any special audits incidental to or required by a registration contemplated by
this Section 8.  Fees and disbursements
of counsel for the transferring Management Stockholders, fees and disbursements
of accountants for the Management Stockholders, underwriting discounts and
selling commissions, transfer taxes and any other expenses incurred by the
Management Stockholders not expressly included above shall be borne by the
applicable Management Stockholders.


 


(d)           Lock-up Agreement.  If any registration of Registrable Shares
shall be in connection with an underwritten public offering, each Management
Stockholder agrees, if requested by the underwriter, not to, and shall use its
best efforts to cause its Affiliates not to, effect any sale or distribution
(except as a participant in such underwritten public offering), including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, except as a participant
in such underwritten public offering), during the seven (7) days prior to, and
during the one hundred eighty-day (180-day) period (or such shorter period as
the managing underwriters may require or permit) beginning on, the effective
date of such registration.


 


9.                                       Representations,
Warranties and Covenants.


 


(a)           Representations and Warranties of
the Management Stockholder.  Each
Management Stockholder hereby represents and warrants to the Company that:


 


(i)            Capacity; Authorization.  The Management Stockholder has all legal capacity
to enter into this Agreement and to carry out its obligations hereunder.  Assuming due execution and delivery by the
other Parties, this Agreement constitutes the legal, valid and binding
obligation of the Management Stockholder, terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).


 


(ii)           Brokerage Arrangements.  No broker has acted on behalf of the
Management Stockholder in connection with this Agreement, and there are no
brokerage commissions, finders’ fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the
Management Stockholder or any action taken by the Management Stockholder.


 


(b)           Representations and Warranties
Regarding Investment.


 


(i)            The Management Stockholder acquired
the Shares for investment purposes only, for its own account, and not with a
view to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act;


 


(ii)           The Management Stockholder is aware
that it may have to bear the economic risk of such investment for an indefinite
period of time or to suffer a complete loss of its investment;


 


(iii)          The Management Stockholder
understands, acknowledges and agrees that the Shares have not been registered
under (and that the Company has no present intention to register the Shares
under) the Securities Act or applicable state securities law and that the
offering sale of such Shares may be made in reliance on the exemption from the
registration requirements provided by Rule 701 promulgated under the Securities
Act and


 


25

















 


analogous provisions of certain state securities laws
or in accordance with Regulation S of the Securities Act (“Regulation
S”), and that such Shares may not be transferred by the
Management Stockholder unless the Shares have been registered under the
Securities Act and applicable state securities laws or are transferred in a
transaction exempt therefrom.  The
Company represents and warrants that the issuance of the Shares was, or will
be, made in reliance on the exemption from the registration requirements
provided by Rule 701 promulgated under the Securities Act.


 


(iv)          The Management Stockholder represents
that he or she has reached the age of 21 and has full power and authority to
execute and deliver this Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof and has
adequate means for providing for his or her current financial needs and
anticipated future needs and possible contingencies and emergencies and has no
need for liquidity in the investment in the Shares.  The execution and delivery of this Agreement
will not violate or be in conflict with any order, judgment, injunction,
agreement or controlling document to which the undersigned is a party or by
which it is bound;


 


(v)           The Management Stockholder
understands that no public market now exists for any of the securities issued
by the Company; and


 


(vi)          Such Management Stockholder
acknowledges that he or she has been advised that (A) a restrictive legend in
the form set forth below will be placed on any certificate representing the
Shares and (B) a notation will be made in the appropriate records of the
Company indicating that the Shares are subject to restrictions on transfer and
appropriate stop transfer restrictions will be issued to the Company’s transfer
agent with respect to the Shares.  Any
certificate representing Shares issued to Management Stockholder shall bear the
following legends on the face thereof:


 


“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS AND
APPLICABLE FOREIGN SECURITIES LAWS, AND MAY NOT BE TRANSFERRED OR SOLD UNLESS
(I) A REGISTRATION STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH RESPECT
THERETO, (II) A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR COUNSEL FOR THE
MANAGEMENT STOCKHOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO
THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED OR (III) A ‘NO ACTION’ LETTER’
OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER OR SALE.”


 


“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A MANAGEMENT
STOCKHOLDERS AGREEMENT, DATED AS OF NOVEMBER 3, 2006, AMONG ENCORE MEDICAL
CORPORATION, THE SPONSOR, HOLDCO AND THE OTHER PARTIES THERETO, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE ISSUER. NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH
MANAGEMENT STOCKHOLDERS AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF
SUCH MANAGEMENT STOCKHOLDERS AGREEMENT.”


 


(c)           Additional Representations of
Non-U.S. Persons.  If the Management
Stockholder is not a “U.S. Person,” then the Management Stockholder hereby
represents and warrants the following:


 


26

















 


(i)            No offer or sale of the Shares was
made to the Management Stockholder in the United States;


 


(ii)           The Management Stockholder is not
acquiring the Shares for the account or on behalf of any U.S. Person;


 


(iii)          The Management Stockholder has not made
any pre-arrangement to transfer the Shares to a U.S. Person or to return the
Shares to the United States securities markets (which includes short sales in
the United States within the Restricted Period to be covered by delivery of
Shares) and is not acquiring the Shares as part of any plan or scheme to evade
the registration requirements of Section 2(a)(11) of the Securities Act;


 


(iv)          All offers and sales of the Shares by
the Management Stockholder in the United States or to U.S. Persons or
otherwise, whether prior to or after the expiration of the Restricted Period
(defined below), shall be made only pursuant to a registration of the Shares
under the Securities Act or an exemption from registration. The Management
Stockholder also understands that the Company will, in order to approve removal
of the restrictive legend from certificates evidencing the Shares, require from
the Management Stockholder (A) certain written representations to indicate that
the sale of the Shares was made in a transaction that complies with the
provisions of Regulation S and (B) require a legal opinion in accordance with Section
2(b) hereof that removal of the legend is appropriate;


 


(v)           The Management Stockholder has not
engaged in any “directed selling efforts” (as defined in Regulation S) in the
United States regarding the Shares, nor has it engaged in any act intended to
or which reasonably might have the effect of preconditioning the U.S. market
for the resale of the Shares;


 


(vi)          The Management Stockholder is not a “distributor”
as defined in Regulation S.  However, if
the Management Stockholder should be deemed to be a distributor prior to
reselling the Shares to a non-U.S. Person during the applicable restricted
period under Regulation S (the “Restricted Period”),
the Management Stockholder will send a notice to each new subscriber of the
Shares that such new subscriber is subject to the restrictions of Regulation S
during the Restricted Period;


 


(vii)         The Management Stockholder is not an “underwriter”
or “dealer” (as such terms are defined in the federal securities laws of the
United States), and the purchase of the Shares by the Management Stockholder is
not a transaction (or part of a series of transactions) that is part of any
plan or scheme to evade the registration provisions of the Securities Act.  If the Management Stockholder becomes an
affiliate of the Company at any time after purchasing the Shares, the
Management Stockholder understands and agrees that every sale made by it thereafter
must be made in compliance with the provisions of Rule 144 of the Securities
Act (except for the two-year holding period requirement), including the filing
of Form 144 with the Commission at the time of the sale, as required under Rule
144.  The Management Stockholder
understands and agrees that the provisions of Rule 144, if at any time
applicable to it, are separate and apart from an independent of any
restrictions imposed by Regulation S and will apply even after the expiration
of the Restricted Period;


 


(viii)        The Management Stockholder does not have
a short position in the Shares of the Company and will not have a short
position in such securities at any time prior to the expiration of the
Restricted Period; and


 


27

















 


(ix)           If at any time after the expiration
of the Restricted Period the Management Stockholder wishes to transfer or
attempts to transfer the Shares to a U.S. Person, the Management Stockholder
agrees to notify the Company if at such time it is an “affiliate” of the
Company or is then acting as an “underwriter,” “dealer” or “distributor” as to
such Shares (as such terms are defined in the federal securities laws of the
United States or the regulations promulgated thereunder, including, but not
limited to, Regulation S), or if such transfer is being made as part of a plan
or scheme to evade the registration provisions of the Securities Act.


 


10.                                 Confidentiality.


 


No Management Stockholder will at any time
(whether during or after such Management Stockholder’s employment with the
Company or one of its Subsidiaries) (x) retain or use, directly or indirectly,
for the benefit, purposes or account of such Management Stockholder or any
other Person (other than the Company or its Affiliates), or (y) disclose,
divulge, reveal, communicate, share, transfer or provide access to any Person
outside the Company (or its Subsidiaries, as appropriate) (other than the
Company’s and its Subsidiaries’ professional advisers who are bound by
confidentiality obligations no less stringent than those provided for in this
Agreement), any non-public, proprietary or confidential information (including,
without limitation, trade secrets, know-how, research and development,
software, databases, inventions, processes, formulae, technology, designs and
other intellectual property, information concerning finances, investments,
profits, pricing, costs, products, services, vendors, customers, clients,
partners, investors, personnel, compensation, recruiting, training,
advertising, sales, marketing, promotions, government and regulatory activities
and approvals) concerning the past, current or future business, activities and
operations of the Company or its Affiliates and/or any third party that has
disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written
authorization of the Board of Directors (or the board of directors or the
equivalent governing body of a Subsidiary of the Company, as applicable).


 


(a)           “Confidential Information” shall not
include any information that is (i) generally known to the industry or the
public other than as a result of a Management Stockholder’s breach of this
covenant, (ii) made legitimately available to such Management Stockholder by a
third party without breach of any confidentiality obligation, or (iii) required
by law to be disclosed; provided, that such Management Stockholder shall give
prompt written notice to the Company of such requirement, disclose no more
information than is so required and cooperate with any attempts by the Company
to obtain a protective order or similar treatment with respect to such
information.


 


(b)           Upon termination of a Management
Stockholder’s employment with the Company (or its Subsidiary, as appropriate)
for any reason, such Management Stockholder (and any of his or her Permitted
Transferees that may hold Shares) shall: 
(i) cease and not thereafter commence use of any Confidential
Information or intellectual property (including, without limitation, any
patent, invention, copyright, trade secret, trademark, trade name, logo, domain
name or other source indicator) owned or used by the Company or its Affiliates;
(ii) immediately destroy, delete or return to the Company, at the Company’s
option, all originals and copies in any form or medium (including memoranda,
books, papers, plans, computer files, letters and other data) in such
Management Stockholder’s possession or control (including any of the foregoing
stored or located in such Management Stockholder’s office, home, laptop or
other computer, whether or not property of the Company) that contain
Confidential Information or otherwise relate to the business of the Company or
its Affiliates, except that such Management Stockholder may retain only those
portions of any personal notes, notebooks and diaries that do not contain any
Confidential Information; and (iii) notify and fully cooperate with the Company


 


28

















 


regarding the
delivery or destruction of any other Confidential Information of which such
Management Stockholder is or becomes aware.


 


(c)           If the confidentiality provisions of
an applicable employment agreement between a Management Stockholder and the
Company (or one of its Subsidiaries) conflicts with this Section 10,
then the confidentiality provisions of such employment agreement shall control
for purposes of determining whether a breach of this Section 10 has
occurred, including the remedy provisions provided for in Section 10(d) hereof.


 


(d)           Each Management Stockholder agrees
that if he breaches the confidentiality covenant set forth in this Section
10, the Company will suffer irreparable damages and such Management
Stockholder will receive a benefit for which such Management Stockholder had
not paid.  Each Management Stockholder
agrees that (i) damages at law will be difficult to measure and an insufficient
remedy to the Company in the event that such Management Stockholder violates
the terms of this Section 10 and (ii) the Company shall be entitled,
upon application to a court of competent jurisdiction, to obtain injunctive
relief to enforce the provisions of this Section 10 without the
necessity of posting a bond or other security or proving actual damages, which
injunctive relief shall be in addition to any other rights or remedies available
to the Company.  No remedy shall be
exclusive of any other, and neither application for nor obtaining injunctive or
other relief shall preclude any other remedy available, including money damages
and reasonable attorneys’ fees.


 


11.                                 Employment
by the Company.


 


Nothing contained in this Agreement (a)
obligates the Company or any Affiliate of the Company to employ the Management
Stockholder in any capacity whatsoever or (b) prohibits or restricts the
Company (or any Affiliate of the Company) from terminating the employment of
the Management Stockholder at any time or for any reason whatsoever, with or
without Cause, and the Management Stockholder hereby acknowledges and agrees
that neither the Company nor any other Person has made any representations or
promises whatsoever to the Management Stockholder concerning the Management
Stockholder’s employment or continued employment by the Company or any
Affiliate of the Company.


12.                                 Taxes.


 


The Company will have the right to deduct
from any cash payment made under this Agreement to the Management Stockholders
any federal, state or local income or other taxes required by law to be
withheld with respect to such payment.


 


13.                                 After-Acquired
Securities.


 


Each Management Stockholder agrees that,
except as otherwise provided herein, all of the provisions of this Agreement
shall apply to all of the Shares now owned or which may be issued or
transferred hereafter to a Management Stockholder in consequence of any
additional issuance, purchase, transfer, exchange or reclassification of any of
such Shares, corporate reorganization, or any other form of recapitalization,
consolidation, merger, share split or share dividend, or which are acquired by
a Management Stockholder in any other manner; provided, however,
that the provisions of this Agreement shall not apply to any shares of Common
Stock acquired by the Management Stockholder after the Initial Public Offering
(except for shares of Common Stock issued upon the exercise of Common Stock
Equivalents held by the Management Stockholder prior to the Initial Public
Offering).


 


29

















 


14.                                 Recapitalization,
Exchange, Etc.


 


The provisions of this Agreement shall apply,
to the full extent set forth herein with respect to the Shares, to any and all
shares of capital stock of the Company, Common Stock Equivalents or other
securities of the Company that may be issued in respect of, in exchange for, or
in substitution of the Shares. If, and as often as, there are any changes in
the Shares or the Common Stock Equivalents, by way of any stock dividends,
splits, reverse splits, combinations, or reclassifications, or through merger,
consolidation, reorganization or recapitalization or by any other means
occurring after the date of this Agreement, appropriate adjustment shall be
made to the provisions of this Agreement, as may be required, so that the
rights, privileges, duties and obligations hereunder shall continue with
respect to the Shares as so changed.


 


15.                                 Notices.


 


All notices, demands or other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first class mail, return receipt requested, telecopier,
courier service, or personal delivery:


 


if to the Company:


 


Encore Medical Corporation


9800 Metric Boulevard


Austin, TX 78758


Telecopy: 
(512) 834-6310


Attention: General Counsel


 


if to the Blackstone Encore Stockholders, the
Sponsor or Blackstone:


 


c/o The Blackstone Group L.P.


345 Park Avenue, 31st Floor


New York, NY 10154


Telecopy: (212) 583-5722


Attention: Chinh Chu


 


with a required copy (which shall not
constitute notice) to:


 


Reed Smith LLP


599 Lexington Avenue


New York, NY 10022


Telecopy: (212) 521-5450


Attention:       John
J. Altorelli / Mark G. Pedretti / Brian E. Burns


 


if to a Management Stockholder, to him or her
at his or her address or telecopy number set forth in the books and records of
the Company.


 


with a required copy (which shall not
constitute notice) to:


 


Willkie Farr & Gallagher LLP


787 Seventh Avenue


New York, NY 10019


Telecopy: (212) 728-9635


Attention: 
David E. Rubinsky


 


30

















 


All such
notices, demands and other communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five (5) Business Days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied. Any Party may by notice given in accordance
with this Section 15 designate another address or Person for receipts of
notices hereunder.


 


16.                                 Successors,
Assigns and Transferees.


 


The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the Parties hereto, their
Permitted Transferees, transferees under Section 2(d) hereof and their
respective successors, each of which such Permitted Transferees and other
transferees shall agree, in a writing in form and substance satisfactory to the
Company, to become a Party hereto and be bound (subject to Section 26 hereof)
to the same extent as its transferor hereby (including, without limitation, Sections
2 through 8 hereof); provided, that no Management Stockholder
may assign to any Permitted Transferee or transferee under Section 2(d)
hereof any of its rights hereunder other than in connection with a transfer of
Shares to such Permitted Transferee or other transferee in accordance with the
provisions of this Agreement.


 


17.                                 Amendment
and Waiver.


 


(a)           No failure or delay on the part of
any Party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Parties hereto at law, in equity or otherwise.


 


(b)           Any amendment, supplement,
modification or waiver of or to any provision of this Agreement shall be
effective only if it is made or given in writing and signed by (i) the Company
and (ii) Parties which own, on a fully diluted basis (assuming the conversion,
exercise or exchange of all Common Stock Equivalents that are then vested),
shares of Common Stock representing at least a majority of the voting power
represented by all Common Stock outstanding on a fully diluted basis and owned
by all Parties; provided, however, that this Agreement shall not
be amended, supplemented or modified or any provision waived in a manner that
materially affects the Management Stockholders and their Permitted Transferees
in an adverse manner without the prior written consent of holders of a majority
of the Common Stock then beneficially owned by the Management Stockholders and
their Permitted Transferees; provided, further, that this
Agreement shall not be amended, supplemented or modified or any provision
waived in a manner that materially and disproportionately affects the rights
and obligations of one or more Management Stockholders and its or their
Permitted Transferees relative to the rights and obligations of the other
Management Stockholders and their Permitted Transferees in an adverse manner
without the prior written consent of such disproportionately affected
Management Stockholder(s) or Permitted Transferee(s), as applicable; provided,
further, that Section 7 of this Agreement shall not be amended,
supplemented or modified or any provision thereof waived in a manner that materially
affects the rights and obligations of one or more Management Stockholders and
its or their Permitted Transferees in an adverse manner without the prior
written consent of such Management Stockholder(s) or Permitted Transferee(s),
as applicable.  Any aforementioned
amendment, supplement, modification, waiver or consent shall be binding upon
the Company, the Blackstone Encore Stockholders, the Sponsor and all of the
Management Stockholders.


 


31

















 


18.                                 Counterparts.


 


This Agreement may be executed in any number
of counterparts (including via facsimile), each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement. Any counterpart or other signature hereupon
delivered by facsimile shall be deemed for all purposes as constituting good
and valid execution and delivery of this Agreement by such Party.


 


19.                                 Specific
Performance; Injunctive Relief.


 


The Parties hereto intend that each of the
Parties hereto be given the right to seek damages or specific performance in
the event that any other Party hereto fails to perform such Party’s obligations
hereunder. Therefore, if any Party shall institute any action or proceeding to
enforce the provisions hereof, any Party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff Party
has an adequate remedy at law.


 


20.                                 Headings;
Interpretation.


 


The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
In this Agreement, unless the context otherwise requires, words in the singular
number or in the plural number will each include the singular number and the
plural number, words of the masculine gender will include the feminine and the
neuter, and, when the sense so indicates, words of the neuter will refer to any
gender.


 


21.                                 Severability.


 


If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.


 


22.                                 Entire
Agreement.


 


This Agreement, any option agreements entered
into between the Company and the Management Stockholders and the other
documents referred to herein or delivered pursuant hereto contain the entire
understanding of the Parties with respect to the subject matter hereof and
thereof. There are no agreements, representations, warranties, covenants or
undertakings with respect to the subject matter hereof and thereof other than
those expressly set forth herein and therein.


 


23.                                 Further
Assurances.


 


Each of the Parties shall, and shall cause
their respective Affiliates to, execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.


 


24.                                 Governing
Law.


 


This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard to
any conflict of law principles thereof.


 


32

















 


25.                                 Consent
to Jurisdiction; No Jury Trial.


 


Any legal action, suit or proceeding arising
out of or relating to this Agreement may be instituted in any federal court in
the Southern District of New York, or in any state court in which venue would
otherwise be properly located in the Southern District of New York, and each
Party waives any objection which such Party may now or hereafter have to the
laying of the venue of any such action, suit or proceeding, and irrevocably
submits to the jurisdiction of any such court. Any and all service of process
and any other notice in any such action, suit or proceeding will be effective
against any Party if given as provided herein. Nothing herein contained will be
deemed to affect the right of any Party to serve process in any manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other Party in any jurisdiction other than New York.  THE PARTIES HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF
THEM AGAINST THE OTHERS IN ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT.


 


26.                                 Additional
Management Stockholders.


 


Any Person that becomes party to a stock
subscription agreement or an option agreement after the date hereof may become
a Party hereto and may become bound hereby by countersigning this Agreement
(which shall not require the consent of the Management Stockholders) or entering
into a supplemental agreement with the Company agreeing to be bound by the
terms hereof (or only specific sections hereof) in the same manner as the other
Management Stockholders.  Each such
supplemental agreement shall become effective upon its execution by the
Company, any of the Blackstone Encore Stockholders and such Person, and it
shall not require the signature or consent of any other Party. Such
supplemental agreement may modify some of the terms hereof as they affect such
Person.


 


 


[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]


 


33

















 


IN WITNESS WHEREOF, the undersigned have
executed, or have caused to be executed, this Management Stockholders Agreement
on the date first written above.


 


	
   

  	
  BLACKSTONE CAPITAL PARTNERS V L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Blackstone Management Associates V

  L.L.C., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Chinh E. Chu

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chinh E. Chu

  
	
   

  	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  
	
   

  	
  BLACKSTONE FAMILY INVESTMENT

  PARTNERSHIP V L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Blackstone Management Associates V

  L.L.C., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Chinh E. Chu

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chinh E. Chu

  
	
   

  	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  
	
   

  	
  BLACKSTONE FAMILY INVESTMENT

  PARTNERSHIP V-A L.P.

  
	
   

  	
   

  
	
   

  	
  By: Blackstone Management Associates V

  L.L.C., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Chinh E. Chu

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chinh E. Chu

  
	
   

  	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  
	
   

  	
  BLACKSTONE PARTICIPATION

  PARTNERSHIP V L.P.

  
	
   

  	
   

  
	
   

  	
  By: Blackstone Management Associates V

  L.L.C., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Chinh E. Chu

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chinh E. Chu

  
	
   

  	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  
	
   

  	
  GRAND SLAM HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Chinh E. Chu

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Chinh E. Chu

  
	
   

  	
  Title: President

  



 

















 


	
   

  	
   

  	
  ENCORE MEDICAL CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Harry L. Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Harry L. Zimmerman

  
	
   

  	
   

  	
   

  	
  Title: Executive Vice President and General

  Counsel

  



 

















 


	
   

  	
  KENNETH W. DAVIDSON

  
	
   

  	
   

  
	
   

  	
    /s/ Kenneth W. Davidson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PAUL D. CHAPMAN

  
	
   

  	
   

  
	
   

  	
    /s/ Paul D. Chapman

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PETER W. BAIRD

  
	
   

  	
   

  
	
   

  	
    /s/ Peter W. Baird

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARRY L. ZIMMERMAN

  
	
   

  	
   

  
	
   

  	
    /s/ Harry L. Zimmerman

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILLIAM W. BURKE

  
	
   

  	
   

  
	
   

  	
    /s/ William W. Burke

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JACK F. CAHILL

  
	
   

  	
   

  
	
   

  	
    /s/ Jack F. Cahill

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SCOTT A. KLOSTERMAN

  
	
   

  	
   

  
	
   

  	
    /s/ Scott A. Klosterman

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIAN T. ENNIS

  
	
   

  	
   

  
	
   

  	
    /s/ Brian T. Ennis

  	
   

  



 

















 


Annex I


FORM OF CONSENT OF SPOUSE1


 


Reference is made to the Management
Stockholders Agreement, signed by                                                         
(the “Management Stockholder”) and dated
as of November 3, 2006 (the “Agreement”),
among Encore Medical Corporation, a Delaware corporation, the Sponsors, Holdco
and the other parties listed on the signature pages thereto, as the same may be
subsequently modified, supplemented or amended in accordance with its
terms.  Capitalized terms used but not
otherwise defined herein will have the meanings set forth in the Agreement.


 


The undersigned is the spouse of the
Management Stockholder and hereby acknowledges that s/he has read the attached
Agreement and knows its content.  The
undersigned is aware that, by its provisions, his or her spouse agrees to sell
all or a portion of his or her Shares, whether now owned or later acquired
through the exercise of stock options or otherwise, including his or her
community property interest therein, if any, upon the occurrence of certain
events.  The undersigned hereby consents
to the sale, approves the provisions of the Agreement, and agrees that those
Shares and his or her interest in them, if any, are subject to the provisions
of the Agreement and that s/he will take no action at any time to hinder
operation of the Agreement on those securities or his or her interest, if any,
in them, and, to the extent required, will take any further action that is
necessary to effectuate the provisions of the Agreement.


 


	
   

  	
   

  
	
   

  	
  Name:

  



 


 






1                                          We
expect every Management Stockholder who is resident of one of the community
property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico,
Texas, Washington and Wisconsin) to have his or her spouse, if any, execute and
deliver this consent as of the date of the Management Stockholders Agreement,
or, if later, the date such Management Stockholder becomes a party to the
Management Stockholders Agreement.


 

















 


Annex II


 


FORM OF ACKNOWLEDGMENT AND AGREEMENT


 


The undersigned wishes to receive from [                    ]
(“Transferor”) [certain shares or
certain options, warrants or other rights to purchase] [                ]
shares, par value $0.01 per share, of common stock (the “Shares”)
of Encore Medical Corporation, a Delaware corporation (the “Company”).


 


The Shares are subject to the Management
Stockholders Agreement, dated as of November 3, 2006 (the “Agreement”),
among the Company, the Sponsors, Holdco and the other parties listed on the
signature pages thereto.  The undersigned
has been given a copy of the Agreement and afforded ample opportunity to read
and to have counsel review it, and the undersigned is thoroughly familiar with
its terms and conditions.


 


Pursuant to the terms of the Agreement, the
Transferor is prohibited from transferring such Shares and the Company is
prohibited from registering the transfer of the Shares unless and until a
transfer is made in accordance with the terms and conditions of the Agreement
and the recipient of such Shares acknowledges the terms and conditions of the
Agreement and agrees to be bound thereby.


 


The undersigned wishes to receive such Shares
and have the Company register the transfer of such Shares.


 


In consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and to induce the Transferor to
transfer such Shares to the undersigned and the Company to register such
transfer, the undersigned does hereby acknowledge and agree that (i) he or she
has been given a copy of the Agreement and afforded ample opportunity to read
and to have counsel review it, and the undersigned is thoroughly familiar with
its terms, (ii) the Shares are subject to the terms and conditions set forth in
the Agreement and (iii) the undersigned does hereby agree fully to be bound
thereby as a “Management Stockholder” under the Agreement and hereby makes the
representations and warranties set forth therein (except to the extent that
such representations do not, by their nature, apply to the undersigned),
including those set forth in Section 2(d) thereof.


 


	
   

  	
   

  
	
  Name:

  	
   

  



 


This                   
day of                     ,
            .