Document:

exv10w9

 

Exhibit 10.9

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of October 4,
2004 between ENCORE MEDICAL CORPORATION, a Delaware corporation (the
“Company”), and                                        (“Optionee”).

     WHEREAS, Optionee, as a result of the merger between the Company and Empi,
Inc., is now an employee of a subsidiary of the Company; and

     WHEREAS, in view of the foregoing, Company desires to grant to Optionee an
option to purchase shares of Company’s Common Stock, par value $0.001, (the
“Stock”).

     NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Company and Optionee,
intending legally to be bound, hereby agree as follows:

     1. Grant of Option and Vesting. Company hereby grants to Optionee an
option to purchase an aggregate total of                     thousand (                   ) shares of
Stock upon the terms and conditions hereinafter set forth. The options granted
hereunder are intended to be “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.

     2. Term of Option.

          (a) The Optionee may exercise any vested option and purchase shares of
Stock under the Agreement at any time after the date the options have vested.
The option to purchase shares of Stock under this Agreement shall terminate on
October 4, 2014.

          (b) The option shall be exercisable in three equal installments, with the
installments vesting on October 4, 2005, October 4, 2006, and October 2007,
respectively, provided, however, that to the extent not exercised, such
installments shall accumulate and be exercisable in whole or in part in any
subsequent period, but not later than October 4, 2014.

          (c) In the event of the failure of Optionee timely to exercise Optionee’s
option on or prior to October 4, 2014, or in the event of the failure of
Optionee to exercise Optionee’s option with respect to all of the shares of
Stock subject to the option within such time period, such part or parts, or the
whole, as the case may be, of Optionee’s option shall, ipso facto, become null
and void and shall no longer be of or have any further force or effect.

     3. Purchase Price. The purchase price per share of Stock subject to the
option specified herein shall be Five and 19/100 Dollars ($5.19).

     4. Procedure for Exercise of Option. Subject to the provisions of Article
2, Optionee may exercise the option specified herein as follows:

          (a) Payment. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one of the alternative forms specified
below: (i) full payment in cash or check made payable to the Company’s order;
or (ii) full payment in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Company’s earnings for financial-reporting
purposes and valued at Fair Market Value on the Exercise Date (as such term is
defined below); or (iii) full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Company’s earnings for financial-reporting purposes and valued at Fair Market
Value on the Exercise Date and cash or check payable to the Company’s order; or
(iv) full payment through a broker-dealer sale and remittance procedure
pursuant to which the optionee (a) shall provide irrevocable written
instructions to a Company-approved brokerage firm to effect the immediate sale
of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares and (b) shall concurrently
provide written directives to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale
transaction. For purposes of this Section 4, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure specified
above is used, payment of the exercise price for the purchased shares must
accompany the exercise notice.

 

 

          (b) Non-Transferability. During the lifetime of the Optionee, the option
grant shall be exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee other than a transfer of the option effected by
will, by the laws of descent and distribution following Optionee’s death.

     5. Changes in the Company’s Capital Structure.

          (a) After a merger of one or more corporations into the Company, Optionee
shall, at no additional cost, be entitled upon exercise of such options to
receive (subject to any required action by stockholders) in lieu of the number
of shares as to which such option shall then be so exercisable, the number and
class of shares of stock or other securities to which such holder would have
been entitled pursuant to the terms of the agreement of merger if, immediately
prior to such merger, such holder had been the holder of record of a number of
shares of Stock equal to the number of shares as to which such option shall be
so exercised.

          (b) If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation or where
the Company will be a wholly owned subsidiary of another corporation, or if the
Company sells or otherwise disposes of all or substantially all of its property
or assets to another corporation while unexercised, vested or unvested options
remain outstanding under the Agreement, then:

               (i) subject to the provisions of clause (ii) below, after the effective
date of such merger, consolidation, or sale, as the case may be, Optionee shall
be entitled, upon exercise of any vested option, to receive, in lieu of shares
of Stock, the number and class of shares of such stock, other securities, cash,
and other property or rights as the holders of shares of Common Stock received
pursuant to the terms of the merger, consolidation, or sale and to which
Optionee would have been entitled if, immediately prior to such merger,
consolidation, or sale, Optionee had been the holder of record of a number of
shares of Stock equal to the number of shares as to which such vested option
shall be so exercised; and

               (ii) all outstanding vested options may be canceled by the Board of
Directors of the Company as of the effective date of any such merger,
consolidation, or sale, provided that (x) written notice of such cancellation
is given to the Optionee not later than thirty (30) days prior to such
effective date, and (y) the Optionee shall have the right to exercise any
vested option in full (without regard to any limitations set forth in or
imposed pursuant to Article 2 hereof) during the said thirty (30)-day period
preceding the effective date of such merger, consolidation, or sale.

          (c) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefore,
or upon conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Stock
then subject to outstanding options.

     6. Investment Warranty. Optionee acknowledges and understands that, in
connection with the issuance of any shares of Stock to it pursuant to the
exercise of the option specified in this Agreement (such shares hereinafter in
this Article 6 referred to as the “Shares”):

          (a) Optionee has been fully informed as to the circumstances under which
he is permitted to take and required to hold the Shares pursuant to the
requirements of the Securities Act of 1933, as amended (the “Act”), and any
applicable state securities or Blue Sky law;

          (b) Company has informed Optionee that the Shares are not registered under
the Act and may not be transferred or otherwise disposed of unless the Shares
are subsequently registered under the Act and registered or qualified under any
applicable state securities or Blue Sky law or an exemption from such
registration and/or qualification is available and the conditions of such
exemption are satisfied;

          (c) Prior to executing this Agreement, Optionee was informed that a
restrictive legend referring to the restrictions set forth herein will be
placed upon the certificate(s) evidencing the Shares;

          (d) Company is under no obligation to register the Shares under the Act or
to comply with Regulation A or any other applicable exemption under the Act
with respect to the Shares;

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          (e) Rule 144 under the Act may not be available and, even if it is
available, Company will not be required to supply Optionee with any information
necessary to enable him to make sales of the Shares pursuant to Rule 144 under
the Act (assuming such Rule is applicable and is otherwise available to
Optionee with respect to the Shares), but Company may make publicly available
such adequate current public information with respect to Company as is required
by Rule 144 under the Act.

     7. No Rights as Stockholder. The option specified in this Agreement shall
not, in and of itself, entitle Optionee to any rights as a stockholder of
Company including, without limitation, the right to receive dividends or other
distributions of any kind, the right to vote or otherwise act at any annual or
special meeting of Stockholders of Company, the right to receive notice of any
corporate action (except as otherwise specified in Article 5 hereof) and the
right to exercise any preemptive rights.

     8. Expenses. All expenses incurred by or on behalf of either party hereto
in connection with the authorization, preparation, execution and consummation
of this Agreement, the option specified herein and the possible purchase of the
shares of Stock subject to the option, including, without limitation of the
generality of the foregoing, all fees and expenses of representatives, counsel
and accountants employed by either such party, shall be borne solely and
entirely by the party who or which has incurred the same.

     9. Warranties of Company. Company hereby represents and warrants as
follows:

          (a) The Board of Directors of Company has authorized the execution and
delivery of this Agreement by the officers of Company executing same;

          (b) The Board of Directors of Company has reserved for issuance, during
the period the option specified herein is exercisable, such number of shares of
Stock of Company as shall be necessary for full exercise of the option
specified in this Agreement and shall take such steps as are necessary to cause
there to be authorized shares available for the issuance of the Stock in the
event that the option is exercised; and

          (c) Any shares of Stock of Company issued and delivered pursuant to the
exercise of the option specified herein shall be validly issued, fully paid and
non assessable.

     10. Requirements of Law.

          (a) The Company shall not be required to sell or issue any Stock pursuant
to any option if the issuance of such Stock shall constitute a violation by the
Optionee or the Company of any provisions of any law or regulation of any
governmental authority. If a registration statement under the Securities Act
of 1933, as amended, and any applicable state securities or Blue Sky laws (the
“Securities Laws”) is not in effect with respect to the shares of Stock
issuable pursuant to any option, the Company may require the Optionee to make
certain representations and may require an opinion of counsel satisfactory to
the Company to the effect that such registration is not required. Any
determination in this connection by the Company shall be final, binding, and
conclusive.

          (b) Upon exercise of any option, the Company shall not be required to
issue such Stock unless the Company has received evidence satisfactory to it to
the effect that the holder of such option will not transfer such Stock except
pursuant to a registration statement in effect under the Securities Laws or
unless an opinion of counsel satisfactory to the Company has been received by
the Company to the effect that such registration is not required. Any
determination in this connection by the Company shall be final, binding, and
conclusive.

          (c) In the event the Stock issuable on exercise of an option is not
registered under the Securities Laws, the Company may imprint the following
legend or any other legend that counsel for the Company considers necessary or
advisable to comply with the Securities Laws:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR THE APPLICABLE STATE SECURITIES LAWS OF ANY
STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER

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EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.

          (d) The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Laws, and in the event any
shares are so registered, the Company may remove any legend on certificates
representing such shares. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of an option or the issuance
of Stock pursuant thereto to comply with any law or regulation of any
governmental authority.

     11. Miscellaneous.

          (a) All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
or sent by registered or certified mail, return receipt requested, first class
postage prepaid, as follows:

	(1)	 	If to Company, to:
	 
	 	 	Encore Medical Corporation

Attn.: Harry L. Zimmerman, Executive Vice President –

General Counsel

9800 Metric Boulevard

Austin, Texas 78758

	 
	(2)	 	If to Optionee, to:
	 
	 	 	                                      

                                      

                                      

                                      

or to such other address as either such party may designate in accordance with
this Section 11(a).

          (b) This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.

          (c) The provisions of this Agreement are not intended to be (and shall not
serve) for the benefit of any creditor (other than a party hereto in its or his
capacity as such) of, or any other person (other than a party hereto in its or
his capacity as such) to whom any debts, liabilities obligations are owed by
(or who otherwise has a claim against), either party hereto, and no such
creditor or other person shall obtain any right under any provision hereof or
shall by reason of any such provision make claims in respect of the aforesaid
debts, liabilities or obligations (or otherwise) against Company or the other
party hereto.

          (d) The Article and other headings in this Agreement are inserted solely
as a matter of convenience and for reference and are not a part of this
Agreement.

          (e) This Agreement supersedes all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof. Neither this Agreement, nor any provision hereof, may be changed,
waived, discharged or terminated orally, but only by a statement in writing
signed by the party against which or whom the enforcement of such change,
waiver, discharge or termination is sought.

          (f) This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware.

          (g) The Company does not guarantee the Stock from loss or depreciation.

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          (h) All claims, disputes and other matters in question between the parties
to this Agreement, arising out of or relating to this Agreement or the breach
thereof, shall be decided by arbitration in accordance with the Arbitration
Rules of the American Arbitration Association then obtaining unless the parties
mutually agree otherwise. Notice of the demand for arbitration shall be filed
in writing with the other party to this Agreement and with the American
Arbitration Association. The demand shall be made within a reasonable time
after the claim, dispute or other matter in question has arisen. In no event
shall the demand for arbitration be made after the date when institution of
legal or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations. The award
rendered by the arbitrators shall be final, and judgment may be entered upon it
in accordance with applicable law in any court having jurisdiction thereof.

          (i) If any action is asserted or brought to enforce this Agreement, the
party or parties prevailing in any such action are entitled to reimbursement,
and shall be reimbursed by the non-prevailing party or parties for all costs
and expenses (including, without limitation, attorneys’ and accounting fees and
expenses) reasonably incurred by the prevailing party or parties in asserting
or bringing such action; provided, however, if such action is asserted for
monetary damages and if the party or parties asserting same are only partially
successful in asserting or bringing any such action, they shall be entitled to
reimbursement hereunder for their costs and expenses only in the proportion
that the amount awarded to such prevailing party bears to the total amount for
which any such action is brought or asserted.

          (j) “Fair Market Value” on a specified date shall be the average of the
closing prices of the Stock on the NASDAQ Stock Market’s National Market System
or whichever other exchange the Company’s stock is being traded on the last
three trading days prior to the day immediately following the specified date.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	ENCORE MEDICAL CORPORATION,
	 	 	a Delaware corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Kenneth W. Davidson,
	

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	OPTIONEE:
	 
	 	 	 	 
	 	 	

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Exhibit 10.11.1

AMENDMENT TO EMPLOYMENT AGREEMENT

     THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is made the 15th
day of November, 2003, by and between ENCORE MEDICAL CORPORATION, a Delaware
corporation, with its principal office located at 9800 Metric Boulevard,
Austin, Texas 78758 (the “Company”) and PAUL D. CHAPMAN, an individual residing
at 1006 Hanover Street, Chattanooga, TN 37405 (the “Employee”).

     WHEREAS, the Employee and the Company entered into an Employment Agreement
dated February 8, 2002 (the “Agreement”);

     WHEREAS, the Employee and the Company desire that there be certain changes
made with respect to the Agreement; and

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

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

	1.	 	The term of the Agreement is hereby extended to December 31,
2006.
	 
	2.	 	Except as specifically changed by this Amendment, all other
terms and provisions of the Agreement shall remain in full force and
effect.

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

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	ENCORE MEDICAL CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Kenneth W. Davidson
	

	 	 	 	

	

	 	 	 	Kenneth W. Davidson, Chief Executive Officer
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 	 	/s/ Paul D. Chapman
	 	 	

	 	 	PAUL D. CHAPMAN

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