Document:

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                                                                   Exhibit 10.16

                          RESTRICTED STOCK AGREEMENT

         THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is entered into
effective as of this 12th day of June, 2001, by and between ENCORE MEDICAL
CORPORATION, a Delaware corporation (the "Company"), and J.D. WEBB, JR.
("Employee").

         WHEREAS, Employee has agreed to terminate the Severance Agreement
that Employee has with the Company in return for the Company selling Employee
shares of the common stock, $0.001 par value per share (the "Common Stock"),
of the Company pursuant to the terms of this Agreement;

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

         1.       Grant of Restricted Shares. The Company hereby agrees to
                  --------------------------
sell to Employee an aggregate of Fifty Thousand (50,000) shares (the
"Restricted Shares") of Common Stock on the terms and conditions hereinafter
set forth.

         2.       Purchase Price. The purchase price of the Restricted Shares
                  --------------
shall be One and 2/100 Dollars ($1.02) per share (the "Purchase Price").

         3.       Payment of Purchase Price. The Purchase Price shall be paid
                  -------------------------
as follows: (a) $50 shall be paid by cash or good check simultaneous with the
execution of this Agreement and (b) the remainder shall be paid by Employee
delivering to Company a secured promissory note payable to the Company in the
form attached hereto as Exhibit A.

         4.       Delivery of Shares. Upon the payment of the Purchase Price by
                  ------------------
Employee or as soon thereafter as is practicable, the Company shall issue and
deliver to Employee a certificate or certificates evidencing the number of
Restricted Shares. Such certificate or certificates shall be registered in the
name of Employee and shall bear an appropriate investment warranty legend, any
legend required by any federal or state securities law, rule or regulation
and, if applicable, a legend referring to the restrictions provided hereunder.
Upon the issuance and delivery of such certificate or certificates, Employee
shall have all the rights of a stockholder with respect to such Restricted
Shares and to receive all dividends or other distributions paid or made with
respect thereto; provided, however that such Restricted Shares shall be
subject to the restrictions hereunder. Notwithstanding, such delivery, Company
shall retain possession of such certificates pursuant to the terms of the
Security Agreement attached hereto as Exhibit B.

         5.       Period of Restriction.
                  ---------------------

                  (a)     Subject to Paragraph 7, the Restricted Shares shall
constitute "Vested Shares" pro rata over a period of thirty-six (36) months,
beginning one month after the date of this Agreement. Notwithstanding the
foregoing schedule, the Company may deem all or any portion of the Restricted
Shares to be Vested Shares whenever, in the Company's sole discretion,
circumstances warrant such action.  Furthermore, should there be a "Change in
Control" of the Company as defined herein, then all remaining Restricted
Shares shall be deemed to be Vested Shares.

                  (b)     "Unvested Shares" shall mean Restricted Shares which
are not Vested Shares in accordance with subparagraph (a) above.
<PAGE>

                  (c)     Employee shall not sell, assign, transfer, pledge,
gift or otherwise dispose of any Unvested Shares, and no Unvested Shares shall
be transferred on the Company's books without the prior written consent of the
Company.

                  (d)     "Change in Control" shall mean a change in control of
a nature that is reportable in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act") as in effect on the date hereof; provided that, without
limitation, such a change in control shall be deemed to have occurred if any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing a majority or more of the combined voting power of
the Company's then outstanding securities.

                  (e)     In the event Employee shall voluntarily leave the
employment of the Company or be terminated for cause, then Employee shall be
required, effective as of the last day of employment, to sell any remaining
Restricted Shares to the Company at a price per share equal to the Purchase
Price. Termination for cause shall mean a discharge resulting from Employee
having (i) failed or refused to follow legal and reasonable policies or
directives established and previously given to Employee in writing by Company,
(ii) willfully failed to attend to his duties after ten (10) days prior
written notice of failure to so act, (iii) committed acts amounting to gross
negligence or willful misconduct to the material detriment of Company, or (iv)
otherwise materially breached any of the terms or provisions of any employment
agreement that the Employee has with the Company after ten (10) days prior
written notice of such material breach and failure to cure such breach.
Employee shall be deemed to have been terminated for cause upon delivery to
Employee of a "Notice of Termination" stating the "Date of Termination" and
specifying the particulars of the conduct justifying discharge for cause.

         6.       Shares Not Transferable. As a condition to the issuance of
                  -----------------------
Restricted Shares, the Company may require an opinion of counsel and/or a
representation letter from the purchaser(s) of such shares, satisfactory to
the Company, to the effect that such transfer will not be in violation of the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities laws or that such transfer has been registered under the
Securities Act and the Company shall not be liable for damages due to delay in
the delivery or issuance of any stock certificates representing Restricted
Shares purchased hereunder for any reason whatsoever, including, but not
limited to, a delay caused by listing requirements of any securities exchange
or any registration requirements under the Securities Act, the Securities
Exchange Act of 1934, as amended, or under any other state or federal law,
rule or regulation. The Company is under no obligation to take any action or
to incur any expense to register or qualify the delivery or transfer
Restricted Shares under applicable securities laws or to perfect any exemption
from such registration or qualification. Furthermore, the Company will have no
liability to Employee for refusing to deliver or transfer Restricted Shares
purchased hereunder if such refusal is based upon the foregoing provisions of
this Paragraph 6.

         7.       Benefit. This Agreement shall be binding upon and shall inure
                  -------
to the benefit of the successors, assigns, legal representatives, heirs,
legatees, executors and administrators of the respective parties hereto.

         8.       Modifications. This Agreement may be altered or amended, in
                  -------------
whole or in part at any time only by written instrument signed by the Company
and Employee setting forth such changes.

         9.       Entire Agreement. This Agreement contains the entire
                  ----------------
agreement between the parties with respect to the subject matter described
herein, and no waiver of any of the terms of this Agreement shall be valid
unless signed by the party against whom such waiver is asserted.

                                     -2-
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         10.      Severability. Should any one or more of the provisions hereof
                  ------------
be determined to be illegal or unenforceable, all of the other provisions
hereof shall be given effect separately therefrom and shall not be affected
thereby.

         11.      Notices. Any notice or other written instrument required or
                  -------
permitted to be given, made or sent hereunder shall be in writing, signed by
the party giving or making the same and shall be sent by United States Mail,
registered or certified, with postage prepaid, to the addresses set forth
below:

                  If to Company:            Encore Medical Corporation
                                            9800 Metric Blvd.
                                            Austin, Texas 78758

                  If to Employee:           J.D. Webb, Jr.
                                            1001 Oakwood Blvd.
                                            Round Rock, TX 78681

         Either party hereto shall have the right to change the place to which
any such notice or other written instrument shall be sent by a similar notice
sent in like manner to the other party hereto. The date of mailing of any
notice or other written instrument shall be deemed to be the date of such
notice or instrument and shall be effective from such date.

         12.      Governing Laws. THIS AGREEMENT WILL BE GOVERNED BY AND
                  --------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF
CONFLICTS OF LAW PRINCIPLES) AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE
DEEMED TO CALL FOR PERFORMANCE IN TRAVIS COUNTY, TEXAS.

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

                                    COMPANY:

                                    ENCORE MEDICAL CORPORATION

                                    By: /s/Kenneth W. Davidson
                                        ----------------------
                                        Kenneth W. Davidson, CEO and President

                                    EMPLOYEE:

                                    /s/J.D. Webb, Jr.
                                    -----------------
                                    J.D. WEBB, JR.

                                     -3-
<PAGE>

                                  EXHIBIT A

                            Form of Promissory Note

                                PROMISSORY NOTE
                                ---------------

Austin, Texas                                                       _____, 2001

         PROMISE TO PAY: For value received, the undersigned, _______ (herein
the "Issuer"), promises to pay to the order of Encore Medical Corporation, a
Delaware corporation, or its successors or assigns (herein the "Payee"), the
Principal Amount (as defined below) in lawful money of the United States of
America, in accordance with all the terms, conditions, and covenants of this
Note.

         ISSUER'S ADDRESS FOR NOTICE: ________________________________________.

         PAYEE'S ADDRESS FOR PAYMENT: 9800 Metric Blvd., Austin, Texas 78758.

         PRINCIPAL AMOUNT: ______________________($_________).

         INTEREST RATE: Eight percent (8%) per annum

         PAYMENT TERMS: Issuer shall pay the principal amount of ________ in
lawful money of the United States, with interest, on the _____ day of _____,
2011. Interest shall be due on a monthly basis on the first day of each month
beginning _____ 1, 2001. Issuer shall bear full recourse for the principal
amount of this Note. Notwithstanding the prior, upon the sale by Issuer of any
Shares (as defined in the Pledge Agreement (as defined below)), Issuer shall
make a prepayment on this Note equal to the product of (i) the number of
Shares sold, multiplied by (ii) $1.02 per Share.

         Issuer may prepay all or any part of this Note without penalty or
premium. Issuer's payments shall be applied on the first business day after
Payee's receipt of such payments.

         1.       Default Provisions:

                  (a)     Events Of Default And Acceleration Of Maturity: PAYEE
                          ----------------------------------------------
MAY, WITHOUT NOTICE OR DEMAND (except as otherwise required by statute or
otherwise specifically provided in this Note or the Pledge Agreement),
ACCELERATE THE MATURITY OF THIS NOTE AND DECLARE THE ENTIRE UNPAID PRINCIPAL
BALANCE AT ONCE DUE AND PAYABLE IF:

                          (i)      There is default by Issuer in the
performance of any covenant, condition, or agreement contained in this Note or
the Pledge Agreement, including any instrument securing the payment of this
Note, and such default continues for a period of thirty (30) days following
written notice to Issuer specifying such default;

                          (ii)     if Issuer makes an assignment for the
benefit of creditors, or petitions or applies for the appointment of a
liquidator, receiver or custodian (or similar official) of it or of any
substantial part of its assets, or if Issuer commences any proceeding or case
relating to it under the Bankruptcy Code or any other bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, or takes any action to
authorize any of the foregoing; or

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                          (iii)    if any petition or application of the type
described in subparagraph (c) immediately above is filed or if any such
proceeding or case described in subparagraph (c) is commenced against Issuer
and is not dismissed within sixty (60) days, or if Issuer indicates its
approval thereof, consents thereto or acquiesces therein, or if an order is
entered appointing any such liquidator or receiver or custodian (or similar
official), or adjudicating Issuer bankrupt or insolvent, or approving a
petition in any such proceeding, or if a decree or order for relief is entered
in respect of Issuer in an involuntary case under the Bankruptcy Code or any
other bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction.

                  (b)     Waiver By Issuer: ISSUER WAIVES DEMAND, NOTICE OF
                          ----------------
INTENT TO DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, PROTEST,
NOTICE OF PROTEST, GRACE, NOTICE OF DISHONOR, NOTICE OF INTENT TO ACCELERATE
MATURITY, AND DILIGENCE IN COLLECTION.

                  (c)     Non-Waiver by Payee: Any previous extension of time,
                          -------------------
forbearance, failure to pursue some remedy, acceptance of late payments, or
acceptance of partial payment by Payee, before or after maturity, does not
constitute a waiver by Payee of its subsequent right to strictly enforce the
collection of this Note according to its terms.

                  (d)     Other  Remedies Not  Required: Payee shall not be
                          -----------------------------
required to first file suit, exhaust all remedies, or enforce its rights
against any security in order to enforce payment of this Note.

                  (e)     Attorney's Fees: If Payee requires the services of an
                          ---------------
attorney to enforce the payment of this Note or the performance of the Pledge
Agreement, or if this Note is collected through any lawsuit, probate,
bankruptcy, or other judicial proceeding, Issuer agrees to pay Payee an amount
equal to its reasonable attorney's fees and other reasonable collection costs.
This provision shall be limited by any applicable statutory restrictions
relating to the collection of attorney's fees.

         2.       Miscellaneous Provisions:

                  (a)     Successors and Assigns: The provisions of this Note
                          ----------------------
shall be binding upon the successors and assigns of Issuer, and shall inure to
the benefit of the successors and assigns of Payee; provided, however, that no
obligations of Issuer hereunder can be assigned without Payee's prior written
consent.

                  (b)     No Duty or Special Relationship: Issuer acknowledges
                          -------------------------------
that Payee has no duty of good faith to Issuer, and Issuer acknowledges that
no fiduciary, trust, or other special relationship exists between Payee and
Issuer; provided, however, the foregoing is not intended to abrogate any
duties which may exist as the result of that Payee having been a director and
executive officer of the Issuer.  If Payee and Issuer are now engaged in or in
the future engage in other business transactions, such other business
transactions are independent of this Note and the indebtedness evidenced
hereby and of the promises and covenants made by Issuer in this Note, and vice
versa.

                  (c)     Security. This Note is secured by a security interest
                          --------
in certain shares of common stock of Payee issued to Issuer, as granted by
that certain Pledge and Security Agreement, of even date herewith, by and
between Issuer and Payee (the "Pledge Agreement").

                  (d)     Entire Agreement. Issuer warrants and represents to
                          ----------------
Payee that this Note and the Pledge Agreement constitute the entire agreement
between Issuer and Payee with respect to the indebtedness evidenced by this
Note and agrees that no modification, amendment, or additional

                                     -5-
<PAGE>

agreement with respect to such indebtedness will be valid and enforceable
unless made in writing signed by both Issuer and Payee.

                  (e)     Issuer's Address for Notice: All notices required to
                          ---------------------------
be sent by Payee to Issuer shall be sent by U.S. Mail, postage prepaid, to
Issuer's Address for Notice stated on the first page of this Note, until Payee
shall receive written notification from Issuer of a new address for notice.

                  (f)     Payee's Address for Payment: All sums payable by
                          ---------------------------
Issuer to Payee shall be paid at Payee's Address for Payment stated on the
first page of this Note, or at such other address as Payee shall designate
from time to time.

                  (g)     Partial Invalidity: The unenforceability or
                          ------------------
invalidity of any provision of this Note shall not affect the enforceability
or validity of any other provision herein, and the invalidity or
unenforceability of any provision of this Note or of the Pledge Agreement as
to any person or circumstance shall not affect the enforceability or validity
of such provision as it may apply to other persons or circumstances.

                  (h)     Applicable Law; Venue and Jurisdiction: This Note has
                          --------------------------------------
been executed and delivered in Texas and shall be construed in accordance with
the applicable laws of the State of Texas and the laws of the United States of
America applicable to transactions in Texas and venue for any action
concerning this Note shall be exclusively in Travis County, Texas.

         EXECUTED as of the date first set forth above.

                                                    ___________________________

                                     -6-
<PAGE>

                                   EXHIBIT B

                          Form of Security Agreement

                         PLEDGE AND SECURITY AGREEMENT
                         -----------------------------

         This Pledge and Security Agreement ("Agreement") is made and entered
into as of the _____ day of _____, 2001 by and between Encore Medical
Corporation, a Delaware corporation ("Secured Party"), and _______ ("Debtor").

                                      1.
                      COLLATERAL AND SECURED INDEBTEDNESS

         Section 1.1      Grant of Security Interest. Debtor hereby assigns and
                          --------------------------
pledges to Secured Party, and hereby grants to Secured Party a security
interest in the following (hereinafter collectively called the "Collateral"):

                  (a) ________ shares (the "Shares") of the common stock, par
value $0.001 per share, owned by Debtor of Secured Party, as evidenced by a
certificate delivered to Secured Party simultaneously with the execution of
this Agreement; and all distributions, fees, dividends, preferences, payments
and other benefits which Debtor is now and may hereafter be entitled to
receive with respect to such shares; and all proceeds (cash and non-cash)
arising out of the sale, exchange, collection or other disposition of all or
any portion of the Shares. In the event that Debtor receives any additional
shares of capital stock of Secured Party by way of a stock split or stock
dividend, the Debtor shall promptly deliver to the Secured Party certificates
evidencing such shares along with appropriate stock powers duly endorsed in
blank.

         Section 1.2      Secured Obligations. This Agreement and the security
                          -------------------
interest herein created shall secure full and punctual payment and performance
of the following indebtedness, duties and obligations (hereinafter
collectively called the "Secured Obligations"):

                  (a) All principal, fees and other amounts payable to the
Secured Party pursuant to the terms and provisions of that certain Promissory
Note of even date herewith issued by Debtor to Secured Party in the original
principal amount of $___________ (the "Note"), including all extensions,
renewals, modifications, increases or substitutions thereof; and

                  (b) All charges, expenses, attorney's and other legal fees
and any other sums incurred by Secured Party in connection with the
enforcement of Secured Party's rights and remedies hereunder.

                                      2.
                        REPRESENTATIONS AND WARRANTIES;
                              FURTHER ASSURANCES

         Section 2.1      Representations and Warranties. Debtor hereby
                          ------------------------------
represents and warrants to Secured Party as follows:

                  (a)     Debtor has good and marketable title to the
Collateral free and clear of any lien, security interest, shareholders
agreement, calls, charge or encumbrance, except for the security interest
created by this Agreement in favor of the Secured Party. No financing
statement or other instrument

                                     -7-
<PAGE>

similar in effect covering all or any part of the Collateral is on file in any
recording office, except as may have been filed in favor of Secured Party
relating to this Agreement.

                  (b)     Debtor has the lawful right, power and authority to
grant a security interest in the Collateral. This Agreement, together with all
filings and other actions necessary or desirable to perfect and protect such
security interest, which have been duly taken, create a valid and perfected
first priority security interest in the Collateral securing the payment and
performance of the Secured Obligations.

                                      3.
                         PARTIAL RELEASE OF COLLATERAL

         Upon the delivery to the Secured Party by Debtor of a written notice
requesting that a specified number of shares representing the Collateral be
released from this Agreement, and either (i) Debtor delivers to Secured Party
cash in the amount of $1.02 multiplied by the number of Shares to be released;
or (ii) Debtor provides assurances acceptable to the Secured Party that the
Shares that are to be released will be sold through a broker acceptable to the
Secured Party, and such broker unconditionally and irrevocably undertakes to
deliver to the Secured Party a portion of the proceeds from such sale equal to
the amount set forth in (i), the Secured Party shall release from the security
interest granted herein the number of Shares specified in the notice. The
amount set forth in subpart (i) of the preceding sentence will be applied to
the outstanding principal balance of the Note as provided therein. Such
release of any shares from the security interest created in this Agreement
shall not affect Secured Party's security interest in any other Collateral.

                                      4.
                             DEFAULT AND REMEDIES

         Section 4.1      Events of Default. An Event of Default (herein so
                          -----------------
called) shall exist upon the failure of Debtor to make when due any scheduled
payment under the Note or any other Secured Obligations.

         Section 4.2      Remedies of Secured Party. Upon the occurrence of an
                          -------------------------
Event of Default:

                  (a)     Secured Party may, without notice or demand,
accelerate the maturity of the Note and declare the entire unpaid principal
balance at once due and payable.

                  (b)     Secured Party may, at Secured Party's option and at
the expense of Debtor, either in Secured Party's own right or in the name of
Debtor and in the same manner and to the same extent that Debtor might
reasonably so act if this Agreement had not been made,

                          (i)      do all things requisite, convenient, or
                  necessary to enforce the performance and observance of all
                  rights, remedies and privileges of Debtor arising from the
                  Collateral, or any part thereof, including, but not limited
                  to, compromising, waiving, excusing, or in any manner
                  releasing or discharging any obligation of any party to or
                  arising from the Collateral;

                          (ii)     sue or otherwise collect and receive money
                  attributable to the Collateral; and

                          (iii)    exercise any other lawfully available powers
                  or remedies, and do all other things which Secured Party
                  deems requisite, convenient or necessary or which the
                  Secured Party deems proper to protect the security interest
                  herein granted.

                                     -8-
<PAGE>

                  (c)     Secured Party may foreclose this Agreement in the
manner now or hereafter provided or permitted by law and shall have the
immediate right to receivership pending foreclosure, and may upon such
reasonable notification prior thereto as may be required by applicable law
(Debtor hereby agreeing that 10 days notice is commercially reasonable), sell,
assign, transfer or otherwise dispose of the Collateral at public or private
sale, in whole or in part, and Secured Party may, in its own name or as the
irrevocably appointed attorney-in-fact of Debtor effectively assign and
transfer the Collateral, or any part thereof, absolutely, and execute and
deliver all necessary assignments, conveyances, bills of sale and other
instruments with power to substitute one or more persons or corporations with
like power. Any such foreclosure sale, assignment, or transfer shall, to the
extent permitted by law, be a perpetual bar, both at law and in equity,
against Debtor and all persons and corporations lawfully claiming by or
through or under Debtor.

                  (d)     Any such foreclosure sale may be adjourned from time
to time provided that at least ten days notice of the continuation of such
sale is given to Debtor.  Upon any sale, Secured Party may bid for and
purchase the Collateral, or any part thereof, and upon compliance with the
terms of sale may hold, retain, possess and dispose of the Collateral, in its
absolute right without further accountability. Secured Party shall have the
right to be credited on the amount of its bid a corresponding amount of the
Secured Obligations as of the date of such sale.

         Section 4.3      Application of Proceeds. Except as otherwise required
                          -----------------------
by applicable law, Secured Party may apply the proceeds of any foreclosure
sale hereunder as follows:

                  (a)     first, to the payment of all costs and expenses of
any foreclosure and collection hereunder and all proceedings in connection
therewith, including reasonable attorneys' fees;

                  (b)     then, to the reimbursement of Secured Party for all
disbursements made by Secured Party for taxes, assessments or liens superior
to the security interest hereof and which Secured Party shall deem expedient
to pay in order to protect its interest in the Collateral;

                  (c)     then, to the reimbursement of Secured Party of any
other disbursements made by Secured Party in accordance with the terms hereof;

                  (d)     then, to or among the amounts of fees and principal
then outstanding and unpaid in respect of the Secured Obligations, in such
priority as Secured Party may determine in its discretion; and

                  (e)     the remainder of such proceeds, if any, shall be paid
to the record owner of the Collateral.

         Section 4.4      Enforcement of Secured Obligation. Nothing in this
                          ---------------------------------
Agreement or in any other agreement shall affect or impair the unconditional
and absolute right of the Secured Party to enforce the Secured Obligations as
and when the same shall become due in accordance with the terms of the Note or
other documents evidencing the Secured Obligations.

                                     -9-
<PAGE>

                                       5.
                             RIGHTS OF SECURED PARTY

         Section 5.1      Subrogation. Upon the occurrence of an Event of
                          -----------
Default, Secured Party, at its election, may subrogate to all of the interest,
rights and remedies of Debtor, in respect to any of the Collateral or
agreements pertaining thereto.

         Section 5.2      Secured Party Appointed Attorney-in-Fact. Debtor
                          ----------------------------------------
hereby irrevocably appoints Secured Party as attorney-in-fact of Debtor, with
full authority in the place and stead of Debtor and in the name of Debtor,
Secured Party or otherwise, from time to time on Secured Party's discretion
and upon the occurrence of an Event of Default, to take any action and to
execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation: (a)
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral; and (b) to assign and transfer the Collateral, or
any part thereof, absolutely and to execute and deliver endorsements,
assignments, conveyances, bills of sale and other instruments with power to
substitute one or more persons or corporation with like power.

         Section 5.3      Performance by Secured Party. If Debtor fails to
                          ----------------------------
perform any agreement contained herein, Secured Party may itself perform, or
cause the performance of, such agreement, and the reasonable expenses of
Secured Party incurred in connection therewith shall be payable by Debtor
under Section 5.8.  In no event, however, shall Secured Party have any
obligation or duties whatsoever to perform any covenant or agreement of Debtor
contained herein, and any such performance by Secured party shall be wholly
discretionary with Secured Party.

         Section 5.4      Duties of Secured Party. The powers conferred upon
                          -----------------------
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
money actually received by it hereunder, Secured Party shall have no duty as
to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.

         Section 5.5      No Liability of Secured Party. Neither the acceptance
                          -----------------------------
of this Agreement by Secured Party, nor the exercise of any rights hereunder
by Secured Party, shall be construed in any way as an assumption by Secured
Party of any obligations, responsibilities or duties of Debtor arising in
connection with the Collateral assigned hereunder or otherwise bind Secured
Party to the performance of any obligations respecting the Collateral, it
being expressly understood that Secured Party shall not be obligated to
perform, observe or discharge any obligation, responsibility, duty, or
liability of Debtor in respect of any of the Collateral, including, but not
limited to, appearing in or defending any action, expending any money or
incurring any expense in connection therewith.

         Section 5.6      Right of Secured Party to Defend Action Affecting
                          -------------------------------------------------
Security. Secured Party may, at the expense of Debtor, appear in and defend
--------
any action or proceeding at law or in equity purporting to affect Secured
Party's security interest under this Agreement.

         Section 5.7      Right of Secured Party to Prevent or Remedy Default.
                          ---------------------------------------------------
If Debtor shall fail to perform any of the covenants, conditions and
agreements required to be performed and observed by Debtor in respect of the
Collateral, Secured Party (a) may but shall not be obligated to take any
action Secured Party deems necessary or desirable to prevent or remedy any
such default by Debtor or otherwise to protect the security interest of
Secured Party under this Agreement, and (b) shall have the absolute and

                                     -10-
<PAGE>

immediate right to take possession of the Collateral or any part thereof (to
the extent Secured Party has not previously taken possession) to such extent
and as often as the Secured Party, in its sole discretion, deems necessary or
desirable in order to prevent or to cure any such default by Debtor, or
otherwise to protect the security of this Agreement.  Secured Party may
advance or expend such sums of money for the account of Debtor as Secured
Party in its sole discretion deems necessary for any such purpose.

         Section 5.8      Secured Party's Expenses. All reasonable advances,
                          ------------------------
costs, expenses, charges and attorneys' fees which Secured Party may make, pay
or incur under any provision of this Agreement for the protection of its
security or for the enforcement of any of its rights hereunder, or in
foreclosure proceedings commenced and subsequently abandoned, or in any
dispute or litigation in which Secured Party or the holder of any of the
Secured Obligations may become involved by reason of or arising out of the
Note or other Secured Obligations or the Collateral shall be a part of the
Secured Obligations and shall bear interest until paid at the rate chargeable
on the Note but not to exceed the maximum rate of interest permitted by
applicable law, from the date of such payment until repaid by Debtor.

         Section 5.9      No Waiver. In case Secured Party shall have proceeded
                          ---------
to enforce any right or remedy hereunder and such proceedings shall have been
discontinued or abandoned for any reason, then in every such case, Debtor and
Secured Party shall be restored to their former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers of Secured
Party shall continue as if no such proceeding had been taken. No failure or
delay on the part of Secured Party in exercising any right, remedy or power
under this Agreement or in giving or insisting upon strict performance by
Debtor hereunder or in giving notice hereunder shall operate as a waiver of
the same or any other power or right, and no single or partial exercise of any
such power or right shall preclude any other or further exercise thereof or
the exercise of any other such power or right. Secured Party, notwithstanding
any such failure, shall have the right thereafter to insist upon the strict
performance by Debtor of any and all of the terms and provisions of this
Agreement to be performed by the Debtor. The collection and application of
proceeds, the entering and taking possession of the Collateral, and the
exercise of the rights of Secured Party contained in this Agreement, shall not
cure or waive any default, or affect any notice of default, or invalidate any
acts done pursuant to such notice. No waiver by Secured Party of any breach or
default of or by any party hereunder shall be deemed to alter or affect
Secured Party's rights hereunder with respect to any prior or subsequent
default.

         Section 5.10     Remedies. No right or remedy herein reserved to
                          --------
Secured Party is intended to be exclusive of any other right or remedy, but
each and every such remedy shall be cumulative, not in lieu of, but in
addition to any other rights or remedies given under this Agreement and all
other security documents. Any and all of Secured Party's rights and remedies
may be exercised from time to time and as often as such exercise as deemed
necessary or desirable by Secured Party.

         Section 5.11     Right of Secured Party to Extend Time of Payment,
                          -------------------------------------------------
Substitute, Release Security, Etc. Without affecting the liability of any
---------------------------------
person, including Debtor, for the payment of any of the Secured Obligations or
the lien of this Agreement on the Collateral, or the remainder thereof, for
the full amount of any indebtedness unpaid, Secured Party may from time to
time, without notice or without affecting or impairing any of Secured Party's
rights under this Agreement: (a) release any person liable for the payment of
any of such indebtedness, (b) extend the time or otherwise alter the terms of
payment of any of such indebtedness, (c) accept additional security therefor
of any kind, including deeds of trust or mortgages, (d) alter, substitute or
release any property securing the Secured Obligations, (e) resort for the
payment of all or any portion of the Secured Obligations to its several
securities therefor in such order and manner as it may deem fit, or (f) join
in any subordination or other agreement affecting this Agreement or the lien
or charge thereof.

                                     -11-
<PAGE>

         Section 5.12     Dividends. Upon the occurrence of an Event of
                          ---------
Default, Secured Party shall be entitled to any dividends, fees, receipts,
payments or other disbursements, attributable in any way to the Collateral.
Debtor shall take all actions necessary to cause the payor of such
disbursements to make such disbursements directly to Secured Party on account
of Debtor. Such amounts, when received by Debtor, will be applied to the
outstanding balance of the Note or the other Secured Obligations, as
determined by Secured Party. At all times during the term of this Agreement,
Secured Party will be entitled to all stock dividends and proceeds of the
Collateral.

         Section 5.13     Delivery of Certificates. Simultaneously with the
                          ------------------------
execution of this Agreement, Debtor shall deliver to Secured Party all
certificates or other documentation evidencing the Collateral, along with such
endorsements or stock powers as the Secured Party may request. In the event
that Debtor receives any certificates evidencing the Collateral, Debtor shall
within three days of receipt, deliver such certificates to Secured Party along
with appropriate stock powers executed in blank.

                                       6.
                                 MISCELLANEOUS

         Section 6.1      Terms Commercially Reasonable. The terms of this
                          -----------------------------
Agreement shall be deemed commercially reasonable within the meaning of the
Uniform Commercial Code in effect and applicable hereto.

         Section 6.2      Notices. Any notices or demands required or permitted
                          -------
to be given hereunder shall be deemed sufficiently given if in writing and
personally delivered or mailed by registered or certified mail, return receipt
requested (with all postage and charges prepaid), addressed as follows:

                            To Secured Party:      Encore Medical Corporation
                                                   9800 Metric Blvd.
                                                   Austin, Texas  78758
                                                   Attn:  Chairman of the Board

                            Debtor:                ____________________________
                                                   ____________________________
                                                   ____________________________

or at such other address as the above parties may from time to time designate
by written notice to the other given in accordance with this Section 6.2. Any
such notice, if personally delivered shall be deemed to have been given on the
date so delivered or, if mailed, be deemed to have been given on the third day
after such notice is placed in the United States mail in accordance with this
Section 6.2.

         Section 6.3      Definitions. The terms "advances," costs," and
                          -----------
"expenses " shall include, but shall not be limited to, attorneys' fees
whenever incurred. The terms "indebtedness" and "obligations" shall mean and
include, but shall not be limited to, all claims, demands, obligations and
liabilities whatsoever, however arising, whether owing by Debtor individually
or as a joint venturer, or jointly or in common with any other party, and
whether absolute or contingent, and whether owing by Debtor as principal
debtor or as accommodation maker or as endorser, liquidated or unliquidated,
and whenever contracted, accrued or payable. In this Agreement, whenever the
context so requires, the neuter gender includes the masculine and feminine,
and the singular number includes the plural and vice versa.

         Section 6.4      Paragraph Headings. The headings of paragraphs herein
                          ------------------
are inserted only for convenience and shall in no way define, describe or
limit the scope of intent of any provisions of this Agreement.

                                     -12-
<PAGE>

         Section 6.5      Change, Amendment, Etc. No change, amendment,
                          ----------------------
modification, cancellation or discharge of any provision of this Agreement
shall be valid unless consented to in writing by Secured Party.

         Section 6.6      Assignment of Secured Party's Interest. Secured Party
                          --------------------------------------
shall have the right to assign all or any portion of its rights in this
Agreement to any subsequent holder of the Note or other instrument evidencing
the Secured Obligations.

         Section 6.7      Parties in Interest. As and when used herein, the
                          -------------------
term "Debtor" shall mean and include the Debtor herein named and its
successors and permitted assigns, and the term "Secured Party" shall mean and
include the Secured Party herein named and its successors and assigns, and all
covenants and agreements herein shall be binding upon and inure to the benefit
of Debtor, Secured Party and their respective successors and permitted assigns.

         Section 6.8      Applicable Laws. This Agreement shall be construed,
                          ---------------
interpreted and enforceable under and pursuant to the laws of the State of
Texas. If any provision of this Agreement is held to be invalid or
unenforceable, the validity or enforceability of the other provisions of this
Agreement shall remain unaffected.

         Section 6.9      Counterparts. This Agreement may be executed in two
                          ------------
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument, and in making proof of
this Agreement it shall not be necessary to produce or account for more than
one such counterpart.

         IN WITNESS WHEREOF, Debtor and Secured Party have executed these
presents on the day and year first above written.

                                   DEBTOR:
                                   -------

                                   ______________________________

                                   SECURED PARTY:
                                   --------------

                                   ENCORE MEDICAL CORPORATION

                                   By: ________________________________________
                                         Kenneth W. Davidson, CEO and President

                                     -13-<PAGE>

                                                                   EXHIBIT 10.23

                          ENCORE MEDICAL CORPORATION
                           1996 INCENTIVE STOCK PLAN

     1.  PURPOSE.  The purpose of the Encore Medical Corporation 1996 Incentive
Stock Plan is to promote the interests of Encore Medical Corporation and its
shareholders by enabling selected key employees of the Company and its
Subsidiaries to participate in the long-term growth of the Company by receiving
the opportunity to acquire shares of the Company's Stock and to provide for
additional compensation based on appreciation in the Company's Stock.  The Plan
provides a means to attract and retain key employees of merit and is intended to
stimulate the efforts of such employees by providing an opportunity for capital
appreciation and recognizing outstanding service to the Company, thus
contributing to the long-term growth and profitability of the Company.

     2.  DEFINED TERMS.  The following defined terms have the meanings set forth
below:

     (a) "Act" means the Securities Exchange Act of 1934, as amended from time
to time.

     (b) "Award" or "Awards," except where referring to a particular category of
grant under the Plan, includes Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Deferred Stock Awards, Performance Unit Awards and Other Stock-Based
Awards.

     (c) "Board" means the Board of Directors of the Company.

     (d) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor code and related rules, regulations and interpretations.

     (e) "Committee" means the Management Compensation and Organization
Committee of the Board (or any successor committee as described in Section 5
below); such Committee shall consist of at least two members of the Board, each
of whom shall be a Non-Employee Director.

     (f) "Company" means Encore Medical Corporation.

     (g) "Deferred Stock Award" shall have the meaning set forth in Section
11(a), and Stock issued pursuant to such an Award shall be deemed "Deferred
Stock."

     (h) "Disability" means permanent and total disability, as determined under
procedures established by the Committee for purposes of the Plan.

     (i) "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.

     (j) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

     (k) "Non-Employee Director" shall have the meaning set forth in Rule 16b-3,
promulgated under the Act, or any successor definition promulgated by the
Securities and Exchange Commission under the Act.

     (l) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

     (m) "Other Stock-Based Award" shall have the meaning set forth in Section
13(a).

     (n) "Performance Unit Award" shall have the meaning set forth in Section
12(a).

     (o) "Plan" means the Encore Medical Corporation 1996 Incentive Stock Plan,
as amended from time to time.

     (p) "Restricted Stock Award" shall have the meaning set forth in Section
9(a).
<PAGE>

     (q) "Retirement" means a severance from the active employment of the
Company or its Subsidiaries by reason of retirement pursuant to the provisions
of any profit sharing, pension or other retirement plan of the Company or its
Subsidiaries, or any contract between the Company or any of its Subsidiaries and
the participant.

     (r) "Rule 16b-3" means Rule 16b-3, as promulgated by the Securities and
Exchange Commission under Section 16(b) of the Act, as amended from time to
time.

     (s) "Stock" means the common stock, $.001 par value, of the Company.

     (t) "Stock Appreciation Right" shall have the meaning set forth in Section
8(a).

     (u) "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 7.

     (v) "Subsidiary" means any corporation a majority of whose stock the
Company owns or controls, either directly or indirectly through another
corporation or series of corporations, domestic or foreign.

     (w) "Unrestricted Stock Award" shall have the meaning set forth in Section
10.

     3.  STOCK SUBJECT TO THE PLAN.

     (a) SHARES ISSUABLE.  The maximum number of shares of Stock reserved and
available for distribution pursuant to Awards under the Plan shall be 2,000,000
shares.  Such shares of Stock may consist, in whole or in part, of authorized
and unissued shares or treasury shares.  If (i) an Award expires or terminates
for any reason without being exercised in full or is satisfied without the
distribution of Stock, or (ii) Stock distributed pursuant to an Award is
forfeited or reacquired by the Company, or is surrendered upon exercise of an
Award, the Stock subject to such Award or so forfeited, reacquired or
surrendered shall again be available for distribution for purposes of the Plan.

     (b) CHANGES IN CAPITALIZATION.  In the event of a stock dividend, spin-off,
stock split, any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or combination of shares effected without receipt
of consideration by the Company or any other change in corporate structure or
other distribution of stock or property (except ordinary cash dividends)
affecting the Stock, the Committee shall make appropriate adjustments in (i) the
number of and kind of shares of stock or securities underlying Awards that may
thereafter be granted, (ii) the number and kind of shares remaining subject to
outstanding Awards and (iii) the option or purchase price in respect of such
shares.  In the event of any such change in capitalization of the Company, the
Committee may make such additional adjustments in the number and class of shares
of Stock or other securities with respect to which outstanding Awards are
exercisable and with respect to which future Awards may be granted as the
Committee in its sole discretion shall deem equitable or appropriate, subject to
the provisions of Section 18 below.  In the event the Stock is changed into the
same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the Stock within the
meaning of the Plan.  Except (i) as expressly provided in the preceding
sentences or (ii) for any distribution or adjustment made with respect to
outstanding shares of Restricted Stock in connection with a distribution or
adjustment made with respect to all other outstanding shares of Stock, any issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Stock
subject to any Award.  The existence of the Plan and the Awards granted pursuant
to the Plan shall not affect in any way the right or power of the Company to
make or authorize any adjustment, reclassification, reorganization or other
change in its capital or business structure, any merger or consolidation of the
Company, any issue of debt or equity securities having preferences or priorities
as to the Stock or the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its business or assets, or
any other corporate act or proceeding.

     (c) SUBSTITUTE AWARDS.  The Company may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary, as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation.  The Committee may direct that
the substitute Awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

     4.  ELIGIBILITY.  Participants in the Plan will be such officers and other
key employees of the Company and its Subsidiaries who are responsible for or
contribute to the management, growth or profitability of the Company and its

                                       2
<PAGE>

Subsidiaries and who are selected from time to time by the Committee, in its
sole discretion.  In the case of Awards payable in Stock, no participant shall
be granted during any fiscal year the right to acquire pursuant to Awards
granted under the Plan more than 1,000,000 shares of Stock.  In the case of
Awards payable in cash, no participant shall be granted Awards entitling the
participant to receive more than $10,000,000 in compensation during the life of
the Plan or during the period within which Awards may be payable under the Plan.

     5.  ADMINISTRATION OF THE PLAN.  The Plan shall be administered by the
Board, the Committee or such other committee of the Board, composed of not less
than two Non-Employee Directors who shall be appointed by the Board and who
shall serve at the pleasure of the Board.  (All references to the Committee
hereinafter shall also be deemed to refer to the Board.)  The Committee shall
have the power and authority to grant Awards consistent with the terms of the
Plan, including the power and authority:

        (i) to select the officers and other key employees of the Company and
     its Subsidiaries to whom Awards may from time to time be granted;

        (ii) to determine the time or times of grant, and the extent, if any, of
     Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
     Rights, Restricted Stock Awards, Unrestricted Stock Awards, Deferred Stock
     Awards, Performance Units Awards, and any Other Stock-Based Awards, or any
     combination of the foregoing, granted to any one or more participants;

        (iii) to determine the number of shares to be covered by any Award;

        (iv) to establish the terms and conditions of any Award, including, but
     not limited to:

                (A)  the share price;

                (B)  any restriction or limitation on the grant, vesting or
               exercise of any Award including, but not limited to, the
               attainment (and certification of the attainment) of one or more
               performance goals based on one or more (or any combination) of
               the following business criteria that may apply to the individual
               participant, a Company business unit, or the Company as a whole:
               revenues, net income (before or after tax), earnings, earnings
               per share, shareholders' equity, return on equity, assets, return
               on assets, capital, return on capital, book value, economic value
               added, operating margins, profit margins, cash flow, shareholder
               return, expenses, sales or market share, expense management,
               return on investment, improvements in capital structure, net
               revenue per employee, profitability of an identifiable business
               unit or product, or stock price, or shall be based on any one or
               more (or any combination) of the foregoing business criteria
               before the effect of acquisitions, divestitures, accounting
               changes, restructuring or other special charges or extraordinary
               items, to the extent the Committee specifies, when granting the
               Award, that the effect of any such extraordinary items shall be
               disregarded; and

                (C) any waiver of vesting, acceleration or forfeiture provisions
               regarding any Stock Option or other Award and the Stock relating
               thereto, based on such factors as the Committee shall determine;
               and

        (v) to determine whether, to what extent and under what circumstances
     Stock and other amounts payable with respect to an Award shall be deferred
     either automatically or at the election of the Participant, and whether and
     to what extent the Company shall pay or credit amounts equal to interest
     (at rates determined by the Committee), dividends or deemed dividends on
     such deferrals.

Subject to the provisions of the Plan, the Committee shall have full and
conclusive authority to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the respective Award agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan.
The Committee's determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
Awards under the Plan (whether or not such persons are similarly situated).  Any
determination made by the Committee pursuant to the provisions of the Plan with
respect to any Award shall be made in its sole discretion at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any

                                       3
<PAGE>

time thereafter. All decisions by the Committee made pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Plan participants.

     6.  LIMITATIONS ON TERM AND DATE OF AWARDS.

     (a) DURATION OF AWARDS.  Subject to Section 19(c) below, no restrictions or
limitations on any Award shall extend beyond ten years from the grant date,
except that deferrals of the receipt of Stock or other benefits under the Plan
elected by participants may extend beyond such date.

     (b) TERM.  No Award shall be granted more than ten years after the
effective date of the Plan as specified in Section 20 below, but then
outstanding Awards may extend beyond such date.

     7.  STOCK OPTIONS.  Stock Options may be granted alone or in addition to
other Awards and may be of two types:  Incentive Stock Options and Non-Qualified
Stock Options.  Each Stock Option shall be clearly identified as to its status
as an Incentive Stock Option or a Non-Qualified Stock Option at the date of
grant.  To the extent that any Stock Option denominated as an Incentive Stock
Option does not qualify as an "incentive stock option" within the meaning of
Section 422 of the Code, it shall constitute a separate Non-Qualified Stock
Option.  Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall be evidenced by option agreements, which shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:

     (a) OPTION PRICE.  The option price per share of Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant and set
forth in the option agreement but shall be (i) in the case of Incentive Stock
Options, not less than 100% of the Fair Market Value on the date of grant and
(ii) in the case of Non-Qualified Stock Options, not less than 50% of Fair
Market Value on the date of grant; provided, however, that the option price per
share of Stock purchasable under a Non-Qualified Stock Option may also be the
par value per share of Stock.  If an officer or key employee owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation, and an Incentive Stock
Option is granted to such officer or key employee, the option price shall be no
less than 110% of the Fair Market Value on the date of grant.  The grant of a
Stock Option shall occur on the date the Committee by resolution designates an
officer or employee to receive a grant of a Stock Option, determines the number
of shares of Stock covered by the Stock Option and specifies the terms and
provisions of the option agreement.

     (b) OPTION TERM.  Unless an option agreement provides for a shorter
exercise period, any Stock Option shall be exercisable not later than ten years
after the Stock Option is granted; provided, however, that if an Incentive Stock
Option is granted to an employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation, the term of such Incentive Stock Option shall be no more than five
years from the date of grant.

     (c) EXERCISABILITY.  Stock Options shall be exercisable at such time or
times and subject to such terms and conditions, and in such amounts, as the
Committee shall specify in the option agreement.  Notwithstanding the foregoing,
subsequent to the grant of a Stock Option, the Committee, at any time before the
complete expiration of such Stock Option, may accelerate the time or times at
which such Stock Option may be exercised in whole or in part.  Except as
provided in subsections (f), (g), (h) and (i) below, a Stock Option may not be
exercised by the holder unless the holder is then, and continually after the
grant of the Stock Option has been, an employee of the Company or one of its
Subsidiaries.

     (d) METHOD OF EXERCISE.  Stock Options may be exercised at any time during
the option period by giving written notice of exercise to the Company specifying
the number of shares to be purchased.  Except as provided in subsection (k)
below, such notice shall be accompanied by payment in full of the purchase
price, either by certified or bank check or other instrument acceptable to the
Committee, or by delivery of shares of Stock as provided in this subsection.  As
determined by the Committee, in its discretion, at (or, in the case of Non-
Qualified Stock Options, at or after) the time of grant, payment in full or part
may also be made in the form of shares of Stock not then subject to restrictions
(but which may include shares the disposition of which constitutes a
disqualifying disposition for purposes of obtaining incentive stock option
treatment under the Code).  Shares of Stock so surrendered shall be valued at
Fair Market Value on the exercise date.  Except as provided in subsection (k)
below, no shares of Stock shall be issued until full payment therefor has been
made.  An optionee shall have all of the rights of a shareholder of the Company,
including the right to vote the shares and the right to receive dividends, with
respect to shares subject to a Stock Option when the optionee has given written
notice of exercise, has paid in full for such shares and, if requested, has
given the representation described in Section 19(c) below.

                                       4
<PAGE>

     (e) TRANSFERABILITY OF OPTIONS.  Options considered to be "Incentive Stock
Options" under the Plan shall not be transferable by the optionee otherwise than
by will or under the laws of descent and distribution and shall be exercisable,
during his or her lifetime, only by him or her or by the guardian or legal
representative of the optionee.  Options which are deemed to be "Non qualified"
Stock Options under the Plan and other grants under the Plan shall only be
transferable by the optionee either (i) by will or under the laws of descent and
distribution, or (ii) to optionee's spouse, parents, children, grandchildren,
brothers, sisters, or to a partnership or corporation controlled by any of the
aforementioned parties.  Such permitted transfer may be by will or intestate
succession or by inter vivos transfer.

     (f) TERMINATION BY DEATH.  If an optionee's employment with the Company or
any Subsidiary terminates by reason of death, any Stock Option held by such
optionee may thereafter be exercised, to the extent exercisable at the time of
death (or on such accelerated basis as the Committee shall at any time
determine), by the legal representative or legatee of the optionee, for a period
of one year (or such other period as the Committee shall specify at or after the
time of grant) from the date of death or until the expiration of the stated term
of the Stock Option, whichever period is the shorter.

     (g) TERMINATION BY DISABILITY.  If an optionee's employment with the
Company or any Subsidiary terminates by reason of Disability, any Stock Option
held by such optionee may thereafter be exercised by the optionee, to the extent
it was exercisable at the time of termination (or on such accelerated basis as
the Committee may at any time determine) for a period of one year (or such other
period as the Committee shall specify at or after the time of grant) from the
date of such termination or until the expiration of the stated term of the Stock
Option, whichever period is the shorter.  Except as otherwise provided by the
Committee at the time of grant, the death of an optionee during such exercise
period shall extend such period for one year following death, or until the
expiration of the stated term of the Stock Option, whichever period is the
shorter.

     (h) TERMINATION BY RETIREMENT.  If an optionee's employment with the
Company or any Subsidiary terminates by reason of Retirement, any Stock Option
held by such optionee may thereafter be exercised by the optionee, to the extent
it was exercisable at the time of Retirement (or on such accelerated basis as
the Committee may at any time determine) for a period of (i) in the case of
Incentive Stock Options, three months, and (ii) in the case of Non-Qualified
Stock Options, one year (or such other period as the Committee shall specify at
or after the time of grant), from the date of Retirement or until the expiration
of the stated term of the Stock Option, whichever period is the shorter.  Except
as otherwise provided by the Committee at the time of grant, the death of an
optionee during such exercise period shall extend such period for one year
following death, or until the expiration of the stated term of the Stock Option,
whichever period is the shorter.

     (i) OTHER TERMINATION.  Unless otherwise determined by the Committee, if an
optionee's employment with the Company or any Subsidiary terminates for any
reason other than death, Disability or Retirement, the Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination, for a period of thirty (30) days from
the date of such termination or until the expiration of the stated term of the
Stock Option, whichever period is the shorter.

     (j) FORM OF SETTLEMENT.  The Committee may provide in the option agreement
that upon receipt of written notice of exercise, the Committee may elect to
settle all or a part of the portion of any Stock Option so exercised by paying
the optionee an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the exercise price (the "Spread Value") (determined on
the date the Stock Option is exercised).

     (k) PROCEDURE FOR CERTAIN CREDIT ASSISTED TRANSACTIONS.  To the extent not
inconsistent with the provisions of Section 422 of the Code or Rule 16b-3, any
optionee desiring to obtain credit from a broker, dealer or other "creditor" as
defined in Regulation T issued by the Board of Governors of the Federal Reserve
System (provided that such broker, dealer or creditor has been approved by the
Committee) to assist in exercising a Stock Option may deliver to such creditor
an exercise notice properly executed by such optionee with respect to such Stock
Option, together with instructions to the Company to deliver the resulting Stock
to the creditor for deposit into a designated account.  Upon receipt of such
exercise notice and related instructions in a form acceptable to the Company,
the Company shall confirm to the creditor that it will deliver to the creditor
the Stock covered by such exercise notice and instructions promptly following
receipt of the exercise price from the creditor.  To the extent not inconsistent
with the provisions of Section 422 of the Code or Rule 16b-3, upon request the
Company may in its discretion, but shall not be obligated to, deliver to the
creditor shares of Stock resulting from an assisted exercise prior to receipt of
the option price for such shares if the creditor has delivered to the

                                       5
<PAGE>

Company, in addition to the other documents contemplated hereby, the creditor's
agreement to pay the Company such exercise price in cash within five days after
delivery of such shares. The credit assistance contemplated hereby may include a
margin loan by the creditor secured by the Stock purchased upon exercise of a
Stock Option or an immediate sale of some or all of such Stock by the creditor
to obtain or recover the option price that the creditor has committed to pay to
the Company.

     (l) SPECIAL PROVISIONS RELATING TO INCENTIVE STOCK OPTIONS.  At the time
any Incentive Stock Option granted under the Plan is exercised, the Company
shall be entitled to legend the certificates representing the shares of Stock
purchased pursuant to such Incentive Stock Option to clearly identify them as
representing shares purchased upon exercise of an Incentive Stock Option that
may be subject to income tax withholding requirements as set forth in Section 15
below.  Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the affected optionee, to disqualify any Incentive Stock
Option under Section 422 of the Code.

     8.  STOCK APPRECIATION RIGHTS.

     (a) GENERAL.  A Stock Appreciation Right is an Award entitling the
recipient to receive an amount in cash or shares of Stock (or forms of payment
permitted under subsection (d) below) or a combination thereof having a value
equal to (or if the Committee shall so determine at time of grant, less than)
the excess of the Fair Market Value of a share of Stock on the date of exercise
over the Fair Market Value of a share of Stock on the date of grant (or over the
option exercise price, if the Stock Appreciation Right was granted in tandem
with a Stock Option) multiplied by the number of shares with respect to which
the Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.

     (b) GRANT AND EXERCISE.  Stock Appreciation Rights may be granted in tandem
with, or independently of, any Stock Option granted under the Plan.  In the case
of a Stock Appreciation Right granted in tandem with a Non-Qualified Stock
Option, such Stock Appreciation Right may be granted either at or after the time
of grant of such option.  In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of grant of such option.  A Stock Appreciation Right or
applicable portion thereof granted in tandem with a Stock Option shall terminate
and no longer be exercisable upon the termination or exercise of the related
Stock Option, except that a Stock Appreciation Right granted with respect to
less than the full number of shares covered by a related Stock Option shall not
be reduced until the exercise or termination of the related Stock Option exceeds
the number of shares not covered by the Stock Appreciation Right.

     (c) TERMS AND CONDITIONS.  Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined from time to time by the
Committee, including the following:

        (i) Stock Appreciation Rights granted in tandem with Stock Options shall
be exercisable only at such time or times and to the extent that the related
Stock Option shall be exercisable. Upon the exercise of a Stock Appreciation
Right, the applicable portion of any related Stock Option shall be surrendered.

        (ii) Stock Appreciation Rights granted in tandem with a Stock Option
shall be transferable only with such Stock Option. Stock Appreciation Rights
shall not be transferable otherwise than by will or the laws of descent and
distribution. All Stock Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative or guardian.

        (iii)  Stock Appreciation Right granted in tandem with an Incentive
Stock Option may be exercised only when the market price of the Stock subject to
the Incentive Stock Option exceeds the exercise price of such option.

     (d) FORM OF SETTLEMENT.  Subject to Section 19(c) below, shares of Stock
issued upon exercise of a Stock Appreciation Right shall be free of all
restrictions under the Plan, except as otherwise provided in this subsection
(d).  The Committee may provide at time of grant of a Stock Appreciation Right
that such shares shall be in the form of Restricted Stock or rights to acquire
Deferred Stock or may reserve the right to provide so at any time after the date
of grant.  Any such shares and any shares subject to rights to acquire Deferred
Stock shall be valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right without regard to any restrictions or deferral limitations.

                                       6
<PAGE>

     (e) RULES RELATING TO EXERCISE.  Where a Stock Appreciation Right relates
to an Incentive Stock Option, the Committee may prescribe, by rule of general
application, such other measure of value as it may determine but not in excess
of an amount consistent with the qualification of such Stock Option as an
"incentive stock option" under Section 422 of the Code.

     9.  RESTRICTED STOCK.

     (a) GENERAL.  A Restricted Stock Award is an Award entitling the recipient
to acquire shares of Stock, subject to such conditions, including the right of
the Company during a specified period or periods to repurchase such shares at
their original price or to require forfeiture of such shares (if no cash
consideration was paid) upon the participant's termination of employment, as the
Committee may determine at the time of grant.  Shares of Restricted Stock may be
granted or sold in respect of past services or other valid consideration.

     (b) AWARD AGREEMENT AND CERTIFICATES.  A participant who is granted a
Restricted Stock Award shall have no rights with respect to such Award unless
the participant shall have accepted the Award within sixty days (or such shorter
period as the Committee may specify) following the Award date by executing and
delivering to the Company a Restricted Stock Award agreement in such form as the
Committee shall determine and by making payment to the Company by certified or
bank check or other instrument acceptable to the Committee for any cash
consideration required to be paid in connection with such Restricted Stock
Award.  Each participant receiving a Restricted Stock Award shall be issued a
certificate in respect of such shares of Restricted Stock.  Such certificate
shall be registered in the name of the participant and deposited with the
Company or its designee, and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Award, substantially in
the following form:

          "This certificate and the shares of stock represented hereby are
          subject to the terms and conditions (including forfeiture and
          restrictions against transfer) contained in the Encore Medical
          Corporation 1996 Incentive Stock Plan and an agreement entered into
          between the registered owner and Encore Medical Corporation.  Release
          from such terms and conditions shall be obtained only in accordance
          with the provisions of the Plan and the Agreement, copies of which are
          on file in the office of the Secretary of Encore Medical Corporation,
          located in its corporate headquarters in Austin, Texas.

The Committee may require that, as a condition of any Restricted Stock Award,
the participant shall have delivered to the Company a stock power, endorsed in
blank, relating to the Stock covered by such Award.

     (c) RIGHTS AS A SHAREHOLDER.  Upon complying with subsection (b) above, a
participant shall have all the rights of a shareholder with respect to the
Restricted Stock, including voting and dividend rights, subject to
nontransferability restrictions, Company repurchase or forfeiture rights and any
other condition described in this Section 9 or contained in the Restricted Stock
Award agreement.  The Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral, or investment of dividends paid on the
Restricted Stock.

     (d) RESTRICTIONS.  Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, or otherwise encumbered or disposed of except as
specifically provided herein and in the Restricted Stock Award agreement. The
Committee shall specify the date or dates (which may depend upon or be related
to the attainment of performance goals or such other factors or criteria as the
Committee shall determine) on which the non-transferability of the Restricted
Stock and the obligation to forfeit or resell such shares to the Company shall
lapse.  The Committee may provide for the lapse of such restrictions in
installments and at any time may accelerate such date or dates and otherwise
waive or, subject to Section 18 below, amend any terms and conditions of the
Award.  Except as otherwise may be provided in the Award agreement or determined
by the Committee at any time after the date of grant, in the event of
termination of employment of a participant with the Company and its Subsidiaries
for any reason (including death), the participant or the participant's legal
representative shall resell to the Company, at the cash consideration paid
therefor, all Restricted Stock, and the Company shall purchase such shares at
that price, or if no cash consideration was paid, all shares of Restricted Stock
awarded to the participant shall automatically be forfeited to the Company.  Any
shares of Stock or other securities of the Company or any other entity that are
issued as a distribution on, or in exchange for, Restricted Stock or into which
Restricted Stock is converted as a result of a recapitalization, stock dividend,
distribution of securities, stock split or combination of shares or a merger,
consolidation or sale of substantially all of the assets of the Company shall be
subject to the restrictions set forth in the Restricted Stock Award agreement,
which shall inure to the benefit of any surviving or successor corporation that
is the

                                       7
<PAGE>

issuer of such securities. Upon the lapse of the restrictions applicable to a
participant's Restricted Stock, certificates for shares of Stock free of any
restrictive legend shall be delivered to the participant or his legal
representative or guardian.

     (e) SECTION 83(B) ELECTION.  Any Restricted Stock Award agreement may
provide that the participant may not elect to be taxed with respect to such
Award in accordance with Section 83(b) of the Code.

     10.  UNRESTRICTED STOCK.  The Committee may, in its sole discretion, grant
or sell to any participant shares of Stock free of restrictions under the Plan
("Unrestricted Stock").  Shares of Unrestricted Stock may be granted or sold in
respect of past services or other valid consideration.  Any purchase of
Unrestricted Stock by a recipient must take place within sixty days after the
time of grant of the right to purchase such shares.

     11.  DEFERRED STOCK AWARDS.

     (a) GENERAL.  A Deferred Stock Award is an Award entitling the recipient to
acquire shares of Stock without  payment in one or more installments at a future
date or dates, all as determined by the Committee.  The Committee may also
condition such acquisition on the attainment of specified performance goals or
such other factors or criteria as the Committee shall determine.

     (b) AWARD AGREEMENT.  A participant who is granted a Deferred Stock Award
shall have no rights with respect to such Award unless within sixty days of the
grant of such Award (or such shorter period as the Committee may specify) the
participant shall have accepted the Award by executing and delivering to the
Company a Deferred Stock Award agreement.

     (c) RESTRICTION ON TRANSFER.  Deferred Stock Awards and rights with respect
to such Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered.  Rights with respect to such Awards shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative or guardian.

     (d) RIGHTS AS A SHAREHOLDER.  A participant receiving a Deferred Stock
Award will have rights of a shareholder only as to shares actually received by
the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant.  A participant shall be
entitled to receive a certificate for shares of Stock only upon satisfaction of
all conditions specified in the Deferred Stock Award agreement.

     (e) ELECTIVE DEFERRAL.  A participant may elect to further defer receipt of
the Stock payable under a Deferred Stock Award (or an installment of the Award)
for a specified period or until a specified event, subject in each case to the
Committee's approval and under such terms as determined by the Committee.
Subject to any exceptions adopted by the Committee, such election must generally
be made at least 12 months prior to completion of the deferral period for the
Award (or for such installment of the Award).

     (f) TERMINATION.  Except as may otherwise be provided in the Deferred Stock
Award agreement, a participant's rights in all Deferred Stock Awards shall
automatically terminate thirty (30) days after the participant's termination of
employment with the Company or any of its Subsidiaries for any reason excluding
death, in which case the participant's rights shall automatically terminate one
(1) year after such termination.  Unless otherwise provided in the terms of an
Award, at any time prior to the participant's termination of employment, the
Committee may in its discretion accelerate, waive, or, subject to Section 18
below, amend any or all of the restrictions or conditions imposed under any
Deferred Stock Award.

     (g) PAYMENTS IN RESPECT OF DEFERRED STOCK.  Without limiting the right of
the Committee to specify different terms, the Deferred Stock Award agreement may
either make no provisions for, or may require or permit the immediate payment,
deferral, or investment of amounts equal to, or less than, any cash dividends
that would have been payable on the Deferred Stock had such Stock been
outstanding, all as determined by the Committee in its sole discretion.

     12.  PERFORMANCE UNIT AWARDS.

     (a) GENERAL.  A Performance Unit Award is an Award entitling the recipient
to acquire cash or shares of Stock, or a combination of cash and shares of
Stock, upon the attainment of specified performance goals.  The Committee in its
sole discretion shall determine whether and to whom Performance Unit Awards
shall be made, the performance goals applicable under each such Award, the
periods during which performance is to be measured and all other

                                       8
<PAGE>

limitations and conditions applicable to a Performance Unit Award. Performance
goals may vary from participant to participant and between groups of
participants and shall be based upon such Company, business unit or individual
performance factors or criteria as the Committee may deem appropriate, including
those factors described in Section 5(iv)(B) above. Performance periods may
overlap and participants may participate simultaneously with respect to
Performance Unit Awards that are subject to different performance periods and
different performance goals. The Committee may adjust the performance goals and
periods applicable to a Performance Unit Award to take into account changes in
law and accounting and tax rules and to make such adjustments as the Committee
deems necessary or appropriate to reflect the inclusion or exclusion of the
impact of extraordinary or unusual items, events or circumstances in order to
avoid windfalls or hardships. Performance Units may be awarded independent of or
in connection with the grant of any other Award under the Plan.

     (b) AWARD AGREEMENT.  A participant shall have no rights with respect to a
Performance Unit Award unless within sixty days of the grant of such Award (or
such shorter period as the Committee may specify) the participant shall have
accepted the Award by executing and delivering to the Company a Performance Unit
Award agreement.

     (c) RESTRICTIONS ON TRANSFER.  Performance Unit Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered, and if exercisable over a specified period, shall be
exercisable during the participant's lifetime only by the participant or the
participant's legal representative or guardian.

     (d) RIGHTS AS A SHAREHOLDER.  A participant receiving a Performance Unit
Award will have rights of a shareholder only as to shares of Stock actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant.  A
participant shall be entitled to receive a certificate evidencing the
acquisition of shares of Stock under a Performance Unit Award only upon
satisfaction of all conditions specified in the Performance Unit Award
agreement.

     (e) TERMINATION. Unless otherwise provided in the terms of an Award, except
as may otherwise be provided by the Committee at any time prior to the
termination of employment, a participant's rights and all Performance Unit
Awards shall automatically terminate thirty (30) days after the participant's
termination of employment by the Company and its Subsidiaries for any reason
excluding death, in which case the participant's rights shall automatically
terminate one (1) year after such termination.

     (f) ACCELERATION; WAIVER.  At any time prior to the participant's
termination of employment with the Company and its Subsidiaries, by death or
disability [or retirement], the Committee may in its sole discretion accelerate,
waive, or, subject to Section 18 below, amend any or all of the goals,
restrictions or conditions imposed under any Performance Unit Award.

     (g) EXERCISE.  The Committee in its sole discretion shall establish
procedures to be followed in exercising any Performance Unit Award, which
procedures shall be set forth in the Performance Unit Award agreement.  The
Committee may at any time provide that payment under a Performance Unit Award
shall be made, upon satisfaction of the applicable performance goals, without
any exercise by the participant.  Except as otherwise specified by the
Committee, (i) a Performance Unit granted in tandem with a Stock Option may be
exercised only while the Stock Option is exercisable, and (ii) the exercise of a
Performance Unit granted in tandem with any Award shall reduce the number of
shares of Stock subject to the related Award on such basis as is specified in
the Performance Unit Award agreement.

                                       9
<PAGE>

     13.  OTHER STOCK-BASED AWARDS.

     (a) GENERAL.  The Committee may grant other Awards under which Stock is or
may in the future be acquired ("Other Stock-Based Awards").  Such Awards may
include, without limitation, debt securities convertible into or exchangeable
for shares of Stock upon such conditions, including attainment of performance
goals, as the Committee shall determine.  Subject to the purchase price
limitations in subsection (b) below, such convertible or exchangeable securities
may have such terms and conditions as the Committee may determine at the time of
grant.  However, no convertible or exchangeable debt shall be issued unless the
Committee shall have provided (by the Company's right of repurchase, right to
require conversion or exchange, or other means deemed appropriate by the
Committee) a means of avoiding any right of the holders of such debt to prevent
a Company transaction by reason of covenants in such debt.

     (b) PURCHASE PRICE; FORM OF PAYMENT.  The Committee may determine the
consideration, if any, payable upon the issuance or exercise of an Other Stock-
Based Award.  The Committee may permit payment by certified check, bank check or
other instrument acceptable to the Committee or by surrender of other shares of
Stock (excluding shares then subject to restrictions under the Plan).

     (c) FORFEITURE OF AWARDS; REPURCHASE OF STOCK; ACCELERATION OR WAIVER OF
RESTRICTIONS.  The Committee may determine the conditions under which an Other
Stock-Based Award shall be forfeited or, in the case of an Award involving a
payment by the recipient, the conditions under which the Company may or must
repurchase such Award or related Stock.  The Committee may in its sole
discretion, at any time prior to a participant's termination of employment with
the Company and its Subsidiaries, by death or disability [or retirement],
accelerate, waive, or, subject to Section 18 below, amend any or all of the
limitations or conditions imposed under any Other Stock-Based Award.

     (d) AWARD AGREEMENTS. Unless otherwise provided in the terms of an Award, a
participant shall have no rights with respect to any Other Stock-Based Award
unless within sixty days after the grant of such Award (or such shorter period
as the Committee may specify) the participant shall have accepted the Award by
executing and delivering to the Company an Other Stock-Based Award agreement.

     (e) RESTRICTIONS ON TRANSFER.  Other Stock-Based Awards may not be sold,
assigned, transferred, pledged, or encumbered except as may be provided in the
Other Stock-Based Award agreement.  However, in no event shall any Other Stock-
Based Award be transferred other than by will or by the laws of descent and
distribution or be exercisable during the participant's lifetime by other than
the participant or the participant's legal representative or guardian.

     (f) RIGHTS AS A SHAREHOLDER.  A recipient of any Other Stock-Based Award
will have rights of a shareholder only at the time and to the extent, if any,
specified by the Committee in the Other Stock-Based Award agreement.

     (g) DEEMED DIVIDEND PAYMENTS; DEFERRALS.  Without limiting the right of the
Committee to specify different terms, an Other Stock-Based Award agreement may
require or permit the immediate payment, waiver, deferral, or investment of
dividends or deemed dividends payable or deemed payable on Stock subject to the
Award.

     14.  SUPPLEMENTAL GRANTS.

     (a) LOANS.  The Company may in its sole discretion make a loan to the
recipient of an Award hereunder, either on or after the date of grant of such
Award.  Such loans may be either in connection with exercise of a Stock Option,
a Stock Appreciation Right or an Other Stock-Based Award, in connection with the
purchase of shares under any Award, or in connection with the payment of any
federal, state and local income taxes in respect of income recognized under an
Award.  The Committee shall have full authority to decide whether to make a loan
hereunder and to determine the amount, term, and provisions of any such loan,
including the interest rate (which may be zero) charged in respect of any such
loan, whether the loan is to be secured or unsecured, the terms on which the
loan is to be repaid and the conditions, if any, under which it may be forgiven.
However, no loan hereunder shall provide or reimburse to the borrower the amount
used by him for the payment of the par value of any shares of Stock issued, have
a term (including extensions) exceeding ten years in duration or be in amount
exceeding the total exercise or purchase price paid by the borrower under an
Award or for related Stock under the Plan plus an amount equal to the cash
payment permitted in subsection (b) below.

                                       10
<PAGE>

     (b) CASH PAYMENTS.  The Committee may, at any time and in its discretion,
authorize a cash payment, in respect of the grant or exercise of an Award under
the Plan or the lapse or waiver of restrictions under an Award, which shall not
exceed the amount that would be required in order to pay in full the federal,
state and local income taxes due as a result of income recognized by the
recipient as a consequence of (i) the receipt of an Award or the exercise of
rights thereunder and (ii) the receipt of such cash payment.  The Committee
shall have complete authority to decide whether to make such cash payments in
any case, to make provisions for such payments either simultaneously with or
after the grant of the associated Award, and to determine the amount of any such
payment.

     15.  WITHHOLDING.  Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares.  If a participant surrenders
shares of Stock acquired pursuant to the exercise of an Incentive Stock Option
in payment of the option price of a Stock Option or the purchase price under
another Award, and such surrender constitutes a disqualifying disposition for
purposes of obtaining incentive stock option treatment under the Code, the
Company shall have the right to require the participant to remit to the Company
an amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.  Whenever under the Plan payments are to be made in cash, such payments
shall be net of an amount sufficient to satisfy any federal, state and local
withholding tax requirements.  A recipient may elect, with respect to any Non-
Qualified Stock Option, Stock Appreciation Right, Restricted Stock Award,
Unrestricted Stock Award, Deferred Stock Award, Performance Unit Award or Other
Stock-Based Award that is paid in whole or in part in Stock, to surrender or
authorize the Company to withhold shares of Stock (valued at Fair Market Value
on the date of surrender or withholding of the shares) in satisfaction of all
such withholding requirements.  The Committee shall have the discretion to
provide (by general rule or a provision in the specific Award agreement) that,
at the election of the recipient, "federal, state and local withholding tax
requirements" shall be deemed to be any amount designated by the recipient that
does not exceed his estimated federal, state and local tax obligations
associated with the transaction, including FICA taxes to the extent applicable.

     16.  MERGER; LIQUIDATION.  If the Company shall be the surviving
corporation in any merger, recapitalization or similar reorganization, the
holder of each outstanding Stock Option shall be entitled to purchase, at the
same times and upon the same terms and conditions as are then provided in the
Stock Option, the number and class of shares of Stock or other securities to
which a holder of the number of shares of Stock subject to the Stock Option at
the time of such transaction would have been entitled to receive as a result of
such transaction, and a corresponding adjustment shall be made in connection
with determining the value of any related Stock Appreciation Right.  In the
event of any such change in capitalization of the Company, the Committee may
make such additional adjustments in the number and class of shares of stock or
other securities with respect to which outstanding Awards are exercisable and
with respect to which future Awards may be granted as the Committee in its sole
discretion shall deem equitable or appropriate, subject to the provisions of
Section 18 below.  In the event of dissolution or liquidation of the Company or
a merger in which the Company is not the surviving corporation, the Committee in
its sole discretion may, as to any outstanding Awards, make such substitution or
adjustment in the aggregate number of shares reserved for issuance under the
Plan and in the number or purchase price (if any) of shares subject to such
Awards as it may determine, or accelerate, amend, or terminate such Awards upon
such terms and conditions as it shall provide, which, in the case of the
termination of the vested portion of any Award, shall require payment or other
consideration that the Committee deems equitable in the circumstances.

     17.  UNFUNDED STATUS OF PLAN.  With respect to the portion of any Award
that has not been exercised and any payments in cash, Stock or other
consideration not received by a participant, a participant shall have no rights
greater than those of a general creditor of the Company unless the Committee
shall otherwise expressly determine in connection with any Award or Awards.  In
its sole discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Awards, provided that the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

     18.  AMENDMENTS AND TERMINATION.  The Board may amend, alter or discontinue
the Plan, but no amendment, alteration or discontinuance shall be made that
would impair the rights of an optionee under a Stock Option or a recipient of
another Award theretofore granted without the optionee's or recipient's consent;
provided, however, that any alteration or amendment that would require
shareholder approval in order for the Plan to continue to meet any applicable
legal or regulatory requirements shall be effective only if it is approved by
the shareholders of the Company in the manner required thereby. Unless otherwise
provided in the terms of an Award, the Committee may at any time decrease or
cancel any outstanding Award (or provide substitute Awards at the same or a
reduced exercise or purchase price or with no exercise or purchase price, but
such price, if any, must satisfy the requirements that would apply to the
substitute or

                                       11
<PAGE>

amended Award if it were then initially granted under the Plan) for the purpose
of satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the
recipient's consent.

     19.  GENERAL PROVISIONS.

     (a) TRANSFERS.  For purposes of the Plan, the transfer to the employment by
the Company from a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another, shall not be deemed a termination of employment.

     (b) LEAVES OF ABSENCE.  The Committee may in its discretion determine
whether a leave of absence constitutes a termination of employment for purposes
of the Plan and the impact, if any, of such leave of absence on Awards
previously granted to a holder who takes a leave of absence.

     (c) RESTRICTIONS ON DELIVERY AND SALE OF SHARES.  Each Award granted under
the Plan is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the Stock covered by such Award upon any securities exchange or under any state
or federal law is necessary or desirable as a condition of or in connection with
the granting of such Award or the purchase or delivery of Stock thereunder, the
delivery of any or all shares pursuant to such Award may be withheld unless and
until such listing, registration or qualification shall have been effected.  If
a registration statement is not in effect under the Securities Act of 1933, as
amended, or any applicable state securities laws with respect to the shares of
Stock purchasable or otherwise deliverable under Awards then outstanding, the
Committee may require, as a condition of any delivery of Stock pursuant to an
Award, that the recipient of Stock represent, in writing, that the shares
received pursuant to the Award are being acquired for investment and not with a
view to distribution and agree that the Stock will not be disposed of except
pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933, as amended, and any applicable
state securities laws.  The Company may endorse on certificates representing
shares delivered pursuant to an Award such legends referring to the foregoing
representations or restrictions or any applicable restrictions on resale as the
Company, in its discretion, shall deem appropriate.

     (d) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS.  Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such approval is
required; such arrangements may be either generally applicable or applicable
only in specific cases.  The adoption of the Plan does not confer upon any
employee any right to continued employment with the Company or a Subsidiary, or
affect the right of the Company or any Subsidiary to terminate the employment of
any of its employees at any time.

     (e) GOVERNING LAW.  The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Texas.

     20.  EFFECTIVE DATE.  The Plan shall become effective on November 8, 1996,
the date of its adoption by the Board, subject, however, to the approval of the
Plan by the shareholders of the Company at their next Annual Meeting, or sooner
if presented for approval by the shareholders prior to such Annual Meeting.
Subject to approval by the shareholders, and to the requirement that no Stock
may be issued hereunder prior to such approval, Awards may be granted hereunder
on and after adoption of the Plan by the Board.  Unless shareholder approval is
obtained by November 7, 1997, this Plan and any Award granted hereunder shall
become void thereafter.

                                       12

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