Document:

Exhibit 10.4

 

EXECUTION COPY

 

TERM
SHEET FOR KENNETH W. DAVIDSON

CHAIRMAN OF THE BOARD OF DJO INCORPORATED

 

	
  Parties:

  	
   

  	
  ReAble Therapeutics, Inc.,
  a Delaware corporation which, following the consummation of certain
  transactions set forth in the Agreement and Plan of Merger, dated July 15,
  2007, intends to change its name to “DJO Incorporated” (the “Company”), and Kenneth W. Davidson (the
  “Director”).

  
	
   

  	
   

  	
   

  
	
  Service Period:

  	
   

  	
  The Director shall serve as the Chairman of the
  Company’s Board of Directors (the “Board”) until the next annual meeting of
  the Company’s stockholders at which time the stockholders may elect the
  Director to serve for an additional term. The Director may be removed at any
  time with or without cause by the Company’s stockholders as set forth under
  the Delaware General Corporation Law or as provided in the Company’s
  Certificate of Incorporation.

  
	
   

  	
   

  	
   

  
	
  Position and Duties:

  	
   

  	
  To serve as the Chairman of the Board. The duties,
  responsibilities and obligations of the Director are as established by law,
  the Certificate of Incorporation and Bylaws of the Company, the Corporate
  Governance Guidelines, Committee Charters and other governance procedures and
  policies established by the Company from time to time.

  
	
   

  	
   

  	
   

  
	
  Annual Retainer:

  	
   

  	
  For each annual term commencing on or after January
  1, 2008 that the Director is elected to serve on the Board, the Director will
  be paid an annual retainer as set forth on Exhibit A, payable in 4
  equal installments on the date of each regularly scheduled quarterly Board
  meeting. No annual retainer shall be paid for Board membership in 2007.

  
	
   

  	
   

  	
   

  
	
  Travel Expenses:

  	
   

  	
  The Director will be reimbursed for all reasonable
  travel and lodging expenses associated with attendance at Board, subject to
  the policies of the Company in effect from time to time.

  
	
   

  	
   

  	
   

  
	
  Equity Grant:

  	
   

  	
  The Director will be granted annual equity awards,
  in the form to be determined by the Company, as set forth on Exhibit A.
  The first equity award will be granted January 1, 2008 and a similar grant
  shall be made on each following January 1 during this term on the Board.

  
	
   

  	
   

  	
   

  
	
  Termination of Service:

  	
   

  	
  All annual retainers, equity awards and expense
  reimbursements will cease and all unvested equity awards, if any, shall be
  forfeited upon the termination of the Director’s membership on the Board for
  any reason whatsoever.

  
	
   

  	
   

  	
   

  
	
  Director’s Covenants:

  	
   

  	
  During the period the Director serves on the Board
  and thereafter, the Director will not disclose or otherwise use any
  confidential information or trade secrets of the Company, its subsidiaries
  and affiliates. “Confidential Information,” shall mean any information
  regarding the business methods, business policies, policies, procedures,
  techniques, research or development projects or results, historical or
  projected financial information, budgets, trade secrets, or other knowledge
  or processes of or developed by the Company or any names and addresses of
  customers or clients or any data on or relating to past, present or
  prospective Company customers or clients or any other confidential
  information relating to or dealing with the business operations or activities
  of the Company, made known to the Director or learned or acquired by the
  Director while associated with the Company, excepting information otherwise
  lawfully known 

  

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  generally by or readily accessible to the general
  public.

  
	
   

  	
   

  	
   

  
	
  Governing Law:

  	
   

  	
  The provisions of this Term Sheet shall be governed
  by the laws of the State of New York, without regard to any choice of law
  provisions.

  

 

[Signature
Page Follows]

 

 

 

 

	
  REABLE
  THERAPEUTICS, INC.

  	
  KENNETH
  W. DAVIDSON

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Harry L. Zimmerman

  	
   

  	
  /s/
  Kenneth W. Davidson

  	
   

  
	
   

  	
  HARRY
  L. ZIMMERMAN

  	
   

  
	
   

  	
   

  
	
  Date:
  

  	
  November
  20, 2007

  	
   

  	
  Date:
  

  	
  November
  20, 2007

  	
   

  
							

 

 

 

 

[Signature Page to Kenneth W. Davidson Board Term
Sheet]

 

 

 

 

 

Exhibit A

 

Certain
Terms and Conditions of Service

	
  Name:

  	
   

  	
  Kenneth W. Davidson

  
	
   

  	
   

  	
   

  
	
  Position:

  	
   

  	
  Chairman of the Board;
  Non-employee Director of the Company

  
	
   

  	
   

  	
   

  
	
  Annual Retainer for
  membership on Board:

  	
   

  	
  $60,000

  
	
   

  	
   

  	
   

  
	
  Annual Equity Award

  	
   

  	
  Annual grant of options
  to acquire the Company’s stock valued at approximately $25,000 (not to exceed
  1,500 shares per grant), with the exercise prices to be set at the fair
  market value of the stock on the date of option grant). One-third of the
  shares subject to each annual option grant shall vest on the first
  anniversary of such grant, and one-third of the shares subject to such annual
  option grant shall vest on each of the next two following anniversaries of
  such annual option grant, provided the Director continues to serve on the Board.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The options shall have
  restrictions on transfer, and the options and the shares subject to such
  options shall be subject to certain call rights, drag-along and tag-along
  rights, and registration rights similar to those included in the Management Stockholders
  Agreement that has been entered into between the Company and its senior
  management.Exhibit 10.5

 

EXECUTION COPY

 

DJO
INCORPORATED

2007
INCENTIVE STOCK PLAN

RESTRICTED
STOCK AWARD AGREEMENT

This RESTRICTED STOCK AWARD
AGREEMENT, dated as of November 20, 2007 (the “Date of Grant”), is delivered by
ReAble Therapeutics, Inc., a Delaware corporation which, following the
consummation of certain transactions set forth in the Agreement and Plan of
Merger, dated July 15, 2007, intends to change its name to “DJO Incorporated”
(the “Company”), to Peter Baird (the “Grantee”).

RECITALS

The DJO Incorporated 2007 Incentive Stock Plan (the “Plan”)
provides for the grant of Restricted Stock Awards in accordance with the terms
and conditions of the Plan.  The
Compensation Committee of the Company’s Board of Directors (the “Committee”)
has decided to make a Restricted Stock Award as an inducement for the Grantee
to promote the best interests of the Company and its stockholders.  A copy of the Plan is attached.

NOW, THEREFORE, the parties to this Agreement, intending to be
legally bound hereby, agree as follows:

1.             Restricted
Stock Award.  Subject to the terms
and conditions set forth in this Agreement and the Plan, the Company hereby
grants the Grantee 24,300 shares of common stock of the Company (the “Shares”),
subject to the restrictions set forth below and in the Plan (“Restricted Stock”).  Shares of
Restricted Stock may not be transferred by the Grantee or subjected to any
security interest until the Shares have become vested pursuant to this
Agreement and the Plan.

2.             Vesting
and Nonassignability of Restricted Stock.

(a)           The shares of Restricted Stock shall
become vested, and the restrictions described in Sections 2(b) and 2(c) shall
lapse, according to the following vesting schedule: 

	
  Date

  	
   

  	
  Vested Shares

  
	
   

  	
   

  	
   

  
	
  January 1, 2009

  	
   

  	
  24,300

  

 

(b)           If the Grantee’s employment with, or
service to, the Company terminates before January 1, 2009, the shares of
Restricted Stock shall be forfeited and must be immediately returned to the
Company.

(c)           During the period before the shares
of Restricted Stock vest (the “Restriction Period”), the non-vested
Restricted Stock may not be assigned, transferred, pledged or otherwise
disposed of by the Grantee.  Any attempt
to assign, transfer, pledge or otherwise dispose of the Shares contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Shares, shall be null, void and without effect.

3.             Issuance of Certificates.

(a)           Stock certificates representing the
Restricted Stock may be issued by the Company and held in escrow by the Company
until the Restricted Stock vests, or the Company may hold non-certificated
Shares until the Restricted Stock vests. 
During the Restriction Period, the Grantee shall receive any cash
dividends with respect to the shares of Restricted Stock, may vote the shares
of Restricted Stock and may participate in any distribution pursuant to a plan
of dissolution or complete liquidation of the Company.  In the event of a dividend or distribution
payable in stock or other property or a reclassification, split up or similar
event during the Restriction Period, the Shares or other property issued or
declared with respect to the non-vested shares of Restricted Stock shall be
subject to the same terms and conditions relating to vesting as the Shares to
which they relate.

(b)           When the Grantee obtains a vested
right to shares of Restricted Stock, a certificate representing the vested
Shares shall be issued to the Grantee, free of the restrictions under Section 2
of this Agreement.

(c)           The obligation of the Company to
deliver Shares upon the vesting of the Restricted Stock shall be subject to all
applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriately to comply with relevant securities laws
and regulations.

4.             Change of Control.  The provisions of the Plan applicable to a
Change of Control shall apply to the Restricted Stock, and, in the event of a
Change of Control, the Committee may take such actions as it deems appropriate
pursuant to the Plan.

5.             Stockholder’s Agreement; Right
of First Refusal; Repurchase Right. 
As a condition of receiving this grant, the Grantee agrees to execute a
stockholder’s agreement, agreeing to be bound thereby, in such form as the
Committee may require, with respect to all Shares that are subject to the
restrictions described in Paragraph 2.

6.             Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the
terms of which are incorporated herein by reference, and in all respects shall
be interpreted in accordance with the Plan. 
The grant is subject to interpretations, regulations and determinations
concerning the Plan established from time to time by the Committee in
accordance with the provisions of the Plan, including, but not limited to,
provisions pertaining to (i) rights and obligations with respect to withholding
taxes, (ii) the registration, qualification or listing of the Shares, (iii)
changes in capitalization of the Company, and (iv) other requirements of
applicable law.  The Committee shall have
the authority to interpret and construe the grant pursuant to the terms of the
Plan, and its decisions shall be conclusive as to any questions arising
hereunder.

7.             Withholding; Gross-Up of
Restricted Stock.

(a)           Withholding.  The Grantee hereby authorizes the Company to
satisfy any tax withholding obligation of the Company with respect to the
Restricted Stock by having Shares withheld up to an amount that does not exceed
the minimum applicable withholding tax rate for federal (including FICA),
state, local and other tax liabilities.

(b)           Gross-up of Restricted Shares.  Notwithstanding anything herein to the
contrary, the Grantee will be awarded an additional number of Restricted Shares
such that after the Company’s tax withholding obligation described in (a) above
is satisfied, 23,400 Shares of Restricted Stock remain subject to this
Agreement, or if the restrictions described in Section 2 above have lapsed,
23,400 Shares are transferred to the Grantee.

 

2

 

8.             Other Restrictions on Sale or
Transfer of Shares.

(a)           The Grantee is acquiring the Shares
underlying this grant solely for investment purposes, with no present intention
of distributing or reselling any of the Shares or any interest therein.  The Grantee acknowledges that the Shares have
not been registered under the Securities Act of 1933, as amended (the “Securities
Act”) and the Company has no obligation to do so.

(b)           The Grantee is aware of the
applicable limitations under the Securities Act and under the Plan relating to
a subsequent sale, transfer, pledge or other assignment or encumbrance of the
Shares.  The Grantee further acknowledges
that the Shares must be held indefinitely unless they are subsequently
registered under the Securities Act and applicable state securities laws or an
exemption from such registration is available.

(c)           The Grantee will not sell, transfer,
pledge, donate, assign, mortgage, hypothecate or otherwise encumber the Shares
underlying this grant unless the Shares are registered under the Securities Act
or the Company is given an opinion of counsel reasonably acceptable to the
Company that such registration is not required under the Securities Act.

(d)           The Grantee realizes that there is no
public market for the Shares underlying this grant, that no market may ever
develop for them, and that they have not been approved or disapproved by the
Securities and Exchange Commission or any governmental agency.

9.             No Employment or Other Rights.  This grant shall not confer upon the Grantee
any right to be retained by or in the employ or service of the Company and
shall not interfere in any way with the right of the Company to terminate the
Grantee’s employment or service at any time. 
The right of the Company to terminate the Grantee’s employment or
service at any time for any reason is specifically reserved.  Nothing in this Agreement shall be construed
to impair any right that the Company may have to terminate or modify the terms
of Grantee’s employment relationship with the Company.

10.           Assignment by Company.  The rights and protections of the Company
hereunder shall extend to any successors or assigns of the Company and to the
Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company
without the Grantee’s consent.

11.           Applicable Law.  The validity, construction, interpretation
and effect of this instrument shall be governed by and construed in accordance
with the laws of State of New York, without giving effect to the conflicts of
laws provisions thereof.

12.           Notice.  Any notice to the Company provided for in
this instrument shall be addressed to the Company in care of Donald Roberts,
and any notice to the Grantee shall be addressed to such Grantee at the current
address shown on the records of the Company, or to such other address as the
Grantee may designate to the Company in writing.  Any notice shall be delivered by hand, sent
by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

 

3

 

IN
WITNESS WHEREOF,
the Company has caused its duly authorized officers to execute and attest this
instrument, and the Grantee has placed his or her signature hereon, effective
as of the Date of Grant.

	
   

  	
  REABLE THERAPEUTICS, INC

  
	
   

  	
   

  
	
   

  	
  /s/ Harry L. Zimmerman

  	
   

  
	
   

  	
  HARRY L. ZIMMERMAN

  
	
   

  
	
  I hereby accept the grant of Restricted Stock
  described in this Agreement, and I agree to be bound by the terms of the
  Plan, the applicable stockholder’s agreement and this Agreement. I hereby
  further agree that all the decisions and determinations of the Committee
  shall be final and binding.

  
	
   

  
	
   

  	
  /s/ Peter Baird

  	
   

  
	
   

  	
  PETER BAIRD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  November 20, 2007

  	
   

  
	
   

  	
  Date

  

 

 

[Signature Page to Peter Baird
Restricted Stock Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]