sc13dza

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NVLg3hxiXjkBL8N3Qboy19nSnxdygQsSfxnJDPa8fWBOdXGZUIUJoH/yms0QuKCX 81Glt2r2yOVdb5WrVDazyg== 0000950133-04-003787.txt : 20041015 0000950133-04-003787.hdr.sgml : 20041015 20041015091711 ACCESSION NUMBER: 0000950133-04-003787 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20041015 DATE AS OF CHANGE: 20041015 GROUP MEMBERS: C/S INTERNATIONAL PARTNERS, LP GROUP MEMBERS: CARLYLE HIGH YIELD PARTNERS, LP GROUP MEMBERS: CARLYLE INTERNATIONAL PARTNERS II, LP GROUP MEMBERS: CARLYLE INTERNATIONAL PARTNERS III, LP GROUP MEMBERS: CARLYLE INVESTMENT GROUP, LP GROUP MEMBERS: CARLYLE INVESTMENT MANAGEMENT, LLC GROUP MEMBERS: CARLYLE PARTNERS II, LP GROUP MEMBERS: CARLYLE SBC PARTNERS II, LP GROUP MEMBERS: CARLYLE-EMPI INTERNATIONAL PARTNERS, LP GROUP MEMBERS: CARLYLE-EMPI PARTNERS II, LP GROUP MEMBERS: CARLYLE-EMPI PARTNERS, LP GROUP MEMBERS: MPI HOLDINGS, LLC GROUP MEMBERS: STATE BOARD OF ADMINISTRATION OF FLORIDA GROUP MEMBERS: TC GROUP II, LLC GROUP MEMBERS: TCG HIGH YIELD HOLDINGS, LLC GROUP MEMBERS: TCG HIGH YIELD, LLC GROUP MEMBERS: TCG HOLDINGS, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ENCORE MEDICAL CORP CENTRAL INDEX KEY: 0000944763 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 650572565 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-50431 FILM NUMBER: 041079921 BUSINESS ADDRESS: STREET 1: 9800 METRIC BOULEVARD STREET 2: P O BOX 1900 CITY: AUSTIN STATE: TX ZIP: 78758 BUSINESS PHONE: 5128329500 MAIL ADDRESS: STREET 1: 9800 METRIC BOULEVARD STREET 2: P O BOX 1900 CITY: AUSTIN STATE: TX ZIP: 78758 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHCARE ACQUISITION CORP DATE OF NAME CHANGE: 19950531 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TC GROUP LLC CENTRAL INDEX KEY: 0000933790 IRS NUMBER: 527656007 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O THE CARLYLE GROUP STREET 2: 1001 PENNSYLVANIA AVENUE NW SUITE 220 S CITY: WASHINGTON STATE: DC ZIP: 20004-2505 BUSINESS PHONE: 2023472626 MAIL ADDRESS: STREET 1: C/O CARLYLE GROUP STREET 2: 1001 PENNSYLVANIA AVENUE NW SUITE 220 S CITY: WASHINGTON STATE: DC ZIP: 20004 SC 13D/A 1 w03897a1sc13dza.htm AMENDMENT NO. 1 TO SCHEDULE 13D sc13dza

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Common Stock, Par Value $0.01 Per Share

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 1)*

ENCORE MEDICAL CORPORATION

(Name of Issuer)

Common Stock, Par Value $0.01 Per Share

(Title of Class of Securities)

29256E109

(Cusip Number)

TC Group, L.L.C.
c/o The Carlyle Group
1001 Pennsylvania Avenue, NW, Suite 220 South
Washington, D.C. 20004-2505
Attn: Jeffrey W. Ferguson
Phone: 202-729-5626
with a copy to:
Latham & Watkins
555 Eleventh Street, N.W., Suite 1000
Washington, D.C. 20004
Attn: Daniel T. Lennon
Phone: 202-637-2200

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

October 4, 2004

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No.

1. Name of Reporting Person:
TCG Holdings, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
54-1686011

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
TC Group, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
54-1686957

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
Carlyle Partners II, L.P. I.R.S. Identification Nos. of above persons (entities only):
51-0357731

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle SBC Partners II, L.P. I.R.S. Identification Nos. of above persons (entities only):
51-0369721

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
State Board of Administration of Florida I.R.S. Identification Nos. of above persons (entities only):
52-2038314

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Instrumentality of the State of Florida

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
Carlyle Investment Group, L.P. I.R.S. Identification Nos. of above persons (entities only):
51-0357730

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle International Partners II, L.P. I.R.S. Identification Nos. of above persons (entities only):
98-0153707

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Cayman Islands

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle International Partners III, L.P. I.R.S. Identification Nos. of above persons (entities only):
98-0153592

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Cayman Islands

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
C/S International Partners, L.P. I.R.S. Identification Nos. of above persons (entities only):
98-0160490

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Cayman Islands

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle- EMPI Partners, L.P. I.R.S. Identification Nos. of above persons (entities only):
51-0393071

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle- EMPI International Partners, L.P. I.R.S. Identification Nos. of above persons (entities only):
98-0216474

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Cayman Islands

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle High Yield Partners, L.P. I.R.S. Identification Nos. of above persons (entities only):
52-2175223

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
Carlyle- EMPI Partners II, L.P. I.R.S. Identification Nos. of above persons (entities only):
51-0393070

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
PN

CUSIP No.

1. Name of Reporting Person:
TCG High Yield, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
52-2175223

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
TCG High Yield Holdings, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
51-0391278

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
Carlyle Investment Management, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
52-1988385

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
TC Group II, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
54-1686957

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

CUSIP No.

1. Name of Reporting Person:
MPI Holdings, L.L.C. I.R.S. Identification Nos. of above persons (entities only):
52-2187753

2. Check the Appropriate Box if a Member of a Group (See Instructions):

(a) o

(b) x

3. SEC Use Only:

4. Source of Funds (See Instructions):
OO

5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

6. Citizenship or Place of Organization:
Delaware

Number of
Shares
Beneficially
Owned by
Each Reporting
Person With

7. Sole Voting Power:
8,000,000

8. Shared Voting Power:

9. Sole Dispositive Power:
8,000,000

10. Shared Dispositive Power:

11. Aggregate Amount Beneficially Owned by Each Reporting Person:
8,000,000

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o

13. Percent of Class Represented by Amount in Row (11):
15.7%

14. Type of Reporting Person (See Instructions):
OO (Limited Liability Company)

Item 1. Security and Issuer.

This statement relates to the common stock, par value $.001 per share (the “ Common Stock ”), of Encore Medical Corporation, a Delaware corporation (“ Encore ”), which has its principal executive offices at 9800 Metric Blvd., Austin, Texas 78758.

Item 2. Identity and Background.

(a) – (c), (f). This statement is being filed jointly by: (i) TCG Holdings, L.L.C., a Delaware limited liability company (“ TCG Holdings ”); (ii) TC Group, L.L.C., a Delaware limited liability company (“ TC Group ”); (iii) Carlyle Partners II, L.P., a Delaware limited partnership (“ CPII ”); (iv) Carlyle SBC Partners II, L.P., a Delaware limited partnership (“ CSBC ”); (v) State Board of Administration of Florida, Instrumentality of the State of Florida (“ SBAF ”); (vi) Carlyle Investment Group, L.P., a Delaware limited partnership (“ CIG ”); (vii) Carlyle International Partners II, L.P., a Cayman Islands exempted limited partnership (“ CIPII ”); (viii) Carlyle International Partners III, L.P., a Cayman Islands exempted limited partnership (“ CIPIII ”); (ix) C/S International Partners, a Cayman Islands partnership (“ C/S ”); (x) Carlyle-EMPI Partners, L.P., a Delaware limited partnership (“ Carlyle-EMPI Partners LP ”); (xi) Carlyle-EMPI International Partners, L.P., a Cayman Islands exempted limited partnership (“ Carlyle-EMPI International Partners LP ”); (xii) Carlyle High Yield Partners, L.P., a Delaware limited partnership (“ CHYP ”); (xiii) Carlyle-EMPI Partners II, L.P., a Delaware limited partnership (“ Carlyle-EMPI Partners II LP ”); (xiv) TCG High Yield, L.L.C., a Delaware limited liability company (“ TCG High Yield ”); (xv) TCG High Yield Holdings, L.L.C., a Delaware limited liability company (“ TCG High Yield Holdings ”); (xvi) Carlyle Investment Management, L.L.C., a Delaware limited liability company (“ CIM ”); (xvii) TC Group II, L.L.C., a Delaware limited liability company (“ TC Group II ”); and (xviii) MPI Holdings, L.L.C., a Delaware limited liability company (“ MPI Holdings ” and, together with TCG Holdings, TC Group, CPII, CSBC, SBAF, CIG, CIPII, CIPIII, C/S, Carlyle-EMPI Partners LP, Carlyle-EMPI International Partners LP, CHYP, Carlyle-EMPI Partners II LP, TCG High Yield, TCG High Yield Holdings, CIM, and TC Group II, the “ Reporting Persons ”).

Pursuant to an Agreement and Plan of Merger (the “ Merger Agreement ”), dated as of August 8, 2004, by and among Encore, Encore Medical Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Encore (“ Merger Sub ”), Empi, Inc., a Minnesota corporation (“ Empi ”), MPI Holdings, GE Capital Equity Investments, Inc., a Delaware corporation (“ GE Capital ”), Patrick D. Spangler and H. Philip Vierling, Encore acquired Empi through a merger of Merger Sub with and into Empi (the “ Merger ”). The Merger Agreement is included as Exhibit 2.1 to Encore’s Form 8-K, filed on October 8, 2004, and incorporated herein by reference, and any description thereof is qualified in its entirety by reference thereto.

On October 4, 2004, pursuant to the Merger Agreement, MPI Holdings, the other former shareholders of Empi and certain option holders of Empi received 8,000,000 shares of Common Stock of Encore in the aggregate as consideration in the Merger. All of these shares of Common Stock are currently held in escrow (the “ Escrowed Shares ”) pursuant to an Indemnification Escrow Agreement, dated as of October 4, 2004 (the “ Escrow Agreement ”), by and among Encore, MPI Holdings and JPMorgan Chase Bank (the “ Escrow Agent ”). In connection with the Merger, the Escrowed Shares were delivered to the Escrow Agent pursuant to the Escrow Agreement as security for the indemnification obligations in favor of Encore under the Merger Agreement and to provide security for the payment of a post-closing working capital adjustment under certain circumstances as described in Article I of the Merger Agreement. During the term of the Escrow Agreement, MPI Holdings has the right to remove any Escrowed Shares from escrow and replace each such removed Escrowed Share with cash in an amount equal to $4.704 for such share. The Escrow Agreement further provides that MPI Holdings shall have the right to vote the Escrowed Shares in connection with actions taken by Encore that require a stockholder vote or written consent. Promptly following October 4, 2005, the Escrow Agent shall

disburse the Escrowed Shares plus any cash or other property then held in escrow, less the aggregate amount of all unresolved claims for indemnification asserted by Encore prior to October 4, 2005, to MPI Holdings, the other former shareholders of Empi and certain option holders of Empi pro rata in accordance with their respective percentage share of the merger consideration under the Merger Agreement as specified in the Escrow Agreement. In the event no distributions of Escrowed Shares or other property are made to Encore under the Escrow Agreement and Escrowed Shares are not replaced with cash by MPI Holdings as described above, MPI Holdings would be entitled to receive 6,399,200 Escrowed Shares out of escrow under the Escrow Agreement. Pursuant to the Escrow Agreement, the Escrowed Shares are owned of record by the Escrow Agent. The Escrow Agreement is attached hereto as Exhibit B and any description of thereof is qualified in its entirety by reference thereto.

As a result of MPI Holdings right to vote all the Escrowed Shares pursuant to the Escrow Agreement, MPI Holdings may be deemed to beneficially own 8,000,000 shares of Common Stock. The following entities (the “ MPI Holdings Members ”) are the managing members of MPI Holdings and, in such capacity, may be deemed to share beneficial ownership of shares of Common Stock beneficially owned by MPI Holdings: CPII, CSBC, SBAF, CIG, CIPII, CIPIII, C/S, Carlyle-EMPI Partners LP, Carlyle-EMPI International Partners LP, CHYP and Carlyle-EMPI Partners II LP. TCG Holdings, as the sole managing member of TC Group, and TC Group, through its capacity as the sole general partner of certain of the Reporting Persons or through its wholly-owned subsidiary TC Group II, exercise investment discretion and control over the shares of Common Stock beneficially owned by MPI Holdings. Specifically, TC Group is the sole general partner of CIG, Carlyle-EMPI Partners LP, Carlyle-EMPI International Partners LP and Carlyle-EMPI Partners II LP and is the sole managing member of TCG High Yield Holdings and CIM. TC Group II is the sole general partner of CPII, CSBC, CIPII, CIPIII and C/S. TCG High Yield is the sole general partner of CHYP. TCG High Yield Holdings is the sole managing member of TCG High Yield. CIM acts as investment advisor and manager with authority and responsibility to invest certain assets on behalf of SBAF.

Accordingly, (i) TC Group II may be deemed to be a beneficial owner of shares of Common Stock owned beneficially by CPII, CSBC, CIPII, CIPIII and C/S, (ii) TCG High Yield and TCG High Yield Holdings each may be deemed to be a beneficial owner of shares of Common Stock owned beneficially by CHYP, (iii) CIM may be deemed to be a beneficial owner of shares of Common Stock owned beneficially by SBAF and (iv) TC Group and TCG Holdings each may be deemed to be a beneficial owner of the shares of Common Stock owned beneficially by each of the Reporting Persons.

William E. Conway, Jr., Daniel A. D’Aniello, and David M. Rubenstein are managing members (the “ TCG Holdings Managing Members ”) of TCG Holdings and, in such capacity, may be deemed to share beneficial ownership of shares of Common Stock beneficially owned by TCG Holdings. Such individuals expressly disclaim any such beneficial ownership. Each of these TCG Holdings Managing Members is a citizen and resident of the United States.

Tamatsu Adachi, Daniel F. Akerson, Leslie L. Armitage, James A. Attwood, Jr., James A. Baker, III, Frank C. Carlucci, Peter J. Clare, William E. Conway, Jr., Daniel Cummings, Robert W. Dahl, Daniel A. D’Aniello, Richard G. Darman, Christopher Finn, Louis V. Gerstner, Jr., Robert E. Grady, John F. Harris, Allan M. Holt, Anthony Jansz, William Kennard, Michael B. Kim, Gregory S. Ledford, Jean-Pierre Millet, Jerome H. Powell, Bruce E. Rosenblum, David M. Rubenstein, Eric Sasson, Robert G. Stuckey, Wayne Tsou, Claudius E. Watts, IV, Xiang-Dong Yang, Glenn A. Youngkin, Gregory M. Zeluck and Michael J. Zupon are executive officers and/or members of TCG Holdings (the “ Carlyle Officers ”). Each of the Carlyle Officers is a citizen and resident of the United States, except Tamatsu Adachi, who is a citizen of Japan, Anthony Jansz, who is a citizen of Australia, Jean-Pierre Millet, who is a citizen of France, and Eric Sasson, who is a citizen of France.

The Reporting Persons are principally engaged in the business of investing in securities. The address of the principal business and principal office of TCG Holdings, TC Group, CPII, CSBC, SBAF, CIG, Carlyle-EMPI Partners LP, Carlyle-EMPI Partners II LP, CIM, TC Group II, the TCG Holdings Managing Members, the Carlyle Officers and MPI Holdings is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington, D.C. 20004-2505. The principal business and principal office address of CHYP, TCG High Yield and TCG High Yield Holdings is c/o The Carlyle Group, 520 Madison Avenue, 41st Floor, New York, New York 10022. The principal business and principal office address of CIPII, CIPIII, C/S and Carlyle-EMPI International Partners LP is c/o Coutts & Co., P.O. Box 707, West Bay Road, Cayman Islands, British West Indies.

(d) – (e). To the best knowledge of the Reporting Persons, none of the entities or persons identified in this Item 2 has, during the last five years, (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor (ii) been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and, as a result of such proceeding was or is, subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

As consideration in the Merger, MPI Holdings, the other former shareholders of Empi and certain option holders of Empi received cash and shares of Common Stock of Encore.

Item 4. Purpose of Transaction.

The response to Item 2 and Item 6 are incorporated herein by reference.

Except as described herein, none of the Reporting Persons has any present plans or proposals which relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. All securities that may be deemed to be beneficially owned by the Reporting Persons are held by the Reporting Persons for investment purposes. Each Reporting Person may acquire from time to time additional securities (including shares of Common Stock) of Encore in the open market or in privately negotiated transactions, by exchange offer or otherwise. Subject to the terms of the Lock-Up Agreement (attached hereto as Exhibit D), each Reporting Person may, from time to time, retain or sell all or a portion of its securities of Encore in the open market, pursuant to a registered public offering or in privately negotiated transactions, including, by way of distribution of some or all of the securities to their partners or members, as applicable. Any actions that any Reporting Person might undertake will be dependent upon such person’s review of numerous factors, including, among other things, the availability of securities of Encore (including Common Stock) for purchase and the price levels of such shares, trading prices of Encore’s Common Stock, general market and economic conditions, ongoing evaluation of Encore’s business operations and prospects, the relative attractiveness of alternative business and investment opportunities, the actions of management and the Board of Directors of Encore and other future developments.

Item 5. Interest in Securities of the Issuer.

(a) As a result of MPI Holdings right to vote all the Escrowed Shares pursuant to the Escrow Agreement, the Reporting Persons may be deemed to beneficially own 8,000,000 shares of Common Stock, representing approximately 15.73% of the outstanding Common Stock (percentage based on the denominator off 50,847,000 shares of Common Stock, which includes, (i) 42,847,000 shares of Common Stock outstanding as of July 3, 2004, as reported in Encore’s Form 8-K filed on September 16, 2004 and

(ii) 8,000,000 shares of Common Stock issued in the Merger). See also the information contained on the cover pages to this Schedule 13D which is incorporated herein by reference.

(b) The number of shares of Common Stock as to which there is sole power to vote or to direct the vote, sole power to dispose or direct the disposition, or shared power to dispose or direct the disposition for the Reporting Persons is set forth on the cover pages of this Statement on Schedule 13D, and such information is incorporated herein by reference.

(c) The Reporting Persons have not engaged in any transactions in any shares of Common Stock of Encore during the past sixty days, other than the acquisition of shares of Common Stock in the Merger reported herein.

(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings, or Relationships with Respect to Securities of the Issuer.

The response to Item 2 and Item 3 and Exhibits B, C and D are incorporated herein by reference.

In connection with the consummation of the Merger, on October 4, 2004, Encore, MPI Holdings, GE Capital, Patrick D. Spangler and H. Philip Vierling entered into an Investors Rights Agreement (the “ Investor Agreement ”). In accordance with the terms of the Investor Agreement, the parties agreed, among other things, until such time that MPI Holdings and its affiliates no longer collectively own any of the voting securities of Encore, MPI Holdings shall have certain rights in order to comply with applicable venture capital operating company regulations, including: (i) the right to consult with Encore’s management regarding operating and financial matters; (ii) the right to examine the books and records of Encore; and (iii) the right to visit and inspect Encore’s properties. In addition, the parties agreed that until such time that MPI Holdings and its affiliates no longer collectively own at least 5% of the outstanding voting securities of Encore, MPI Holdings shall have the right to designate a representative to attend and observe meetings of the Board of Directors of Encore in a nonvoting capacity. In addition, the Investor Agreement provides (i) that Encore shall promptly file a registration statement on Form S-3 under the Securities Act of 1933, as amended, to cover resales of Escrowed Shares held by the former shareholders of Empi and certain option holders of Empi, (ii) that MPI Holdings shall have the right to have such shares sold pursuant to no more than three underwritten offerings and (iii) that such holders of Common Stock may include their shares, subject to certain limitations, in registrations of Common Stock by Encore (collectively, “ Registrations ”). The Investor Agreement is attached hereto as Exhibit D, and any description thereof is qualified in its entirety by reference thereto.

In connection with the consummation of the Merger, on October 4, 2004, Encore entered into a Lock-Up Agreement with MPI Holdings (the “ Lock-Up Agreement ”). Among other things, the Lock-Up Agreement provides that until October 4, 2005, or except under certain limited circumstances, the shares of Encore Common Stock received by MPI Holdings as consideration in the Merger will not, without Encore’s prior written consent, be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of if, after giving effect to such disposition, the aggregate number of shares of Encore Common Stock transferred exceeds (i) during the first six month period, zero shares and (ii) during the second six month period, fifty percent of the shares of Encore Common Stock entitled to be received by MPI Holdings as consideration in the Merger. Notwithstanding the foregoing, the transfer restrictions in the Lock-

Up Agreement will not apply to Registrations made pursuant to the Investor Agreement. The Lock-Up Agreement is attached hereto as Exhibit D, and any description thereof is qualified in its entirety by reference thereto.

Item 7. Material to be Filed as Exhibits.


Exhibit A:		Joint Filing Agreement, dated October 14, 2004.

Exhibit B:		Indemnification Escrow Agreement dated as of October 4, 2004 among Encore, MPI Holdings and JPMorgan Chase Bank.

Exhibit C:		Investors Rights Agreement dated as of October 4, 2004 among Encore, MPI Holdings, GE Capital, Patrick D. Spangler and H. Philip Vierling.

Exhibit D:		Lock-Up Agreement dated as of October 4, 2004 between Encore and MPI Holdings.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.


Dated: October 15, 2004

	TCG HOLDINGS, L.L.C.

	By:	/s/ Daniel A. D’Aniello

		Daniel A. D’Aniello, Managing Director

	TC GROUP, L.L.C.

	By:	TCG Holdings, L.L.C., its Managing Member

	By:	/s/ Daniel A. D’Aniello

		Daniel A. D’Aniello, Managing Director

	CARLYLE PARTNERS II, L.P.

	By:	TC Group II, L.L.C., its General Partner

	By:	TC Group, L.L.C., its Managing Member

	By:	TCG Holdings, L.L.C., its Managing Member

	By:	/s/ Daniel A. D’Aniello

		Daniel A. D’Aniello, Managing Director

	CARLYLE SBC PARTNERS II, L.P.

	By:	TC Group II, L.L.C., its General Partner

	By:	TC Group, L.L.C., its General Partner

	By:	TCG Holdings, L.L.C., its Managing Member

	By:	/s/ Daniel A. D’Aniello

		Daniel A. D’Aniello, Managing Director


		STATE BOARD OF ADMINISTRATION OF FLORIDA

		separate account maintained pursuant to an Investment Management Agreement dated as of September 6, 1996 between the State Board of Administration of Florida, Carlyle Investment Group, L.P. and Carlyle Investment Management, L.L.C.

		By:		Carlyle Investment Management, L.L.C., as Investment Manager

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INVESTMENT GROUP, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INTERNATIONAL PARTNERS II, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INTERNATIONAL PARTNERS III, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		C/S INTERNATIONAL PARTNERS

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE-EMPI PARTNERS, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE-EMPI INTERNATIONAL PARTNERS, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE HIGH YIELD PARTNERS, L.P.

		By:		TCG High Yield, L.L.C., its General Partner

		By:		TCG High Yield Holdings, L.L.C., its Managing Member

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		CARLYLE-EMPI PARTNERS II, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TCG HIGH YIELD, L.L.C.

		By:		TCG High Yield Holdings, L.L.C., its Managing Member

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TCG HIGH YIELD HOLDINGS, L.L.C.

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INVESTMENT MANAGEMENT, L.L.C.

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TC GROUP II, L.L.C.

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		MPI HOLDINGS, L.L.C.

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

EX-99.A 2 w03897a1exv99wa.htm EXHIBIT A exv99wa

EXHIBIT A

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock of beneficial interest of Encore Medical Corporation, a Delaware corporation, and that this Agreement may be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the 14th day of October, 2004.


		TCG HOLDINGS, L.L.C.

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TC GROUP, L.L.C.

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE SBC PARTNERS II, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		CARLYLE PARTNERS II, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director
		STATE BOARD OF ADMINISTRATION OF FLORIDA

		separate account maintained pursuant to an Investment Management Agreement dated as of September 6, 1996 between the State Board of Administration of Florida, Carlyle Investment Group, L.P. and Carlyle Investment Management, L.L.C.

		By:		Carlyle Investment Management, L.L.C., as Investment Manager

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INVESTMENT GROUP, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE INTERNATIONAL PARTNERS II, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		CARLYLE INTERNATIONAL PARTNERS III, L.P.

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		C/S INTERNATIONAL PARTNERS

		By:		TC Group II, L.L.C., its General Partner

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE-EMPI PARTNERS, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE-EMPI INTERNATIONAL PARTNERS, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		CARLYLE HIGH YIELD PARTNERS, L.P.

		By:		TCG High Yield, L.L.C., its General Partner

		By:		TCG High Yield Holdings, L.L.C., its Managing Member

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		CARLYLE-EMPI PARTNERS II, L.P.

		By:		TC Group, L.L.C., its General Partner

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TCG HIGH YIELD, L.L.C.

		By:		TCG High Yield Holdings, L.L.C., its Managing Member

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TCG HIGH YIELD HOLDINGS, L.L.C.

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director


		CARLYLE INVESTMENT MANAGEMENT, L.L.C.

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		TC GROUP II, L.L.C.

		By:		TC Group, L.L.C., its Managing Member

		By:		TCG Holdings, L.L.C., its Managing Member

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

		MPI HOLDINGS, L.L.C.

		By:		/s/ Daniel A. D’Aniello

				Daniel A. D’Aniello, Managing Director

EX-99.B 3 w03897a1exv99wb.htm EXHIBIT B exv99wb

EXHIBIT B

INDEMNIFICATION ESCROW AGREEMENT

This INDEMNIFICATION ESCROW AGREEMENT (this “Agreement”), dated as of October 4, 2004, is made and entered into by and among Encore Medical Corporation, a Delaware corporation (the “Acquiror”), MPI HOLDINGS, LLC, a Delaware limited liability company (“MPI”), solely in its capacity as the initial Holder Representative (MPI and any of its successors in such capacity being sometimes referred to herein in such capacity as the “Holder Representative”) and JPMorgan Chase Bank, a New York corporation (the “Escrow Agent”).

W I T N E S S E T H :

WHEREAS, the Acquiror, Empi, Inc. a Minnesota corporation (the “Company”), Encore Medical Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Acquiror (“Merger Sub”), MPI, solely in its capacity as the initial Holder Representative, and the Company Principal Shareholders have entered into that certain Agreement and Plan of Merger, dated as of August 8, 2004 and attached hereto as Exhibit A (the “Merger Agreement”; capitalized terms used herein and not otherwise defined having the meanings assigned to them in the Merger Agreement), which provides for, among other things, the merger of Merger Sub with and into the Company, with the Company being the surviving corporation;

WHEREAS, pursuant to the terms of the Merger Agreement, the Stock Portion of the Merger Consideration shall be delivered by the Acquiror to the Escrow Agent to be held in escrow (i) as security for the indemnification obligations in favor of Acquiror under Article XIII of the Merger Agreement and (ii) as a security for any amount payable to the Acquiror pursuant to Section 1.5(d) of the Merger Agreement to the extent provided in Section 1.5(d) of the Merger Agreement; and

WHEREAS, Acquiror and the Holder Representative desire that the Escrow Agent hold and dispose of such escrowed property, and the Escrow Agent is willing to do so, on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

1. Appointment of Escrow Agent. By its signature below, Escrow Agent acknowledges receipt of the Escrow Shares (as defined below). The Escrow Agent is hereby constituted and appointed the escrow agent hereunder.

2. Escrow Property. Simultaneously with the execution of this Agreement, Acquiror shall deliver to and deposit with the Escrow Agent, in accordance with the Merger Agreement, a stock certificate in the name of the Escrow Agent (or its nominee) representing eight million (8,000,000) shares of Acquiror Common Stock (the

“Escrow Shares”). The Escrow Agent agrees to hold in escrow, in accordance with this Agreement, the Escrow Shares together with any dividends or other distributions (other than cash dividends or distributions) made on the Escrow Shares and such cash, stock or other property into which Escrow Shares may be changed pursuant to any merger consideration or similar transaction involving the Acquiror and any substitutions of cash for such Escrow Shares pursuant to Section 6 of this Agreement, in each case with the benefit of any earnings thereon (collectively, the “Escrow Property”). The Escrow Agent hereby agrees to take appropriate measures to safeguard the certificates(s) evidencing Escrow Shares in accordance with customary custodial practices and to retain the other Escrow Property in an account.

3. Investment of Cash. During the term of this Agreement, any Escrow Property received in the form of cash shall be invested and reinvested by the Escrow Agent in one of the following investments as per the joint instruction of Acquiror and the Holder Representative:

• JPMorgan Chase Bank Money Market Account;

• A trust account with JPMorgan Chase Bank;

• A money market mutual fund, including without limitation the JPMorgan Fund or any other mutual fund for which the Escrow Agent or any affiliate of the Escrow Agent serves as investment manager, administrator, shareholder servicing agent and/or custodian or subcustodian, notwithstanding that (i) the Escrow Agent or an affiliate of the Escrow Agent receives fees from such funds for services rendered, (ii) the Escrow Agent charges and collects fees for services rendered pursuant to this Escrow Agreement, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Escrow Agreement may at times duplicate those provided to such funds by the Escrow Agent or its affiliates.

In the absence of investment instructions, the Escrow Property shall be invested in a JPMorgan Chase Bank Money Market Account. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated herein. Subject to Section 8(b), 60% of all interest earned and other income earned on the Escrow Property shall become part of the Escrow Property. The Escrow Agent shall distribute 40% of all interest earned and other income earned on the Escrow Property (excluding amounts to be distributed pursuant to Section 8(b)) to the holders of the Common Shares and Options pro rata at their respective mailing addresses and in accordance with their Applicable Percentages, both as set forth on Exhibit B. Such distribution shall be made by December 31^st of each year.

4. Transfer of Escrow Shares Following Determination Date. Immediately following the date on which the Holder Representative finally determines and delivers to Acquiror its calculation of the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents (the “Determination Date”), the Acquiror and the Holder Representative shall deliver to the Escrow Agent (if required by Section 1.5(d) of the Merger Agreement) joint written instructions setting forth how the Escrow Shares (if any) are to be delivered to the Acquiror, which instructions shall be based on the terms set forth in Section 1.5 of the Merger Agreement. As promptly as practicable following receipt of such joint written instruction, the Escrow Agent shall deliver to the Acquiror the number of Escrow Shares (if any) as specified in such joint written instruction by delivering the stock certificate representing the Escrow Shares to the Acquiror’s stock transfer agent in exchange for a stock certificate in the name of the Escrow Agent (or its nominee) representing the number of remaining Escrow Shares to be retained as Escrow Property as set forth in the joint written instructions delivered to the Escrow Agent.

5. Payment of Damages.

(a) The Escrow Property shall be available to pay, in accordance with the procedures set forth herein, any Damages for which a Purchaser Indemnitee is entitled to indemnification pursuant to Article XIII of the Merger Agreement (subject to the limitations therein); provided, however, that any claims by a Purchaser Indemnitee for indemnification under Article XIII of the Merger Agreement must be made before the Distribution Date (as defined herein).

(b) If a Purchaser Indemnitee determines in good faith that it is entitled to indemnification for Damages pursuant to Section 13.2 of the Merger Agreement, the Acquiror may deliver to the Escrow Agent and the Holder Representative a written request for the payment of such Damages amount (a “Payment Request”), which Payment Request shall identify in reasonable detail the facts and circumstances with respect to the subject matter of such Damages claim and the section of the Merger Agreement for which indemnification is sought and the amount and method of computing the amount of Damages. Any Third Party Action shall be identified as such in the Payment Request. Within thirty (30) days after the Holder Representative receives a Payment Request, the Holder Representative shall deliver to the Escrow Agent and the Acquiror a written notice (a “Response Notice”) stating whether the Holder Representative objects to the Payment of all or any portion of the Damages amount set forth in the Payment Request and advising of the allocation of shares and/or cash to be delivered. In the event the Holder Representative does not deliver a Response Notice within 30 days after its receipt of a Payment Request, it will be deemed not to have objected to any portion of the Damages amount set forth in the Payment Request and the Escrow Agent shall pay such Damages amount to Acquiror in accordance with Section 5(c) below. The Escrow Agent will be prohibited from paying any Damages amount in dispute as set forth in the Response Notice, unless (i) the Holder Representative delivers

a written notice (an “Amended Response Notice”) to the Escrow Agent stating that the Holder Representative has withdrawn its objection with respect to all or any part of the objections set forth in the Response Notice or (ii) Acquiror delivers to the Escrow Agent and the Holder Representative a copy of a final, non-appealable order of a court of competent jurisdiction (a “Final Order”) determining that Acquiror is entitled to payment of such Damages amount under the Merger Agreement and directing the Escrow Agent to disburse an amount set forth in such order (provided that the Escrow Agent shall be entitled to receive from the claiming party, with a copy to the non-claiming party, a letter, on which the Escrow Agent may conclusively rely, to the effect that the order of the court is final and binding, unless the non-claiming party provides written notice to the Escrow Agent and the claiming party that the order of the Court is not final and binding within 15 days of receipt of the Final Order by the Escrow Agent and the non-claiming party). In the event there is a dispute between Acquiror and the Holder Representative as to whether an order from a court is a Final Order, the Escrow Agent shall have the right to interplead all interested parties in accordance with Section 11(a). Upon receipt of an Amended Response Notice from the Holder Representative or a Final Order, as applicable, the Escrow Agent shall thereafter act in accordance with Section 5(c) below.

(c) If the Escrow Agent has received a Response Notice (or fails to receive a Response Notice as specified above), an Amended Response Notice or a Final Order, and if such Response Notice (or Payment Request in the event Escrow Agent has not received a Response Notice as specified above), Amended Response Notice or Final Order indicates that a Purchaser Indemnitee is entitled to payment in respect of all or any portion of a Damages amount set forth in a Payment Request, then the Escrow Agent shall release Escrow Property and deliver to the Purchaser Indemnitee a number of Escrow Shares or cash held in escrow in an amount equal to the amount due to the Purchaser Indemnitee as indicated in such Response Notice (or Payment Request in the event Escrow Agent has not received a Response Notice as specified above), Amended Response Notice or Final Order (the “Payment Amount”) (it being understood and agreed that the Holder Representative shall designate in writing the mix of Escrow Shares and/or cash to be released by the Escrow Agent in respect of such Payment Amount (a “Payment Instruction Notice”). If such Response Notice, Amended Response Notice or Final Order indicates that the Purchaser Indemnitee is not entitled to all or any portion of the Damages amount set forth in the Payment Request, then the Escrow Agent shall hold the amount of Escrow Shares and/or cash to which the Purchaser Indemnitee is determined not to be entitled in accordance with the terms of this Agreement until such amounts are distributed (i) to the holders of Common Shares and Options pursuant to Section 7 below, (ii) to any Purchaser Indemnitee in respect of another Payment Request pursuant to this Section 5 or (iii) as specified in joint written instructions from the Holder Representative and the Acquiror. For purposes hereof, in the event a Purchaser Indemnitee is to receive Escrow Shares in respect of any Payment Amount or any portion thereof, such Purchaser Indemnitee shall be entitled to receive a number of Escrow Shares equal to (x) such Payment Amount or portion thereof, divided by (y) the average closing price for one share of Escrow Shares for the ten (10) Business Day period ending on the Business Day

immediately preceding the date on which such shares are released by the Escrow Agent. The Response Notice (or Payment Request in the event the Escrow Agent has not received a Response Notice as specified above), Amended Response Notice or Final Order shall specify the amount of shares and/or cash to which the Purchaser Indemnitee is entitled (it being understood that the Escrow Agent will not be responsible for the calculations associated therewith). In the event any Escrow Shares are to be delivered to the Acquiror pursuant to this Section 5, the Escrow Agent shall deliver to the Acquiror such number of Escrow Shares (if any) as specified in the Response Notice (or Payment Request in the event the Escrow Agent has not received a Response Notice as specified above), Amended Response Notice or Final Order by delivering the stock certificate representing the Escrow Shares then held by the Escrow Agent as Escrow Property to Acquiror’s stock transfer agent in exchange for a stock certificate in the name of the Escrow Agent (or its nominee) representing the number of remaining Escrow Shares to be retained as Escrow Property as set forth in such Response Notice (or Payment Request in the event the Escrow Agent has not received a Response Notice as specified above), Amended Response Notice or Final Order delivered to the Escrow Agent.

6. Substitution of Escrow Property. At any time, the Holder Representative shall have the right to replace Escrow Shares with cash by providing a written notice to the Escrow Agent and the Acquiror setting forth the number of Escrow Shares to be so replaced (a “Replacement Notice”). As promptly as practicable after delivery of a Replacement Notice, the Escrow Agent shall deliver to the Holder Representative (or its designee), the number of Escrow Shares specified in the Replacement Notice in exchange for the delivery by the Holder Representative (or its designee) of cash in an amount equal to the product of (x) the number of such Escrow Shares to be replaced and (y) 4.704 (the “Closing Stock Price”); provided, however, that the Closing Stock Price shall be proportionately reduced or increased, as applicable, to account for any stock split, subdivision, stock dividend, recapitalization, merger, combination or similar transaction (a “Capital Stock Event”) in respect of the Escrow Shares occurring after the date hereof. The Escrow Agent shall effect the delivery of Escrow Shares pursuant to this Section 6 by delivering the stock certificate representing the Escrow Shares then held by the Escrow Agent as Escrow Property to Acquiror’s stock transfer agent in exchange for: (i) stock certificates for and in the name of the persons designated by the Holder Representative in writing representing the number of Escrow Shares as specified in the Replacement Notice; and (ii) a stock certificate in the name of the Escrow Agent (or its nominee) representing the number of remaining Escrow Shares to be retained as Escrow Property as set forth in such Replacement Notice. The Acquiror agrees to (i) provide the Holder Representative written notice of any Capital Stock Event setting forth in reasonable detail the terms and conditions thereof and (ii) to cause its stock transfer agent to deliver as promptly as practicable a stock certificate in the name of the Escrow Agent (or its nominee) representing such new number of shares or other securities in which the Escrow Shares then held as Escrow Property shall have been converted into, or shall otherwise reflect to account for dividends or distributions, pursuant to the Capital Stock Event in exchange for the delivery by the Escrow Agent of

the stock certificate representing the Escrow Shares held by the Escrow Agent as Escrow Property immediately prior to the Capital Stock Event. The parties hereto further agree to provide such reasonable cooperation and take such actions as may be reasonably requested by the other parties in connection with a sale or registration of Escrow Shares made in conjunction with the replacement of Escrow Shares with cash pursuant to this Section 6.

7. Distribution of Escrow Property.

(a) Promptly after the first anniversary of the date of this Agreement (the “Distribution Date”), the Escrow Agent shall distribute the Escrow Property, in accordance with the written instructions of the Holder Representative, to the holders of the Common Shares and Options listed in Exhibit B at their respective mailing addresses pro rata in accordance with their Applicable Percentages as set forth on Exhibit B; provided, however, that in the event that (i) prior to the Distribution Date, Acquiror delivers a Payment Request seeking indemnification for Damages pursuant to Section 13.2 of the Merger Agreement (a “Pending Claim”) and such claim is unresolved as of the Distribution Date, the Escrow Agent shall not distribute and will continue to hold pursuant hereto Escrow Property having a value equal to the Damages payment sought with respect to such Pending Claim that is unresolved (the “Reserved Property”) (it being understood and agreed that the Holder Representative shall, in such event, have the right to designate the mix of Escrow Shares and/or cash to be released pursuant to this Section 7). For purposes of calculating the Reserved Property, each Escrow Share shall be valued at the average closing price for one share of Acquiror Common Stock for the ten (10) Business Day period ending on the Business Day immediately preceding the Distribution Date. The Reserved Property shall remain in escrow following the Distribution Date pending resolution of the applicable Pending Claims and, upon resolution of the applicable Pending Claim, shall be either (i) distributed in whole or in part to Acquiror as appropriate following resolution of the applicable Pending Claim in accordance with Section 5 or (ii) distributed in whole or in part to the holders of Common Shares and Options listed in Exhibit B as provided in this Section 7. In the event that (i) the Holder Representative or Acquiror delivers to the Escrow Agent a Final Order that determines or provides that the Purchaser Indemnitees are or are not, as the case may be, entitled to payment or reimbursement of some or all of the Damages requested in any Pending Claim or (ii) the Holder Representative and Acquiror deliver to the Escrow Agent joint written instructions signed by Acquiror and the Holder Representative indicating that the Purchaser Indemnitees are or are not, as the case may be, entitled to some or all of the Damages requested in any Pending Claim, the Escrow Agent will disburse the Reserved Property or portion thereof held in respect of the Damages subject to such Pending Claim to (A) the holders of the Common Shares and Options listed in Exhibit B at their respective mailing addresses pro rata in accordance with their Applicable Percentages as set forth in Exhibit B and as specified in written instructions of the Holder Representative and/or (B) Acquiror, in each case, as specified in such Final Order or joint written instructions. At such time as all Pending Claims have been finally resolved in

accordance with this Agreement and there remains any Reserved Property, all remaining Reserved Property shall be delivered or paid to the holders of the Common Shares and Options at their respective mailing addresses listed in Exhibit B pro rata in accordance with their Applicable Percentages as set forth in Exhibit B and as specified in the written instructions of the Holder Representative. A Pending Claim shall be considered to be resolved at such time as (i) one of the parties has delivered to the Escrow Agent a Final Order determining the extent (if any) to which the Acquiror is entitled to indemnification under Section 13.2 of the Merger Agreement for the Damages pursuant to such Pending Claim or (ii) the Acquiror and the Holder Representative provide to the Escrow Agent joint written instructions signed by Acquiror and the Holder Representative advising the Escrow Agent that such Pending Claim has otherwise been resolved, which such joint written instruction indicates the extent (if any) to which the Acquiror is entitled to indemnification under Section 13.2 of the Merger Agreement for the Damages pursuant to such Pending Claim.

(b) In the event a Final Order is delivered to the Escrow Agent pursuant to this Agreement, the Escrow Agent shall be entitled to receive from the claiming party, with a copy to the non-claiming party, a letter, on which the Escrow Agent may conclusively rely, to the effect that the order of the court is final and binding, unless the non-claiming party provides written notice to the Escrow Agent and the claiming party that the order of the Court is not final and binding within 15 days of receipt of the Final Order by the Escrow Agent and the non-claiming party. In the event there is a dispute between Acquiror and the Holder Representative as to whether an order from a court is a Final Order, the Escrow Agent shall have the right to interplead all interested parties in accordance with Section 11(a).

(c) The Escrow Agent shall effect the delivery of Escrow Shares (if any) pursuant to this Section 7 by delivering the stock certificate representing the Escrow Shares then held by the Escrow Agent as Reserved Property to the Acquiror’s stock transfer agent in exchange for: (i) in the case where Escrow Shares held as Reserved Property are to be delivered to the holders of the Common Shares and Options, stock certificates for and in the name of the persons designated by the Holder Representative in writing representing the number of Escrow Shares as specified in the Final Order or joint written instructions signed by Acquiror and the Holder Representative delivered to the Escrow Agent; and (ii) in the case where Escrow Shares are to remain as Reserved Property, a stock certificate in the name of the Escrow Agent (or its nominee) representing the number of remaining Escrow Shares to be retained as Reserved Property as specified in the Final Order or joint written instructions signed by Acquiror and the Holder Representative delivered to the Escrow Agent.

(d) Acquiror hereby agrees to cause its stock transfer agent to deliver as promptly as practicable stock certificates to the Escrow Agent and otherwise take such necessary actions to effect the exchange of stock certificates representing Escrow Shares or other securities as contemplated by this Agreement.

8. Voting of Shares and Dividends.

(a) If a meeting or written action of the Acquiror’s stockholders occurs while this Agreement is in effect and Escrow Shares are held as Escrow Property, the Acquiror shall promptly send to the Holder Representative and the Escrow Agent copies of any notices, proxies and proxy materials in connection with such meeting or written action when such materials are sent to the stockholders of the Acquiror, and the Escrow Agent shall vote the Escrow Shares in accordance with the written instructions of the Holder Representative.

(b) All cash dividends and distributions made with respect to the Escrow Shares shall be distributed, promptly upon receipt, to the holders of Common Shares and Options listed in Exhibit B at their respective mailing addresses, pro rata in accordance with their Applicable Percentages as set forth on Exhibit B.

9. Tax Matters. For tax purposes, all interest and other income earned on the Escrow Property (other than cash dividends and distributions received by the holders of Common Shares and Options pursuant to Section 8(b)) shall be reported as taxable income of the holders of Common Shares and Options pro rata in accordance with their Applicable Percentage as set forth on Exhibit B. Any cash dividends or distributions made in respect of Escrow Shares and received by the holders of Common Shares and Options pursuant to Section 8(b) shall be reported for tax purposes as taxable income of the applicable recipient. Acquiror shall file tax returns and the Escrow Agent shall file a Form 1099 INT consistent with such treatment. Payment of any interest and other income earned on the Escrow Property will, and the distribution of any other amounts under this escrow may, be subject to U.S. backup withholding tax unless a properly completed IRS Form W-8 or W-9 certification is submitted to the Escrow Agent by the person entitled to receive such payment. An IRS Form W-8 or W-9 certification shall be submitted for each holder of Common Shares and Options, as well as for each of Acquiror and the Holder Representative to the Escrow Agent on or before the date the Escrow Property is deposited into escrow.

10. Security Procedures. In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement, as indicated in Section 2 herein) whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on schedule 1 hereto (“Schedule 1”), and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any of the authorized representatives identified in Schedule 1, the Escrow Agent is hereby authorized to seek confirmation of such instructions by telephone call-back to any one or more of the executive officers of the other parties hereto (“Executive Officers”), which shall include the titles of Partner, Managing

Director, Principal, President or Vice President, as the Escrow Agent may select. Such Executive Officer shall deliver to the Escrow Agent a fully executed Incumbency Certificate, and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such Executive Officer. The Escrow Agent and the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Acquiror or the Holder Representative to identify (i) the beneficiary, (ii) the beneficiary’s bank or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even when its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s bank or an intermediary bank so designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable.

11. Duties of the Escrow Agent.

(a) Duties in General.

(1) The Escrow Agent undertakes to perform only such duties as are expressly set forth herein (and required by applicable law), which the parties agree are ministerial in nature. The Escrow Agent shall have no duty to inquire as to the provisions of any other agreement. The Escrow Agent may consult with counsel of its choice and shall be protected in any action taken or omitted in connection with the advice or opinion of such counsel.

(2) If the Escrow Agent becomes involved in litigation with respect to this Agreement for any reason, it is hereby authorized to deposit the Escrow Property with the clerk of such court in which such litigation is pending, or to interplead all interested parties in any court of competent jurisdiction and to deposit with the clerk of such court the Escrow Property. Upon the happening of either of the above, the Escrow Agent shall be fully relieved and discharged of any further duties hereunder.

(3) If the Escrow Agent should at any time be confronted with inconsistent instructions, claims or demands by the parties hereto, the Escrow Agent shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. The Escrow Agent shall have the right to interplead such parties in any state or federal court located in the State of New York (or if such court does not have jurisdiction, any other court of competent jurisdiction), to deposit the Escrow Property with the clerk of such court, and to request that such court determine the respective rights of the parties with respect to this Agreement, and upon doing so, the Escrow Agent automatically shall be released from any obligations or liability as a consequence of any claims or demands hereunder.

(b) Exculpation. Except for the Escrow Agent’s own willful misconduct, bad faith or gross negligence: (i) the Escrow Agent shall have no liability of any kind whatsoever for its performance of any duties imposed upon the Escrow Agent under this Agreement or for any of its acts or omissions hereunder; (ii) the Escrow Agent shall not be responsible for any of the acts or omissions of the other parties hereto; (iii) the Escrow Agent shall not be liable to any Person not a party hereto for damages, losses or expenses arising out of this Agreement; and (iv) the Escrow Agent may rely and/or act upon any written instrument, document or request believed by the Escrow Agent in good faith to be genuine and to be executed and delivered by the proper Person, and may assume in good faith the authenticity, validity and effectiveness thereof and shall not be obligated to make any investigation or determination as to the truth and accuracy of any information contained therein. Anything in this Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits).

(c) No Additional Duties. The Escrow Agent shall have no duties except those that are expressly set forth herein, and it shall not be bound by any notice of a claim or demand hereunder, or any waiver, modification, amendment, termination or rescission of this Agreement, unless received by it in writing.

(d) Miscellaneous. The Escrow Agent may execute any of its powers or responsibilities hereunder and exercise any rights hereunder either directly or by or through its agents or attorneys. The Escrow Agent shall not be responsible for and shall not be under a duty to examine or pass upon the validity, binding effect, execution or sufficiency of this Agreement or of any agreement amendatory or supplemental hereto.

12. Fees and Expenses of Escrow Agent. For the Escrow Agent’s services hereunder, Acquiror, on the one hand, and the Holder Representative, on the other hand, severally and not jointly, each agree to (i) pay to the Escrow Agent fifty percent (50%) of the fees of $3,500 per year (payable for the first year promptly following execution and delivery of this Agreement) and (ii) reimburse the Escrow Agent upon request for fifty percent (50%) of all reasonable expenses, disbursements and advances, including reasonable attorneys’ fees, incurred or made by it in connection with carrying out its duties hereunder (it being understood and agreed that all such fees, expenses, disbursements and advances payable by the Holder Representative shall be Holder Allocable Expenses).

13. Indemnification of the Escrow Agent. In consideration of its acceptance of the appointment as Escrow Agent, Acquiror and the Holder Representative each agree to indemnify and hold the Escrow Agent harmless as to fifty percent (50%) of any loss, liability or expense incurred by the Escrow Agent without gross negligence, bad faith or willful misconduct by the Escrow Agent by reason of its having accepted the

same or in carrying out any of the terms hereof. The foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Agreement.

14. Resignation of the Escrow Agent.The Escrow Agent, and any successor Escrow Agent, may resign at any time as Escrow Agent hereunder by giving at least fifteen (15) Business Days written notice to the other parties hereto. Upon such resignation and the appointment of a successor Escrow Agent, the resigning Escrow Agent shall be absolved from any duties as Escrow Agent hereunder. Upon their receipt of notice of resignation from the Escrow Agent, the Acquiror and the Holder Representative shall use their reasonable best efforts jointly to designate a successor Escrow Agent. If the Acquiror and the Holder Representative do not agree upon a successor Escrow Agent within fifteen (15) Business Days after the receipt by the parties of the Escrow Agent’s resignation notice, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent or other appropriate relief and any such resulting appointment shall be binding upon all parties hereto. By mutual agreement, the Acquiror and the Holder Representative shall have the right at any time upon not less than seven (7) Business Days written notice to terminate the appointment of the Escrow Agent, or any successor Escrow Agent, as Escrow Agent hereunder. Notwithstanding anything to the contrary in the foregoing, the Escrow Agent, or any successor Escrow Agent, shall continue to act as Escrow Agent until a successor is appointed and qualified to act as Escrow Agent.

15. Notices. All notices and other communications required or permitted pursuant to this Agreement shall be in writing and be deemed to have been duly given when delivered personally (which shall include delivery by Federal Express or other nationally recognized, reputable overnight courier service that issues a receipt or other confirmation of delivery) to the party for whom such communication is intended, or three (3) business after the date mailed by certified mail, return receipt requested, postage prepaid, as follows:

If to Acquiror:

Encore Medical Corporation
9800 Metric Boulevard
Austin, Texas 78758
Attention: Harry L. Zimmerman
Telecopy No. (512) 834-6310

with copies to:

Jackson Walker LLP
100 Congress Avenue, Suite 1100
Austin, Texas 78701
Attention: Lawrence A. Waks

Telecopy No. (512) 236-2002

and

If to the Holder Representative:

MPI Holdings, LLC
c/o The Carlyle Group
520 Madison Avenue
New York, New York 10022
Attention: W. Robert Dahl
Telecopy No.: (212) 381-4901

with copies to:

Latham & Watkins LLP
555 Eleventh Street, N.W.
Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
Telecopy No.: (202) 637-2201

and

If to the Escrow Agent:

JPMorgan Chase Bank
4 New York Plaza, 21^st Floor
Attention: Joe Morales
Telecopy No.: 212-623-6168

or to such other address as such party shall specify by written notice to the other parties hereto. Any notice sent to Escrow Agent shall also be sent to the other parties to this Agreement).

16. Assignment; Successors and Assigns. No party to this Agreement shall assign this Agreement or any part hereof without the prior written consent of the other parties. Subject to the foregoing, this Agreement shall bind and inure to the benefit of the parties hereto and their respective, heirs, personal representatives, successors and permitted assigns.

17. Entire Agreement. This Agreement, and with respect to the Acquiror and the Holder Representative, the Merger Agreement, embody the entire agreement and understanding of the parties concerning the Escrow Property, and, in the

event of any inconsistency between this Agreement and the Merger Agreement, this Agreement shall control.

18. Amendments. This Agreement may be amended only by a writing signed by each of the parties hereto.

19. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, except the choice of law rules utilized in that state (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).

20. Jurisdiction; Waiver of Jury Trial. The parties hereto irrevocably submit to the non-exclusive jurisdiction of (i) the New York State Courts and (ii) the United States Court for the Southern District of New York for the purposes of any action arising out of this Agreement or any of the transactions contemplated hereby. The parties hereto further agree that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to such party’s respective address set forth in Section 8 shall be effective service of process for any action in New York with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. The parties hereto irrevocably and unconditionally waive any objection to the laying of venue of any action arising out of this Agreement or the transactions contemplated hereby in (i) the New York State Courts or (ii) the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

21. Captions; Counterparts. The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts and delivered via facsimile transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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

ENCORE MEDICAL CORPORATION

By:   /s/ Harry L. Zimmerman
Name:   Harry L. Zimmerman
Title:   Executive Vice President – General Counsel

MPI HOLDINGS, LLC

By:   /s/ W. Robert Dahl
Name:   W. Robert Dahl
Title:   Managing Director

JPMORGAN CHASE BANK, N.A.,
as Escrow Agent

By:   /s/ Debra DeMarco
Name:   Debra DeMarco
Title:   Vice President

Schedule 1

Telephone Number(s) for Call-Backs and Person(s) Designated to Confirm Funds Transfer Instructions

If to Acquiror:


	Name	Telephone Number
1.	Harry L. Zimmerman	512-834-6208
2.	William W. Burke	512-834-6346
3.	Paul Chapman	512-834-6338

If to Holder Representative:


	Name:	Telephone Number
1.	Walter S. Jin	212-381-4922
2.	W. Robert Dahl	212-381-4994
3.	Glenn A. Youngkin	44 (20) 7894 – 1583

Telephone call-backs should be made to each of Acquiror and Holder Representative if joint instructions are required pursuant to this Agreement.

EXHIBIT A

Merger Agreement

EXHIBIT B

Holders of

Common

Applicable

Shares and

Percentages

International

Options

(%)

Street

City

State, ZIP

Address

Stockholders

MPI Holdings, LLC

79.99

c/o The Carlyle Group Attn: W. Robert Dahl 520 Madison Ave.

New York

NY, 10022

GE Capital Equity Investments, Inc.

7.27

Attn: Steven J. Warner 500 West Monroe Street

Chicago

IL, 60661

Spangler, Patrick D.

2.70

599 Cardigan Road

Shoreview

MN, 55126

Vierling, H. Philip

3.04

599 Cardigan Road

Shoreview

MN, 55126

Optionees

Bjerke, Marlin C.

0.06

18081 SD Highway 15

Clear Lake

SD, 57226

Boemers, Frank

0.13

Kreuzgartenstrasse 1
79238 Ehrenkirche
Germany

Burnham, William

0.13

P.O. Box 282

Yardley

PA, 19067

Clapp, Robert

0.14

2316 19^th Avenue NE

Minneapolis

MN, 55418

Cox, Craig C.

0.13

5722 Rosemount Way

Medina

OH, 44256

Cox, John C.

0.13

1307 Fallsworth
Terrace

Acworth

GA, 30101

Davis, Lawrence II

0.19

5101 Newtown Road

Placerville

CA, 95667

Grider, James

0.13

15200 Manitou Road

Prior Lake

MN, 55372

Gunderson, Priscilla A.

0.13

6556 White Oak Road

Lino Lakes

MN, 55038

Holders of

Common

Applicable

Shares and

Percentages

International

Options

(%)

Street

City

State, ZIP

Address

Rudiger, Hausherr

0.64

Goethestrasse 58, 79100
Freiburg Germany

Hughes, Thomas P.

0.19

1816 Interlachen
Alcove

Woodbury

MN, 55125

Hutto, Barbara C.

0.26

1206 Benton Street

Anoka

MN, 55303

Kircher, Kyle C.

0.13

1020-G Oswald Road

Yuba City

CA, 95993

Laptewicz, Joseph

3.09

311 Neuse Road

Chocowinity

NC, 27817

LeFauve, Michael

0.06

20126 Tailwind Lane

Cornelius

NC, 28031

Meidt, Gregory J.

0.13

3065 Meadow Brook
Court

Woodbury

MN, 55125

Pierson, Michelle
Marie

0.13

1101 Sibley
Memorial Highway

Lilydale

MN, 55118

Schoenhals, Jeff A.

0.13

2712 Pine Valley

Edmond

OK, 73003

Schulze, Gerald

0.08

9 North Point Trail

Beaufort

SC, 29907

Sellers, Kenneth R.

0.13

113 Walter Hagen
Drive

Mebane

NC, 27302

Stem, Birt Clinton

0.06

2970 East
Timberchase Trail

Highlands Ranch

CO, 80126

Strand, Joan
Elizabeth

0.32

5345 Hodgson Road

Shoreview

MN, 55126

Tarnowski, Patrick J.

0.06

4740 Bassett Creek

Golden Valley

MN, 55422

Waller, Thomas Scott

0.13

14412 Cecil Drive

Little Rock

AR, 72223

Wass, Loren W.

0.06

34 Hog Hill Road

Pepperell

MA, 01463

White, Keith A.

0.19

6281 Hilton Court North

Pine Springs

MN, 55115

EX-99.C 4 w03897a1exv99wc.htm EXHIBIT C exv99wc

EXHIBIT C

ENCORE MEDICAL CORPORATION
INVESTORS RIGHTS AGREEMENT

This Investors Rights Agreement (this “Agreement”) is made and entered into as of the 4^th day of October, 2004 by and among Encore Medical Corporation, a Delaware corporation (the “Company”), and holders of the Company’s Common Stock listed on Exhibit A attached hereto (“Empi Principal Shareholders”).

Recitals

WHEREAS, (i) the Empi Principal Shareholders are parties to the Agreement and Plan of Merger dated as of August 8, 2004 among the Company, the Empi Principal Shareholders, Encore Merger Sub, Inc. and Empi, Inc. (the “Merger Agreement”), (ii) pursuant to the Merger Agreement, the Company is issuing to the Empi Principal Shareholders and the persons listed on Schedule 1 (together with the Empi Principal Shareholders, the “Investors”) shares of Acquiror Common Stock and (iii) certain of the Company’s and the Empi Principal Shareholders’ obligations under the Merger Agreement are conditioned upon the execution and delivery by the Empi Principal Shareholders and the Company of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. REGISTRATION RIGHTS.

1.1 Certain Definitions. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Merger Agreement. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) “Commission” shall mean the U.S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

(b) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

(c) “Holder” shall mean each Investor and any holder of Registerable Shares to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement.

(d) “Registerable Shares” shall mean (i) shares of Acquiror Common Stock constituting the Stock Portion of the Merger Consideration, (ii) any Acquiror Common Stock issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in clause (i) above and (iii) any securities into which the shares of Acquiror Common Stock described in clause (i) or (ii) above are subsequently converted; provided, however, that Registerable Shares shall not include any shares of Common Stock which have previously been registered or which have been sold to the public either pursuant to a registration

statement or Rule 144, or which have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned.

(e) The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

(f) “Registration Expenses” shall mean all expenses incurred in, or incident to, effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification, and filing fees, printing expenses, escrow fees, delivery expenses, fees and disbursements of counsel for the Company, disbursements of custodians, blue sky and federal securities laws fees and expenses, and expenses of any regular or special audits incident to or required by any such registration, fees and disbursements of counsel for the Holder Representative and the compensation of regular employees of the Company, which shall be paid in any event by the Company, but shall not include Selling Expenses.

(g) “Restricted Securities” shall mean any Registerable Shares required to bear the legend set forth in Section 1 .2(b) hereof.

(h) “Rule 144” shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

(i) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

(j) “Selling Expense” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registerable Shares and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel included in Registration Expenses).

(k) “Shares” shall mean shares of the Company’s Common Stock, par value $.001 per share.

1.2 Registration on Form S-3.

(a) The Company shall file or cause to be filed with the Commission as soon as reasonably practicable after the date hereof, a registration statement (the “Registration Statement”) on Form S-3 (or, in the event the Company is not eligible to register shares of its Common Stock on Form S-3, such other appropriate form) to cover resales of all Registerable Shares. The Company shall cause such Registration Statement to be declared effective as soon as practicable thereafter but in any event not later than 180 days after the Closing Date. The Company shall keep such Registration Statement continuously effective, supplemented, amended, current and in conformity with the Securities Act and the policies, rules and regulations of the Commission to the extent necessary to ensure that it is available for resales of

the Registerable Shares for a period ending on the earlier of (x) the date on which all Registerable Shares have been sold pursuant to such Registration Statement and (y) the date on which all Registerable Shares are eligible for resale under Rule 144(k) promulgated under the Securities Act (the “Rights Period”). The Company shall not include any shares of Acquiror Common Stock or other securities of the Company (other than the Registerable Shares) in the Registration Statement effected pursuant to this Section 1.2.

(b) The Company hereby agrees, upon written request from the Holder Representative, to file one or more prospectus supplements or otherwise amend the Registration Statement from time to time as appropriate to permit the sale and distribution of the Registerable Shares in one or more (but not more than three (3)) underwritten offerings, led by a managing underwriter selected by the Holder Representative and reasonably acceptable to the Company. The Company further agrees that the Registration Statement shall provide for any intended method or methods of distribution as may be reasonably requested by the Holder Representative in writing, and to amend or supplement the Registration Statement from time to time as may be reasonably requested by the Holder Representative in writing to provide for such intended method or methods of distribution of shares.

1.3 Company Registration.

(a) If, during the Rights Period, the Company shall determine to register any of its securities either for its own account or the account of a security holder or holders exercising their respective demand registration rights, other than a registration relating solely to employee benefit plans on Form S-8 or any successor form, a registration relating to a corporate reorganization or other transaction on Form S-4 or any successor form, or a registration pursuant to Section 1.2, the Company will:

(i) promptly give the Holder Representative written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), except as set forth in Section 1.3(b) below, and in any underwriting involved therewith, all the Registerable Shares specified in a written request or requests, made by the Holder Representative and delivered to the Company within twenty (20) days after the written notice from the Company described in clause (i) above is received by the Holder Representative.

(b) If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holder Representative as a part of the written notice given pursuant to Section 1.3(a)(i). In such event, the right of any holder of Registerable Shares to registration pursuant to this Section 1.3 shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registerable Shares in the underwriting on the same terms and conditions as the securities to be sold on behalf of the Company. All holders of Registerable Shares proposing to distribute their securities through such underwriting shall (together with the Company and the other holders of securities of the Company with registration rights to participate therein distributing their securities though such underwriting) enter into an underwriting agreement in

customary form with the representative of the underwriter or underwriters selected by the Company on the same terms and conditions as the securities to be sold on behalf of the Company.

(c) Notwithstanding any other provision of this Section 1.3, if the representative of the underwriters of such offering reasonably determines that marketing factors require a limitation on the number of shares to be underwritten, the representative may (subject to the limitations set forth below) exclude all Registerable Shares from, or limit the number of Registerable Shares to be included in, the registration and underwriting. The Company shall so advise the Holder Representative, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated first to the Company for securities being sold for its own account and thereafter as set forth in Section 1.14.

If any person does not agree to the terms of any such underwriting, their Registerable Shares shall be excluded therefrom by written notice from the Company or the underwriter to the Holder Representative. Any Registerable Shares or other securities so excluded from such underwriting shall be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares of Registerable Shares to be included in such registration was previously reduced as a result of marketing factors, the Company shall then offer to all persons who have retained the right to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among the persons requesting additional inclusion in accordance with Section 1.14 hereof:

1.4 Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.5 hereof.

1.5 Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 1.2 or 1.3 hereof and reasonable and actual fees and expenses of one counsel for the Holder Representative (such fees and expenses of counsel for the Holder Representative limited to $35,000 in the aggregate for each registration or $105,000 in the aggregate for all such registrations) shall be borne by the Company; provided, however, that with respect to underwritten offerings effected pursuant to Section 1.2, the Company shall only bear such Registration Expenses and fees and expenses of one counsel for the Holder Representative for three (3) underwritten offerings. All Selling Expenses relating to securities registered for Holders shall be borne by the Holders pro rata on the basis of the number of shares of securities so registered on their behalf, as shall any other expenses in connection with the registration required to be borne by the Holder’s of such securities.

1.6 Registration Procedures. In connection with the registration and sale of the Registerable Shares pursuant to Section 1.2 and, pursuant to Section 1.3 solely with respect to clauses (c) and (d) below, the Company will:

(a) Prepare and file with the SEC as soon as practicable the Registration Statement as set forth above;

(b) Prepare and file with the SEC such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 1.2; cause the Registration Statement to be supplemented by any required supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement;

(c) Provide to each holder of Registerable Shares such copies of the Registration Statement and related prospectus, and each amendment and supplement thereto, as are reasonably requested to satisfy any prospectus delivery requirements;

(d) Use its best efforts to register or qualify the Registerable Shares under such other securities or blue sky laws of such jurisdictions as each holder of Registerable Shares may reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable each holder of Registerable Shares to consummate the disposition of the Registerable Shares owned by such holder in such jurisdictions; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

(e) Upon the occurrence of any event that would cause the Registration Statement (i) to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) to be not effective and useable for resale of the Registerable Shares during the period that such Registration Statement is required to be effective and useable, the Company shall as promptly as practicable file any correcting information or an appropriate amendment to the Registration Statement, as the Company deems appropriate, correcting any such defect, and use its best efforts to cause such amendment to be declared effective and such Registration Statement to become useable as soon as practicable thereafter;

(f) cause all Registerable Shares to be listed for quotation on the NASDAQ National Market (or other interdealer quotation system or national market on which the Shares are traded);

(g) provide a CUSIP for all Registerable Shares not later than the effective date of the Registration Statement;

(h) cooperate with the Holder Representative and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive

legends representing the Registerable Shares to be sold and cause such Registerable Shares to be in such denominations and registered in such names as the managing underwriter may reasonably request;

(i) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement in customary form with the managing underwriter of such offering and perform all other action as are customary in such an underwritten public offering, including, if requested by the underwriter, reasonable participation of senior management of the Company in a “road show” to the extent such participation does not unduly interfere with the conduct of the Company’s business; provided, however, that the Company shall not be obligated to provide its cooperation with respect to more than three (3) underwritten public offerings (excluding underwritten offerings effected pursuant to Section 1.3) made at the request of the Holder Representative; and

(j) enter into such agreements (including an underwriting agreement) and do anything else reasonably necessary or advisable in order to expedite or facilitate the disposition of such Registerable Shares in accordance with applicable law and the disclosure set forth in the applicable Registration Statement; provided, however, that the Company shall not be obligated to provide its cooperation with respect to more than three (3) underwritten public offerings made at the request of the Holder Representative.

1.7 Notwithstanding anything to the contrary in this Agreement, the Company may prohibit offers and sales of the Registerable Shares pursuant to the Registration Statement once during any 12-month period if:

(a) (i) it is in possession of material non-public information, (ii) the Board of Directors determines based on advice of counsel that such prohibition is necessary in order to avoid a requirement to disclose such material non-public information, and (iii) the Board of Directors of the Company determines in good faith that disclosure of such material non-public information would not be in the best interests of the Company and its stockholders, or

(b) the Company has made a public announcement relating to an acquisition or business combination transaction including the Company and/or one or more of its subsidiaries (i) that is material to the Company and its subsidiaries taken as a whole, and (ii) the Board of Directors of the Company determines in good faith that offers and sales of the Registerable Shares pursuant to the Registration Statement prior to the consummation of such transaction (or such earlier date as the Board of Directors shall determine) is not in the best interests of the Company and its stockholders.

The period during which any such prohibition of offers and sales of Registerable Shares pursuant to the Registration Statement is in effect pursuant to subsections (a) or (b) of this Section 1.7 is referred to herein as a “Suspension Period”. A Suspension Period shall commence on and include the date on which the Company provides written notice to holders of the Company Common Stock covered by the Registration Statement that offers and sales of Registerable Shares cannot be made thereunder in accordance with this Section 1.7 and shall end three business days after the earlier to occur of (x) the date on which such material information is

disclosed to the public or ceases to be material or the Company is able to so comply with its disclosure obligations and SEC requirements, or (y) sixty (60) days after written notice is provided by the Company to the holders of Registerable Shares of the commencement of such Suspension Period. Each notice shall state to the extent, if any, as is practicable, an estimate of the expected duration of the Suspension Period.

1.8 Holder Information. As a condition to including Registerable Shares of a Holder in any registration, such Holder shall furnish to the Company such information requested by the Company as is required by law to be disclosed in the Registration Statement with respect to a sale by such Holder (the “Requisite Information”) with respect to any such sales pursuant to such Registration Statement. Each Holder as to which any Registration Statement is being effected agrees prior to effecting any sale of the Registerable Shares thereunder to furnish promptly to the Company all information required to be disclosed in order to make any Requisite Information previously furnished to the Company by such Holder not materially misleading or necessary to cause such Registration Statement not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading.

1.9 Suspension of Disposition of Registerable Shares. Each Holder agrees that, upon receipt of a notice from the Company of the existence of any fact of the kind described in Subsection 1.6(e) hereof (an “Amendment Notice”), such Holder will forthwith discontinue disposition of Registerable Shares until such Holder’s receipt of (a) copies of the supplemented or amended prospectus contemplated by Subsection 1.6(e) hereof, or until counsel for the Company shall have determined that such disclosure is not required due to subsequent events, or (b) notice in writing from the Company that the use of the prospectus may be resumed. In the event the Company shall give any such notice, the time period regarding the filing of the Registration Statement set forth in Section 1.2 hereof shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 1.7 hereof to and including the date when each holder of Registerable Shares covered by such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by this Section 1.9.

1.10 Indemnification.

(a) The Company will indemnify each Holder, each of its officers, directors, partners, employees, legal counsel, and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification, or compliance has been effected pursuant to this Section 1, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses, claims, losses, damages, and liabilities (or actions, proceedings, or settlements in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, preliminary prospectus, offering circular, or other document (including any related registration statement, notification, or the like) incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or

inaction required of the Company in connection with any such registration, qualification, or compliance, and will reimburse each such Holder, each of its officer’s, directors, partners, legal counsel, and accountants and each person controlling such Holder, each such underwriter, and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability, or action; provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or expense rises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter and stated to be specifically for use therein or by such Holder’s failure to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto to the extent the same had been delivered by the Company to such Holder. It is agreed that the indemnity agreement contained in this Section 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

(b) Each Holder will, if Registerable Shares held by such Holder are included in the securities as to which such registration, qualification, or compliance is being effected, indemnify the Company, each of its directors, officers, partners, employees, legal counsel, and accountants and each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, and each of their officers, directors, and partners, and each person controlling such Holder against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, preliminary prospectus, offering circular, or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holder’s, directors, officers, partners, legal counsel, and accountants, persons, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder (with respect to such Holder) and stated to be specifically for use therein provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided that that the obligation to indemnify under this Section 1.10(b) will be several, not joint and several, among the Holders and in no event shall any indemnity under this Section 1.10(b) exceed the net amount received by such Holder from the sale of Registerable Shares pursuant to the Registration Statement.

(c) Each party entitled to indemnification under this Section 1.10 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the

defense of such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 1.10, to the extent such failure is not prejudicial. Notwithstanding the foregoing, any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof; but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (i) the Indemnified Party shall have been advised by counsel that representation of the Indemnified Party by counsel provided by the Indemnifying Party would be inappropriate due to actual or potential conflicting interests between the Indemnifying Party and the Indemnified Party, including situations in which there are one or more legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, (ii) the Indemnifying Party shall have authorized in writing the employment of counsel for the Indemnified Party at the expense of the Indemnifying Party, or (iii) the Indemnifying Party shall have failed to assume the defense or retain counsel reasonably satisfactory to the Indemnified Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

(d) If the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. In no event shall any contribution by a Holder under this Section 1.10 exceed the net amount received by such Holder from the sale of Registerable Shares pursuant to the Registration Statement.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in any underwriting agreement entered into in connection with the underwritten public offering of Registerable Shares are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control,

(f) This Section 1.10 shall survive the completion of any offering of Registerable Shares in a registration statement under this Section 1, and otherwise.

1.11 Rule 144 Reporting and S-3. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration and to permit the use of Form S-3, the Company agrees to:

(a) Make and keep public information regarding the Company available as those terms are understood and defined in Rule 144 under the Securities Act (or any successor provision), at all times from and after the date hereof;

(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act as a condition to the availability of Rule 144 under the Securities Act (or any successor provision) by the holders of Registerable Shares and the use of Form S-3; and

(c) So long as a Holder owns any Registerable Shares, furnish to such Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the Commission as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.

1.12 Transfer or Assignment of Registration Rights. The rights to cause the Company to register securities granted to MPI by the Company under this Agreement may be transferred or assigned by MPI only to its Affiliates or its members (or the Affiliate thereof), provided that the Company is given written notice at the time of or within a reasonable time after said transfer or assignment, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, and, provided further, that the transferee or assignee of such rights assumes in writing the obligations of MPI under this Section 1.

1.13 “Market Stand-Off” Agreement. If requested by an underwriter of the Company’s Shares (or other securities) sold in a registration of the type effected pursuant to Section 1.3 and each Holder is notified in writing of such request, a Holder shall not sell or otherwise transfer or dispose of any Registerable Shares (or other securities of the Company) held by such Holder (other than those included in the registration) during the one hundred eighty (180) day period following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that this Section 1.13 shall not apply in the event of a Registration Statement to any Holder who is not selling Registerable Shares pursuant to such Registration Statement. The Company may impose stop-transfer instructions with respect to the Registerable Shares subject to the foregoing restriction until the end of such one hundred eighty (180) day period.

1.14 Allocation of Registration Opportunities. In any circumstance in which the Registerable Shares and other shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of shares of any series of Preferred Stock of the Company) with registration rights (the “Other Shares”) requested to be included in a registration effected pursuant to Section 1.3 on behalf of the Holder’s or other selling stockholders cannot be so included as a result of limitations of the aggregate number of shares of Registerable Shares and Other Shares that may be so included, the number of shares of Registerable Shares and Other Shares that may be so included shall be allocated among the Holders and other selling stockholders requesting inclusion of shares pro rata on the basis of the number of shares of Registerable Shares and other shares that would be held by such Holders and other selling stockholders, assuming conversion (“Other Shares”); provided, however that such allocation shall not operate to reduce the aggregate number of Registerable Shares and Other Shares to be included in such registration, if any Holder or other selling stockholder does not request inclusion of the maximum number of shares of Registerable Shares and Other Shares allocated to him pursuant to the above-described procedure, in which case the remaining portion of his allocation shall be reallocated among those requesting Holders and other selling stockholders whose allocations did not satisfy their requests pro rata on the basis of the number of shares of Registerable Shares and Other Shares which would be held by such Holder’s and other selling stockholders, assuming conversion, and this procedure shall be repeated until all of the shares of Registerable Shares and Other Shares which may be included in the registration on behalf of the Holder’s and other selling stockholder’s have been so allocated. The Company shall not limit the number of Registerable Shares to be included in a registration pursuant to this Agreement in order to include shares held by stockholders with no registration rights or to include shares of stock issued to employees, officers, directors, or consultants pursuant to the Company’s stock option or similar compensation plan, or in the case of the registration under Section 1.2 hereof, in order to include in such registration securities registered for the Company’s own account,

1.15 Termination of Registration Rights.

(a) Except as set forth in subparagraph (b) below, the right of any Holder to request registration or inclusion in any registration pursuant to Section 1.2 or 1.3 shall terminate if all shares of Registerable Shares held by such Holder may be sold under Rule 144 during any 90-day period.

(b) The provisions of subparagraph (a) above shall not apply to any Holder who owns more than one percent (1%) of the Company’s outstanding stock until such time as such Holder owns less than one percent (1%) of the outstanding stock of the Company.

2. COVENANTS OF THE COMPANY.

The Company hereby covenants and agrees as follows:

2.1 Information Rights.

(a) So long as MPI or any of its Affiliates own any Registerable Shares, the Company shall, provide MPI, or its designee, reasonable access to Company information to the

extent reasonably necessary to comply with applicable “Venture Capital Operating Company” requirements, including, without limitation, the right to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its management, all at such reasonable times as may be requested by MPI.

(b) The provisions of Section 2.l(a) shall not be in limitation of any rights which MPI or its Affiliates may have with respect to the books and records of the Company and its subsidiaries, or to inspect their properties or discuss their affairs, finances and accounts, under the laws of the jurisdictions in which they are incorporated.

(c) MPI hereby agrees, and agrees to cause its Affiliates, successors and assigns, to hold in confidence and trust and not to disclose any confidential information provided pursuant to this Section 2.1; provided, however, MPI may disclose any such confidential information: (i) if the Company consents in writing to such disclosure; (ii) if the confidential information is or becomes generally available to the public other than as a result of a disclosure by MPI, its Affiliates, successors or assigns; or (iii) if the confidential information becomes available to MPI on a non-confidential basis from a source other than the Company, provided that MPI does not know or have reason to believe that the source of such information is bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company.

(d) The Company shall not be required to comply with this Section 2.1 with respect to non-public, commercially sensitive information of the Company in the event MPI becomes a Competitor of the Company or greater than five percent (5%) stockholder of a Competitor of the Company. For purposes of this Agreement, a “Competitor” of the Company shall mean a person who is primarily engaged in the orthopedic rehabilitation business.

2.2 Observer Rights. As long as MPI or its Affiliates owns not less than five percent (5%) of the outstanding Shares, the Company shall invite a representative of MPI (as selected by MPI), or its designee, to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors at the same time such materials are provided to the members of the Board of Directors, provided, however, that such representative (i) shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided and (ii) shall not be a director, officer or employee of an entity that is a Competitor of the Company.

2.3 Form S-3 Eligibility. The Company shall use its best efforts to maintain its qualification for registration on Form S-3 or any comparable or successor form or forms.

3. MISCELLANEOUS.

3.1 Governing Law. This Agreement shall be governed in all respects by the laws of the State of Delaware, without regard to its conflicts of laws principles.

3.2 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successor’s, assigns, heir’s, executor’s and administrators of the parties hereto and the Investors listed on Schedule I that receive Acquiror Common Stock pursuant to the Merger Agreement and the Indemnification Escrow Agreement shall be intended third party beneficiaries of this Agreement.

3.3 Entire Agreement; Amendment, Waiver. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Company and MPI and any such amendment, waiver, discharge or termination shall be binding on all the Holders.

3.4 Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated in the Merger Agreement or at such other address or facsimile number as such Holder or permitted assignee shall have furnished to the Company in writing, or (b) if to the Company, at such address or facsimile number as the Company shall have furnished to each Holder in writing. All such notices and other written communications shall be effective on the date of mailing, confirmed facsimile transfer or delivery.

3.5 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder; upon any breach or default of the Company under this Agreement shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement or any waiver on the part of any Holder of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Holder; shall be cumulative and not alternative.

3.6 Rights; Separability. Unless otherwise expressly provided herein, a Holder’s rights hereunder are several rights, not rights jointly held with any of the other Holders. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

3.7 Information Confidential. Each Holder acknowledges that the information received pursuant hereto may be confidential and for its use only, and it will not use such confidential information in violation of the Exchange Act or reproduce, disclose or disseminate such information to any other person (other than its employees or agents having a need to know the contents of such information, and its attorneys), except in connection with the exercise of rights under this Agreement, unless the Company has made such information available to the public generally or such Holder is required to disclose such information by a governmental body.

3.8 Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing or interpreting this Agreement.

3.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

[Balance of the page intentionally left blank.]

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


COMPANY:		INVESTORS:

ENCORE MEDICAL CORPORATION		MPI HOLDINGS, LLC

By:	/s/ Harry L. Zimmerman	By:	/s/ W. Robert Dahl

	Name: Harry L. Zimmerman		Name: W. Robert Dahl
	Title: EVP – General Counsel		Title: Managing Director

		GE CAPITAL EQUITY INVESTMENTS, INC.

		By:	/s/ Steve Warner

			Name: Steve Warner
			Title: Duly Authorized Signatory

		/s/ Patrick D. Spangler

		Patrick D. Spangler

		/s/ H. Philip Vierling

		H. Philip Vierling

[Signature Page to Investors Rights Agreement]

SCHEDULE 1

ADDITIONAL INVESTORS


Additional				International
Investors	Street	City	State, ZIP	Address
Bjerke, Marlin C.	18081 SD Highway 15	Clear Lake	SD, 57226

Boemers, Frank				Kreuzgartenstrasse 1 79238 Ehrenkirche Germany

Burnham, William	P.O. Box 282	Yardley	PA, 19067

Clapp, Robert	2316 19^th Avenue NE	Minneapolis	MN, 55418

Cox, Craig C.	5722 Rosemount Way	Medina	OH, 44256

Cox, John C.	1307 Fallsworth Terrace	Acworth	GA, 30101

Davis, Lawrence II	5101 Newtown Road	Placerville	CA, 95667

Grider, James	15200 Manitou Road	Prior Lake	MN, 55372

Gunderson, Priscilla A.	6556 White Oak Road	Lino Lakes	MN, 55038

Rudiger, Hausherr				Goethestrasse 58, 79100 Freiburg Germany

Hughes, Thomas P.	1816 Interlachen Alcove	Woodbury	MN, 55125

Hutto, Barbara C.	1206 Benton Street	Anoka	MN, 55303

Kircher, Kyle C.	1020-G Oswald Road	Yuba City	CA, 95993

Laptewicz, Joseph	311 Neuse Road	Chocowinity	NC, 27817

LeFauve, Michael	20126 Tailwind Lane	Cornelius	NC, 28031

Meidt, Gregory J.	3065 Meadow Brook Court	Woodbury	MN, 55125

Pierson, Michelle Marie	1101 Sibley Memorial Highway	Lilydale	MN, 55118

Schoenhals, Jeff A.	2712 Pine Valley	Edmond	OK, 73003

Schulze, Gerald	9 North Point Trail	Beaufort	SC, 29907

Sellers, Kenneth R.	113 Walter Hagen Drive	Mebane	NC, 27302

Stem, Birt Clinton	2970 East	Highlands	CO, 80126

Schedule 1 to Investors Rights Agreement


Additional				International
Investors	Street	City	State, ZIP	Address
	Timberchase Trail	Ranch

Strand, Joan Elizabeth	5345 Hodgson Road	Shoreview	MN, 55126

Tarnowski, Patrick J.	4740 Bassett Creek	Golden Valley	MN, 55422

Waller, Thomas Scott	14412 Cecil Drive	Little Rock	AR, 72223

Wass, Loren W.	34 Hog Hill Road	Pepperell	MA, 01463

White, Keith A.	6281 Hilton Court North	Pine Springs	MN, 55115

Schedule 1 to Investors Rights Agreement

EXHIBIT A

EMPI PRINCIPAL SHAREHOLDERS

1. MPI Holdings, LLC, including the members of MPI Holdings, LLC that receive Registerable Shares as part of a distribution by MPI Holdings, LLC and the Affiliates of such members that may also receive distributions

2. GE Capital Equity Investments, Inc.

3. Patrick D. Spangler

4. H. Philip Vierling

EX-99.D 5 w03897a1exv99wd.htm EXHIBIT D exv99wd

EXHIBIT D

LOCK-UP AGREEMENT

This LOCK-UP AGREEMENT (this “Agreement”), dated as of October 4, 2004, by and between Encore Medical Corporation, a Delaware corporation (the “Company”), and the party listed on the signature page hereto. Capitalized terms used in this Agreement without definition have the respective meanings given to them in the Merger Agreement (as defined below).

WHEREAS, the Company, Encore Medical Merger Sub, Inc., a Delaware corporation (“Merger Sub”), EMPI, Inc., a Minnesota corporation (“EMPI”), and certain shareholders of EMPI have entered into an Agreement and Plan of Merger Agreement, dated as of August 8, 2004 (the “Merger Agreement”); and

WHEREAS, the Company Principal Shareholders have agreed to enter into this Agreement as a condition to closing the Merger.

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

AGREEMENT:

1. For a period of one year from the date of the Effective Time of the Merger (the “Lock-up Period”), the undersigned will not, without the prior written consent of the Company, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell (if such sale would or could be consummated within the applicable Lock-Up Period), hypothecate or otherwise dispose of (collectively, “Transfer”) any shares of Acquiror Common Stock (including, without limitation, Acquiror Common Stock which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Act and the Exchange Act (such shares, the “Beneficially Owned Shares”)) which the undersigned is entitled to as consideration pursuant to the Merger Agreement (“Merger Common Stock”) if, after giving effect to such Transfer, the aggregate number of shares of Merger Common Stock transferred by the undersigned during the Lock-Up Period exceeds the Permitted Number of Transfer Shares. For the purpose hereof, the “Permitted Number of Transfer Shares” means (i) during the first six (6) month period during the Lock-Up Period, zero shares and (ii) during the second six (6) month period during the Lock-Up Period, 50% of the shares of Merger Common Stock to which the undersigned is entitled to be issued pursuant to the Merger Agreement (assuming 100% of the shares of Acquiror Common Stock held pursuant to the Indemnification Escrow Agreement are released from escrow to the holders of Company Common Shares and Options entitled to receive the Merger Consideration). For the purpose hereof, the term “Transfer” includes the entry into any swap, hedge or similar agreement or arrangement that transfers in whole or in part the economic risk of ownership of the Beneficially Owned Shares or securities convertible into or exercisable or exchangeable for Acquiror Common Stock or any short selling of the Merger Common Stock; provided, however, that nothing in this Agreement shall prevent the undersigned from entering into any legally permissible hedge or collar transaction (or similar transaction) that (i) does not permit or require the Merger Common Stock to be Transferred into the open market or (ii) would or could result in a change of beneficial ownership of the Beneficially Owned Shares, in the case of (i) or (ii), prior to the expiration of the applicable Lock-Up Period.

2. Notwithstanding the foregoing, the undersigned may (a) Transfer any or all of the Merger Common Stock, as the case may be, by gift, will or intestacy, (b) pursuant to the Registration Statement or a Piggyback Registration (each as defined in the “Summary of Terms of Investor Rights Agreement” attached to the Merger Agreement), (c) pledge or hypothecate such Merger Common Stock in connection with a bona fide loan transaction or (d) transfer any or all of its shares of Merger Common Stock to an Affiliate of the undersigned; provided, however, that in any such case (other than in the case of any Transfer pursuant to clause (b) above) it shall be a condition to the transfer or pledge that the transferee or pledgee execute an agreement stating that (i) the transferee or pledgee is receiving and holding the Merger Common Stock subject to the provisions of this Agreement and (ii) there shall be no further Transfer of such Merger Common Stock except in accordance with this Agreement.

3. The undersigned agrees that the Company may, and in the case of clause (ii) that the undersigned will, (i) with respect to any shares of Merger Common Stock for which the undersigned is the record holder, cause the transfer agent for the Company to note stop transfer instructions with respect to such shares of Merger Common Stock on the transfer books and records of the transfer agent or the Company, as applicable, reflecting the transfer restrictions set forth herein and (ii) with respect to any shares of Merger Common Stock for which the undersigned is the beneficial holder but not the record holder, cause the record holder of such shares of Merger Common Stock to cause the transfer agent for the Company to note stop transfer instructions with respect to such shares of Merger Common Stock on the transfer books and records of the transfer agent or the Company, as applicable, reflecting the transfer restrictions set forth herein.

4. The undersigned understands that the parties to the Merger Agreement will proceed with the Merger in reliance on this Agreement.

5. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

6. This Agreement may not be changed except in a writing signed by the person(s) against whose interest such change shall operate. This Agreement shall be governed by and construed under the laws of the State of New York without regard to principles of conflicts of law.

7. This Agreement shall be deemed to be jointly prepared by the parties hereto, and no ambiguity herein shall be construed for or against either party based upon the identity of the author of this Agreement or any provision hereof.

[Balance of the page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first above written.


		ENCORE MEDICAL CORPORATION, a Delaware corporation

		By:		/s/ Harry L. Zimmerman

				Name: Harry L. Zimmerman
				Title: EVP – General Counsel

		COMPANY PRINCIPAL SHAREHOLDER:

		/s/ W. Robert Dahl

		Name: MPI Holdings, LLC
		Address: 520 Madison Avenue New York, NY 10022

Signature Page- MPI Shareholder Lock-Up Agreement

-----END PRIVACY-ENHANCED MESSAGE-----


CUSIP No.

	1.	Name of Reporting Person: TCG Holdings, L.L.C.			I.R.S. Identification Nos. of above persons (entities only): 54-1686011

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


CUSIP No.

	1.	Name of Reporting Person: TC Group, L.L.C.			I.R.S. Identification Nos. of above persons (entities only): 54-1686957

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


CUSIP No.

	1.	Name of Reporting Person: Carlyle Partners II, L.P.			I.R.S. Identification Nos. of above persons (entities only): 51-0357731

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: Carlyle SBC Partners II, L.P.			I.R.S. Identification Nos. of above persons (entities only): 51-0369721

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: State Board of Administration of Florida			I.R.S. Identification Nos. of above persons (entities only): 52-2038314

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Instrumentality of the State of Florida

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


CUSIP No.

	1.	Name of Reporting Person: Carlyle Investment Group, L.P.			I.R.S. Identification Nos. of above persons (entities only): 51-0357730

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: Carlyle International Partners II, L.P.			I.R.S. Identification Nos. of above persons (entities only): 98-0153707

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: C/S International Partners, L.P.			I.R.S. Identification Nos. of above persons (entities only): 98-0160490

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: Carlyle- EMPI Partners, L.P.			I.R.S. Identification Nos. of above persons (entities only): 51-0393071

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: Carlyle High Yield Partners, L.P.			I.R.S. Identification Nos. of above persons (entities only): 52-2175223

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): PN


CUSIP No.

	1.	Name of Reporting Person: TCG High Yield, L.L.C.			I.R.S. Identification Nos. of above persons (entities only): 52-2175223

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


CUSIP No.

	1.	Name of Reporting Person: TC Group II, L.L.C.			I.R.S. Identification Nos. of above persons (entities only): 54-1686957

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


CUSIP No.

	1.	Name of Reporting Person: MPI Holdings, L.L.C.			I.R.S. Identification Nos. of above persons (entities only): 52-2187753

	2.	Check the Appropriate Box if a Member of a Group (See Instructions):
		(a)	o
		(b)	x

	3.	SEC Use Only:

	4.	Source of Funds (See Instructions): OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o

	6.	Citizenship or Place of Organization: Delaware

Number of Shares Beneficially Owned by Each Reporting Person With
			7.	Sole Voting Power: 8,000,000

			8.	Shared Voting Power:

			9.	Sole Dispositive Power: 8,000,000

			10.	Shared Dispositive Power:

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person: 8,000,000

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): o

	13.	Percent of Class Represented by Amount in Row (11): 15.7%

	14.	Type of Reporting Person (See Instructions): OO (Limited Liability Company)


Item 6.	Contracts, Arrangements, Understandings, or Relationships with Respect to Securities of the Issuer.

•		JPMorgan Chase Bank Money Market Account;

•		A trust account with JPMorgan Chase Bank;

•		A money market mutual fund, including without limitation the JPMorgan Fund or any other mutual fund for which the Escrow Agent or any affiliate of the Escrow Agent serves as investment manager, administrator, shareholder servicing agent and/or custodian or subcustodian, notwithstanding that (i) the Escrow Agent or an affiliate of the Escrow Agent receives fees from such funds for services rendered, (ii) the Escrow Agent charges and collects fees for services rendered pursuant to this Escrow Agreement, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Escrow Agreement may at times duplicate those provided to such funds by the Escrow Agent or its affiliates.


ENCORE MEDICAL CORPORATION
By:	/s/ Harry L. Zimmerman
	Name:	Harry L. Zimmerman
	Title:	Executive Vice President – General Counsel


JPMORGAN CHASE BANK, N.A., as Escrow Agent
By:	/s/ Debra DeMarco
	Name:	Debra DeMarco
	Title:	Vice President

1.		MPI Holdings, LLC, including the members of MPI Holdings, LLC that receive Registerable Shares as part of a distribution by MPI Holdings, LLC and the Affiliates of such members that may also receive distributions

2.		GE Capital Equity Investments, Inc.

3.		Patrick D. Spangler

4.		H. Philip Vierling