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EXHIBIT 10.30
AMENDED AND RESTATED
DONJOY, L.L.C.
1999 OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of the Amended and Restated DonJoy, L.L.C. 1999
Option Plan (the "Plan") is (i) to further the growth and success of, DonJoy,
L.L.C. (the "Company") and its Subsidiaries (as hereinafter defined) by enabling
directors and employees of, and independent consultants and contractors to, the
Company and any of its Subsidiaries to acquire equity ownership interests in the
Company (the "Units"), thereby increasing their personal interest in such growth
and success, and (ii) to provide a means of rewarding outstanding performance by
such persons to the Company and/or its Subsidiaries. For purposes of the Plan,
the term "Subsidiary" shall mean "Subsidiary Corporation" as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended.
2. ADMINISTRATION OF THE PLAN
(a) Option Committee
The Plan shall be administered by the Board of Managers of
the Company (the "Board") or a three-person Option Committee (the "Committee")
appointed from time to time by the Board. Any reference in the Plan to action by
the Company means action by or under the authority of the Board or the
Committee. The members of the Committee may be removed by the Board at any time
either with or without cause. Any vacancy on the Committee, whether due to
action of the Board or any other cause, shall be filled by the Board. The term
"Committee" shall, for all purposes of the Plan other than this Section 2, be
deemed to refer to the Board if the Board is administering the Plan.
(b) Procedures
The Committee shall adopt such rules and regulations as it
shall deem appropriate concerning the holding of meetings and the administration
of the Plan. A majority of the entire Committee shall constitute a quorum and
the actions of a majority of the members of the Committee present at a meeting
at which a quorum is present, or actions approved in writing by all of the
members of the Committee, shall be the actions of the Committee.
(c) Interpretation
Except as otherwise expressly provided in the Plan, the
Committee shall have all powers with respect to the administration of the Plan,
including, without limitation, full power and authority to interpret the
provisions of the Plan and any Option Agreement (as defined in Section 5(b)),
and to resolve all questions arising under the Plan. All decisions of the Board
or the Committee, as the case may be, shall be conclusive and binding on all
participants in the Plan.
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3. UNITS SUBJECT TO THE PLAN.
(a) Number of Units
Subject to the provisions of Section 9 (relating to
adjustments upon changes in capital structure and other limited liability
company transactions), the maximum number of Units subject at any one time to
options granted under the Plan ("Options"), plus the number of Units theretofore
issued and delivered pursuant to the exercise of Options granted under the Plan,
shall not in aggregate exceed 148,799 Units, as follows:
(i) Options relating to up to 55,520 Units may be
granted pursuant to Option Agreements substantially in the form of
Exhibit A hereto ("Tier I Options");
(ii) Options relating to up to 37,013 Units may be
granted pursuant to Option Agreements substantially in the form of
Exhibit B hereto ("Tier II Options");
(iii) Options relating to up to 46,266 Units may be
granted pursuant to Option Agreements substantially in the form of
Exhibit C hereto ("Tier III Options"); and
(iv) Options relating to up to 10,000 Units may be
granted pursuant to Option Agreements substantially in the form of
Exhibit D hereto ("Non-Employee Options").
If and to the extent that Options granted under clauses (i)
through (iv) above terminate, expire or are canceled without having been fully
exercised, new Options may be granted under clauses (i) through (iv) above with
respect to the Units covered by the unexercised portion of such terminated,
expired or canceled Options.
(b) Character of Units
The Units issuable upon exercise of an Option granted
under the Plan shall be (i) authorized but unissued Units, (ii) Units held in
the Company's treasury or (iii) a combination of the foregoing.
(c) Reservation of Units
The number of Units reserved for issuance under the Plan
shall at no time be less than the maximum number of Units which may be purchased
at any time pursuant to outstanding Options.
4. ELIGIBILITY
Options may be granted under the Plan only to (i) persons who are
employees of, or independent consultants to, the Company or any of its
Subsidiaries and (ii) persons who are directors or managers of the Company or
any of its Subsidiaries. Notwithstanding the foregoing,
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Options may be conditionally granted to persons who are prospective employees or
directors or managers of, or independent consultants to, the Company or any of
its Subsidiaries.
5. GRANT OF OPTIONS
(a) General
Options may be granted under the Plan at any time and from
time to time on or prior to the tenth anniversary of the Effective Date (as
defined in Section 11). Subject to the provisions of the Plan, the Committee
shall have plenary authority, in its discretion, to determine:
(i) the persons (from among the class of persons
eligible to receive Options under the Plan) whom Options shall be
granted (the "Optionees");
(ii) the time or times at which Options shall be
granted;
(iii) the number of Units subject to each Option;
(iv) the Option Price of the Units subject to each
Option; and
(v) the time or times when each Option shall become
exercisable and the duration of the exercise period.
(b) Option Agreements
Each Option granted under the Plan shall be evidenced by a
written agreement (an "Option Agreement"), containing such terms and conditions
and in such form, not inconsistent with the Plan, as the Committee shall, in its
discretion, provide. Each Option Agreement shall be executed by the Company and
the Optionee.
(c) No Evidence of Employment or Service
Nothing contained in the Plan or in any Option Agreement
shall confer upon any Optionee any right with respect to the continuation of his
or her employment by or service with the Company or any of its Subsidiaries or
interfere in any way with the right of the Company or any such Subsidiary
(subject to the terms of any separate agreement to the contrary) at any time to
terminate such employment or service or to increase or decrease the compensation
of the Optionee from the rate in existence at the time of the grant of an
Option.
(d) Date of Grant
The date of grant of an Option under the Plan shall be the
date as of which the Committee approves the grant; provided, however, that the
grant shall in no event be earlier than the date as of which the Optionee
becomes an employee of the Company or one of its Subsidiaries.
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6. OPTION PRICE
Subject to Section 9, the price (the "Option Price") at which
each Unit subject to an Option granted under the Plan may be purchased shall be
determined by the Committee at the time the Option is granted.
7. EXERCISABILITY OF OPTIONS
(a) Committee Determination
Each Option granted under the Plan shall be exercisable at
such time or times, or upon the occurrence of such event or events, and for such
number of Units subject to the Option, as shall be determined by the Committee
and set forth in the Option Agreement evidencing such Option. If an Option is
not at the time of grant immediately exercisable, the Committee may (i) in the
Option Agreement evidencing such Option, provide for the acceleration of the
exercise date or dates of the subject Option upon the occurrence of specified
events and/or (ii) at any time prior to the complete termination of an Option,
accelerate the exercise date or dates of such Option.
(b) Automatic Termination of Options
The unexercised portion of any Option granted under the
Plan shall automatically terminate and shall become null and void and be of no
further force or effect upon the first to occur of the following:
(i) the end of the stated term thereof;
(ii) if the Optionee is an employee, unless a
shorter period is provided for in any Option Agreement, the expiration
of three months from the date that the Optionee ceases to be an employee
of the Company or any of its Subsidiaries (other than as a result of an
Involuntary Termination (as defined in clause (iii) below) or
termination For Cause (as defined herein)); provided, however, that if
the Optionee shall die during such three-month period, the time of
termination of the unexercised portion of such Option shall be the
expiration of 12 months from the date that such Optionee ceased to be an
employee of the Company or any of its Subsidiaries;
(iii) if the Optionee is an employee, the
expiration of 12 months from the date that the Optionee ceases to be an
employee of the Company or any of its Subsidiaries, if such termination
is due to such Optionee's death or Disability (as defined below) (an
"Involuntary Termination");
(iv) if the Optionee is an employee, immediately
upon the date that the Optionee ceases to be an employee of the Company
or any of its Subsidiaries, if such termination is For Cause;
(v) the expiration of such period of time or the
occurrence of such event as the Committee in its discretion may provide
in the Option Agreement;
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(vi) on the effective date of a Material
Transaction (as defined in Section 9(b)(i)) to which Section 9(b)(ii)
(relating to assumptions and substitutions of Options) does not apply;
and
(vii) except to the extent permitted by Section
9(b)(ii), the date on which an Option or any part thereof or right or
privilege relating thereto is transferred (otherwise than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
As used herein, "Disability" means any accident, sickness,
incapacity or other disability which (i) renders the Optionee unable to
substantially perform all of his duties for 90 days during any period of 360
consecutive days or (ii) would reasonably be expected to render the Optionee
unable to substantially perform all of his duties for 90 days during any period
of 360 consecutive days, in the case of each of clauses (i) or (ii), as
determined by the Board (excluding the Optionee should he be a member of the
Board at the time of such determination) in its good faith judgment.
As used herein, "For Cause" shall mean (i) the failure by
the Optionee to perform such duties as are reasonably requested by the Board or
the Chief Executive Officer of the Company or its Subsidiaries, as applicable,
(ii) the Optionee's failure to observe any material policies of the Company or
its Subsidiaries, as applicable, (iii) gross negligence or willful misconduct by
the Optionee in the performance of his duties, (iv) the commission by the
Optionee of any act of fraud, theft or financial dishonesty with respect to the
Company or any of its Affiliates, or any felony or act involving moral
turpitude, (v) the material breach by the Optionee of his/her employment
agreement (if applicable) with the Company or its Subsidiaries, as applicable,
or of any other agreement or contract with the Company or any Affiliate thereof
(including, without limitation, the Members' Agreement of the Company or any
option agreement which must be entered into pursuant to this Plan), (vi) chronic
absenteeism or (vii) the failure of the Optionee to give at least 30 days' prior
written notice of his termination of employment with the Company or its
Subsidiaries, as applicable. For purposes of this Agreement, "Affiliates" means
dj Orthopedics, LLC (or its successors or assigns) and all subsidiaries thereof.
Anything contained in the Plan to the contrary
notwithstanding, unless otherwise provided in an Option Agreement, no Option
granted under the Plan shall be affected by any change of duties or position of
the Optionee (including a transfer to or from the Company or one of its
Subsidiaries), so long as such Optionee continues to be an employee of the
Company or one of its Subsidiaries.
8. PROCEDURE FOR EXERCISE
(a) Payment
Payment upon exercise of an Option shall be made, at the
election of the Optionee, (i) in cash or personal or certified check payable to
the Company in an amount equal to the aggregate Option Price of the Units with
respect to which the Option is being exercised or (ii) upon the surrender of
Units or option to
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buy Units, in each case with such Units or Options to buy Units, as the case may
be, valued at the Fair Value per Unit (as defined in Section 8) thereof as
determined by the Committee.
(b) Notice
An Optionee (or other person, as provided in Section
10(b)) may exercise an Option granted under the Plan in whole or in part (but
for the purchase of whole Units only), as provided in the Option Agreement
evidencing his Option, by delivering a written notice (the "Notice") to the
Secretary of the Company. The Notice shall state:
(i) that the Optionee elects to exercise the
Option;
(ii) the number of Units with respect to which the
Option is being exercised (the "Optioned Units");
(iii) the method of payment for the Optioned Units
(which method must be available to the Optionee under the terms of his
or her Option Agreement);
(iv) the date upon which the Optionee desires to
consummate the purchase (which date must be prior so the termination of
such Option);
(v) a copy of any election filed by the Optionee
pursuant to Section 83(b) of the Code; and
(vi) such further provisions consistent with the
Plan as the Committee may from time to time require.
The exercise date of an Option shall be the date on which
the Company receives the Notice from the Optionee.
(c) Issuance of Certificates
The Company shall issue a certificate in the name of the
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10(b)) for the Optioned Units as soon as practicable after
receipt of the Notice and payment of the aggregate Option Price for such Units.
Neither the Optionee nor any person exercising an Option in accordance with the
provisions of Section 10(b) shall have any privileges as a holder of Units with
respect to any Units subject to an Option granted under the Plan until the date
of payment for such Units pursuant to the Option.
(d) Determination of Fair Market Value.
Fair Market Value of each Unit shall be determined in
accordance with the following:
(i) "FAIR VALUE PER UNIT " shall mean, as of any
date of determination, the fair value of each Unit (or, with respect to
a warrant or option, the fair value of each Unit obtainable upon
exercise thereof net of the exercise price), determined as follows:
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At any time that the Fair Value per Unit shall be required to be
determined hereunder, the Board shall make a good faith determination
(the "Board's Determination") of the fair value of each Unit within 30
days of the delivery by the Company of a Repurchase Notice (as defined
in the Operating Agreement) (without taking into account that the Units
may be "restricted securities" but with a reasonable discount, for the
minority position represented by the Units and shall provide to the
Member (as defined in the Operating Agreement) with respect to whose
Unit such determination is being made a written notice thereof which
notice shall set forth supporting data in respect of such calculation
(the "Determination Notice"). The Member shall have 10 days following
receipt of the Determination Notice within which to deliver to the
Company a written notice (the "Objection Notice") of an objection, if
any, to the Board's Determination, which Objection Notice shall set
forth the Member's good faith determination (the "Member's
Determination") of the fair value of each Unit. The failure by the
Member to deliver the Objection Notice within such 10-day period shall
constitute the Member's acceptance of the Board's Determination as
conclusive. In the event of the timely delivery of an Objection Notice,
the Company and the Member shall attempt in good faith to arrive at an
agreement with respect to the Fair Value per Unit, which agreement shall
be set forth in writing within 15 days following delivery of the
Objection Notice. If the Company and the Member are unable to reach an
agreement within such 15-day period, the matter shall be promptly
referred for determination to a regionally or nationally recognized
investment banking or valuation firm (the "Valuer") reasonably
acceptable to the Company and the Member. The Company and the Member
will cooperate with each other in good faith to select such Valuer. The
Valuer may select the Board's Determination or the Member's
Determination as the Fair Value per Unit or may select any other number
or value (determined without taking into account that the Units may be
"restricted securities" but with a reasonable discount, not to exceed
20% for the minority position represented by the Units). The Valuer's
selection will be furnished to the Company and the Member in writing and
conclusive and binding upon the Company and the Member. The fees and
expenses of the Valuer shall be borne equally by the Company and the
Member with respect to whose Units such determination relates; provided,
however, that if the Fair Value per Unit, as determined by the Valuer,
shall be more than 15% greater than the Board's Determination of such
Fair Value per Unit, then such fees and expenses of the Valuer shall be
borne entirely by the Company.
9. ADJUSTMENTS
(a) Changes in Capital Structure
Subject to Section 9(b), if the Unit is changed by reason
of a split, reverse split or recapitalization, or converted into or exchanged
for other securities as a result of a merger, consolidation or reorganization,
the Committee shall make such adjustments in the number and class of Units with
respect to which Options may be granted under the Plan as shall be equitable and
appropriate in order to make such Options, as nearly as may be practicable,
equivalent to such Options immediately prior to such change. A corresponding
adjustment changing the
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number and class of Units allocated to, and the Option Price of, each Option or
portion thereof outstanding at the time of such change shall likewise be made.
(b) Material Transactions
The following rules shall apply in connection with the
dissolution or liquidation of the Company, a reorganization, merger or
consolidation in which the Company is not the surviving corporation, or a sale
of all or substantially all of the assets of the Company to another person or
entity (each, a "Material Transaction"), unless otherwise provided in the Option
Agreement or in the Members' Agreement of even date herewith:
(i) each holder of an Option outstanding at such
time shall be given (A) written notice of such Material Transaction at
least 20 days prior to its proposed effective date (as specified in such
notice) and (B) an opportunity, during the period commencing with
delivery of such notice and ending 10 days prior to such proposed
effective date, to exercise the Option to the full extent to which such
Option would have been exercisable by the Optionee at the expiration of
such 20-day period; provided, however, that upon the occurrence of a
Material Transaction, all Options granted under the Plan and not so
exercised shall automatically terminate; and
(ii) Notwithstanding anything contained in the Plan
to the contrary, Section 9(b)(i) shall not be applicable if provision
shall be made in connection with such Material Transaction for the
assumption of outstanding Options by, or the substitution for such
Options of new options covering the equity securities of, the surviving,
successor or purchasing corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number, kind and option prices of
Units subject to such options.
(c) Special Rules
The following rules shall apply in connection with Section
9(a) and (b) above:
(i) no fractional Units shall be issued as a result
of any such adjustment, and any fractional Units resulting from the
computations pursuant to Section 9(a) or (b) shall be eliminated and the
Optionee shall receive cash consideration for such fractional Unit at
the rate of the Fair Market Value of such Unit, determined in accordance
with clause (d) below;
(ii) no adjustment shall be made for cash dividends
or the issuance to holders of rights to subscribe for additional Units
or other securities; and
(iii) any adjustments referred to in Section 9(a)
or (b) shall be made by the Board or Committee (as the case may be) in
good faith and shall be conclusive and binding on all persons holding
Options granted under the Plan.
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10. RESTRICTIONS ON OPTIONS AND OPTIONED UNITS
(a) Compliance With Securities Laws
No Options shall be granted under the Plan, and no Units
shall be issued and delivered upon the exercise of Options granted under the
Plan, unless and until the Company and/or the Optionee shall have complied with
all applicable Federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.
The Committee in its discretion may, as a condition to the
exercise of any Option granted under the Plan, require an Optionee (i) to
represent in writing that the Units received upon exercise of an Option are
being acquired for investment and not with a view to distribution and (ii) to
make such other representations and warranties as are deemed appropriate by the
Company. Certificates representing Units acquired upon the exercise of Options
that have not been registered under the Securities Act shall, if required by the
Committee, bear the following legend and such additional legends as may be
required by the Option Agreement evidencing a particular Option:
"THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE UNITS HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE UNITS UNDER THE SECURITIES ACT OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT."
(b) Nonassignability of Option Rights
No Option granted under the Plan shall be assignable or
otherwise transferable by the Optionee except by will or by the laws of descent
and distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee. If an Optionee dies, his or her Option shall thereafter be
exercisable, during the period specified in Section 7(b)(ii) or (iii) (as the
case may be), by his or her executors or administrators to the full extent to
which such Option was exercisable by the Optionee at the time of his or her
death.
11. EFFECTIVE DATE OF PLAN
The Plan shall become effective on the date of its
adoption by the Board.
12. EXPIRATION AND TERMINATION OF THE PLAN
Except with respect to Options then outstanding, the Plan
shall expire on the first to occur of (i) the fifteenth anniversary of the date
on which the Plan is approved by the holders of Units and (ii) the date as of
which the Board, in its sole discretion, determines that the Plan
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shall terminate (the "Expiration Date"). Any Options outstanding as of the
Expiration Date shall remain in effect until they have been exercised or
terminated or have expired by their respective terms.
13. AMENDMENT OF PLAN
The Board may at any time prior to the Expiration Date
modify and amend the Plan in any respect. No such amendment to the Plan shall
affect the terms or provisions of any Option granted by the Company prior to the
effectiveness of such amendment.
14. CAPTIONS
The use of captions in the Plan is for convenience. The
captions are not intended to provide substantive rights.
15. WITHHOLDING TAXES
Whenever under the Plan, Units are to be delivered by an
Optionee upon exercise of an Option, the Company shall be entitled to require as
a condition of delivery that the Optionee remit or, in appropriate cases, agree
to remit when due, an amount sufficient to satisfy all current or estimated
future Federal, state and local income tax withholding the employee's portion of
any employment tax requirements relating thereto.
16. OTHER PROVISIONS
Each Option granted under the Plan may contain such other
terms and conditions not inconsistent with the Plan as may be determined by the
Committee, in its sole discretion.
17. NUMBER AND GENDER
With respect to words used in the Plan, the singular form
shall include the plural form, the masculine gender shall include the feminine
gender, and vice-versa, as the context requires.
18. GOVERNING LAW
The validity and construction of the Plan and the
instruments evidencing the Options granted hereunder shall be governed by the
laws of the State of Delaware.
AS ADOPTED BY THE BOARD OF MANAGERS
OF DONJOY, L.L.C.
ON JANUARY 20, 2000.
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