ENCORE MEDICAL CORP
KENNETH W. DAVIDSON EMPLOYMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>dex105.txt
<DESCRIPTION>KENNETH W. DAVIDSON EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>

                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (this "Agreement") made and effective as of
the 12th day of June, 2001, by and between ENCORE MEDICAL CORPORATION, a
Delaware corporation (the "Company"), and KENNETH W. DAVIDSON (the "Employee").

         In consideration of the mutual promises contained herein, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Employee agree as follows:

                                    ARTICLE 1
                                   EMPLOYMENT

         1.1      Employment Term. The Company hereby employs the Employee for
                  ---------------
a primary term commencing on the date set forth above and, subject to earlier
termination as provided in Section 1.5 hereof, ending December 31, 2003 (the
"Employment Term"). Employee agrees to accept such employment and to perform
the services specified herein, all upon the terms and conditions hereinafter
stated.

         1.2      Duties. The Employee shall serve in the capacity as Chief
                  ------
Executive Officer and President of the Company, or in such other capacity as
the Company may in its sole discretion direct, and shall report to, and be
subject to the general direction and control of, the Board of Directors of the
Company. It is further understood and agreed that any modification in or
expansion of Employee's duties hereunder shall not, unless specifically agreed
in writing by Company, result in any modification in, increase or decrease of
Employee's compensation referred to in Section 1.4 hereof.

         1.3      Extent of Service. The Employee shall devote his full time,
                  -----------------
attention, and energy to the business of the Company and, except as may be
specifically permitted by the Company and approved by the Board of Directors of
the Company, shall not be engaged in any other business activity while in the
employ of the Company.

         1.4      Compensation
                  ------------

                  1.4.1   Salary. The Company shall pay to the Employee a base
                          ------
salary at a rate of not less than Two Hundred Seventy-Five Thousand Dollars
($275,000) per year, or at such greater rate as the Board of Directors of the
Company shall from time to time determine (the "Base Salary"). The Base Salary
shall be subject to review on no less than an annual basis, beginning January 1,
2002. Such salary is to be payable in installments in accordance with the
payroll policies of the Company in effect from time to time during the
Employment Term.

                  1.4.2   Other Benefits. The Employee shall be entitled to such
                          --------------
vacation days, sick days, insurance and other fringe benefit programs (including
pension, profit-sharing, bonus and stock plans, if any) as are established for
all other executive employees of the Company, on the same basis as such other
employees are entitled thereto, it being understood that the
<PAGE>

establishment, termination, or change of any such program shall be at the
instance of the Company, in exercise of its sole discretion, from time to time,
and any such termination or change in any such program shall not affect this
Agreement.

         1.5      Termination.
                  -----------

                  1.5.1   Termination by Employee. At any time after one (1)
                          -----------------------
year from the commencement of the Employment Term, Employee may terminate this
Agreement on thirty (30) days' prior written notice.

                  1.5.2   Termination by Company. Prior to the end of the
                          ----------------------
Employment Term, the Company may upon ten (10) days' prior written notice
discharge the Employee with or without cause at its sole option without any
further liability hereunder to the Employee or his estate; provided, however, in
the event such termination was without cause, the Company shall be required to
pay the Employee, at the time of his discharge, an amount equal to (a) one (1)
year's Base Salary and (b) an amount equal to the bonus that the Employee earned
in the prior fiscal year of the Company, in addition to any accrued, but unpaid
Base Salary. The Employee will have no further liability hereunder to the
Company except pursuant to Article 2 and Section 3.2 hereof. In the event such
termination was with cause, the Company shall only be required to pay the
Employee, at the time of his discharge, an amount equal to any accrued, but
unpaid Base Salary. For purposes of this Agreement, a "discharge for cause"
shall mean a discharge resulting from Employee having (i) failed or refused to
follow legal and reasonable policies or directives established and previously
given to Employee in writing by Company, (ii) willfully failed to attend to his
duties after ten (10) days prior written notice of failure to so act, (iii)
committed acts amounting to gross negligence or willful misconduct to the
material detriment of Company, or (iv) otherwise materially breached any of the
terms or provisions of this Agreement after ten (10) days prior written notice
of such material breach and failure to cure such breach. Employee shall be
deemed to have been discharged for cause upon delivery to Employee of a "Notice
of Termination" stating the "Date of Termination" and specifying the particulars
of the conduct justifying discharge for cause.

                                    ARTICLE 2
                 NON-COMPETITION AND DISCLOSURE OF INFORMATION

         2.1      Non-competition. Employee acknowledges that his services to be
                  ---------------
rendered hereunder are of a special and unusual character which have a unique
value to Company, the loss of which cannot adequately be compensated by damages
in an action at law. In view of the unique value to Company of the services of
Employee for which Company has contracted hereunder, and because of the
confidential information to be obtained by or disclosed to Employee, and as a
material inducement to Company to enter into this Agreement, and to pay to
Employee the compensation referred to in Section 1.4 hereof, Employee covenants
and agrees that during Employee's employment hereunder and for a period of one
(1) year after he ceases to be employed by Company, Employee shall not (a)
directly or indirectly, solicit business from, divert business from, or attempt
to convert to other methods of using the same or similar

                                     -2-
<PAGE>

products or services as provided by Company, any client, account or location of
Company with which Employee has had any contact as a result of his employment
by Company hereunder; (b) engage in or carry on, directly or indirectly, either
for himself, as a member of a partnership, or as a stockholder (except as
limited partner or stockholder of less than one percent (1%) of the issued and
outstanding limited partnership interests or stock of a publicly held
partnership or corporation whose gross assets exceed $l,000,000), as an
investor, lender, guarantor, landlord, manager, officer, or director of any
person, partnership, corporation, or other entity (other than the Company or
its subsidiaries), or as an employee, agent, associate, broker, or consultant
of any person, partnership, corporation, or other entity (other than the
Company or its subsidiaries), any business (or segment of a business if such
business operates in more than one segment of the orthopedic industry) that
competes with any operations of the Company, as they exist at the time of
Employee's termination, within an one hundred (100)-mile radius of any
geographic area where Company is actually engaged in business, or maintains
sales or service representatives or employees; or (c) directly or indirectly,
solicit for employment or employ any employee of Company.

         2.2      Disclosures of Information. The Employee acknowledges that in
                  --------------------------
the course of his employment by the Company, he will receive certain trade
secrets, programs, methods of operation, financial information, lists of
customers, and other confidential information and knowledge concerning the
businesses of the Company (hereinafter collectively referred to as
"Information") that the Company desires to protect. As a material inducement to
Company to enter into this Agreement, and to pay to Employee the compensation
referred to in Section 1.4 hereof, Employee covenants and agrees that he shall
not, at any time during or following the term of his employment hereunder,
directly or indirectly, divulge or disclose, for any purpose whatsoever, any of
such Information which has been obtained by or disclosed to him as a result of
his employment by Company. The Employee further agrees that he will at no time
use the Information in competing with the Company. Upon termination of this
Agreement, the Employee shall surrender to the Company all lists, books,
financial information, records, literature, products, papers, documents,
writings, and other property produced by him or coming into his possession by
or through his employment relating to the Information, and the Employee agrees
that all such materials will at all times remain the property of the Company.
In the event of a breach or threatened breach by Employee of any of the
provisions of this Article 2, Company, in addition to and not in limitation of
any other rights, remedies or damages available to Company at law or in equity,
shall be entitled to a permanent injunction in order to prevent or to restrain
any such breach by Employee, or by Employee's partners, agents,
representatives, servants, employers, employees and/or any and all persons
directly or indirectly acting for or with him.

         2.3      Accounting for Profits. Employee covenants and agrees that if
                  ----------------------
he shall violate any of his covenants or agreements under Article 2 hereof,
Company shall be entitled to an accounting and repayment of all profits,
compensation, commissions, remunerations or benefits which Employee directly or
indirectly has realized and/or may realize as a result of, growing out of or in
connection with any such violation; such remedy shall be in addition to and not
in limitation of any injunctive relief or other rights or remedies to which
Company is or may be entitled at law or in equity or under this Agreement.

                                     -3-
<PAGE>

         2.4      Reasonableness of Restrictions.
                  ------------------------------

                  2.4.1   Employee has carefully read and considered the
provisions of Article 2 hereof and, having done so, agrees that the restrictions
set forth in such Article (including, but not limited to, the time period of
restriction and the geographical areas of restriction set forth in Article 2
hereof) are fair and reasonable and are reasonably required for the protection
of the interest of Company, its officers, directors and other employees.

                  2.4.2   In the event that, notwithstanding the foregoing, any
of the provisions of Article 2 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof shall nevertheless continue to
be valid and enforceable as though the invalid or unenforceable parts had not
been included therein. In the event that any provision of Article 2 relating to
time period and/or areas of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or areas such court
deems reasonable and enforceable, said time period and/or areas of restriction
shall be deemed to become and thereafter be the maximum time period and/or
areas which such court deems reasonable and enforceable.

                                    ARTICLE 3
                               EMPLOYEE INVENTIONS

         3.1      Employee Inventions. Employee shall promptly disclose to the
                  -------------------
Company or its designee any and all ideas, inventions, works of authorship
(including, but not limited to computer programs, software and documentation),
improvements, discoveries, developments, or innovations (hereinafter referred to
as "said inventions"), whether patentable or unpatentable, copyrightable or
uncopyrightable, made, developed, worked on, or conceived by Employee, either
solely or jointly with others, whether or not reduced to drawings, written
description, documentation, models, or other tangible form: (a) during the
Employment Term that relate to, or arise out of, any developments, services,
research, or products of, or pertain to the business of, the Company and (b) for
a period of six (6) months after termination of the Employment Term, said
inventions that relate to, or arise out of, any developments, services,
research, or products that Employee has been concerned with during the term of
his employment.

         3.2      Assignment. Employee hereby assigns and agrees to assign to
                  ----------
the Company, its successors and assigns, Employee's entire right, title, and
interest in and to any of said inventigns. All of said inventions shall
forthwith and without further consideration become and be the exclusive
property of the Company, it successors and assigns.

         3.3      Cooperation. Employee shall, without further compensation, do
                  -----------
all lawful things, including, but not limited to, maintaining invention records
that shall be the property of the Company, rendering assistance, giving of
evidence and testimony, and executing necessary documents, as requested, to
enable the Company to file and obtain patents in the United States and foreign
countries on any of said inventions, as well as to protect the Company's
interest in any of said inventions.

                                     -4-
<PAGE>

                                    ARTICLE 4
                                  MISCELLANEOUS

         4.1      Notices. All notices, requests, consents, and other
                  -------
communications under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or on the date mailed,
postage prepaid, by certified mail, return receipt requested, or telegraphed or
telexed and confirmed if addressed to the respective parties as follows: (a) if
to the Employee to the address set forth below, and (b) if to the Company to
Encore Medical Corporation, 9800 Metric Blvd., Austin, Texas 78758 ATTENTION:
Chairman of the Board. Either party hereto may designate a different address by
providing written notice of such new address to the other party hereto.

         4.2      Specific Performance. The Employee acknowledges that a remedy
                  --------------------
at law for any breach or attempted breach of Section 1.3 and Article 2 of this
Agreement will be inadequate, and agrees that the Company shall be entitled to
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach, and further agrees to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive or any other equitable relief. In the event the Company brings
legal action to enforce its rights hereunder, the Employee shall pay all of the
Company's court costs and legal fees and expenses arising out of such action if
the Company prevails in such action.

         4.3      Severability. Whenever possible, each provision of this
                  ------------
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

         4.4      Assignment. This Agreement may not be assigned by the
                  ----------
Employee.  Neither the Employee nor his spouse shall have any right to commute,
encumber, or otherwise dispose of any right to receive payments hereunder, it
being the intention of the parties that such payments and the rights thereto
are nonassignable and nontransferable. This Agreement is only assignable by the
Company to a parent, subsidiary, successor or other affiliate of the Company.

         4.5      Binding Effect. Subject to the provisions of Section 4.4 of
                  --------------
this Agreement, this Agreement shall be binding upon and inure to the benefit
of the parties hereto, the Employee's heirs and personal representatives, and
the successors and assigns of the Company.

         4.6      Governing Law. This Agreement shall be construed and enforced
                  -------------
in accordance with and governed by the laws of the State of Texas.

         4.7      Entire Agreement; Amendment. This Agreement contains the
                  ---------------------------
entire understanding between the parties, and there are no agreements or
understandings among the parties except as set forth herein. The Employee
represents and warrants to the Company that at the time of execution of this
Agreement he is not a party to any other employment agreement. Employee further
represents and warrants that he neither has any proprietary information of any

                                     -5-
<PAGE>

other business nor is he providing any other business' proprietary information
to the Company.  No alteration or modification of this Agreement shall be valid
except by subsequent written instrument executed by the parties hereto. No
waiver by either party of any breach by the other party of any provision or
condition of this Agreement in one circumstance shall be deemed a waiver of
such provision or condition in any other circumstances or be deemed a waiver of
any other provision or condition. The section and paragraph headings in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

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

                                   COMPANY:
                                   -------

                                   ENCORE MEDICAL CORPORATION

                                        /s/ Kenneth W. Davidson
                                   By: ___________________________
                                   Name: _________________________
                                   Title: ________________________

                                   EMPLOYEE:

                                   /s/ Kenneth W. Davidson
                                   -----------------------
                                   KENNETH W. DAVIDSON

                                   Address:   6133 Pasadena Pt.
                                              Gulfport, FL 33707

                                     -6-

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