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EXHIBIT 10(llll)
HANGER ORTHOPEDIC GROUP, INC.
Incentive Stock Option Agreement
THIS AGREEMENT is made as of February 21, 1996, by and between
HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxxx (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company desires to grant to the Optionee an
incentive stock option under the Company's 1991 Stock Option Plan to purchase
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), in consideration for the Optionee's service to the Company.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, do agree as follows:
1. Grant of Option. Subject to the terms and conditions
of this Agreement, the Company hereby grants to Optionee the right and option
to purchase from the Company all or part of an aggregate of 33,000 shares of
Common Stock. This option is intended to constitute an incentive stock option
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Option Price and Time of Exercise. The per-share
purchase price at which the shares subject to option hereunder may be purchased
by Optionee pursuant to his exercise of this option shall be $3.50, which price
equals the closing sale price per share of the Common Stock on the American
Stock Exchange on February 21, 1996, the date of grant of this option. The
Optionee's right to exercise this option shall vest as to 25% of the shares of
Common Stock underlying the option at the end of each of the first four years
following the date hereof. The right to exercise the option shall be
cumulative to the extent not theretofore exercised. The right to exercise the
option shall in all events expire, except as provided in Paragraph 7 below,
after the day preceding the tenth anniversary hereof (the "Option Period").
3. Method of Exercise and Payment for Shares. This
option shall be exercised by written notice directed to the Company at its
principal office, specifying the number of shares to be acquired upon such
exercise and indicating whether the exercise is being paid for (i) in cash,
(ii) in shares of Common Stock already owned by the Optionee and valued at
their fair market value on the date of exercise of the option, (iii) by
requesting the Company to withhold from the number of shares of Common Stock
otherwise issuable upon exercise of the option that number of shares of Common
Stock having an aggregate fair market value on the date of exercise equal to
the option price for all the shares of Common Stock subject to such exercise,
or (iv) by a combination of (i),
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(ii) and/or (iii) above.
4. Non-transferability. This option is not transferable
by Optionee except as otherwise provided in Paragraph 7 below, and during
Optionee's lifetime is exercisable only by him.
5. Agreement to Continue in Employment. The Optionee
hereby agrees to remain in the employment of the Company, at the pleasure of
the Company, for a continuous period of at least six months after the date
hereof, at the salary rate in effect as of the date hereof or at such increased
salary as may be fixed, from time to time, by the Company.
6. Notice of Sale of Stock; Withholding. The Optionee
hereby agrees to notify the Company in writing if any shares of Common Stock
acquired hereunder are "disposed of" within the meaning of Section 422A of the
Code, within two years after the date of grant of this option or within one
year after the transfer of such shares of Common Stock to the Optionee. If the
Optionee does "dispose of" any shares of Common Stock acquired hereunder within
either such time period, then the Optionee further agrees to make appropriate
arrangements with the Company to provide for the amount of additional
withholding required by Sections 3102 and 3402 of the Code and applicable state
income tax laws.
7. Exercise After Death or Termination of Service to the
Company. In the event Optionee dies before the expiration of this option,
Optionee's estate, or the person or persons to whom his rights under this
option shall pass by will or the laws of descent and distribution, may exercise
this option, to the extent exercisable at the date of death, at any time within
six months following Optionee's death (but in any event before the expiration
of the Option Period). In the event Optionee ceases to be employed by the
Company or a subsidiary of the Company by reason of termination of employment
other than for cause, before expiration of the Option Period, Optionee may
exercise this option, to the extent exercisable upon termination of employment,
at any time within three months next following such termination of employment
(but in any event before the expiration of the Option Period). If Optionee's
employment is otherwise terminated, this option shall terminate at the time of
such termination of employment.
8. Adjustments.
(a) Adjustments by Stock Split, Stock Dividend, Etc. If
the Company shall at any time increase or decrease the number of its
outstanding shares of Common Stock, or change in any way the rights and
privileges of such shares, by means of the payment of a Common Stock dividend
or the making of any other distribution upon such shares payable in Common
Stock, or through a Common Stock split or subdivision of shares, or a
consolidation or combination of shares, or through a reclassification or
recapitalization involving the Common Stock, then the numbers, rights and
privileges of the shares of Common Stock underlying the option granted
hereunder shall be
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increased, decreased or changed in like manner as if they had been issued and
outstanding, fully paid and nonassessable at the time of such occurrence.
(b) Dividend Payable in Stock of Another
Corporation, Etc. If the Company shall at any time pay or make any dividend or
other distribution upon the Common Stock payable in securities or other
property (except money or Common Stock), a proportionate part of such
securities or other property shall be set aside and delivered to the Optionee
upon exercise hereof.
(c) Apportionment of Price. Upon any occurrence
described in the preceding subsections (a) and (b) of this Section 8, the total
option price hereunder shall remain unchanged but shall be apportioned ratably
over the increased or decreased number or changed kinds of securities or other
property subject to this option.
(d) Rights to Subscribe. If the Company shall at
any time grant to the holders of its Common Stock rights to subscribe pro rata
for additional shares thereof or for any other securities of the Company or of
any other corporation, there shall be added to the number of shares underlying
this option the Common Stock or other securities which the Optionee would have
been entitled to subscribe for if immediately prior to such grant the Optionee
had exercised his entire option, and the option price shall be increased by the
amount which would have been payable by the Optionee for such Common Stock or
other securities.
(e) Determination by the Company. Adjustments
under this Section 8 shall be made by the Company, whose determinations with
regard thereto shall be final and binding. No fractional shares of Common
Stock shall be issued on account of any such adjustment.
9. Merger, Consolidation, Etc.
(a) Effect of Transaction. Upon the occurrence
of any of the following events, if the notice required by Section 9(b) hereof
shall have first been given, the option granted hereunder shall automatically
terminate and be of no further force and effect whatsoever, without the
necessity for any additional notice or other action by the Company: (i) the
merger, consolidation or liquidation of the Company or the acquisition of its
assets or stock pursuant to a nontaxable reorganization, unless the surviving
or acquiring corporation, as the case may be, shall assume all outstanding
options of the Company or substitute new options for them pursuant to Section
425(a) of the Code; (ii) the dissolution or liquidation of the Company; (iii)
the appointment of a receiver for all or substantially all of the Company's
assets or business; (iv) the appointment of a trustee for the Company after a
petition has been filed for the Company's reorganization under applicable
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statutes; or (v) the sale, lease or exchange of all or substantially all of the
Company's assets and business.
(b) Notice of Such Occurrences. At least 30
days' prior written notice of any event described in Section 9(a) hereof,
except the transactions described in subsections 9(a)(iii) and (iv) as to which
no notice shall be required, shall be given by the Company to the Optionee. If
the Optionee is so notified, he may exercise all or a portion of the entire
unexercised portion of this option at any time before the occurrence of the
event requiring the giving of notice, regardless of whether all conditions of
exercise relating to continuation of employment for specified periods of time
have been satisfied. Such notice shall be deemed to have been given when
delivered personally to the Optionee or when mailed to the Optionee by
registered or certified mail, postage prepaid, at the Optionee's last address
known to the Company.
10. Binding Effect, Entire Agreement. Subject to the
limitations stated above, this Agreement shall be binding upon and inure to the
benefit of the personal representatives of Optionee and the successors of the
Company. This Agreement constitutes the entire agreement between the parties
and cannot be altered, modified, or changed in any way unless made in writing
and signed by the party against whom such alteration, modification, or change
is asserted.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be signed by its President and its corporate seal to be hereunto affixed and
attested by its Chairman, and the Optionee has affixed his signature hereto.
XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Optionee
Attest: HANGER ORTHOPEDIC GROUP, INC.
XXXXXXX X. XXXXX By: XXXX X. XXXXX
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Xxxxxxx X. Xxxxx Xxxx X. Xxxxx
Secretary President
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