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EXHIBIT 10(gggg)
FOURTH AMENDMENT TO STOCK OPTION
AND VESTING AGREEMENTS
AND AMENDMENT AGREEMENT
THIS FOURTH AMENDMENT (this "Amendment"), dated as of October
27, 1995, is by and among Chemical Venture Capital Associates, A California
Limited Partnership ("CVCA"), Chemical Equity Associates, A California Limited
Partnership ("CEA"), Hanger Orthopedic Group, Inc., a Delaware corporation (the
"Company") and Messrs. Xxxxxx X. Xxxxxxxxxxx, Xxxx X. Xxxxx and Xxxxxxx X.
Xxxxx (such individuals hereinafter referred to individually as an "Optionee"
and collectively as the "Optionees"). This Amendment amends (i) the Stock
Option and Vesting Agreements, dated as of March 14, 1991, by and between CVCA
and the Optionees (the "Additional Manager Option Agreements") and (ii) the
Stock Option and Vesting Agreements, dated as of May 16, 1994, by and between
CVCA and the Optionees (the "New Manager Option Agreements").
WHEREAS, pursuant to the Stock Option and Vesting Agreements,
dated as of August 13, 1990, by and between CVCA and the Optionees (the
"Manager Option Agreements"), CVCA granted options to the Optionees and Xxxxxx
X. Xxxxxxx to purchase a total of 496,250 shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"), which number of shares
gave effect to the one-for-four reverse split of the Common Stock effected on
December 31, 1990; and, as a result of the cancellation on March 31, 1991 of an
option for 82,500 shares upon the resignation of Xxxxxx X. Xxxxxxx, options
were then held by the Optionees for a total of 413,750 shares (the "Manager
Options") under the Manager Option Agreements;
WHEREAS, pursuant to paragraph 3 of the Amendment Agreement,
dated as of August 13, 1990, by and among the Company, CVCA, CEA, the Optionees
and Xxxxxx X. Xxxxxxx (the "Amendment Agreement"), CVCA agreed to promptly pay
to the Company 27.5% of the exercise price received by CVCA upon the exercise
of any Manager Options (the "Company Payment");
WHEREAS, pursuant to the Additional Manager Option Agreements,
CVCA granted options to the Optionees (the "Additional Manager Options") to
purchase from CVCA an aggregate of 348,265 shares of Common Stock in accordance
with the terms of the Additional Manager Option Agreements;
WHEREAS, CVCA, CEA and Exeter Capital, L.P., a Delaware
Limited Partnership ("Exeter"), entered into an agreement, dated as of February
20, 1992 (the "Termination Agreement"), pursuant to paragraph 6 of which CVCA
and Exeter agreed to enter into an agreement amending each of the Manager
Option Agreements and
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Additional Manager Option Agreements to provide that Exeter would be obligated
as optionor with respect to 24.16% of the shares of Common Stock covered by
each of the Manager Options and Additional Manager Options;
WHEREAS, CVCA, CEA, Exeter, the Company and the Optionees
entered into an Amendment to Stock Option and Vesting Agreements and Amendment
Agreement, dated as of February 20, 1992 (the "First Amendment"), pursuant to
which, among other things, (i) each Manager Option Agreement and Additional
Manager Option Agreement was amended to provide that of the shares of Common
Stock underlying each Manager Option and Additional Manager Option, 75.84% of
the shares could be purchased by the Optionees from CVCA and 24.16% of the
shares could be purchased by the Optionees from Exeter, with each Optionee
being required to provide separate written notices to each of CVCA and Exeter
with respect to each exercise of a Manager Option or Additional Manager Option
by the Optionee, and that 75.84% and 24.16% of the shares of Common Stock
purchased and purchase price payable by the Optionee must be purchased from and
paid to CVCA and Exeter, respectively; (ii) the Amendment Agreement was amended
to provide that 75.84% and 24.16% of the Company Payment would be made by CVCA
and Exeter, respectively; and (iii) each of CVCA and Exeter would not be liable
for any obligation of the other under the Manager Option Agreements and the
Manager Options granted pursuant thereto or the Additional Manager Option
Agreements and the Additional Manager Options granted pursuant thereto, as
amended by the First Amendment;
WHEREAS, the Manager Option Agreements and the Manager Options
granted pursuant thereto expired on May 15, 1994, together with the expiration
on that date of the obligation of CVCA and Exeter to pay the Company Payment,
as set forth in the Amendment Agreement and the First Amendment;
WHEREAS, pursuant to the New Manager Option Agreements, CVCA
granted options to the Optionees to purchase a total of 313,788 shares of
Common Stock (the "New Manager Options") to replace the 75.84% portion of the
shares of Common Stock that were previously purchasable by the Optionees from
CVCA under the Manager Option Agreements and the Manager Options that expired
on May 15, 1994 (it being understood by the Company that it has no right to a
Company Payment with respect to such New Manager Option Agreements);
WHEREAS, CVCA, CEA, the Company and the Optionees entered into
a Second Amendment to Stock Option and Vesting Agreements and Amendment
Agreement, dated as of May 16, 1994 (the "Second Amendment"), pursuant to which
each Additional Manager Option Agreement between CVCA and the Optionees was
amended by replacing the then existing expiration date of December 14, 1994,
with a new expiration date of December 14, 1995, with such extension having no
effect on the expiration date of the exercise period relating to the 24.16%
portion of each Additional Manager Option, which expired on December 14, 1994
and for which Exeter was solely responsible as provided under the terms of the
First Amendment;
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WHEREAS, CVCA, CEA, the Company and the Optionees entered into
a Third Amendment to Stock Option and Vesting Agreements and Amendment
Agreement, dated as of September 22, 1994 (the "Third Amendment"), pursuant to
which each New Manager Option Agreement and each Additional Manager Option
Agreement between CVCA and the Optionees was amended by (i) changing the
exercise price per share of each New Manager Option and each Additional Manager
Option to equal $3.875, which exercise price exceeded the closing sale price of
$3.625 per share of Common Stock as reported on the American Stock Exchange as
of the close of business on September 22, 1994, (ii) extending the expiration
date of each New Manager Option from May 16, 1995 to March 22, 1996 and (iii)
extending the expiration date of each Additional Manager Option from December
14, 1995 to March 22, 1996; and
WHEREAS, CVCA, CEA, the Company and Xxxxxx X. Xxxxxxxxxxx each
desire to further amend each New Manager Option Agreement and each Additional
Manager Option Agreement between CVCA and Xxxxxx X. Xxxxxxxxxxx to (i) extend
the expiration date of the New Manager Option of Xxxxxx X. Xxxxxxxxxxx from
March 22, 1996 to March 22, 1997; (ii) extend the expiration date of the
Additional Manager Option of Xxxxxx X. Xxxxxxxxxxx from March 22, 1996 to March
22, 1997; and (iii) provide for the payment of the exercise price of the New
Manager Option and Additional Manager Option of Xxxxxx X. Xxxxxxxxxxx with cash
and/or the reduction in the number of shares of Common Stock issuable upon the
exercise of the subject option.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, the parties hereto agree as follows:
1. Each and all of the recital paragraphs set forth
above are hereby incorporated as if set forth herein.
2. Paragraph 3(b)(i) of the New Manager Option Agreement
between CVCA and Xxxxxx X. Xxxxxxxxxxx is hereby amended by replacing the
existing expiration date of March 22, 1996, with the new expiration date of
March 22, 1997.
3. Paragraph 3(b)(i) of the Additional Manager Option
Agreement between CVCA and Xxxxxx X. Xxxxxxxxxxx is hereby amended by replacing
the existing expiration date of March 22, 1996, with the new expiration date of
March 22, 1997.
4. Paragraph 5 of the New Manager Option Agreement
between CVCA and Xxxxxx X. Xxxxxxxxxxx is hereby amended by replacing the
existing text thereof with the following language:
5. Exercise of Option. Written notice of the
exercise of the Option or any portion thereof shall be given
to CVCA accompanied by the aggregate Exercise Price for the
Option Shares proposed to be acquired payable (i)
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in cash by certified or bank cashier's check, (ii) by
instructing CVCA to cancel that portion of this Option
exercisable for that number of shares of Company Common Stock
(the "Relinquished Shares") having an aggregate Market Value
on the last business day immediately preceding the date of
exercise equal to sum of (A) the Exercise Price multiplied by
the number of Relinquished Shares plus (B) the Exercise Price
multiplied by the number of shares subject to such exercise or
(iii) by a combination of the foregoing. If any exercise is
made pursuant to clause (ii) above, the Option shall
automatically be adjusted to reduce the number of shares
issuable upon exercise of the Option by the number of
Relinquished Shares. No exercise may be made pursuant to
clause (ii) above if the number of shares subject to such
exercise and the number of Relinquished Shares exceeds the
number of shares issuable upon exercise of the Option. As
used herein, "Market Value" means as to any security the
average of the closing prices of such security's sales on the
United States securities exchanges on which such security may
at the time be listed, or, if there have no sales on any such
exchange on the subject day, the average of the highest bid
and lowest asked prices on such exchange at the end of such
day, or, if on any such day such security is not so listed,
the average of the representative bid and asked prices quoted
on the NASDAQ System as of 4:00 P.M., New York time on such
day, or, if on any day such security is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or
any similar or successor organization.
5. Paragraph 5 of the Additional Manager Option
Agreement between CVCA and Xxxxxx X. Xxxxxxxxxxx is hereby amended by replacing
the existing text thereof with the following language:
5. Exercise of Option. Written notice of the
exercise of the Option or any portion thereof shall be given
to CVCA accompanied by the aggregate Exercise Price for the
Vested Shares proposed to be acquired payable (i) in cash by
certified or bank cashier's check, (ii) by instructing CVCA to
cancel that portion of this Option exercisable for that number
of shares of Company Common Stock (the "Relinquished Shares")
having an aggregate Market Value on the last business day
immediately preceding the date of exercise equal to sum of (A)
the Exercise Price multiplied by the number of Relinquished
Shares plus (B) the Exercise Price multiplied by the number of
shares subject to such exercise or (iii) by a combination of
the foregoing. If any exercise is made
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pursuant to clause (ii) above, the Option shall automatically
be adjusted to reduce the number of shares issuable upon
exercise of the Option by the number of Relinquished Shares.
No exercise may be made pursuant to clause (ii) above if the
number of shares subject to such exercise and the number of
Relinquished Shares exceeds the number of shares issuable upon
exercise of the Option. As used herein, "Market Value" means
as to any security the average of the closing prices of such
security's sales on the United States securities exchanges on
which such security may at the time be listed, or, if there
have no sales on any such exchange on the subject day, the
average of the highest bid and lowest asked prices on such
exchange at the end of such day, or, if on any such day such
security is not so listed, the average of the representative
bid and asked prices quoted on the NASDAQ System as of 4:00
P.M., New York time on such day, or, if on any day such
security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar or successor
organization.
6. Except as otherwise herein amended, the terms and
conditions of the New Manager Option Agreements, the Additional Manager Option
Agreements and the Amendment Agreement shall remain in force.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
CHEMICAL VENTURE CAPITAL ASSOCIATES
By: CHEMICAL VENTURE PARTNERS,
Its General Partner
By: XXXXXXXX X. XXXXX, M.D.
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Xxxxxxxx X. Xxxxx, M.D.,
Executive Partner
CHEMICAL EQUITY ASSOCIATES
By: CHEMICAL VENTURE PARTNERS,
Its General Partner
By: XXXXXXXX X. XXXXX, M.D.
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Xxxxxxxx X. Xxxxx, M.D.,
Executive Partner
HANGER ORTHOPEDIC GROUP, INC.
By: XXXX X. XXXXX
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Xxxx X. Xxxxx
President
OPTIONEE
XXXXXX X. XXXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxxx
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