Exhibit 4(b)
HANGER ORTHOPEDIC GROUP, INC.
Stock Option Agreement
THIS AGREEMENT is made as of October 15, 2001, by and between HANGER
ORTHOPEDIC GROUP, INC., a Delaware corporation (the "Company"), and Xxxxxx
XxXxxxx (the "Optionee").
W I T N E S S E T H:
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WHEREAS, the Company desires to grant to the Optionee an incentive stock
option under the Company's 1991 Stock Option Plan to purchase seventy-five
thousand (75,000) 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 seventy-five thousand (75,000) 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 $5.50, which price equals the
closing sale price per share of the Common Stock on the New York Stock Exchange
on October 12, 2001, being the last business day immediately preceding the
commencement of Optionee's employment with Company on October 15, 2001. 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), (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. [Paragraph Intentionally Deleted].
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 twelve (12) 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 (as defined in Optionee's Employment Agreement with the Company or a
subsidiary of the Company) or other than for the voluntary termination of
employment by Optionee, before expiration of the Option Period, the shares of
Common Stock underlying this option, to the extent not previously exercised,
shall become fully vested and exercisable, with this option thereafter being
exercisable at any time within twelve (12) months immediately following such
termination of employment (but in any event before the expiration of the Option
Period). If Optionee's employment is otherwise terminated for cause or the
voluntary termination of employment by Optionee, this option shall immediately
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 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.
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(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, Acceleration of Option Vesting.
(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 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
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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.
This Agreement shall be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its President and attested by its Secretary, and the Optionee has affixed his
signature hereto.
/s/ Xxxxxx XxXxxxx
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Xxxxxx XxXxxxx
Optionee
Attest: HANGER ORTHOPEDIC GROUP, INC.
/s/ Xxxxx Xxxxxxxx /s/ Xxxx X. Xxxxx
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Xxxxx Xxxxxxxx Xxxx X. Xxxxx
Secretary Chairman, President and Chief
Executive Officer
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HANGER ORTHOPEDIC GROUP, INC.
Amendment to Stock Option Agreement
THIS AMENDMENT, dated as of January 2, 2002, is entered into by and between
HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (the "Company"), and
Xxxxxx X. XxXxxxx (the "Optionee"), and amends the Stock Option Agreement, dated
as of October 15, 2001, by and between the Company and the Optionee (the "Stock
Option Agreement").
The Stock Option Agreement is hereby amended to provide that (i) the option
granted under the Stock Option Agreement is a nonqualified stock option and is
not an incentive stock option under the Company's 1991 Stock Option Plan; and
(ii) the provisions set forth as Section 3(iii) of the Stock Option Agreement,
which permits the withholding from shares issuable upon exercise of the option
that number of shares having an aggregate fair market value equal to the option
exercise price, is hereby eliminated as a method of exercise and payment under
the Stock Option Agreement. All other provisions of the Stock Option Agreement
remain unchanged.
IN WITNESS WHEREOF, the Company has caused this Amendment to be signed by
its President and attested by its Secretary, and the Optionee has affixed his
signature hereto.
/s/ Xxxxxx XxXxxxx
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Xxxxxx X. XxXxxxx
Optionee
ATTEST: HANGER ORTHOPEDIC GROUP, INC.
/s/ Xxxxx Xxxxxxxx /s/ Xxxx X. Xxxxx
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Xxxxx Xxxxxxxx Xxxx X. Xxxxx
Secretary Chairman and Chief Executive Officer
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