Exhibit 4(a)
HANGER ORTHOPEDIC GROUP, INC.
Non-Qualified Stock Option Agreement
THIS AGREEMENT is made as of December 12, 2001, by and between HANGER
ORTHOPEDIC GROUP, INC., a Delaware corporation (the "Company"), and Xxx Xxxx &
Associates, Inc. (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 a non-qualified
stock option to purchase One Million Two Hundred Two Thousand Four Hundred
Thirty-Six (1,202,436) shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), in consideration for services rendered to the
Company by the Optionee pursuant to the terms of the letter agreement, dated
January 23, 2001 (the "Letter Agreement"), between the Company and the Optionee.
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 One Million Two Hundred
Two Thousand Four Hundred Thirty-Six (1,202,436) shares of Common Stock. This
option is not intended to qualify as an incentive stock option within the
meaning of Section 422A of the Internal Revenue Code of 1986, as amended.
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 its exercise of this option shall be $1.40, which price equals the
average closing price per share of the Common Stock on the New York Stock
Exchange for all trading days during the period from December 23, 2000 through
January 23, 2001, as required under the terms of the Letter Agreement. The
Optionee's right to exercise this option shall not vest until June 18, 2002,
from and after which time the Optionee may exercise this option in whole or in
part at any time prior to the expiration of this option on May 31, 2007 (the
"Option Period"). The right to exercise this option shall be cumulative to the
extent not theretofore exercised.
3. Method of Exercise and Payment for Shares. This option shall be
exercised by written notice from the Optionee and delivered to the Company at
its principal office, specifying the number of shares to be acquired upon such
exercise and delivering therewith by wire transfer of funds or a certified check
in an amount equal to the exercise price of the option multiplied by the number
of shares of Common Stock to be acquired upon such exercise of the option by the
Optionee.
4. Non-transferability of Option; Restricted Securities. This option is
not transferable by Optionee, except only after the written consent of the
Company, which shall not
be unreasonably withheld, in connection with a merger of the Optionee or the
transfer by the Optionee of all or substantially all of its assets (including
this option), in which event this option may be transferred by the Optionee to
such successor after the issuance of the written consent of the Company. The
shares of Common Stock acquired by Optionee upon any exercise of this option
shall be "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act of 1933 and Optionee shall be required to comply with and satisfy
all applicable laws in any resale transactions conducted by Optionee which
involve any such shares of Common Stock so acquired by Optionee under this
option.
5. 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 5(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 6(a) hereof, except the transactions described
in subsections 5(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, it 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 such event occurs prior to June 18, 2002. 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.
6. Adjustments Upon Certain Events. If the Company shall at any time
increase or decrease the number of its outstanding shares of Common Stock by
means of the payment of a stock dividend, a stock split or subdivision of
shares, a consolidation or combination of shares, or through a reclassification
of the then outstanding shares of Common Stock, then the aggregate number of
shares of Common Stock subject to this Option and the exercise price of this
Option shall be adjusted proportionately.
7. Binding Effect, Entire Agreement. Subject to the limitations stated
above, this Agreement shall be binding upon and inure to the benefit of the
Optionee (and its successor as provided in Section 4 of this Agreement) and 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.
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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 its
signature hereto.
HANGER ORTHOPEDIC GROUP, INC.
By:/s/ Xxxxxx XxXxxxx
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Xxxxxx XxXxxxx
Executive Vice President &
Chief Financial Officer
ACCEPTED BY:
XXX XXXX & ASSOCIATES, INC.
By:/s/ Xxxxxx X. Xxxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxxx
Treasurer
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TERM SHEET
This Term Sheet is intended to summarize the material provisions under
which each of Hanger Orthopedic Group, Inc. ("Hanger") and Xxx Xxxx &
Associates, Inc., now known as AlixPartners, LLC ("AlixPartners") desire to
amend the terms of (i) the Non-qualified Stock Option Agreement, dated as of
December 12, 2001, between Hanger and AlixPartners (the "Option Agreement") and
(ii) the Letter Agreement, dated January 23, 2001 between AlixPartners and
Hanger (the "Letter Agreement"). In the event each of Hanger and AlixPartners
confirm their agreement with the provisions of this Term Sheet by signing this
Term Sheet in the spaces provided below, then within five (5) business days
after the signing of this Term Sheet by both parties, Hanger will present this
matter to its Board of Directors for its approval. In the event of such Board
approval, Hanger will then cause its counsel to prepare the appropriate
transactional documents for the mutual approval of both Hanger and AlixPartners
in order to formally complete this matter. The material terms of this
transaction are as follows:
1. The Option Agreement will be amended to reduce the number of shares
of Hanger Common Stock underlying the Option Agreement by one-half (1/2) from
1,202,436 shares to 601,218 shares in consideration for the payment by Hanger to
AlixPartners of $2,392,704.00.
2. In the event the provisions of this Term Sheet are approved by the
Board of Directors of Hanger, then within fifteen (15) business days after such
approval by the Hanger Board of Directors, Hanger will file a registration
statement with the SEC with respect to the remaining 601,218 shares of Hanger
Common Stock which will underlie the Option Agreement after the amendment
thereof as described in the first paragraph of this Term Sheet and Hanger will
use its best efforts to obtain the effectiveness of that registration statement
with the SEC, with the subsequent sale by AlixPartners of such shares (a) being
subject to a volume limitation of no more than 40,000 shares being sellable by
AlixPartners in any calendar week thereafter until all such shares have been
sold, or (b) constituting a larger block trade on terms which are reasonably
acceptable to Hanger.
3. The Letter Agreement will be amended to reflect that any success
fees, if earned by AlixPartners, which are paid after the date of this Term
Sheet will only be paid in cash, with the right to receive a portion of any such
success fee in the form of a stock option for any further shares of Hanger
Common Stock being hereafter deleted from the terms of the Letter Agreement.
By signing this Term Sheet below, each of Hanger and AlixPartners
confirm their agreement with the provisions of this Term Sheet.
HANGER ORTHOPEDIC GROUP, INC. ALIXPARTNERS, LLC
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxxxx
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Name: Xxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxxxxxxx
Title: C.E.O. Title: Treasurer
Date: July 23, 2002 July 19, 2002
