EXHIBIT 1
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 a
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.
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
