Exhibit 10.1

 

EMPLOYMENT AND NON-COMPETE AGREEMENT

 

This EMPLOYMENT AND NON-COMPETE AGREEMENT (this “Agreement”) is made effective
as of August 25, 2014, between HANGER PROSTHETICS & ORTHOTICS, INC., a Delaware
corporation (the “Company”); and Melissa Debes (“Executive”).  The Company and
Executive agree as follows:

 

1.                                      Employment. The Company agrees to employ
Executive and Executive accepts such employment by the Company upon the terms
and conditions set forth in this Agreement, for the period beginning on
September 8, 2014 (the “Commencement Date”) and ending upon termination pursuant
to Section 4 (the “Employment Period”).  Executive represents and warrants that
Executive is not subject to any restrictive covenants (including, without
limitation, covenants not to compete and covenants not to solicit) that could
possibly prevent Executive from entering into this Agreement or providing
services on the Company’s behalf. Executive agrees not to use or disclose in the
course of Executive’s employment with the Company any confidential information
or trade secrets of any other Person.

 

2.                                      Services. During the Employment Period,
Executive agrees (i) to devote Executive’s best efforts and substantially all of
Executive’s business time and attention to the business affairs of the Company
(except for reasonable vacation periods subject to the reasonable approval of
the Company or reasonable periods of illness or other incapacity); (ii) to
render such services as the Company or Hanger, Inc. (“Hanger”) may from time to
time direct; (iii) that Executive will not, except with the prior written
consent of the Company, become engaged in or render services for any business
other than the business of the Company; and (iv) that Executive will follow the
policies and procedures of the Company, as set forth by the Company from time to
time, as well as all applicable laws, rules and regulations, including with
respect to healthcare.

 

3.                                      Salary, Bonus, Stock Options, Other
Benefits.  In consideration for the valuable services to be rendered by
Executive and for Executive’s agreement not to compete against the Company as
described in Section 6 and not to disclose or use Confidential Information of
the Company as described in Section 7, the Company hereby agrees as follows:

 

3.1                                               Salary.  From and after the
Commencement Date, the Company will pay Executive a gross salary in periodic
installments (the “Base Salary”) that, when annualized, is equivalent to Three
Hundred Thousand Dollars ($300,000.00).  The Base Salary will be paid according
to the Company’s normal payroll cycle and practices, which practices include the
withholding of applicable payroll taxes and other normal adjustments and
deductions.  Executive’s Base Salary may be adjusted annually each year based on
an annual performance review as determined in the reasonable discretion of the
Company.

 

3.2                                               Bonus Plan. Executive shall
also be eligible to receive cash bonus compensation (“Bonus”) for each full
calendar year during the Employment Period (which shall be deemed to include on
a pro-rated basis, the portion of the calendar year 2014 during which Executive
is employed with the Company, provided that Executive remains continuously
employed with the Company for the remainder of 2014).  The targeted Bonus is
forty percent (40%) of the Base Salary and is contingent on Executive meeting or
exceeding certain performance goals and/or Hanger achieving certain year-end
financial criteria, all as determined in the reasonable discretion of

 

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Hanger. If Executive fails to meet such goals and/or Hanger fails to achieve
such criteria, the Bonus will range from zero percent (0%) of the Base Salary to
forty percent (40%) of the Base Salary. If Executive exceeds such goals and
Hanger achieves or exceeds such criteria, the Bonus will range from forty
percent (40%) of the Base Salary to eighty percent (80%) of the Base Salary.
Notwithstanding the foregoing, in the event that Executive or Hanger fail to
attain their minimum respective goals or criteria in any given year, Hanger may,
in its reasonable discretion, decline to award any Bonus to Executive. Such
Bonus shall be payable between January 1 and March 15 (inclusive) of the
calendar year following the calendar year for which the bonus is determined in
accordance with Hanger’s normal practices.

 

3.3                               Stock Options & Restricted Stock.

 

(a)                                 In addition to the compensation described in
Section 3.1 and Section 3.2 of this Agreement, Executive may have the
opportunity to receive options to purchase stock or restricted shares of stock
of Hanger in a manner consistent with any stock option or restricted share plan
adopted by Hanger. The determination as to the amount of stock, if any, to be
purchased under such stock option or restricted share plan shall be subject to
the sole discretion of the Board of Directors of Hanger or a committee thereof.

 

(b)                                 As an incentive for Executive’s future
performance in improving shareholder value, Executive will be entitled to
receive a special, time-based grant of five thousand (5,000) restricted shares
of Hanger stock (“Special Grant”).  The grant date of the Special Grant shall be
no later than thirty (30) days after the Commencement Date of the Original
Agreement.  The Special Grant shall be subject to such other terms and
conditions as reasonably determined by the Board of Directors of Hanger or a
committee thereof, consistent with the terms and conditions of the applicable
stock option or restricted share plan and agreement(s) executed in connection
therewith.

 

(c)                                  The options or restricted shares described
in Section 3.3(a) and Section 3.3(b) shall be evidenced by one or more stock
option agreements or restricted share agreements (each, a “Stock Agreement”)
between Executive and Hanger, which Stock Agreement(s) shall provide for a
vesting schedule of four (4) years, in equal parts, of the options or restricted
shares granted thereunder.

 

3.4                               Benefits.  Executive shall be entitled to four
(4) weeks of vacation per year and sick leave and medical and other benefits
consistent with those received by other similarly-situated executives of the
Company as determined in the sole discretion of Hanger’s executive management.
Executive shall also receive an automobile allowance in an amount equal to Five
Hundred Dollars ($500.00) per month.

 

3.5                               Determination of Cap or Payment.

 

(a)                                 If any benefit to be received by Executive
under this Agreement, either alone or in conjunction with any other payment or
benefit to which the Executive is entitled (the “Total Benefits”), would be
subject to an excise tax pursuant to Internal Revenue Code (“Code”)
Section 4999, then the Total Benefits payable in cash shall first be reduced
(such reduction to be applied first to the payments otherwise scheduled to occur
the earliest), and the

 

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Total Benefits to be provided on a non-cash basis shall thereafter be reduced
(such reduction to be applied first to the benefits otherwise scheduled to occur
the earliest), to the minimum extent necessary so that no portion of the Total
Benefits is subject to such excise tax; provided that such reduction shall only
apply if the net amount of the Total Benefits, as so reduced (and after
subtracting the net amount of federal, state and local income taxes on such
reduced Total Benefits) is greater than or equal to the net amount of the Total
Benefits without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Benefits and the amount of
excise taxes to which Executive would be subject in light of such unreduced
Total Benefits).

 

(b)                                 The determination of whether excise taxes
will apply as a result of the provision of the Total Benefits hereunder will be
made by independent tax counsel selected and paid by the Company.

 

4.                                      Termination of Employment. The
Employment Period will continue from the Commencement Date until terminated by
(a) Executive’s death or permanent disability which renders Executive unable to
perform the essential functions of Executive’s duties hereunder, with or without
reasonable accommodation; (b) Executive, including Executive’s resignation;
(c) the Company for Cause; or (d) the Company without Cause. If Executive
terminates Executive’s employment under Section 4.1(b), written notice of at
least thirty (30) days shall be provided to the Company in accordance with the
provisions of Section 8; and if the Company terminates Executive’s employment
under Section 4.1(d), written notice of at least thirty (30) days shall be
provided to Executive in accordance with the provisions of Section 8. For
purposes of this Section 4.1, “Cause” shall mean (i) the repeated failure or
refusal of Executive to follow the lawful directives of the Company or its
designee (except due to sickness, injury or disabilities), (ii) gross
inattention to duty or any other willful, reckless or grossly negligent act (or
omission to act) by Executive, which, in the good faith judgment of the Company,
materially injures the Company, including the repeated failure to follow the
policies and procedures of the Company, (iii) a material breach of this
Agreement by Executive, (iv) the commission by Executive of a felony or other
crime involving moral turpitude or the commission by Executive of an act of
financial dishonesty or (v) the failure of Executive to meet acceptable and
ordinary performance standards commensurate with the position then held by
Executive after notice and an opportunity to cure.

 

5.                                      Non-Compete.

 

5.1                               In the event the Employment Period is
terminated under Section 4(b) or Section 4(c), then Section 5(b) will apply to
Executive. In the event the Employment Period is otherwise terminated, such as
without Cause, then no part of Section 5(b) will apply to Executive.  All other
provisions of Section 5 will apply to Executive regardless of the reason for
termination of the Employment Period.

 

5.2                               Executive recognizes and acknowledges that by
virtue of signing this Agreement and accepting employment hereunder, Executive
will receive training materials, Trade Secrets and other Confidential
Information and will acquire additional valuable training and knowledge, enhance
Executive’s professional skills and experience, and learn additional proprietary
Trade Secrets and Confidential Information of the Company.  In consideration of
the

 

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foregoing and this employment contract, Executive agrees that Executive will
not, during Executive’s term of employment and for a period of two (2) years
after the termination of such employment, directly or indirectly (i) engage,
whether as principal, agent, investor, representative, or stockholder (other
than as the holder of not more than five percent (5%) of the stock or equity of
any corporation the capital stock of which is publicly traded), any employee,
consultant, volunteer or otherwise, with or without pay, in any activity or
business venture anywhere within the continental United States that is
competitive with the business of the Company and/or Hanger (including any direct
or indirect subsidiary of Hanger) on and prior to the termination of Executive’s
employment, (ii) solicit or entice or endeavor to solicit or entice away from
the Company and/or Hanger (including any direct or indirect subsidiary of
Hanger) any director, officer, employee, agent or consultant of the Company
and/or Hanger (including any direct or indirect subsidiary of Hanger), with whom
Executive had contact during Executive’s employment with the Company, either on
Executive’s own account or for any Person, firm, corporation or other
organization, regardless of whether the Person solicited would commit any breach
of such Person’s contract of employment by reason of leaving the Company’s
service; (iii) solicit or entice or endeavor to solicit or entice away any of
the referral sources, patients, clients or customers of the Company and/or
Hanger (including any direct or indirect subsidiary of Hanger) with whom
Executive had contact during Executive’s employment with the Company for the
purpose of competing with the business of the Company and/or Hanger (including
any direct or indirect subsidiary of Hanger), either on Executive’s own account
or for any other Person, firm, corporation or organization; (iv) employ or
otherwise utilize (whether as a consultant, advisor or otherwise) any Person who
was a director, officer, or employee of the Company and/or Hanger (including any
direct or indirect subsidiary of Hanger) at any time during the two (2) years
preceding the termination of the Employment Period and with whom Executive had
contact during Executive’s employment with the Company, unless such Person’s
employment was terminated by the Company and/or Hanger (including any direct or
indirect subsidiary of Hanger); or (v) employ or otherwise utilize (whether as a
consultant, advisor or otherwise) any Person who is or may be likely to be in
possession of any Confidential Information.  Executive agrees that the restraint
imposed under this Section 5 is reasonable and not unduly harsh or oppressive. 
The parties hereto agree that if, in any proceeding, the Court or other
authority shall refuse to enforce covenants set forth in this Section 5, because
such covenants cover too extensive a geographic area or too long a period of
time, any such covenant shall be deemed appropriately amended and modified in
keeping with the intention of the parties to the maximum extent permitted by
law.

 

5.3                               Since a material purpose of this Agreement is
to protect the Company’s investment in Executive and to secure the benefits of
Executive’s background and general experience in the industry, the parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Section 5 or Section 6 and that any
such breach will cause the Company irreparable harm.  Therefore, in the event of
a breach by Executive of any of the provisions of this Section 5 or Section 6,
the Company or its successors or assigns may, in addition to other rights and
remedies existing in its favor, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions of this Agreement.

 

5.4                               Executive specifically authorizes and permits
the Company to provide any Person with which Executive serves (or may serve) as
an employee, director, owner,

 

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stockholder, consultant, partner (limited or general) or otherwise with a copy
of this Agreement or a general description of some or all of the terms of this
Agreement.

 

6.                                      Confidential Information; Return of
Property. During Executive’s employment with the Company and for an unlimited
period of time thereafter, this Section 6 shall apply to Executive.

 

6.1                               Executive acknowledges that the Confidential
Information to be obtained by Executive during the Employment Period is the
property of the Company.  Unless Executive secures the Company’s written
consent, Executive will not disclose, use, disseminate, lecture upon, or publish
Confidential Information, whether or not such Confidential Information was
developed by Executive.

 

6.2                               Definitions.

 

(a)                                 “Confidential Information” means information
disclosed to Executive or known by Executive as a result of Executive’s
employment with the Company, not generally known in the industry, about the
Company’s product specifications, service specifications, manufacturing
procedures, technology, designs, know-how, research and development programs,
sales methods, sales levels and quantities, costs, margins, customer usages and
requirements, designs, specifications, developments, discoveries, inventions,
products, techniques, processes, methods, programs, formulas, notes, equipment,
plans, devices, computer programs, hardware or software, including, without
limitation, flow charts, logic diagrams, passwords, source code and object code,
documentation, data services, suppliers, referral sources, patients, clients or
customers, including, but not limited to, clinical programs, procedures and
protocols, research, operating manuals, business methods, financial strategic
planning, client retention, customer, patient, client, referral source and
supplier lists, data processing, insurance plans, risk management, marketing,
contracting, selling and employees, including, without limitation, Trade
Secrets.

 

(b)                                 “Trade Secret” shall mean information,
including a formula, pattern, compilation, program, device, method, technique,
process, financial data, or list of actual or potential customers or suppliers
that: (a) derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.

 

6.3                               Executive agrees to preserve for the Company’s
exclusive use and deliver to the Company at the termination of Executive’s
employment, or at any other time the Company may request, all Company equipment
and property (including, without limitation, tools, computers, mobile
communication devices and furniture) and all memoranda, data, notes, plans,
records, reports and other documents, whether in electronic, written or other
form (and copies thereof), relating to the business of the Company which
Executive may then possess or have under Executive’s control.

 

7.                                      Miscellaneous. Whenever possible, each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law.  The parties agree

 

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that (i) the provisions of this Agreement shall be severable in the event that
any of the provisions hereof are for any reason whatsoever invalid, void or
otherwise unenforceable, (ii) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions which are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (iii) the remaining provisions
shall remain enforceable to the fullest extent permitted by law. This Agreement
embodies the complete agreement and understanding among the parties and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors and assigns. Executive may not assign Executive’s rights or delegate
Executive’s obligations hereunder without the prior written consent of the
Company. The Company may assign its rights and delegate its duties hereunder
without the consent of Executive to Permitted Transferees. All questions
concerning the construction, validity and interpretation of the Agreement will
be governed by the internal law, and not the law of conflicts, of the State of
Texas.  All disputes under this Agreement shall be submitted to and governed by
binding arbitration with an arbitrator experienced in corporate health care from
the American Arbitration Association; except only that the Company may seek
relief in a court of competent jurisdiction in the event of a claimed violation
of Section 5 or Section 6 of this Agreement. Executive hereby agrees that any
action or proceeding regarding or relating to this Agreement that is properly
submitted to a court of competent jurisdiction as described in the preceding
sentence shall be subject to the exclusive jurisdiction of the courts of the
State of Texas, County of Travis, or, if it has or can acquire jurisdiction, in
the United States District Court for the Western District of Texas, and each of
the parties hereto consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein.  Process in any action or proceeding referred
to in the preceding sentence may be served on any party hereto anywhere in the
world. Any provision of this Agreement may be amended or waived only with the
prior written consent of the Company and Executive.  Notwithstanding anything in
this Agreement to the contrary, the Company shall unilaterally have the right to
amend this Agreement to comply with Section 409A of the Code.  This Agreement
may be executed in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.  The parties further agree that facsimile signatures or signatures
scanned into .pdf (or similar) format and sent by e-mail shall be deemed
original signatures.

 

8.                                      Notices. Any notice to be given
hereunder shall be in writing and delivered personally or sent by certified
mail, postage prepaid, return receipt requested, addressed to the party
concerned at the address indicated below or at such other address as such party
may subsequently be designated by like notice:

 

If to the Company:

 

Vice President, Human Resources

c/o Hanger, Inc.

10910 Domain Drive, Suite 300

Austin, Texas 78758

 

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If to Executive:

 

Melissa Debes

(Intentionally Omitted)

 

9.                                      Severance.

 

9.1                                               In the event that Executive’s
employment with the Company is terminated under Section 4(a), Section 4(b),
Section 4(c), Executive shall receive no severance payments or salary
continuation whatsoever.

 

9.2                                               In the event Executive’s
employment with the Company is terminated under Section 4(d), then the Company
shall provide Executive with salary continuation in a total aggregate amount
equal to the sum of six (6) months of the Base Salary (at the annualized rate in
effect immediately prior to termination), to be paid out in equal installments
over a six (6) month period, with such payments to commence within thirty (30)
days following Executive’s execution on or following Executive’s last day of
work with the Company of the agreement and general release described in this
Section 9.2. Nothing in this Section 9.2 shall preclude the Company from
exercising any rights or remedies available to it at law or in equity.
Notwithstanding anything in this Agreement to the contrary, Executive shall not
be entitled to any payments under this Section 9.2 unless Executive has first
duly executed a form of agreement and general release acceptable to the Company
releasing the Company from certain claims Executive may have in connection with
Executive’s employment with the Company and the termination thereof, to the
extent permitted by law.

 

10.                               Benefit and Severance Limitations. 
Notwithstanding anything in this Agreement to the contrary, each of the
following shall, without limiting any other remedies available to the Company,
be considered a breach of this Agreement completely relieving the Company of any
obligations due or owing at any time to Executive under Section 9: (i) the
failure of Executive to use Executive’s best efforts to ensure a smooth
transition to Executive’s successor; or (ii) the breach by Executive of any of
the provisions of Sections 5 or 6. Nothing in this Agreement shall preclude the
Company from exercising any rights or remedies available to it at law or in
equity.

 

11.                               Definitions.

 

11.1                        The “Company” shall include Hanger and any other
past, present or future direct or indirect subsidiaries of Hanger.

 

11.2                        “Permitted Transferee” shall mean (a) any successor
by merger or consolidation to the Company or any Permitted Transferee; (b) any
purchaser of all or substantially all of the Company’s or any Permitted
Transferee’s assets; (c) any parent or subsidiary corporation of the Company;
and (d) any lender to (i) the Company, (ii) any Permitted Transferee and/or
(iii) any affiliate of the Company or of any Permitted Transferee.

 

11.3                        “Person” shall mean and include an individual, a
partnership, a joint

 

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venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a governmental entity or any department or agency thereof.

 

12.                               Acknowledgement. Executive acknowledges and
agrees that Executive has been given ample time and fair opportunity to review
this Agreement, to ask any questions Executive might have, to consult with an
attorney or other professional and to suggest alternative provisions. Executive
further states that Executive understands the meaning and import of the terms
and provisions of this Agreement, that the Company has not unfairly or unduly
influenced Executive to sign this Agreement and that Executive willingly and
voluntarily enters into this Agreement as a condition of Executive’s employment
and for fair and reasonable consideration.

 

[The next page is the signature page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

HANGER PROSTHETICS & ORTHOTICS, INC.

 

 

 

 

 

 

 

By:

/s/ Andrew C. Morton

 

 

Andrew C. Morton

 

 

Vice President & Chief Human Resources Officer

 

 

 

 

 

 

 

 

/s/ Melissa Debes

 

 

Melissa Debes

 

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