Exhibit 10.4

 

HANGER, INC.

Performance Share Unit Agreement for Executives

 

THIS AGREEMENT (this “Agreement”) is made by and between HANGER, INC., a
Delaware corporation (the “Company”), and the employee (“Employee”) identified
on the Company’s online electronic list of persons to whom a grant of
Performance Share Units has been made by the Company.

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to award to the Employee Performance Share Units
relating to the Company’s common stock, par value $.01 per share (the “Common
Stock”), under the Company’s Special Equity Plan (the “Plan”) in consideration
for the Employee’s service to the Company and its Affiliates.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, do agree as
follows:

 

1.                                      Award of Performance Share Units. 
Subject to the terms and conditions of this Agreement and the Plan, the Employee
is granted Performance Share Units relating to the number of shares of Common
Stock as set forth on the Company’s online electronic list as being granted to
the Employee (hereinafter such units are referred to as the “Target Performance
Share Units”) as of the date shown on the Company’s online electronic list as
being the date of grant to the Employee (the “Grant Date”).

 

2.                                      Performance Share Units Non-Assignable
and Non-Transferable.  Each Performance Share Unit and all rights under this
Agreement shall be non-assignable and non-transferable other than by will or the
laws of descent and distribution in accordance with the Plan and may not be
sold, pledged, hypothecated, assigned or transferred, except only as to such
shares of Common Stock, if any, which have been issued in settlement of the
Performance Share Units upon vesting pursuant to the terms of the Plan and this
Agreement.  The foregoing prohibition against transfer or assignment, together
with the obligation to forfeit the Performance Share Units upon (i) termination
of service with the Company and/or its Affiliates as set forth in Section 3 of
this Agreement, (ii) failure to achieve the performance goal set forth in
Section 4 of this Agreement and/or (iii) a breach by Employee of the
confidentiality provisions as set forth in Section 10 of this Agreement, are
herein collectively referred to as the “Forfeiture Restrictions.”  The
Forfeiture Restrictions shall be binding upon and enforceable against any
transferee of the Performance Share Units.

 

3.                                      Termination of Employment.  In the event
of the Employee’s termination of employment with the Company and its Affiliates
prior to the date shares of Common Stock are issued in settlement of any
Performance Share Units (i) by reason of total and permanent disability (within
the meaning of Code Section 409A) or death, (ii) by the Company without “Cause”
(as defined by the Employee’s Employment Agreement with the Company), or
(iii) by reason of “Retirement” (as defined by Employee’s Employment Agreement
with the Company), the Employee shall remain eligible to become vested in the
Performance Share Units in accordance with Section 4 of this Agreement.  In the
event of the Employee’s termination of employment

 

--------------------------------------------------------------------------------

 

with the Company and its Affiliates prior to the date shares of Common Stock are
issued in settlement of any Performance Share Units (i) by the Employee for any
reason other than Retirement or (ii) by the Company for Cause, all Performance
Share Units shall be forfeited and cancelled as of the date of such termination
of employment.  Notwithstanding the foregoing, to the extent the Employee’s
Employment Agreement provides for more favorable treatment to the Employee upon
a termination of employment, the Employment Agreement shall govern the treatment
of the Performance Share Units.

 

4.                                      Vesting of Performance Share Units. 
Subject to Section 3, the Employee may vest in up to the maximum number of
Performance Share Units listed below on the third anniversary of the Grant Date
based on the level of achievement of the 3-year absolute Common Stock price
compounded annual growth rate (“CAGR”).  The percentage of Performance Share
Units that vest will be interpolated on a linear basis for CAGR results between
the Threshold and Target and Target and Maximum.  If achievement is below the
Threshold level, no Performance Share Units will vest. The achievement of the
3-year CAGR and the number of Performance Share Units that vest shall be
determined by the Committee.

 

 

 

CAGR Result on 3rd
Anniversary of Grant Date

 

Percent of Target Performance
Share Units that Vest

Threshold

 

10%

 

50%

Target

 

20%

 

100%

Maximum

 

30% or above

 

200%

 

5.                                      Issuance of Shares.  As soon as
practicable (but not more than thirty (30) days) after Performance Share Units
vest under this Agreement (subject to any six-month delay to the extent required
to comply with the provisions of Code Section 409A applicable to specified
employees), the Company shall issue a number of shares of Common Stock to the
Employee equal to the number of Performance Share Units that have vested.  The
Company shall issue a certificate or certificates evidencing such shares of
Common Stock in the name of the Employee or shall make an appropriate book
entry.

 

6.                                      Change of Control. If a Change of
Control occurs prior to the settlement of the Performance Share Units, then the
Performance Share Units shall be treated as provided in Employee’s Employment
Agreement with the Company, or, if (a) the Employee does not have an Employment
Agreement or (b) the Employee’s Employment Agreement does not address the
treatment of the Performance Share Units on the Change of Control, then the
Target Performance Share Units shall vest or, if greater, the number of
Performance Share Units corresponding to the performance result calculated as of
immediately prior to the Change of Control.  Any Performance Share Units not
deemed vested upon the Change of Control shall be cancelled.

 

7.                                      Limitation of Rights.

 

(a)  No Right to Continue as an Employee.  Neither the Plan nor the grant of the
Performance Share Units shall constitute or be evidence of any agreement or
understanding, express or implied, that the Employee has a right to continue as
an employee of the Company or any of its subsidiaries for any period of time, or
at any particular rate of compensation.

 

--------------------------------------------------------------------------------

 

(b)  No Stockholder’s Rights as to Performance Share Units.  The Employee shall
have no rights as a stockholder with respect to the shares of Common Stock
subject to Performance Share Units granted hereunder until the date such shares
are issued to the Employee, and no adjustment will be made for any dividends or
other rights for which the record date is prior to the date of the vesting of
the Performance Share Units.  After Performance Share Units have vested, the
Employee will be entitled to receive shares of Common Stock subject to the
Performance Share Units that have vested and shall be entitled to receive a
payment equal to any dividends or other rights for which the record date is on
or after the vesting of the Performance Share Units.

 

(c)  Restrictions on Sales of Shares.  By accepting the grant of the Performance
Share Units, the Employee agrees not to sell any shares of Common Stock acquired
in connection with the Performance Share Units other than as set forth in the
Plan and at a time when applicable laws, Company policies or an agreement
between the Company and its underwriters do not prohibit a sale.

 

8.                                      Taxes.  The Employee (and not the
Company or any Affiliate) shall be responsible for the Employee’s federal,
state, local or foreign tax liability and any of the Employee’s other tax
consequences that may arise as a result of the transactions contemplated by this
Agreement.  The Employee shall rely solely on the determinations of the
Employee’s own tax advisors or the Employee’s own determinations, and not on any
statements or representations by the Company or any of its agents, with regard
to all such tax matters.  To the extent that the receipt, vesting or settlement
of the Performance Share Units, or other event, results in income to the
Employee for federal, state or local income tax purposes, the Employee shall
deliver to the Company or its Affiliate at the time the Company or its Affiliate
is obligated to withhold taxes in connection with such receipt, vesting,
settlement or other event, as the case may be, such amount as the Company or its
Affiliate requires to meet its withholding obligation under applicable tax laws
or regulations, and if the Employee fails to do so, the Company shall not be
obligated to deliver any shares of Common Stock to the Employee and shall have
the right and authority to deduct or withhold from other compensation payable to
the Employee an amount sufficient to satisfy its withholding obligations.

 

9.                                      Incorporation by Reference.  The terms
of the Plan to the extent not stated herein are expressly incorporated herein by
reference and in the event of any conflict between this Agreement and the Plan,
the terms of the Plan shall govern, control and supersede over the provisions of
this Agreement.  Capitalized terms used in this Agreement and not defined shall
have the meanings given in the Plan.

 

10.                               Confidentiality.  The Employee acknowledges
that the information, observations, data and trade secrets (collectively,
“Confidential Information”) obtained or created by him or her during the course
of his or her employment with the Company or its Affiliates concerning the
business or affairs of the Company or any of its Subsidiaries or Affiliates are
the property of the Company.  For purposes of this Agreement, “trade secret”
means any method, program or compilation of information which is used in the
business of the Company or any of its Subsidiaries or Affiliates, including but
not limited to:  (a) techniques, plans and materials used by the Company or any
of its Subsidiaries or Affiliates, (b) marketing methods and strategies employed
by the Company or any of its Subsidiaries or Affiliates, and (c) all lists of
past, present or prospective patients, customers, suppliers and referral sources
of the Company or any of its Subsidiaries or Affiliates. 

 

--------------------------------------------------------------------------------

 

The Employee agrees that he or she will not disclose to any unauthorized person
or entity nor use for his or her own account any of such Confidential
Information without the prior written consent of the Chairman or President of
the Company, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
the Employee’s acts or omissions to act or become known to the Employee lawfully
outside the scope of his or her employment with the Company or its Affiliates. 
The Employee agrees to deliver to the Company at the termination of his or her
employment, or at any other time the Company may request, all memoranda, notes,
plans, records, reports and other documents (and copies thereof) relating to the
business of the Company or any of its Subsidiaries or Affiliates which the
Employee may then possess or have under his or her control.

 

All of the terms and conditions of this Agreement are hereby confirmed,
ratified, approved and accepted by the Company and by the Employee, who has
accepted this Agreement and its terms pursuant to Employee’s electronic
submission of Employee’s confirmation of this Agreement in accordance with the
instructions contained on the online website maintained for the benefit of the
Company for grants of Performance Share Units by the Company.

 

--------------------------------------------------------------------------------