Exhibit 10.5

 

HANGER ORTHOPEDIC GROUP, INC.

Non-Employee Director Non-Qualified Stock Option Agreement

 

THIS AGREEMENT is made by and between HANGER ORTHOPEDIC GROUP, INC., a Delaware
corporation (the “Company”), and the optionee (“Optionee”) identified on the
Company’s on-line electronic list of persons to whom an option has been granted
by the Company.

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to grant to the Optionee a stock option under the
Company’s 2010 Omnibus Incentive Plan (the “Plan”) to purchase shares of the
Company’s common stock, par value $.01 per share (the “Common Stock”), in
consideration for the Optionee’s service as a member of the Board of Directors
of the Company (the “Board of Directors”).

 

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 and the Plan, the Company hereby grants to the Optionee the right and
option to purchase from the Company all or part of the number of shares of
Common Stock as set forth on the Company’s on-line electronic list as being
granted to the Optionee effective as of the date shown on the Company’s on-line
electronic list as being the date of grant to the Optionee (the “Grant Date”). 
This option is not intended to qualify as an incentive stock option within the
meaning of Section 422 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 may be purchased by Optionee pursuant to
the exercise of this option shall be the closing sale price per share of the
Common Stock on the New York Stock Exchange on the date preceding the Grant
Date.  Notwithstanding any provisions of the Plan to the contrary, the Optionee
and the Company agree that the Optionee’s right to exercise this option shall
vest as to one-third of the shares of Common Stock underlying the option at the
end of each of the first three years following the Grant Date.  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 5 below, on the day preceding the tenth anniversary of
the Grant Date (the “Grant Expiration Date”).

 

3.             Method of Exercise and Payment for Shares.  This option shall be
exercised by the methods set forth in the instructions relating thereto as
contained on the Company’s on-line website from which the Optionee has received
notice as to the grant of this option by the Company to the Optionee.  No
fractional shares of Common Stock shall be issued pursuant to the grant of this
option, but in lieu thereof, the cash value of such fraction shall be paid.

 

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4.             Option Non-Assignable and Non-Transferable.  This option and all
rights hereunder shall be non-assignable and non-transferable other than by will
or the laws of descent and distribution and shall be exercisable during the
Optionee’s lifetime only by the Optionee or the Optionee’s guardian or legal
representative.

 

5.             Exercise After Termination of Membership on the Board of
Directors.   In the event of termination of the Optionee’s membership on the
Board of Directors by reason of total and permanent disability, this option will
immediately vest and become exercisable in full at any time within one year
after such disability, but in no event after the Grant Expiration Date.  In the
event of the termination of the Optionee’s membership on the Board of Directors
by reason of the death of the Optionee, the option shall immediately vest and
become exercisable in full by the Optionee’s legal representative at any time
within one year after death, but in no event after the Grant Expiration Date. 
In the event of the termination of the Optionee’s membership on the Board of
Directors other than by reason of total and permanent disability or death, this
option will be exercisable, to the extent exercisable on the date of such
termination, at any time within ninety (90) days after such termination, but in
no event after the Grant Expiration Date.

 

6.             Limitation of Rights.

 

(a)  No Right to Continue as a Director.  Neither the Plan nor this option shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Optionee has a right to continue as a member of the Company’s Board of
Directors for any period of time, or at any particular rate of compensation.

 

(b)           No Stockholder’s Rights for Options.  The Optionee shall have no
rights as a stockholder with respect to the shares covered by this option until
the date of the issuance of a stock certificate therefor, and no adjustment will
be made for any dividends or other rights for which the record date is prior to
the date such certificate is issued.

 

7.             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 supercede over the provisions of this Agreement.

 

All of the terms and conditions of this Agreement are hereby confirmed,
ratified, approved and accepted by the Company and by the Optionee, who has
accepted this Agreement and its terms pursuant to Optionee’s electronic
submission of Optionee’s confirmation of this Agreement in accordance with the
on-line instructions relating thereto as set forth on the Company’s on-line
website relating to options.

 

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