Exhibit 10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made effective as of
January 1, 2012 (“Agreement”) by and between HANGER PROSTHETICS &
ORTHOTICS, INC., a Delaware corporation (the “Company”), and VINIT ASAR (the
“Executive”).

 

WHEREAS, the Executive and the Company executed an initial Employment Agreement
in November 2008 (“Original Agreement”); and

 

WHEREAS, the parties hereto desire to amend the Original Agreement as set forth
in this Agreement, with such amendments to be effective as of January 1, 2012.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements set forth
below, both parties agree as follows:

 

1.             Employment.

 

1.1           Employment.  The Company agrees to employ the Executive and the
Executive accepts such employment by the Company upon the terms and conditions
set forth in this Agreement, for the period beginning on December 29, 2008 (the
“Commencement Date”) and ending upon termination pursuant to Section 4 or
Section 5 (the “Employment Period”).  The Executive represents and warrants that
the Executive is not subject to any restrictive covenants (including, without
limitation, covenants not to compete and covenants not to solicit) that would
prevent the Executive from entering into this Agreement or providing services on
the Company’s behalf. The Executive agrees not to use or disclose in the course
of the Executive’s employment with the Company any confidential information or
trade secrets of any other Person.

 

2.             Services.

 

During the Employment Period, the Executive agrees (i) to devote the Executive’s
best efforts and substantially all of the 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) as of the date of this Amended and
Restated Employment Agreement, to serve Hanger Orthopedic Group, Inc. (“Hanger”)
as President and its Chief Operating Officer and to render such services as the
Company or Hanger may from time to time direct; provided, however, that the
Executive recognizes and agrees that Hanger or the Company may change the
Executive’s job description as set forth in this Section 2 as a result of a good
faith restructuring of the Company’s or Hanger’s operations; (iii) that the
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 the 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 federal and state healthcare laws, rules and regulations.

 

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3.             Salary, Incentive Bonus, Stock Options, Other Benefits.

 

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

 

3.1           Salary.  The Company will pay the Executive a bi-weekly gross
salary at the annual rate of Four Hundred Fifteen Thousand ($415,000.00),
effective September 12, 2011, payable in accordance with the standard payroll
practices of the Company (the “Base Salary”).  The Executive’s Base Salary may,
but is not required to, be increased annually in January of each year (but
cannot be decreased) based on an annual performance salary review as determined
in the reasonable discretion of the Company.

 

3.2           Bonus.

 

(a)           In addition to the Base Salary, the Executive shall participate in
Hanger’s current bonus plan for senior corporate officers (the “Bonus Plan”), as
approved by the Compensation Committee of the Board of Directors of Hanger
(“Board of Directors”) in each calendar year during the term of this Agreement. 
As of the date of this Amended and Restated Employment Agreement, the
Executive’s target bonus is sixty percent (60%) of the Base Salary (the “Target
Bonus”) and is contingent on the Executive meeting certain performance criteria
and Hanger achieving certain year-end financial criteria, and up to one hundred
twenty percent (120%) of the Base Salary (the “Maximum Bonus”) if the Executive
exceeds certain performance criteria and Hanger exceeds certain year-end
financial criteria all as determined in the reasonable discretion of the Board
of Directors and its Compensation Committee.  The Executive shall be entitled to
such increases in the “Target Bonus” and the “Maximum Bonus” during the term
hereof as shall be determined and approved by the Compensation Committee of the
Board of Directors in its sole discretion, taking account of the performance of
Hanger, the Company and the Executive, and other factors generally considered
relevant to the salaries of executives holding similar positions with
enterprises comparable to the Company.  Notwithstanding the foregoing, in the
event that the Executive, Hanger or the Company fail to attain their minimum
respective criteria in any given year, the Board of Directors and its
Compensation Committee may, in their reasonable discretion, decline to award any
bonus to the Executive.

 

(b)           The bonus described in Section 3.2(a) 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 the Company’s normal
practices.  In the event that the Executive is employed for less than the full
calendar year in the year in which his Termination Date occurs (“Termination
Year”), the bonus payable to the Executive shall be subject to Sections 4 and 5
of this Agreement and calculated based on the Executive meeting certain
performance criteria and Hanger achieving certain year-end financial criteria,
all as determined by the Compensation Committee of the Board of Directors, in
its sole discretion.  Such bonus shall be pro-rated for the portion of the
Termination Year during which the Executive was employed by the Company.  With
respect to the bonus for the Termination Year, any bonus payable pursuant to
this Section 3.2(b) shall be payable to the Executive between

 

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January 1 and March 15 (inclusive) of the calendar year following the calendar
year for which the bonus is determined in accordance with the Company’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, the 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 the Executive’s future performance in
improving shareholder value, the Executive received a special, time-based grant
of twenty thousand (20,000) restricted shares of Hanger stock (“Special
Grant”).  The grant date of the Special Grant was within fourteen (14) days
after the Commencement Date.  The vesting schedule for the Special Grant
conformed to the vesting schedule described in Section 3.3(c) of this Agreement
and the Stock Agreement (as hereinafter defined).  In addition to the Special
Grant, the Company, within fourteen (14) days after the Commencement Date,
granted to the Executive a minimum of twenty thousand (20,000) restricted shares
of Hanger stock (“2008 Grant”), with thirteen thousand four hundred (13,400) of
those shares being performance-based restricted shares and six thousand six
hundred (6,600) of those shares being time-based restricted shares.  The
Executive also received a grant of twenty thousand (20,000) additional
restricted shares of Hanger stock (“Additional Grant”) on or before March 31,
2010.  The 2008 Grant and Additional Grant are subject to such other terms and
conditions as reasonably determined by Hanger’s Board of Directors or a
committee thereof, consistent with the terms and conditions of the applicable
stock incentive plan and restricted share grant agreement(s).

 

(c)           The options or restricted shares provided in Section 3.3(a) and
Section 3.3(b) shall be or were evidenced by one or more stock option agreements
or restricted share grant agreements (each, a “Stock Agreement”) between the
Executive and Hanger, which Stock Agreement(s) shall or did provide for a
vesting schedule of four (4) years, in equal parts, of the options or restricted
shares granted thereunder.  Notwithstanding any provisions now or hereafter
existing under any stock incentive plan of Hanger, all options or restricted
shares granted to the Executive shall vest in full immediately upon the
Termination Date except for termination of employment pursuant to Section 4.3 or
Section 4.5 hereof, and the Executive (or his estate or legal representative, if
applicable) shall thereafter have twelve (12) months from such Termination Date
to exercise such options, if applicable.

 

(d)           Notwithstanding any provisions now or hereafter existing under any
stock option plan or restricted share plan of Hanger, in the event of a Change
in Control (as hereinafter defined), all options or restricted shares provided
to the Executive pursuant to Section 3.3(a) and Section 3.3(b) of this Agreement
or any Stock Agreement shall be granted and shall immediately fully vest as of
the date of such Change in Control with such options or restricted shares being
valued at the closing price of Hanger’s common stock on the day prior to the day
of the Change in Control.

 

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(e)           For purposes of this Agreement, a “Change in Control” shall be
deemed to exist if:

 

(i)            a person, as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (other than the Executive or a group including
the Executive), either (A) acquires twenty percent (20%) or more of the combined
voting power of the outstanding securities of Hanger having the right to vote in
elections of directors and such acquisition shall not have been approved within
sixty (60) days following such acquisition by a majority of the Continuing
Directors (as hereinafter defined) then in office, or (B) acquires fifty percent
(50%) or more of the combined voting power of the outstanding securities of
Hanger having a right to vote in elections of directors; or

 

(ii)           Continuing Directors shall for any reason cease to constitute a
majority of the Board of Directors; or

 

(iii)          Hanger disposes of all or substantially all of the business of
Hanger to a party or parties other than a subsidiary or other affiliate of
Hanger pursuant to a partial or complete liquidation of Hanger, sale of assets
(including stock of a subsidiary of Hanger) or otherwise; or

 

(iv)          the Board of Directors approves Hanger’s consolidation or merger
with or into any other Person (other than a wholly-owned subsidiary of Hanger),
or any other Person’s consolidation or merger with or into Hanger, which results
in all or part of the outstanding shares of Stock being changed in any way or
converted into or exchanged for stock or other securities or cash or any other
property.

 

(f)            For purposes of this Agreement, the term “Continuing Director”
shall mean a member of the Board of Directors who either was a member of the
Board of Directors on the date hereof or who subsequently became a Director of
Hanger and whose election, or nomination for election, was approved by a vote of
at least two-thirds (2/3) of the Continuing Directors then in office.

 

3.4           Benefits.  The Executive also shall be entitled to (i) an
automobile allowance in the amount of One Thousand Dollars ($1,000.00) per month
and the provision of, or reimbursement for, parking of such automobile at the
Company’s headquarters, (ii) four (4) weeks of vacation per year, and (iii) sick
leave, medical and other benefits, including, without limitation, participation
in the Company’s Supplemental Executive Retirement Program (“SERP”) and
appropriate directors and officers liability insurance (to the extent
commercially reasonable for the Company to obtain such insurance), all of which
are consistent with those received by other similarly-situated senior executives
of Hanger and its subsidiaries as determined in the sole discretion of the
Compensation Committee of the Board of Directors. With regard to the Company’s
SERP, the Executive’s level of benefit shall be sixty-five percent (65%) of the
Executive’s average base salary, as defined by the SERP plan.  The Executive
shall receive life insurance in an amount equal to one (1) times the Executive’s
Base Salary (in addition to the life insurance in an amount equal to one
(1) times the Executive’s Base Salary provided by the Company as part of the
Executive’s base benefit program), with the premiums for such policy to be paid
by the Company, and the Executive shall also receive the option to participate
in the Company’s supplemental life

 

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and accidental death and dismemberment policies, with the premiums for such
policies to be paid by the Executive, all in accordance with the terms and
conditions of such policies as generally applied by the Company.

 

3.5           Determination of Cap or Payment.

 

(a)           Notwithstanding any other provision of this Agreement, if any
portion of any payment under this Agreement, or under any other agreement or
arrangement with the Executive or plan of the Company or one of its subsidiaries
or affiliates (in the aggregate, “Total Payments”), would constitute an “excess
parachute payment” and would, but for this Section 3.5, result in the imposition
on the Executive of an excise tax under Code Section 4999 (the “Excise Tax”),
then the Total Payments to be made to the Executive shall either be
(i) delivered in full, or (ii) reduced to 299.99% of the Executive’s “base
amount” for purposes of Code Section 280G so that no portion of such Total
Payments would be subject to the Excise Tax, whichever of the foregoing results
in the receipt by the Executive of the greatest benefit on an after-tax basis
(taking into account the applicable federal, state and local income taxes and
the Excise Tax).

 

(b)           Within forty (40) days following a termination or notice by one
party to the other of its belief that there is a payment or benefit due the
Executive that will result in an excess parachute payment, the Company shall
obtain, at its expense, the opinion (which need not be unqualified) of
nationally recognized tax counsel (“Tax Counsel”) selected by the Compensation
Committee of the Board of Directors, which sets forth (i) the “base amount”
within the meaning of Code Section 280G; (ii) the aggregate present value of the
payments in the nature of compensation to the Executive as prescribed in Code
Section 280G(b)(2)(A)(ii); (iii) the amount and present value of any “excess
parachute payment” within the meaning of Code Section 280G(b)(1); and (iv) the
net after-tax proceeds to the Executive, taking into account the tax imposed
under Code Section 4999 if (x) the Total Payments were delivered in full or
(y) the Total Payments were reduced in accordance with Section 3.5(a).  Such
opinion shall be addressed to the Company and the Executive and shall be binding
upon the Company and the Executive.  If such opinion determines that clause
(a)(ii) above applies, then the payments or benefits under this agreement or any
other payment or benefit determined by Tax Counsel to be includable in the Total
Payments shall be reduced or eliminated so that under the bases of calculations
set forth in such opinion there will be no excess parachute payment.  In such
event, payments or benefits included in the Total Payments shall be reduced or
eliminated by applying the following principles, in order:  (1) the payment or
benefit with the higher ratio of the parachute payment value to present economic
value (determined using reasonable actuarial assumptions) shall be reduced or
eliminated before a payment or benefit with a lower ratio; (2) the payment or
benefit with the later payment date shall be reduced or eliminated before a
payment or benefit with an earlier payment date; and (3) cash payments shall be
reduced prior to non-cash benefits; provided that if the foregoing order of
reduction or elimination would violate Code Section 409A, then the reduction
shall be made pro rata among the payments or benefits to be received by the
Executive (on the basis of the relative present value of the parachute
payments).

 

(c)           For purposes of this Agreement, (i) the value of any noncash
benefits or any deferred payment or benefit shall be determined in accordance
with the principles

 

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of Code Sections 280G(d)(3) and (4), and (ii) the Executive shall be deemed to
pay federal income tax and employment taxes at the highest stated rate of
federal income and employment taxation, and state and local income taxes at the
highest stated rate of taxation in the state or locality of the Executive’s
domicile (determined in both cases in the calendar year in which the termination
or notice described in Section 3.5(b) is given, whichever is earlier), net of
the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.

 

(d)           If such Tax Counsel so requests in connection with the opinion
required by this Section 3.5, the Company shall obtain, at its expense, and the
Tax Counsel may rely on, the advice of a firm of recognized executive
compensation consultants as to (1) the reasonableness of any item of
compensation to be received by the Executive solely with respect to its status
under Code Section 280G, or (2) the fair market value of any non-cash benefit. 
Such firm shall be selected by the Compensation Committee of the Board of
Directors.

 

(e)           This Section 3.5 shall be amended to comply with any amendment or
successor provision to Code Sections 280G or 4999.  If such provisions are
repealed without successor, then this Section 3.5 shall be cancelled without
further effect.

 

4.             Termination of Employment.

 

4.1           Death. The Executive’s employment shall be terminated by the
Executive’s death.  In the event of the death of the Executive, the Company
shall pay to the estate or other legal representative of the Executive the Base
Salary (at the annual rate in effect) and vacation as accrued through the
Termination Date and the bonus provided for in Section 3.2 for the Termination
Year (as well as any then earned but unpaid bonus for the year preceding the
Termination Year, if applicable).  Except as otherwise provided in this
Agreement, the rights and benefits of the estate or other legal representative
of the Executive under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and programs.

 

4.2           Disability.

 

(a)           “Disability” means, for purposes of this Agreement, that the
Executive is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months.

 

(b)           If the Executive shall incur a Disability, the employment of the
Executive shall be terminated.  In the event of such termination, the Company
shall pay to the Executive the Base Salary (at the annual rate then in effect)
and vacation accrued through the Termination Date and the bonus provided for in
Section 3.2 for the Termination Year (as well as any then earned but unpaid
bonus for the year preceding the Termination Year, if applicable).  Except as
otherwise provided under this Agreement, the rights and benefits of the
Executive or his transferee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs.

 

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4.3           Due Cause.  The employment of the Executive hereunder may be
terminated by the Company at any time for Due Cause (as hereinafter defined). 
In the event of such termination, the Company shall pay to the Executive the
Base Salary (at the annual rate then in effect) and vacation accrued through the
Termination Date and not theretofore paid to the Executive.  Except as otherwise
provided under this Agreement, the rights and benefits of the Executive or his
transferee under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and programs.  For
purposes hereof, “Due Cause” shall mean any of: (i) the repeated failure or
refusal of the Executive to follow the lawful directives of the Company (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 the
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 the
Executive, or (iv) the commission by the Executive of a felony or other crime
involving moral turpitude or an act of financial dishonesty against the Company.

 

4.4           Termination by the Company Without Cause.

 

(a)           The Company may terminate the Executive’s employment at any time,
for whatever reason it deems appropriate or without reason; provided, however,
that in the event that such termination is not pursuant to Section 4.1 (Death);
4.2 (Disability); 4.3 (Due Cause); 4.5 (Voluntary Termination); or 4.6
(Retirement), the Company shall pay to the Executive the Base Salary (at the
annual rate then in effect) and vacation accrued through the Termination Date
and the bonus provided for in Section 3.2 for the Termination Year (as well as
any then earned but unpaid bonus for the year preceding the Termination Year, if
applicable).

 

(b)           In addition to the payments described in Section 4.4(a), the
Company shall pay to the Executive, on the date that is six (6) months and one
day after the Termination date, a lump sum in an amount equal to eighteen (18)
months of the monthly Base Salary (at the annual rate in effect immediately
prior to termination) and an additional bonus payment equal to one and one-half
(1.5) times the Target Bonus for the Termination Year (collectively, the
“Severance Payment”).  In addition, the Company shall for eighteen (18) months
following the Termination Date, (i) reimburse the Executive for his reasonable
costs of medical and dental coverage as provided under COBRA, (ii) reimburse the
Executive for his reasonable costs incurred in maintaining his life and
disability coverage, and (iii) reimburse the Executive for similar, applicable
benefits granted to the Executive in Section 3.4, each at levels substantially
equivalent to those provided by the Company to the Executive immediately prior
to the termination of his employment (including such other benefits as shall be
provided to senior corporate officers of the Company in lieu of such benefits
from time to time during the eighteen (18) month payment period), on the same
basis, including the Company’s payment of premiums and contributions, as such
benefits are provided to other senior corporate officers of the Company or were
provided to the Executive prior to the termination. Reimbursements of expenses
which provide for nonqualified deferred compensation under Code Section 409A, if
any, shall not be paid before six (6) months and one day after the Executive’s
Termination Date.  The amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a taxable year of the Executive may not affect the
expenses eligible for reimbursement, or in-kind benefits to be provided in any
other taxable year.  Reimbursements shall be paid on or before the

 

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last day of the Executive’s taxable year following the taxable year in which the
expense was incurred.  The right to reimbursement hereunder is not subject to
liquidation or exchange for another benefit.

 

In addition, for a period of eighteen (18) months immediately following the
Executive’s Termination Date, the Executive will be provided with outplacement
services commensurate with those provided to other senior corporate officers of
the Company through a vendor selected by the Company. Except as otherwise
provided under this Agreement, the rights and benefits of the Executive or his
transferee under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and programs.

 

(c)           Notwithstanding Section 4.4(b), in the event that (i) the
Executive is not a Specified Employee, then the Company shall pay to the
Executive the Severance Payment within forty-five (45) days from the Termination
Date and the six (6) month delay for reimbursements shall cease to apply, or
(ii) the Executive is a Specified Employee and the death of the Executive occurs
within six (6) months following the Termination Date, the Company shall pay to
the Executive’s estate any unpaid portion of the amounts due to be paid to the
Executive pursuant to Section 4.4(b) within forty-five (45) days following the
Executive’s death.  If the Executive’s estate or legal representative fails to
notify the Company of the death of the Executive such that the Company is unable
to make timely payment hereunder, then the Company shall not be treated as in
breach of this Agreement and shall not be liable to the estate or legal
representative for any losses, damages, or other claims resulting from such late
payment.

 

(d)           Notwithstanding anything in this Agreement to the contrary, the
Executive shall not be entitled to any payments under Section 4.4(b) unless the
Executive has first duly and timely executed (and not revoked) a form of
agreement and general release acceptable to the Company releasing the Company
from certain claims the Executive may have in connection with the Executive’s
employment with the Company and the termination thereof, to the extent permitted
by law.

 

4.5           Voluntary Termination.  The Executive may terminate his employment
with the Company at any time and the Company shall pay to the Executive the Base
Salary (at the annual rate then in effect) and vacation accrued through the
Termination Date and the bonus provided for in Section 3.2 for the Termination
Year (as well as any then earned but unpaid bonus for the year preceding the
Termination Year, if applicable).  In the event the Executive terminates the
Executive’s employment under this Section 4.5, written notice of at least thirty
(30) days shall be provided to the Company in accordance with the provisions of
Section 9. Except as otherwise provided under this Agreement, the rights and
benefits of the Executive or his transferee under the benefit plans and programs
of the Company shall be determined in accordance with the provisions of such
plans and programs.

 

4.6           Retirement.

 

(a)           In the event of the Executive’s Retirement (as defined in
Section 4.6(b)), the Company shall pay to the Executive the Base Salary (at the
annual rate then in effect) and vacation accrued through the date of Retirement
and the bonus provided for in Section 3.2 for the Termination Year (as well as
any then earned but unpaid bonus for the year preceding the

 

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Termination Year, if applicable).  Except as otherwise provided under this
Agreement, the rights and benefits of the Executive or his transferee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs.

 

(b)           “Retirement” shall mean the Executive’s voluntary termination of
employment at or after age sixty-five (65), provided the Executive has given the
Company written notice of the Executive’s intent to retire no less than one
(1) year prior to the scheduled Termination Date and the Executive has, as of
the scheduled Termination Date, been continuously employed with Hanger,
including any of its direct or indirect subsidiaries, for a period of no less
than ten (10) years.

 

5.             Change In Control and Termination Provisions.

 

If within a two (2) year period following any Change in Control there occurs:

 

(a)           any termination of the Executive (other than as set forth in
Section 4.1 (Death), 4.2 (Disability), 4.3 (Due Cause), 4.5 (Voluntary
Termination) or 4.6 (Retirement) of this Agreement);

 

(b)           a material diminution of the Executive’s responsibilities, as
compared to the Executive’s responsibilities immediately prior to the Change in
Control;

 

(c)           any reduction in the Base Salary or Bonus Plan targets (as
distinguished from the payments received thereunder), as compared to such Base
Salary or such targets as of the date immediately prior to the Change in
Control;

 

(d)           any failure to provide the Executive with benefits: (1) at least
as favorable as those enjoyed by similarly-situated senior corporate officers of
the Company under the Company’s pension, life insurance, medical, health and
accident, disability or other written employee plans under which the form and/or
amounts of benefits are prescribed in applicable documents or (2) granted to the
Executive by this Agreement;

 

(e)           any relocation of the Executive’s principal site of employment to
a location more than fifty (50) miles from the Executive’s principal place of
employment as of the date immediately prior to the Change in Control; or

 

(f)            any material breach of this Agreement by the Company;

 

then, at the option of the Executive, exercisable by the Executive within ninety
(90) days after the occurrence of any of the foregoing events, the Executive may
resign his employment with the Company (or, if involuntarily terminated, give
notice of his intention to collect benefits under this Agreement) by delivering
a notice in writing (the “Notice of Termination”) to the Company, and the
Executive shall be entitled to receive the Base Salary (at the annual rate then
in effect) and vacation accrued to the Termination Date and the bonus provided
for in Section 3.2 for the Termination Year (as well as any then earned but
unpaid bonus for the year preceding the Termination Year, if applicable).  In
addition, the Company shall pay to the Executive on the date that is six
(6) months and one day after the Termination Date the Severance Payment.  In
addition, the Company shall, for eighteen (18) months following the Termination
Date, (i)

 

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reimburse the Executive for his reasonable costs of medical and dental coverage
as provided under COBRA, (ii) reimburse the Executive for his reasonable costs
incurred in maintaining his life and disability coverage, and (iii) reimburse
the Executive for similar, applicable benefits granted to the Executive in
Section 3.4, each at levels substantially equivalent to those provided by the
Company to the Executive immediately prior to the termination of his employment
(including such other benefits as shall be provided to senior corporate officers
of the Company in lieu of such benefits from time to time during the eighteen
(18) month payment period), on the same basis, including the Company’s payment
of premiums and contributions, as such benefits are provided to other senior
corporate officers of the Company or were provided to the Executive prior to the
termination.  Reimbursements of expenses which provide for nonqualified deferred
compensation under Code Section 409A, if any, shall not be paid before six
(6) months and one day after the Executive’s Termination Date.  The amount of
expenses eligible for reimbursement, or in-kind benefits provided, during a
taxable year of the Executive may not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided in any other taxable year. 
Reimbursements shall be paid on or before the last day of the Executive’s
taxable year following the taxable year in which the expense was incurred.  The
right to reimbursement hereunder is not subject to liquidation or exchange for
another benefit.

 

In addition, for a period of eighteen (18) months immediately following the
Executive’s Termination Date, the Executive will be provided with outplacement
services commensurate with those provided to other senior corporate officers of
the Company through a vendor selected by the Company.  Except as otherwise
provided under this Agreement, the rights and benefits of the Executive or his
transferee under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and programs.

 

(g)           Notwithstanding the prior provisions of this Section 5, in the
event that (i) the Executive is not a Specified Employee, then the Company shall
pay to the Executive the Severance Payment within forty-five (45) days from the
Termination Date and the six (6) month delay for reimbursements shall cease to
apply, or (ii) the Executive is a Specified Employee and the death of the
Executive occurs within six (6) months following the Termination Date, the
Company shall pay to the Executive’s estate any unpaid portion of the amounts
due to be paid to the Executive pursuant to this Section 5 within forty-five
(45) days following the Executive’s death.  If the Executive’s estate or legal
representative fails to notify the Company of the death of the Executive such
that the Company is unable to make timely payment hereunder, then the Company
shall not be treated as in breach of this Agreement and shall not be liable to
the estate or legal representative for any losses, damages, or other claims
resulting from such late payment.

 

(h)           Notwithstanding anything contained in this Agreement to the
contrary, the Executive shall not be entitled to any payments under this
Section 5 unless the Executive has first duly and timely executed (and not
revoked) the Release; provided, however, that, in the event of any change in any
applicable law (or interpretation thereof), the Release shall be subject to
reasonable modification by the parties so as to preserve the intent of the
parties with respect to such Release.

 

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6.             Confidential Information.

 

6.1           Unless the Executive secures the Company’s written consent, the
Executive will not, for a period of eighteen (18) months after the Termination
Date, disclose, use, disseminate, lecture upon, or publish Confidential
Information, whether or not such Confidential Information was developed by him.

 

6.2           “Confidential Information” means information disclosed to the
Executive or known by him as a result of his employment with the Company, not
generally known in the industry, about the Company’s and/or Hanger’s (including
any direct or indirect subsidiary of Hanger) services, products, or customers,
including, but not limited to, clinical programs, procedures and protocols,
research, operating manuals, business methods, financial strategic planning,
client retention, customer and supplier lists, data processing, insurance plans,
risk management, marketing, contracting, selling and employees.

 

7.             Non-Compete.

 

7.1           In the event the Employment Period is terminated under Sections
4.3, 4.5, 4.6 or 5, then this Section 7 will apply to the Executive. In the
event the Employment Period is otherwise terminated, such as pursuant to
Section 4.4, then no part of this Section 7 will apply to the Executive.

 

7.2           The Executive will not, during the Executive’s term of employment
and for a period of eighteen (18) months after the Termination Date, directly or
indirectly (i) engage, whether as principal, agent, investor, representative,
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), 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 the Termination Date,
(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), either on his 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 clients or customers
of the Company and/or Hanger (including any direct or indirect subsidiary of
Hanger) as of the Termination Date for the purpose of competing with the
business of the Company and/or Hanger (including any direct or indirect
subsidiary of Hanger), either on his 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 Date, 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.  The parties hereto agree that if, in any proceeding, the Court or
other authority shall refuse to enforce covenants set forth in this

 

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Section 7, 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.

 

7.3           Since a material purpose of this Agreement is to protect the
Company’s investment in the Executive and to secure the benefits of the
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 Section 6 or this Section 7 and that any
such breach will cause the Company irreparable harm.  Therefore, in the event of
a breach by the Executive of any of the provisions of Section 6 or this
Section 7, 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.

 

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

 

8.             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
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 the Executive and the Company, and their
respective successors and assigns. The Executive may not assign the Executive’s
rights or delegate the 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 the 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 Delaware.  All disputes under this
Agreement shall be submitted to and governed by binding arbitration with an
arbitrator 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 6 or Section 7 of this Agreement. Any provision of
this Agreement may be amended or waived only with the prior written consent of
the Company and the 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

 

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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.

 

9.             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:

 

c/o Hanger Orthopedic Group, Inc.
Suite 300
10910 Domain Drive
Austin, Texas 78758
Attention: Chief Executive Officer

 

If to the Executive:

 

Vinit Asar

108 Dawn River Cove

Austin, Texas 78732

 

10.          Withholding.

 

Anything to the contrary notwithstanding, all payments required to be made by
the Company hereunder to the Executive or his beneficiaries, including his
estate, shall be subject to withholding of such amounts relating to taxes as the
Company may reasonably determine it should withhold pursuant to any applicable
law or regulation.  In lieu of withholding such amounts, in whole or in part,
the Company may, in its sole discretion, accept other provisions for payment of
taxes as permitted by law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to withhold such taxes
have been satisfied.

 

11.          Survivorship.

 

The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

 

12.          Definitions.

 

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

 

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12.2         “Person” shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a governmental entity or any department or
agency thereof.

 

12.3         “Termination Date” shall mean (i) if the Executive’s employment is
terminated by the Company for any reason whatsoever, other than death or
Disability, the Executive’s last day of work; (ii) if the Executive’s employment
is terminated by reason of death or Disability, the date of death of the
Executive or the effective date of the Disability, as the case may be; and
(iii) if the Executive’s employment is terminated by the Executive, the
expiration date of the applicable notice period that is required pursuant to
this Agreement.  Notwithstanding the foregoing, no Termination Date shall be
earlier than the date as of which the Executive has incurred a “separation from
service” within the meaning of Internal Revenue Code (“Code”) Section 409A, as
determined by applying the default rules thereof.

 

12.4         The Executive will be a “Specified Employee” if the Executive is a
key employee (as defined in Code Section 416(i) but without regard to Code
Section 416(i)(5)) of the Company or an affiliate of the Company (within the
meaning of Code Section 414(b) or (c)) any of the stock of which is publicly
traded on an established securities market or otherwise, as determined at the
time of the Executive’s “separation from service”.  The Executive is a key
employee under Code Section 416(i) if the Executive meets the requirements of
Code Section 416(i)(1)(A)(i), (ii) or (iii), applied in accordance with the
regulations under Code Section 416, but disregarding Code Section 416(i)(5), at
any time during the twelve (12) month period ending on an identification date. 
For purposes of determining whether the Executive is a key employee,
compensation shall mean wages within the meaning of Code Section 3401(a) but
determined without regard to any rules that limit the amount of remuneration
included in wages based on the nature or location of the employment or services
performed.  If the Executive is a key employee as of an identification date, the
Executive is treated as a key employee for the twelve (12) month period
beginning on the first day of the fourth month following the identification
date.  The identification date for this Agreement shall be December 31 of each
year, such that if the Executive satisfies the foregoing requirements for key
employee status as of December 31 of a year, the Executive shall be treated as a
key employee for the twelve (12) month period starting April 1 of the following
calendar year.

 

If, in a transaction constituting a “change in control” of the Company, as
determined by Code Section 409A, the Company is merged with or acquired by
another entity, and immediately following such change in control of the Company
the stock of either the Company or the acquirer or successor in such transaction
is publicly traded on an established securities market or otherwise, then for
the period between the date of such transaction and the next specified employee
effective date of the acquirer or survivor, the acquirer or survivor shall
combine the lists of the specified employees of each entity participating in the
transaction and re-order the list to identify the top 50 key employees (as well
as 1% and 5% owners that are considered key employees) in accordance with
Treasury Regulation §1.409A-1(i)(6)(i).

 

[The next page is the signature page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
26th day of January, 2012.

 

 

HANGER PROSTHETICS & ORTHOTICS, INC.

 

 

 

 

 

By:

/s/ Andrew C. Morton

 

 

Andrew C. Morton, Vice President - HR

 

 

 

 

 

 

/s/ Vinit K. Asar

 

 

Vinit K. Asar

 

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