Document:

Exhibit 10.1

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

Amendment No. 1 to Credit Agreement dated as of May 7, 2013 (this “First Amendment”) among ALTISOURCE SOLUTIONS S.À R.L., a private limited liability company (société à responsabilité limitée) organized and established under the laws of the Grand Duchy of Luxembourg, having its registered office at 291, route d’Arlon, L-1150 Luxembourg, Grand Duchy of Luxembourg, having a share capital of USD 21,463,001 and registered with the Luxembourg Trade and Companies register under number B 147268 (the “Borrower”), ALTISOURCE SOLUTIONS S.A., a public limited liability company (société anonyme) organized and established under the laws of the Grand Duchy of Luxembourg, having its registered office at 291, route d’Arlon, L-1150 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade and Companies register under number B 72391 (“Holdings”), BANK OF AMERICA, N.A., as lender (the “Incremental Term Lender”), BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) and the Lenders party hereto (the “Lenders”).

 

The Borrower, Holdings, the lenders from time to time party thereto and the Administrative Agent, are parties to a Credit Agreement dated as of November 27, 2012 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”).  Pursuant to Section 2.12(a) of the Credit Agreement, the Borrower has requested that the Incremental Term Lender provide Incremental Term Loan Commitments.  In accordance with Section 2.12(b) of the Credit Agreement, the Incremental Term Lender has elected to provide Incremental Term Loan Commitments on the terms and conditions set forth herein.  In addition, the Borrower has requested that the Lenders agree to certain amendments to the Credit Agreement, and each of the Lenders signatory hereto (which Lenders collectively constitute the Required Lenders under the Credit Agreement), have agreed, subject to the terms and conditions set forth herein, to amend the Credit Agreement as herein provided.  Accordingly, the Borrower, Holdings, the Incremental Term Lender, the Administrative Agent and the Lenders party hereto agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.01  Definitions.  All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement, as amended by and after giving effect to this First Amendment (the “Amended Credit Agreement”).

 

ARTICLE II
 INCREMENTAL TERM LOAN COMMITMENT

 

Section 2.01  Incremental Term Loan Commitment.  The Incremental Term Lender hereby agrees to establish First Amendment Incremental Term Loan Commitments pursuant to which the Incremental Term Lender will provide First Amendment Incremental Term Loans on the First Amendment Effective Date on the terms and conditions set forth herein and in the amount set forth opposite its name on Annex I attached hereto.  First Amendment Incremental Term Loan Commitments and First Amendment Incremental Term Loans shall be subject to all of the terms and conditions set forth in the Amended Credit Agreement, including, without limitation, Section 2.12.  First Amendment Incremental Term Loans shall be Term B Loans and shall, for all purposes of this First Amendment and the other Loan Documents, be subject to all the terms and conditions set forth in the Amended Credit

 

 

Agreement applicable to the Term B Loans.  For the avoidance of doubt and without limiting the generality of the foregoing, (i) the First Amendment Incremental Term Loans shall bear interest at the rates applicable to the Term B Loans from time to time and (ii) the Term Facility Maturity Date of the First Amendment Incremental Term Loans shall be the Term B Facility Maturity Date.

 

ARTICLE III
 AMENDMENTS TO THE CREDIT AGREEMENT

 

Section 3.01  Amendments.  The Credit Agreement is hereby amended as follows:

 

(a)                                 Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in the appropriate alphabetical order:

 

“Permitted Fiji Transaction” means a potential transaction or series of transactions by the Borrower or a Restricted Subsidiary relating to the acquisition (of stock, assets or a combination thereof) of, or combination with, a Person engaged in business line(s) similar to certain Core Business Activities which, as of the First Amendment Effective Date, is anticipated to be consummated prior to December 31, 2013; provided that (i) the aggregate cash purchase price payable by the Borrower or any Restricted Subsidiary shall not exceed $110,000,000; (ii) the earn-out obligations incurred by the Borrower or any Restricted Subsidiary shall not exceed $40,000,000; (iii) any Acquired Entity in the Permitted Fiji Acquisition shall become a Subsidiary Guarantor pursuant to, and as required by, Section 6.09; and (iv) any property or assets acquired in connection with the Permitted Fiji Transaction shall be acquired by a Loan Party.

 

“Permitted ResCap Transaction” means the transactions contemplated by that certain Agreement dated as of April 12, 2013 between the Borrower and Ocwen, pursuant to which, among other things, the parties thereto agreed that the Borrower shall, in accordance with the terms thereof, be the exclusive provider of certain services with respect to the mortgage servicing platform assets of Residential Capital, LLC which were acquired by Ocwen on February 15, 2013.

 

“Permitted Share Buyback” means any existing share repurchase program of Holdings pursuant to which Holdings may repurchase a portion of its Equity Interests pro rata from its equityholders.

 

(b)                                 Clause (ii) of the definition of “Consolidated Excess Cash Flow” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(ii)                                  the sum, without duplication, of (a) the amounts for such period of (1) scheduled and other mandatory repayments, without duplication, of Indebtedness for borrowed money (excluding repayments of any revolving credit facility that are not included in Consolidated Working Capital Liabilities except to the extent the commitments with respect thereto are permanently reduced in connection with such repayments) and scheduled repayments of obligations under Capital Leases (excluding any interest expense portion thereof), (2) Consolidated Capital Expenditures (other than Consolidated Capital Expenditures that are financed with the proceeds of any issuance or incurrence of Indebtedness or any capital contributions or net cash proceeds of equity issuances received or made by Holdings or the Borrower), and (3) Acquisition Consideration and all consideration paid in connection with Permitted Acquisitions and

 

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other Investments permitted to be made under Section 7.06 (other than (x) the transactions referred to in the proviso to the second sentence of Section 6.12 consummated prior to the First Amendment Effective Date, (y) the Permitted ResCap Transaction and (z) other Permitted Acquisitions or other Investments that are, in the case of this clause (z), financed with the Available Amount or with the proceeds of any issuance or incurrence of Indebtedness or any capital contributions or net cash proceeds of equity issuances received or made by Holdings or the Borrower, without duplication), plus (b) other non cash gains increasing Consolidated Net Income for such period (excluding any such non cash gain to the extent it represents the reversal of an accrual or reserve for potential cash gain in any prior period). As used in this clause (ii), “scheduled and other mandatory repayments, without duplication, of Indebtedness” do not include any voluntary prepayments of Loans pursuant to Section 2.08(a) or mandatory prepayments of the Loans pursuant to Section 2.08(b).

 

(c)                                  Clause (j) of the definition of “Consolidated Adjusted EBITDA” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(j) costs, fees and expenses incurred in connection with the Spinoff, the Transactions, the First Amendment (including without limitation the incurrence of First Amendment Incremental Term Loans on the First Amendment Effective Date and the use of proceeds thereof and the payment of fees and expenses in connection therewith), Permitted Acquisitions and Permitted Spin-Offs,

 

(d)                                 The definition of “Incremental Amount” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Incremental Amount” means, at any time, the excess, if any, of (i) the sum of (A) $200,000,000 and (B) the principal amount of the First Amendment Incremental Term Loans, over (ii) the aggregate amount of Incremental Term Loan Commitments established pursuant to Section 2.12.  For the avoidance of doubt, after giving effect to the making of the First Amendment Incremental Term Loans on the First Amendment Effective Date, the Incremental Amount is $200,000,000.

 

(e)                                  Section 6.12 of the Credit Agreement is hereby amended by amending and restating the parenthetical in clause (i) of the proviso thereof as follows:

 

(including, without limitation, Principal Customer Acquisitions, the Permitted Fiji Transaction, and the Permitted ResCap Transaction and any acquisition of Residential Capital, LLC or the Homeward Residential business)

 

(f)                                   Section 7.04 of the Credit Agreement is hereby amended by (i) amending and restating clause (c) thereof by inserting the word “other” immediately following the word “make” and immediately prior to the word “Restricted”, (ii) deleting the word “and” before clause (f) thereof and replacing it with a comma, (iii) amending and restating clause (f) thereof in its entirety to read as follows and (iv) adding a new clause (g) at the end thereof to read as follows:

 

(f) (i) the Restricted Junior Payments made by the Borrower and Holdings under this clause (f) prior to the First Amendment Effective Date in an amount equal to $16,094,000 were permitted plus (ii) the Borrower and Holdings may make other Restricted Junior Payments in an aggregate amount for all such Restricted Junior Payments made under this clause (f)(ii) not to exceed the greater of (x) $15,000,000 and (y) 15.0% of

 

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Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending as of the last day of the most recently ended Fiscal Quarter, and (g) the Borrower may, from time to time after the First Amendment Effective Date, make payments to Holdings in an aggregate amount not to exceed $35,000,000, and Holdings may accept such payments and use such proceeds from time to time to consummate all or any portion of the Permitted Share Buyback.

 

(g)                                  The form of Compliance Certificate attached as Exhibit C to the Credit Agreement is amended and restated in its entirety and replaced with the Compliance Certificate attached hereto as Exhibit 1.

 

ARTICLE IV
 AMENDMENTS TO THE CREDIT AGREEMENT TO IMPLEMENT 
 THE FIRST AMENDMENT INCREMENTAL TERM LOANS

 

Section 4.01  Amendments.  The Credit Agreement is hereby amended as follows:

 

(a)                                 Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in the appropriate alphabetical order:

 

“First Amendment” means that certain Amendment No. 1 to Credit Agreement dated as of May 7, 2013 among the Borrower, Holdings, the Administrative Agent, the Incremental Term Lender (as defined therein) and the other Lenders party thereto.

 

“First Amendment Effective Date” means the date on which the conditions specified in Section 5.01 of the First Amendment are satisfied (or waived).

 

“First Amendment Incremental Term Loan Commitments” means Incremental Term Loan Commitments established pursuant to the First Amendment.

 

“First Amendment Incremental Term Loans” means Incremental Term Loans implemented pursuant to the First Amendment.

 

(b)                                 The definition of “Lender” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Lender” means each financial institution listed on Schedule 2.01 (other than any such person that ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 10.06), as well as any Person that becomes a “Lender” hereunder pursuant to Section 10.06, 2.12 or 2.14, including, for the avoidance of doubt, the Incremental Term Lender under and as defined in the First Amendment.

 

(c)                                  The definition of “Loan Documents” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Loan Documents” means this Agreement, each Guaranty, each Security Document, each Note (if any), the First Amendment, the Administrative Agent Fee Letter and the Engagement Letter and all agreements, instruments or documents in connection therewith.

 

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(d)                                 The definition of “Term B Loan Commitment” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Term B Loan Commitment” means with respect to each Lender, the commitment of such Lender to make Term B Loans as set forth in Section 2.01(i) (and any Incremental Term Loans in the form of Term B Loans as set forth in Section 2.01(ii)).  The initial amount of each Lender’s Term B Loan Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance (or Incremental Assumption Agreement) pursuant to which such Lender shall have assumed its Term B Loan Commitment (or its Incremental Term Loan Commitment), as applicable.  The aggregate amount of the Term B Loan Commitments on the First Amendment Effective Date is $200,000,000, which Term B Loan Commitments are in the form of the First Amendment Incremental Term Loan Commitments.

 

(e)                                  Section 2.07(a)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(i)                                     the Borrower shall repay Term B Borrowings (including, for the avoidance of doubt, the First Amendment Incremental Term Loans) to the Administrative Agent for the ratable accounts of the Lenders on the last Business Day of March, June, September and December, commencing with June 30, 2013, and prior to the Term B Facility Maturity Date (each such date, a “Scheduled Repayment Date”) in the aggregate principal amount (a “Scheduled Repayment”) equal to $1,001,253.13;

 

(f)                                   Section 6.12 of the Credit Agreement is hereby amended by adding the following sentence at the end thereof:

 

Use the proceeds of the First Amendment Incremental Term Loans:  (i) to pay fees, commissions and expenses, including any upfront fees, in connection with the First Amendment and the First Amendment Incremental Term Loans and (ii) for other general corporate purposes not in contravention of any Law or any Loan Document.

 

ARTICLE V
 CONDITIONS TO EFFECTIVENESS

 

Section 5.01  Conditions to Effectiveness of this First Amendment.  This First Amendment, the funding of the First Amendment Incremental Term Loans pursuant hereto and each of the amendments to the Credit Agreement contained herein shall become effective on the date (the “First Amendment Effective Date”) on which the following conditions precedent are satisfied (or waived):

 

(a)                                 Execution and Delivery of this First Amendment and Amendments to the Luxembourg Security Agreements.  The Administrative Agent shall have received counterparts of this First Amendment duly executed by the Borrower, Holdings, the Incremental Term Lender, the Administrative Agent and, solely with respect to the amendments to the Credit Agreement contained in Article III herein, the Required Lenders under the Credit Agreement.  The Administrative Agent shall have received counterparts of the amendments to the Luxembourg Security Agreements duly executed by the Luxembourg Parties party thereto and the Collateral Agent, in form and substance reasonably satisfactory to the Administrative Agent.

 

(b)                                 Payment of Fees.  All fees required to be paid and costs and expenses, in each case, due to the Administrative Agent and its affiliates and the Lenders shall have been paid (including (i)

 

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the fees referred to in that certain Engagement Letter, dated as of April 25, 2013 among the Borrower and the Lead Arrangers and (ii) a fee to the Administrative Agent for the ratable accounts of the Lenders holding Term B Loans made on the Effective Date that remain outstanding on the First Amendment Effective Date that consent to the amendments to the Credit Agreement contained in Article III herein (as evidenced by the receipt by the Administrative Agent of an executed counterpart signature page) equal to 0.125% of the aggregate principal amount of such Term B Loans outstanding on the First Amendment Effective Date); provided that any fees may, if applicable, be paid by being netted out of the proceeds of the First Amendment Incremental Term Loans.

 

(c)                                  Counsel Fees.  Fried, Frank, Harris, Shriver & Jacobson LLP (“Fried Frank”) and Arendt & Medernach — Avocats (“Arendt”) shall have received full payment from the Borrower of the fees and expenses of Fried Frank and Arendt described in Section 7.06 of this First Amendment.

 

(d)                                 Deliverables.  The Administrative Agent’s receipt of the following, each of which shall be originals or pursuant to electronic transmission (followed promptly by originals) unless otherwise specified, each properly executed by an Authorized Officer of the signing Loan Party, each dated the First Amendment Effective Date (or, in the case of certificates of governmental officials, a recent date before the First Amendment Effective Date) and each in form and substance reasonably satisfactory to the Administrative Agent:

 

(i)                                     if requested by the Incremental Term Lender, a Note executed by the Borrower in favor of the Incremental Term Lender evidencing the First Amendment Incremental Term Loans of the Incremental Term Lender;

 

(ii)                                  a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of each applicable jurisdiction) of each Loan Party in the domestic jurisdiction of such Loan Party as of a recent date and, with respect to each Luxembourg Party, a negative certificate issued by the Luxembourg Register of Commerce and Companies;

 

(iii)                               a certificate of the Secretary or Assistant Secretary or similar officer or a manager of each Loan Party dated the First Amendment Effective Date and certifying:

 

(A)                               that either (1) attached thereto is a true, correct and complete copy of the certificate or articles of incorporation, certificate of formation or articles of association (to the extent such concept or a similar concept exists under the laws of each applicable jurisdiction), including all amendments thereto, of such Loan Party or (2) such Loan Party’s certificate or articles of incorporation, certificate of formation or articles of association (to the extent such concept or a similar concept exists under the laws of each applicable jurisdiction), which was previously delivered to the Administrative Agent continues to be in full force and effect and has not been rescinded, amended, repealed or otherwise modified since such delivery date;

 

(B)                               that attached thereto, with respect to each Luxembourg Party, is a true, correct and complete copy of an excerpt issued by the Luxembourg Trade and Companies Register;

 

(C)                               that either (1) attached thereto is a true, correct and complete copy of the by-laws (or limited liability company agreement or other equivalent governing documents) of such Loan Party which were at the time of adoption of the resolutions described in (C) below and are on and as of the First Amendment Effective

 

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Date in full force and effect or (2) such Loan Party’s by-laws (or limited liability company agreement or other equivalent governing documents) which were previously delivered to the Administrative Agent continues to be in full force and effect and has not been rescinded, amended, repealed or otherwise modified since such delivery date;

 

(D)                               that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors or managers (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance of the First Amendment Documents (as defined in Section 6.01) to which such Loan Party is a party, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the First Amendment Effective Date;

 

(E)                                that the certificate or articles of incorporation, certificate of formation or articles of association of such Loan Party described in (A) above has not been amended since the date of the last amendment thereto disclosed pursuant to (A) above; and

 

(F)                                 as to the incumbency and specimen signature of each officer, manager, or other representative executing any First Amendment Document or any other document delivered in connection herewith on behalf of such Loan Party;

 

(iv)                              (i) a certificate of another officer or manager as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer or manager executing the certificate pursuant to clause (iii) above (which may, for the avoidance of doubt, be included as a part of such certificate delivered pursuant to clause (iii) above) or (ii) or a certification from an Authorized Officer of such Loan Party that the Secretary or Assistant Secretary or similar officer listed on the incumbency certificate delivered as a part of the Secretary’s Certificate of such Loan Party previously delivered to the Administrative Agent prior to the First Amendment Effective Date are and continue to be authorized to act on behalf of such Loan Party in connection with the First Amendment and the other Loan Documents to which such Loan Party is a party;

 

(v)                                 a favorable written opinion of (i) Hunton & Williams LLP, special counsel to the Loan Parties, (ii) Kevin J. Wilcox, general counsel to Holdings, (iii) Nauta Dutilh, special Luxembourg counsel to Holdings and the Borrower and (iv) Arendt, special Luxembourg counsel to the Administrative Agent, in each case (A) dated the First Amendment Effective Date, (B) addressed to the Administrative Agent and the Incremental Term Lender and (C) in form and substance reasonably satisfactory to the Administrative Agent and covering such matters as the Administrative Agent shall reasonably request;

 

(vi)                              a certificate signed by an Authorized Officer of the Borrower certifying that (i) the conditions precedent set forth in Section 5.01(b) and (c) of the Credit Agreement shall have been satisfied both immediately before and after giving effect to this First Amendment and the First Amendment Incremental Term Loans and (ii) the Senior Secured Leverage Ratio determined in accordance with Section 7.07 of the Credit Agreement is equal to or less than 3.00 to 1.00 as of the last day of the Fiscal Quarter most recently ended immediately prior to and after giving effect to the incurrence of First Amendment Incremental Term Loans, together with supporting calculations; and

 

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(vii)                           a certificate signed by the chief financial officer of the Borrower attesting to and demonstrating that each of the Borrower, individually, and the Loan Parties, taken as a whole, was Solvent and would be Solvent immediately before and after giving effect to the incurrence of the First Amendment Incremental Term Loans.

 

(e)                                  First Amendment Effective Date.  The First Amendment Effective Date shall have occurred on or prior to May 7, 2013.

 

(f)                                   Representations and Warranties.  The representations and warranties set forth in Section 6.01 of this First Amendment and any other the Loan Document shall be true and correct in all material respects as of such date, as applicable, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

 

(g)                                  Notices Required by Section 2.12 of the Credit Agreement.  All notices required for Incremental Term Loans shall have been delivered as required by Section 2.12(a) of the Credit Agreement.

 

(h)                                 Borrowing Request.  The Administrative Agent shall have received a Borrowing Request requesting the borrowing of First Amendment Incremental Term Loans on the First Amendment Effective Date in accordance with the requirements of Section 2.03 of the Credit Agreement; provided that the Administrative Agent, in its reasonable discretion, may shorten notice periods required by Section 2.03 of the Credit Agreement.

 

Section 5.02  Effects of this First Amendment.

 

(a)                                 On the First Amendment Effective Date, the Credit Agreement will be automatically amended to reflect the amendments thereto provided for in this First Amendment.  The rights and obligations of the parties hereto shall be governed (i) prior to the First Amendment Effective Date, by the Credit Agreement and (ii) on and after the First Amendment Effective Date, by the Amended Credit Agreement.  Once the First Amendment Effective Date has occurred, each reference in the Credit agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement and all references to the Credit Agreement in any document, instrument, agreement, or writing shall be deemed to refer to the Amended Credit Agreement.

 

(b)                                 Other than as specifically provided herein, this First Amendment shall not operate as a waiver or amendment of any right, power or privilege of the Administrative Agent or any Lender under the Credit Agreement or any other Loan Document or of any other term or condition of the Credit Agreement or any other Loan Document, nor shall the entering into of this First Amendment preclude the Administrative Agent and/or any Lender from refusing to enter into any further waivers or amendments with respect thereto.  This First Amendment is not intended by any of the parties hereto to be interpreted as a course of dealing which would in any way impair the rights or remedies of the Administrative Agent or any Lender except as expressly stated herein, and no Lender shall have any obligation to extend credit to the Borrower other than pursuant to the strict terms of the Credit Agreement and the other Loan Documents, as amended or supplemented to date (including by means of this First Amendment).

 

(c)                                  For the purpose of Luxembourg law (including article 1278 of the Luxembourg Civil Code), the provisions of any Security Document governed by Luxembourg law and the first ranking security interests created thereunder shall continue in full force and effect and shall be preserved for the

 

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benefit of the Collateral Agent.  The first ranking security interests created under any Security Document governed by Luxembourg law shall secure the Obligations, as resulting from the Loan Documents and the Credit Agreement (as amended, supplemented, restated, extended or novated (in each case, however fundamentally and of whatsoever nature) from time to time in the past or in the future).

 

ARTICLE VI
 REPRESENTATIONS AND WARRANTIES

 

Section 6.01  Representations and Warranties of the Borrower.  In order to induce the Incremental Term Lender to commit to provide First Amendment Incremental Term Loans and the Administrative Agent and the Incremental Term Lender to enter into this First Amendment, the Borrower represents and warrants, as of the First Amendment Effective Date, that:  (a) each Loan Party party hereto or thereto has all requisite power and authority to enter into the First Amendment and the other Loan Documents required to be delivered hereunder (collectively, the “First Amendment Documents”) to which it is a party and to carry out the transactions contemplated thereby; (b) the execution, delivery and performance of each of the First Amendment Documents have been duly authorized by all necessary action on the part of each Loan Party that is a party thereto and on the part of the respective shareholders, members or other equity security holders of each Loan Party; (c) the execution, delivery and performance by the Loan Parties of the First Amendment Documents to which they are parties and the consummation of the transactions contemplated thereby do not and shall not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority (other than any filings or reports required under the securities laws) except as otherwise set forth in the First Amendment Documents and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Collateral Agent for filing and/or recordation; (d) each First Amendment Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or limiting creditors’ rights or by equitable principles relating to enforceability; and (e) no Default or Event of Default has occurred and is Continuing or would result from the First Amendment and the First Amendment Incremental Term Loans.

 

ARTICLE VII
 MISCELLANEOUS

 

Section 7.01  Headings.  Article and Section headings used herein are for convenience of reference only, are not part of this First Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this First Amendment.

 

Section 7.02  Execution in Counterparts.  This First Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this First Amendment by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this First Amendment.

 

Section 7.03  Successors and Assigns.  The provisions of this First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

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Section 7.04  Governing Law; Jurisdiction, Etc.

 

(a)           Governing Law.  THIS FIRST AMENDMENT AND THE OTHER FIRST AMENDMENT DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR ANY OTHER FIRST AMENDMENT DOCUMENT (EXCEPT, AS TO ANY OTHER FIRST AMENDMENT DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF LAWS OF ANOTHER JURISDICTION.

 

(b)           Submission to Jurisdiction.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS FIRST AMENDMENT AND THE OTHER FIRST AMENDMENT DOCUMENTS TO WHICH IT IS A PARTY OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS FIRST AMENDMENT OR ANY OTHER FIRST AMENDMENT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS FIRST AMENDMENT OR ANY OTHER FIRST AMENDMENT DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           Waiver of Venue.  THE BORROWER AND EACH OTHER LOAN PARTY PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR ANY FIRST AMENDMENT DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           Service of Process.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  NOTHING IN THIS FIRST AMENDMENT OR ANY OTHER FIRST

 

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AMENDMENT DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

Section 7.05  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR ANY OTHER FIRST AMENDMENT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS FIRST AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 7.06  Fees and Expenses.  The Borrower agrees to pay all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its affiliates (including the reasonable and invoiced fees, charges and disbursements of Fried Frank, as U.S. counsel for the Administrative Agent, and Arendt, as Luxembourg counsel to the Administrative Agent) in connection with the preparation, negotiation, execution, delivery, administration and enforcement of this First Amendment and the other documents and instruments referred to herein or contemplated hereby.

 

Section 7.07  Loan Document Pursuant to Credit Agreement.  This First Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the effectiveness hereof, the Amended Credit Agreement).

 

Section 7.08  Incremental Assumption Agreement Pursuant to Credit Agreement.  This First Amendment, except for Article III hereof, shall constitute an Incremental Assumption Agreement for all purposes of the Amended Credit Agreement and the other Loan Documents.

 

[Signature Pages Follow]

 

11

 

IN WITNESS WHEREOF, the signatories hereto have caused this First Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

 

	
BORROWER:
    	
ALTISOURCE   SOLUTIONS S.À R.L. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
HOLDINGS:
    	
ALTISOURCE   PORTFOLIO SOLUTIONS S.A. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Chief   Executive Officer
    

 

S-1

 

	
ADMINISTRATIVE   AGENT:
    	
BANK OF AMERICA, N.A., as Administrative Agent 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert Rittelmeyer 
    
	
 
    	
 
    	
Name:
    	
Robert   Rittelmeyer 
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

S-2

 

	
INCREMENTAL   TERM LENDERS:
    	
BANK OF AMERICA, N.A., as an Incremental Term   Lender 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Short 
    
	
 
    	
 
    	
Name:
    	
Mark   Short 
    
	
 
    	
 
    	
Title:
    	
Director
    

 

S-3

 

	
LENDERS:
    	
SIGNATURE   PAGE TO THE AMENDMENT NO. 1 DATED AS OF MAY 7, 2013 TO THE CREDIT   AGREEMENT DATED AS OF NOVEMBER 27, 2012, AMONG ALTISOURCE SOLUTIONS S.À R.L.,   ALTISOURCE PORTFOLIO SOLUTIONS S.A., THE LENDERS FROM TIME TO TIME PARTY   THERETO AND BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT 
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A., as Administrative Agent,   for and on behalf of the Required Lenders who have consented hereto as   provided in Section 10.01 of the Credit Agreement 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert Rittelmeyer 
    
	
 
    	
 
    	
Name:
    	
Robert   Rittelmeyer 
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

S-4

 

ACKNOWLEDGEMENT AND AGREEMENT

 

Each Loan Party listed below hereby acknowledges that it has reviewed the Amendment No. 1 to Credit Agreement dated as of May 7, 2013 to which this Acknowledgement and Agreement is attached as an exhibit (the “First Amendment”) and hereby consents to the execution, delivery and performance thereof by the Borrower.  Each Loan Party hereby confirms its obligation under each Loan Document to which it is a party and agrees that, after giving effect to the First Amendment, neither the modification of the Credit Agreement or any other Loan Document effected pursuant to the First Amendment, nor the execution, delivery, performance or effectiveness of the First Amendment or any other Loan Document impairs the validity or effectiveness of any Loan Document to which it is a party or impairs the validity, effectiveness or priority of the Liens granted pursuant to any other Loan Document to which it is a party or by which it is otherwise bound.

 

THIS ACKNOWLEDGEMENT AND AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS ACKNOWLEDGEMENT AND AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF LAWS OF ANOTHER JURISDICTION.

 

 

	
 
    	
ALTISOURCE FULFILLMENT OPERATIONS, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeffery R. McGuiness 
    
	
 
    	
 
    	
Name:
    	
Jeffery   R. McGuiness 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
ALTISOURCE HOLDINGS, LLC 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Manager   
    
	
 
    	
 
    
	
 
    	
ALTISOURCE PORTFOLIO SOLUTIONS, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert I. Herman 
    
	
 
    	
 
    	
Name:
    	
Robert   I. Herman 
    
	
 
    	
 
    	
Title:
    	
Vice   President 
    

 

S-1

 

	
 
    	
ALTISOURCE SINGLE FAMILY, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jason C. Kirkley 
    
	
 
    	
 
    	
Name:
    	
Jason   C. Kirkley 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
ALTISOURCE SOLUTIONS, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John P. Barrack 
    
	
 
    	
 
    	
Name:
    	
John   P. Barrack 
    
	
 
    	
 
    	
Title:
    	
Treasurer   
    
	
 
    	
 
    
	
 
    	
ALTISOURCE   US DATA, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John P. Barrack 
    
	
 
    	
 
    	
Name:
    	
John   P. Barrack 
    
	
 
    	
 
    	
Title:
    	
Treasurer   
    
	
 
    	
 
    
	
 
    	
BELTLINE ROAD INSURANCE AGENCY, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John P. Barrack 
    
	
 
    	
 
    	
Name:
    	
John   P. Barrack 
    
	
 
    	
 
    	
Title:
    	
Treasurer   
    
	
 
    	
 
    
	
 
    	
NATIONWIDE   CREDIT, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Vivek Bhandari 
    
	
 
    	
 
    	
Name:
    	
Vivek   Bhandari 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
PORTFOLIO MANAGEMENT OUTSOURCING SOLUTIONS, LLC 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Manager   
    

 

S-2

 

	
 
    	
POWER DEFAULT SERVICES, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John P. Barrack 
    
	
 
    	
 
    	
Name:
    	
John   P. Barrack 
    
	
 
    	
 
    	
Title:
    	
Treasurer   
    
	
 
    	
 
    
	
 
    	
PREMIUM TITLE AGENCY, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Weld 
    
	
 
    	
 
    	
Name:
    	
James   A. Weld 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
PREMIUM TITLE OF CALIFORNIA, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Weld 
    
	
 
    	
 
    	
Name:
    	
James   A. Weld 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
PREMIUM TITLE SERVICES, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Weld 
    
	
 
    	
 
    	
Name:
    	
James   A. Weld 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
PTS   — TEXAS TITLE, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Weld 
    
	
 
    	
 
    	
Name:
    	
James   A. Weld 
    
	
 
    	
 
    	
Title:
    	
President   
    
	
 
    	
 
    
	
 
    	
REALHOME SERVICES AND SOLUTIONS, INC. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christian D. Webb 
    
	
 
    	
 
    	
Name:
    	
Christian   D. Webb 
    
	
 
    	
 
    	
Title:
    	
President   
    

 

S-3

 

	
 
    	
SPRINGHOUSE,   LLC 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Kevin Raney 
    
	
 
    	
 
    	
Name:
    	
J.   Kevin Raney 
    
	
 
    	
 
    	
Title
    	
President   
    
	
 
    	
 
    
	
 
    	
THE MORTGAGE PARTNERSHIP OF AMERICA, L.L.C. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Manager   
    
	
 
    	
 
    
	
 
    	
WESTERN PROGRESSIVE TRUSTEE, LLC 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William B. Shepro 
    
	
 
    	
 
    	
Name:
    	
William   B. Shepro 
    
	
 
    	
 
    	
Title:
    	
Manager   
    

 

S-4

 

ANNEX I

 

INCREMENTAL TERM LOANS

 

	
Incremental Term Lender
    	
 
    	
Amount
    	
 
    
	
Bank of America, N.A.
    	
 
    	
$
    	
200,000,000
    	
 
    
	
Total:
    	
 
    	
$
    	
200,000,000Exhibit 10.1

 

HANGER, INC.

 

DEFINED CONTRIBUTION SUPPLEMENTAL

RETIREMENT PLAN

 

Effective as of May 1, 2013.

 

 

HANGER, INC.

 

DEFINED CONTRIBUTION SUPPLEMENTAL RETIREMENT PLAN

 

ARTICLE I - PURPOSE; EFFECTIVE DATE

 

1.1.                  Purpose.  The purpose of this Defined Contribution Supplemental Retirement Plan (hereinafter, the “Plan”) is to provide a select group of highly compensated employees of HANGER, INC. (and its selected subsidiaries and/or affiliates) the opportunity to defer the receipt of income which would otherwise be payable to them.  It is intended that this Plan, by providing these eligible individuals with these benefits and the deferral of income tax recognition of these benefits, will assist in retaining and attracting individuals of exceptional ability.

 

1.2.                  Effective Date.  It is the intent that all of the amounts contributed under this Plan and benefits provided hereunder will be subject to the terms of Section 409A of the Code and shall be effective as of May 1, 2013.

 

1.3.                  Plan Type.  For purposes of Section 409A of the Code, the portion of the amounts contributed as SERP Contributions and benefits attributable thereto, shall be considered a nonelective account balance plan as defined in Treas. Reg. §1.409A -1(c)(2)(i)(B), or as otherwise provided by the Code.

 

ARTICLE II - DEFINITIONS

 

For the purpose of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise:

 

2.1.                  Account.  “Account” means the account or accounts maintained on the books of the Company used solely to calculate the amount payable to each Participant under this Plan and shall not constitute a separate fund of assets.  An Account shall be deemed to exist from the time amounts are first credited to an Account until such time that the entire Account balance has been distributed in accordance with this Plan.

 

2.2.                  Beneficiary.  “Beneficiary” means the person, persons or entity as designated by the Participant, or who is otherwise entitled under Article VI, to receive any Plan benefits payable after the Participant’s death.

 

2.3.                  Board.  “Board” means the Board of Directors of Hanger, Inc., or any successor thereto.

 

2.4.                  Cause.  “Cause” means any of the following: (i) gross misconduct in the course of employment with the Company, or (ii) the violation of a noncompete, nondisclosure, nondisparagement, or other restrictive covenant entered into by way of an employment agreement or other employee benefit plan, agreement, arrangement, or policy, whether or not employment with the Company has ended.

 

2

 

2.5.                  Change in Control.  A “Change in Control” means a change in the ownership of Hanger, Inc., a change in the effective control of Hanger, Inc., or a change in the ownership of a substantial portion of the assets of Hanger, Inc., all as defined by Section 409A of the Code and the guidance applicable to interpreting it.

 

2.6.                  Code.  “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time and as interpreted by regulations and rulings issued pursuant to the Code.  Any references to a specific provision shall be deemed to include references to any successor Code provision.

 

2.7.                  Company.  “Company” means HANGER, INC., a Delaware corporation, any directly or indirectly affiliated subsidiary corporation thereof, and any other affiliate designated by the Board, including  any successors to the business thereof.

 

2.8.                  Covered Termination.  “Covered Termination” means a Termination upon or following a Change in Control under the following circumstances: (i) if a Participant has an employment, severance or similar agreement in effect with the Company entitling the Participant to severance benefits, then “Covered Termination” with respect to such a Participant means a Termination that entitles him or her to such severance benefits; or (ii) if a Participant has no such agreement in effect with the Company, then “Covered Termination” with respect to such a Participant means a Termination by the Participant for “good reason” or by the Company for reasons other than Cause, death or Disability within one year following a Change in Control.  For purposes of clause (ii), “good reason” means any of the following events that are not cured to the reasonable satisfaction of the Participant after providing notice to the Company and a thirty (30) day period to cure: (x) a material diminution of the Participant’s responsibilities, as compared to the Participant’s responsibilities immediately prior to the Change in Control, (y) any reduction in the Participant’s base salary or bonus plan targets as compared to such base salary or such targets as of the date immediately prior to the Change in Control, or (z) any relocation of the Participant’s principal place of employment to a location more than twenty-five (25) miles from the Participant’s principal place of employment as of the date immediately prior to the Change in Control.

 

2.9.                  Compensation Committee.  “Compensation Committee” means the committee appointed by the Board to administer the compensation programs and compensation of the Company’s executives and directors.

 

2.10.           Determination Date.  “Determination Date” means any business day on which the New York Stock Exchange is open for trading.

 

2.11.           Disability.  “Disability” means a physical or mental condition whereby the Participant (i) who is not covered by a Company accident and health plan which pays income replacement benefits to the employees of the Participant’s employer, 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, or (ii) is, by reason of any medically determinable physical or mental 

 

3

 

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, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer.

 

2.12.           Distribution Election.  “Distribution Election” means the form prescribed by the SERP Committee and completed by the Participant, indicating the chosen form of payment for benefits payable from the Participant’s Account, as elected by the Participant.

 

2.13.           Executive Officer.  “Executive Officer” means any executive whose compensation must be reviewed and approved by the Compensation Committee.

 

2.14.           401(k) Plan.  “401(k) Plan” means the Hanger, Inc. 401(k) Savings Plan, or any other successor defined contribution plan maintained by the Company that qualifies under Section 401(a) of the Code and satisfies the requirements of Section 401(k) of the Code.

 

2.15.           Interest.  “Interest” means the amount credited to or debited against a Participant’s Account on a Determination Date, which shall be based on the Valuation Funds chosen by the Participantpursuant to  Section 4.3, in order to reflect the increase or decrease in value of the Account in accordance with the provisions of this Plan.

 

2.16.           Participant.  “Participant” means any individual who has been selected to participate in the Plan pursuant to Section 3.1.  Such individual shall remain a Participant in this Plan until such time as all benefits payable under this Plan have been paid in accordance with the provisions hereof.

 

2.17.           Plan.  “Plan” means this Defined Contribution Supplemental Retirement Plan, as amended from time to time.

 

2.18.           Retirement.  “Retirement” means the termination of a Participant’s employment with the Company, for reasons other than death or Disability, on or after attainment of age sixty (60) with at least five (5) Years of Service with the Company.

 

2.19.           SERP Committee.  “SERP Committee” means the committee appointed by the Board to administer the Plan pursuant to Article VII.  The initial Committee so designated by the Board shall consist of the following officers of Hanger, Inc.: the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”), and the Chief Human Resources Officer (“CHRO”).

 

2.20.           SERP Contribution.  “SERP Contribution” means the Company contribution credited to a Participant’s Account under Section 4.4.

 

2.21.           Termination.  “Termination”, “terminates employment” or any other similar such phrase means the Participant’s “separation from service” with the Company, for any reason, within the meaning of Section 409A of the Code, except that for purposes of determining “control” pursuant to Sections 414(b) or (c) of the Code, the phrase “at least 50 percent” shall be used in place of the 

 

4

 

phrase “at least 80 percent” in each place it appears in the regulations thereunder.

 

2.22.           Valuation Funds.  “Valuation Funds” means one or more of the independently established funds or indices that are approved by the SERP Committee.  These Valuation Funds are used solely to calculate the Interest that is credited to each Participant’s Account in accordance with Article IV, and does not represent, nor should it be interpreted to convey, any beneficial interest on the part of the Participant in any asset or other property of the Company. The determination of the increase or decrease in the performance of each Valuation Fund shall be made by the SERP Committee in its reasonable discretion.  The SERP Committee shall select the various Valuation Funds available to the Participants and may add or remove any Valuation Funds on a prospective basis at any time in its sole discretion.

 

2.23.           Years of Participation.  “Years of Participation” means the number of consecutive twelve month periods that an individual has both been a Participant in this Plan and an employee of the Company.

 

2.24.           Years of Service.  “Years of Service” means the number of years of service performed by a Participant for the Company as determined under the terms of the 401(k) Plan.

 

ARTICLE III - ELIGIBILITY AND PARTICIPATION

 

3.1.                  Eligibility and Participation.

 

a)                            Eligibility.      The Compensation Committee shall designate those key employees of the Company who are eligible to participate in the Plan.  The SERP Committee shall designate Participants from among the eligible employees so approved by the Compensation Committee.

b)                            Participation.  An individual’s participation in the Plan shall be effective upon the date such individual is approved as a Participant by the SERP Committee, unless either the SERP Committee or Compensation Committee specifically designates a later effective date of participation for such individual.

 

3.2.                  Participant Elections.  No more than thirty (30) days after the effective date of a Participation’s participation as set forth in Section 3.1(b), the Participant may submit the following forms to the SERP Committee:

 

a)                            Distribution Election.  The Participant may submit a Distribution Election, on which the Participant shall elect a form of payment to be made with respect to the Participant’s Account.  The Participant may submit a new Distribution Election at any time prior to the end of the thirty (30) day period referenced in this Section 3.2, and the Distribution Election most recently filed at the end of such thirty (30) day period shall be irrevocable.  In the event that a Participant does not timely submit a properly completed Distribution Election, the form of payment deemed to be elected will be a lump sum.

b)                            Allocation Election.  The Participant may submit an allocation form, which shall provide instructions on how the SERP Contributions credited to the Participant’s Account shall be 

 

5

 

allocated among the various available Valuation Funds.  In the event that a Participant does not submit a timely and properly completed allocation form, the SERP Committee shall allocate the SERP Contributions to the default Valuation Fund designated by the SERP Committee until a properly completed allocation form is submitted.

 

ARTICLE IV - DEFERRED COMPENSATION ACCOUNT

 

4.1.                  Accounts.  The SERP Contributions and Interest thereon shall be credited to the Participant’s Account as otherwise provided in this Article.  The Participant’s Account shall be used solely to calculate the amount payable to the Participant under this Plan and shall not constitute a separate fund of assets.

 

4.2.                  Timing of Credits; Withholding.  Any SERP Contributions shall be credited to a Participant’s Account as of a time and in a manner provided by the SERP Committee, but typically as soon as practicable in the calendar year following the year to which such contribution relates.  Any withholding of taxes or other amounts with respect to the SERP Contribution credited to a Participant’s Account that is required by local, state or federal law shall reduce the amount credited to the Participant’s Account in any manner specified by the SERP Committee.

 

4.3.                  Valuation Funds.  A Participant shall be permitted to designate one or more Valuation Funds for the sole purpose of determining the amount of Interest to be credited or debited to the Participant’s Account.  Such election shall designate how each SERP Contribution shall be allocated among the available Valuation Fund(s). A Participant shall also be permitted to reallocate the balance in the Participant’s Account among the available Valuation Funds. The manner in which such elections shall be made and the frequency with which such elections may be changed and the manner in which such elections shall become effective shall be determined in accordance with the procedures adopted by the SERP Committee or its delegates from time to time.  As of the Effective Date, such elections may be made on a daily basis electronically, and such elections shall become effective on the date made or the next available Determination Date.

 

4.4.                  SERP Contributions.  A Participant’s Account shall be credited with a SERP Contribution in accordance with this Section 4.4.  The amount of the SERP Contribution for any Participant shall be stated either as (i) a flat dollar amount, or (ii) a percentage of the Participant’s base salary received or payable in the calendar year (provided that, for the first year of participation under the Plan, only base salary and other compensation earned after the first thirty (30) days of participation shall be considered for such percentage method).

 

a)                            Contribution Amount.  The Compensation Committee, in its sole discretion, shall determine the maximum amount of the SERP Contribution that may be made for a Participant, and may consider any factors it deems relevant in making such such determination.  The SERP Committee, in its sole discretion, shall determine the actual amount of the SERP Contribution to be allocated to a Participant’s Account for each year (or portion thereof), if any, up to the maximum amount approved by the Compensation Committee.  For a Participant’s initial year of participation, the determination of the SERP Contribution for such Participant typically shall be made within ninety (90) days of becoming eligible to participate.  Once established, 

 

6

 

the SERP Contribution for any Participant shall remain the same for each succeeding year, unless changed by either the SERP Committee or the Compensation Committee, as the case may be.  Any such changes must be made no later than December 31 and shall apply to the SERP Contribution made with respect services performed in the following calendar year.

b)                            No Guarantee of Future Contributions.  The designation of any Participant as being eligible to receive a SERP Contribution in any year shall not be a guarantee of future contributions, and the crediting of any particular level of SERP Contribution in any year shall not be a guarantee of that level in future years.

 

4.5.                  Determination of Accounts.  Each Participant’s Account on a Determination Date shall consist of the balance of the Account as of the immediately preceding Determination Date, adjusted as follows:

 

a)                            SERP Contributions.  Each Account shall be increased by any SERP Contribution credited since such prior Determination Date as set forth in Section 4.4.

b)                            Distributions.  Each Account shall be reduced by the amount of each benefit payment made from that Account since the prior Determination Date.  Distributions shall be deemed to have been made proportionally from each of the Valuation Funds maintained within such Account based on the proportion that such Valuation Fund bears to the sum of all Valuation Funds maintained within the Account for that Participant as of the Determination Date immediately preceding the date of payment.

c)                             Interest.  Each Account shall be increased or decreased by the Interest credited or debited to such Account as though the balance of that Account  was invested in the applicable Valuation Funds chosen by the Participant.

 

4.6.                  Vesting of Accounts.  Unless otherwise specified by the SERP Committee (with respect to non-Executive Officer Participants) or the Compensation Committee (with respect to Executive Officer Participants) in writing, or except as set forth in Section 4.7, each Participant shall be one hundred percent (100%) vested in the Participant’s Account, including any Interest thereon, upon the earlier of: (a) death; (b) Disability; (c) attaining five (5) Years of Participation: (d) becoming eligible for Retirement; or (e) a Covered Termination.

 

4.7.                  Forfeiture of Accounts.  Any Participant who Terminates employment before becoming fully vested in the Participant’s Account shall immediately forfeit the unvested balance of his or her Account.  Any Participant whose employment is terminated for Cause, or whose employment is terminated for any reason at a time when such termination could have been for Cause, shall immediately forfeit the balance of his or her Account, including any vested amounts.  In addition, if a Participant’s employment is not terminated for Cause, but the SERP Committee (with respect to non-Executive Officer Participants) or the Compensation Committee (with respect to Executive Officer Participants) later determines that such termination could have been for Cause if all the facts had been known at the time of such termination, then any unpaid portion of the Participant’s Account shall be immediately forfeited as of the date of such Committee’s determination.

 

7

 

4.8.                  Statement of Accounts.  To the extent that the Company does not arrange for a Participant’s Account balance to be accessible online by the Participant, the SERP Committee shall provide to each Participant a statement showing the balance in the Participant’s Account no less frequently than annually.

 

ARTICLE V - PLAN BENEFITS

 

5.1.                  A Participant’s Account.  The vested portion of a Participant’s Account shall be distributable to the Participant upon the Participant’s Termination of employment with the Company.

 

a)                  Timing of Payment.  Benefits payable from a Participant’s Account shall be paid (if a lump sum) or commence (if installments) on the first Determination Date that occurs on or immediately following six (6) months following the Participant’s Termination.

b)                  Form of Payment.  The form of benefit payment shall be that form selected by the Participant in his or her Distribution Election made (or deemed made) pursuant to Section 3.2(a), and as permitted pursuant to Section 5.5, except if the Participant terminates employment prior to Retirement, then the Participant’s Account shall be paid in the form of a lump sum payment regardless of the form of payment otherwise selected.  If the form of payment selected provides for subsequent payments, subsequent payments shall be made on or about the anniversary of the initial payment.

 

5.2.                  Death Benefit. Upon the death of a Participant prior to the commencement of benefits from the Participant’s Account, the Company shall pay to the Participant’s Beneficiary an amount equal to the Participant’s vested Account balance in the form of a lump sum payment as soon as administratively practicable (but in no event more than ninety (90) days) after the Participant’s death.  In the event of the death of the Participant after the commencement of benefits from the Participant’s Account, the remaining unpaid benefits from the Participant’s Account shall be paid to the Participant’s Beneficiary in the form of a lump sum as soon as administratively possible (but in no event more than ninety (90) days) after the Participant’s death.  If the Participant’s Beneficiary, estate or legal representative fails to notify the SERP Committee of the death of the Participant in the manner specified in Section 10.9, such that the Company is unable to make timely payment hereunder, then the Company shall not be treated as in breach of this Plan and shall not be liable to the Beneficiary, estate or legal representative for any losses, damages, or other claims resulting from such late payment.

 

5.3.                  Disability Distributions.  Upon a finding by the SERP Committee that a Participant has suffered a Disability, the Company shall make a full distribution of the Participant’s Account. The payment of such distribution shall be made in the form of a lump sum in an amount equal to the Participant’s vested Account balance as soon as administratively practical (but in no event more than ninety (90) days) after the date of such Disability.

 

5.4.                  Permitted Acceleration of Payments.  To the extent permitted by Section 409A of the Code, the SERP Committee may, in its sole discretion, accelerate the time or schedule of a distribution under the Plan, such as accelerated distributions to address the payment of employment taxes or early income inclusion that may occur for a Participant’s Account balance.

 

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5.5.                  Form of Payment.  Unless otherwise specified in this Article V, the benefits payable from a Participant’s Account shall be paid in the form of benefit as provided below, and specified by the Participant in the Distribution Election or as otherwise set forth in Section 3.2(a).  The permitted forms of benefit payments are:

 

a)                  A lump sum amount which is equal to the vested Participant’s Account balance; and

b)                  Annual installments for a period of up to fifteen (15) years where the annual payment shall be equal to the vested balance of the Participant’s Account immediately prior to the payment, multiplied by a fraction, the numerator of which is one (1) and the denominator of which commences at the number of annual payment initially chosen and is reduced by one (1) in each succeeding year.  Interest on the unpaid balance shall be based on the most recent allocation among the available Valuation Funds chosen by the Participant, made in accordance with Section 4.3.

 

5.6.                  Small Account.  If the Participant’s vested Account balance as of the time the payments are to commence is less than $50,000,  then such Account shall be paid in a lump sum, notwithstanding any election by the Participant to the contrary.

 

5.7.                  Withholding; Payroll Taxes.  The Company shall withhold from any payment made pursuant to this Plan any taxes required to be withheld from such payments under local, state or federal law.

 

5.8.                  Payments in Connection with a Domestic Relations Order.  Notwithstanding anything herein to the contrary, the Company may make distributions to someone other than the Participant if such payment is necessary to comply with a domestic relations order, as defined in Code section 414(p)(1)(B), involving the Participant.

 

5.9.                  Payment to Guardian.  If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of the property, then the SERP Committee may direct payment to the guardian, legal representative or person having the care and custody of such minor, incompetent or person.  The SERP Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution.  Such distribution shall completely discharge the SERP Committee and the Company from all liability with respect to such benefit.

 

5.10.           Effect of Payment.  The full payment of the applicable benefit under this Article V shall completely discharge all obligations on the part of the Company to the Participant (and the Participant’s Beneficiary) with respect to the operation of this Plan, and the Participant’s (and the Participant’s Beneficiary’s) rights under this Plan shall terminate.

 

5.11.           Amount of Payment.  Notwithstanding anything herein to the contrary, the amount payable from a Participant’s vested Account may be determined and valued within a period of up to ten (10) business days preceding the date of actual payment.

 

ARTICLE VI - BENEFICIARY DESIGNATION

 

Beneficiary Designation.  Each Participant shall have the right, at any time, to designate one (1) or 

 

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more persons or entity as a Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of the Participant’s death prior to complete distribution of the Participant’s vested Account balance.  Each Beneficiary designation shall be in a written form prescribed by the SERP Committee and shall be effective only when filed with the SERP Committee during the Participant’s lifetime.

 

6.1.                  Changing Beneficiary. Any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new Beneficiary designation with the SERP Committee during the Participant’s lifetime.

 

6.2.                  No Beneficiary Designation.   If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by a deceased Participant dies before the Participant or before complete distribution of the Participant’s benefits, and the Beneficiary designation form does not specify to whom payments should be made in such event, then the Participant’s Beneficiary shall be the person in the first of the following classes in which there is a survivor:

 

a)                  The Participant’s spouse; or

b)                  The Participant’s estate.

 

6.3.                  Effect of Payment.   Payment to the Beneficiary shall completely discharge the Company’s obligations under this Plan.

 

ARTICLE VII - ADMINISTRATION

 

7.1.                  SERP Committee. Except to the extent that authority is reserved to the Compensation Committee herein, this Plan shall be administered by the SERP Committee.  The SERP Committee shall have the discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as they may arise in such administration.  A majority vote of the SERP Committee members shall control any decision.  Members of the SERP Committee may be Participants under this Plan.

 

7.2.                  Compliance with Section 409A of the Code.   It is intended that the Plan comply with the provisions of Section 409A of the Code, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to the Participants or Beneficiaries. This Plan shall be construed, administered, and governed in a manner that effects such intent, and neither the SERP Committee nor the Compensation Committee shall not take any action that would be inconsistent with such intent.  Although both Committees shall use their best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, neither the Company nor any Committee guarantees or provides any warranties with respect to the tax treatment of amounts deferred under this Plan.  Neither the Company, the Board, any director, officer, employee and advisor, nor any Committee (nor its designee) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant, Beneficiary or other taxpayer as a result of the Plan.  For purposes of the Plan, the phrase “permitted by Section 409A 

 

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of the Code,” or words or phrases of similar import, shall mean that the event or circumstance shall only be permitted to the extent it would not cause an amount deferred or payable under the Plan to be includible in the gross income of a Participant or Beneficiary under Section 409A(a)(1) of the Code.

 

7.3.                  Agents.   Both the SERP Committee and Compensation Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company.

 

7.4.                  Binding Effect of Decisions.   The decision or action of any Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

 

7.5.                  Indemnity of Committee Members.   The Company shall indemnify and hold harmless the members of any Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan on account of such member’s service on such Committee, except in the case of gross negligence or willful misconduct.

 

ARTICLE VIII - CLAIMS PROCEDURE

 

8.1.                  Claim.   Any person or entity claiming a benefit, or requesting an interpretation, ruling, or information under the Plan (hereinafter referred to as “Claimant”), shall present the request in writing to the SERP Committee (with respect to non-Executive Officer Participants) or the Compensation Committee (with respect to Executive Officer Participants) within one (1) year following the date that such person or entity knew or, exercising reasonable care, should have known of such claim, and the SERP Committee shall respond in writing as soon as practical, but in no event later than ninety (90) days after receiving the initial claim, or no later than forty-five (45) days after receiving the initial claim regarding a Disability under this Plan.  If special circumstances require an extension of the time for processing the claim, the initial ninety (90) or forty-five (45) day period may be extended for up to an additional ninety (90) or thirty (30) day period, respectively.  If such an extension is required, the SERP Committee will provide written notice of the required extension before the end of the initial ninety (90) or forty-five (45) day period, which notice shall (i) specifiy the circumstances requiring an extension, (ii) a description of any additional material or information required and an explanation of why it is necessary, and (iii) the date by which the SERP Committee expects to make a decision.  Notwithstanding the foregoing provisions of this Section 8.1, to the extent the Claimant is an Executive Officer, any claim under this Article VIII shall be addressed by the Compensation Committee or one of its authorized delegates.

 

8.2.                  Denial of Claim.  If a claim is denied, the applicable Committee shall provide the Claimant with written notice containing:

 

a)                  The reasons for the denial, with specific reference to the Plan provisions on which the denial is based; and

 

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b)                  An explanation of the Plan’s claim review procedure.

 

8.3.                  Review of Claim.  Any Claimant whose claim or request is denied or who has not received a response within the applicable time period set forth in Section 8.1 may request a review by notice given in writing to the applicable Committee.  For claims not involving Disability, such a request must be made within sixty (60) days after receiving notice of the denial or the expiration of the time period set forth in Section 8.1 if the Claimant has not received a response.  For claims involving Disability, such a request must be made within one hundred and eighty (180) days after receiving notice of the denial or the expiration of the time period set forth in Section 8.1 if the Claimant has not received a response.  Such a request shall then be reviewed by the applicable Committee which may, but shall not be required to, grant the Claimant a hearing.  On review, the Claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

 

8.4.                  Final Decision.  The applicable Committee shall provide the Claimant with written notice of its decision on review within sixty (60) days after receipt of the Claimant’s review request or hearing date or within forty-five (45) days of such time if the claim review involves Disability.  If special circumstances require an extension of the time to process the decision on review, the processing period may be extended for up to an additional sixty (60) or forty-five (45) day period, respectively.  If such an extension is required, the applicable Committee will provide written notice of the required extension to the Claimant before the end of the initial sixty (60) or forty-five (45) day period set forth in this Section 8.4.  If the claim is then denied, the applicable Committee will provide the Claimant with a written notice containing:

 

a)                  A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claim; and

b)                  The reasons for the denial, with specific reference to the Plan provisions on which the denial is based.

 

All decisions on review shall be final and bind all parties concerned.

 

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ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN

 

9.1.                  Amendment.   The Board may at any time amend the Plan by written instrument, notice of which is given to all the Participants and to each Beneficiary receiving installment payments who are affected by such amendment, except that no amendment shall reduce the amount vested or accrued in any Participant’s Account as of the date the amendment is adopted.  In addition, any amendment which adds a distribution event to the Plan shall not be affective with respect to any Participant’s Account that is already established as of the time of such amendment.  Notwithstanding anything in this Plan to the contrary, the Board shall have the unilateral right to amend this Plan to comply with Section 409A of the Code.

 

9.2.                  Company’s Right to Terminate. The Board may, in its sole discretion, terminate the entire Plan and require distribution of all benefits due under the Plan or portion thereof, provided that:

 

a)                  The termination of the Plan does not occur proximate to a downturn in the financial health, as determined by the SERP Committee, of Hanger, Inc. and all entities considered to be part of the same controlled group under Treas. Reg. §1.409A-1(g) (the “Hanger Controlled Group”);

b)                  The Hanger Controlled Group also terminates all other plans or arrangements which are considered to be of a similar type as defined in Treas. Reg. §1.409A -1(c)(2)(i), or as otherwise provided by the Code;

c)                   No payments made in connection with the termination of the Plan occur earlier than 12 months following the Plan termination date other than payments the Plan would have made irrespective of Plan termination;

d)                  All payments made in connection with the termination of the Plan are completed within 24 months following the Plan termination date;

e)                   The Hanger Controlled Group does not establish a new plan of a similar type as defined in Treas. Reg. §1.409A -1(c)(2)(i), within 3 years following the Plan termination date; and,

f)                    The Hanger Controlled Group meets any other requirements deemed necessary to comply with provisions of the Code and applicable regulations which permit the acceleration of the time and form of payment made in connection with plan terminations and liquidations.

 

ARTICLE X - MISCELLANEOUS

 

10.1.           Unfunded Plan. This plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.

 

10.2.           Unsecured General Creditor.   Notwithstanding any other provision of this Plan, all Participants and each Participants’ Beneficiary shall be unsecured general creditors, with no secured or preferential rights to any assets of the Company or any other party for payment of benefits under this Plan.  Any property held by the Company for the purpose of generating the cash flow for benefit payments shall remain its general, unpledged and unrestricted assets.  The Company’s obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future.

 

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10.3.           Trust Fund. The Company shall be responsible for the payment of all benefits provided under the Plan.  At its discretion, the Company may establish one (1) or more trusts, with such trustees as the Board may approve, for the purpose of assisting in the payment of such benefits. The assets of any such trust shall be held for payment of all the Company’s general creditors in the event of insolvency.  To the extent any benefits provided under the Plan are paid from any such trust, the Company shall have no further obligation to pay them.  If not paid from the trust, such benefits shall remain the obligation of the Company.

 

10.4.           Nonassignability and Offset.

 

a)                  Nonassignability.                           Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable, other than (i) to a Participant’s Beneficiary pursuant to Article VI, (ii) pursuant to a domestic relations order deemed legally sufficient by the SERP Committee, or (iii) by will or the laws of descent and distribution.  No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

b)                  Offset.  If, at the time a payment is due hereunder, the Company determines that the Participant is indebted or obligated to the Company or any subsidiary or other affiliate thereof (including, but not limited to, for amounts owed as a result of the Participant’s breach of his or her fiduciary duty owed to, or breach of any restrictive covenant in effect with, the Company, a subsidiary or affiliate), then the payment to be made to or with respect to such Participant (including a payment to the Participant’s Beneficiary) may, at the discretion of the Company, be reduced by the amount of such indebtedness or obligation; provided, however, that an election by the Company to not reduce any such payment shall not constitute a waiver of its claim for such indebtedness or obligation.

 

10.5.           Not a Contract of Employment.  This Plan shall not constitute a contract of employment between the Company and the Participant.  Nothing in this Plan shall give a Participant the right to be retained in the service of the Company or to interfere with the right of the Company to discipline or discharge a Participant at any time.

 

10.6.           Protective Provisions.   A Participant will cooperate with the Company by furnishing any and all information requested by the Company, in order to facilitate the payment of benefits hereunder, and by taking such physical examinations as the Company may deem necessary and taking such other action as may be requested by the Company.

 

10.7.           Governing Law.   The provisions of this Plan shall be construed and interpreted according to the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule, except as preempted by federal law.

 

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10.8.           Validity.   If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

 

10.9.           Notice.   Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail.  Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.  Mailed notice to either the SERP Committee or the Compensation Committee shall be directed to Hanger, Inc.’s headquarters address.  Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in the Company’s records.

 

10.10.    Successors.   The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns.  The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Company, and successors of any such corporation or other business entity.

 

	
 
    	
HANGER, INC.
    
	
 
    	
 
    
	
 
    	
BY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DATED:
    

 

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