Document:

EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of August ___,
2001, by and between HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (the
"Company"), and GEORGE McHENRY, an individual residing at 10 Blue Heron Court,
Medford, New Jersey 08055 (the "Executive").

                                   WITNESSETH:

         WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment by the Company, subject to the terms and
conditions set forth in this Agreement.

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

         1.       Employment, Term.

         1.1 Employment. The Company agrees to employ the Executive in the
position and with the responsibilities, duties and authority set forth in
Section 2.

         1.2 Term. The term of the Executive's employment under this Agreement
shall commence as of October 15, 2001 and shall terminate on the fifth
anniversary of the date hereof, unless extended or sooner terminated in
accordance with this Agreement.

         1.3 Office. The Executive's principal office will be in Bethesda,
Maryland.

         2.       Position, Duties.

         The Executive shall serve the Company in the position of Chief
Financial Officer. The Executive shall perform, faithfully and diligently, such
duties, and shall have such responsibilities, appropriate to said position, as
shall be assigned to him from time to time by the Chief Executive Officer and
the Board of Directors of the Company. The Executive shall devote his full
business time and attention to the performance of his duties and
responsibilities hereunder.

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

         3.1 Salary. Commencing after the Executive reports for full-time duty
with the Company on or about October 15, 2001 and continuing during the
remainder of the term of this Agreement, the Company shall pay to the Executive
a base salary at the rate of two hundred seventy-five thousand dollars
($275,000.00) per annum, payable in accordance with the standard payroll
practices

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of the Company. The Executive shall be entitled to such increases in base salary
during the term hereof, as shall be determined and approved by the Compensation
Committee of the Board of Directors of the Company in their sole discretion,
taking account of the performance of 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.

         3.2 Bonus. (a) Commencing on January 1, 2002, in addition to the base
salary provided for in Section 3.1, the Executive shall participate in the
Company's bonus plan for senior corporate officers (the "Bonus Plan"), as
approved by the Compensation Committee of the Board of Directors, in each
calendar year that this Agreement is effective. The target bonus for the
Executive will be at least 50% of base salary if performance goals are met, and
up to 100% of base salary on a pro rata basis for performance which exceeds
goals. The bonus shall be payable upon or within a reasonable period of time
after the receipt of the Company's audited financial statements for the
applicable calendar year in accordance with the Company's normal practices.

         (b) In the event of the termination of employment of the Executive
pursuant to Section 6.1 (Death), Section 6.2 (Disability), Section 6.4 (Without
Cause) or Section 7 (Change of Control) of this Agreement, and provided that all
of the terms and conditions of the Bonus Plan are satisfied including, but not
limited to, the attainment of stated performance goals, the Executive (or his
estate or other legal representative) shall be entitled to receive a pro-rated
bonus for the calendar year in which such termination occurs in an amount equal
to the product of (i) the bonus for such calendar year determined pursuant to
Section 3.2, multiplied by (ii) a fraction, the numerator of which is the number
of days from the beginning of such calendar year to the date of termination, and
the denominator of which is 365. In the event of the termination of employment
of the Executive pursuant to Section 6.3 (Due Cause) of this Agreement, the
Executive shall not be entitled to a bonus from the Company for the calendar
year in which such termination occurs.

         3.3 Stock Options. (a) The Company shall grant to the Executive options
to purchase seventy-five thousand (75,000) shares of Company common stock, par
value $.01 per share (the "Stock"), pursuant to the terms of the Company's 1991
Stock Option Plan, as amended, upon the commencement of the Executive's
employment on or about October 15, 2001 pursuant to Section 1.2 of this
Agreement (the "Initial Option Grant"). The Company shall also grant to the
Executive options to purchase an additional seventy-five thousand (75,000)
shares of Stock on the second anniversary of the commencement of his employment
with the Company (the "Second Option Grant"). Grants of options to purchase
Stock following the Initial Option Grant and the Second Option Grant shall be
based upon minimum net sales and net income targets adopted annually by the
Board of Directors, which are derived from management-generated budgets.

         (b) The options granted under each of the Initial Option Grant and the
Second Option Grant shall be evidenced by separate stock option agreements
("Option Agreements") entered into between the Executive and the Company. The
Option Agreements shall provide for a vesting schedule of

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four years, in equal parts, of the options. Notwithstanding any provisions now
or hereafter existing under the Company's 1991 Stock Option Plan, as amended,
all options granted pursuant to this Agreement shall fully vest immediately
after the date of grant in the event of the subsequent termination of employment
of the Executive pursuant to Section 6.1 (Death), Section 6.2 (Disability),
Section 6.4 (Without Cause), or Section 7 (Change of Control) of this Agreement.

         (c) Notwithstanding any provisions now or hereafter existing under the
Company's 1991 Stock Option Plan, as amended, in the event of a Change in
Control (hereinafter defined) occurring after the grant of any stock options to
the Executive, all options granted to the Executive to purchase shares of Stock
shall become fully vested as of the date of such Change in Control occurring
after October 15, 2001, unless the employment of the Executive has been
terminated pursuant to either Section 6.3 (Due Cause) or Section 6.5 (Voluntary
Termination) prior to the date of a Change in Control, in which event, no such
change shall be made in the vesting schedule of any stock options granted to the
Executive.

         (d) 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 the Company 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 the Company having a right to vote
                  in elections or directors; or

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

                  (iii) all or substantially all of the business and/or assets
                  of the Company are disposed of by the Company to a party or
                  parties other than a subsidiary or other affiliate of the
                  Company, pursuant to a partial or complete liquidation of the
                  Company, sale of assets (including stock of a subsidiary of
                  the Company) or otherwise; or

                  (iv) the Company consolidates with, or merges with or into,
                  any other person (other than a wholly owned subsidiary of the
                  Company), or any other person consolidates with, or merges
                  with or into, the Company, and, in connection therewith, all
                  or part of the outstanding shares of common stock of the
                  Company shall be

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                  changed in any way or converted into or exchanged for stock or
                  other securities or cash or any other property.

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

         (f) The Executive may participate in future awards of options to
purchase Stock in a manner consistent with any stock option plan adopted by the
Company for its senior corporate officers. The determination as to the amount of
options, if any, shall be at the sole discretion of the Board of Directors of
the Company.

         3.4 Senior Corporate Officer Benefits. The Executive shall be entitled
to participate in all applicable benefits plans now existing or hereafter
adopted by the Company's Board of Directors for all the senior corporate
officers of the Company, as well as such other benefits as may be granted from
time to time to the Executive by the Company's Chairman/Chief Executive Officer.
Upon a Change in Control occurring after the Executive has commenced his
employment with the Company on or about October 15, 2001, any interest which the
Executive has in any future retirement plan or deferred compensation plan shall
immediately vest if so permitted under the terms of each such plan.

         3.5 Parachute penalties. The Company agrees to provide the Executive
with payment sufficient to cover any tax resulting from the imposition of any
parachute penalties under the Internal Revenue Code or applicable state tax laws
imposed on the Executive in the event of the grant of certain benefits to the
Executive by the Company upon the termination of the Executive's employment
after he has commenced his employment with the Company on or about October 15,
2001.

         3.6 Relocation. The Company agrees to perform the following obligations
so long as the Executive has commenced his employment with the Company on or
prior to October 15, 2001 and the Executive has further executed a promissory
note, in the form attached hereto as Exhibit "A," payable to the Company
relating hereto which will require the Executive to reimburse the Company for
portions of the following amounts in the event of the termination of the
employment of the Executive pursuant to Section 6.3 (Due Cause) or Section 6.5
(Voluntary Termination) of this Agreement within the first twenty-four (24)
months after the commencement of the term of this Agreement on October 15, 2001:

         (a) reimbursement of all costs incurred by the Executive in connection
with the packing, insuring, transporting and unpacking of his household items
which are moved from his current residence to his new residence in the State of
Maryland, the Commonwealth of Virginia or the

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District of Columbia (collectively, the "Washington, D.C. Metropolitan Area") as
a result of his employment hereunder;

         (b) reimbursement of reasonable costs incurred by the Executive,
including transportation, room, and food expenses, for up to two house-hunting
trips from his current state of residence to the Washington, D.C. Metropolitan
Area (each house-hunting trip shall consist of a maximum period of five
consecutive calendar days);

         (c) payment of all closing costs (excluding points), reasonable fees
and commissions to be paid in connection with the sale of the Executive's
current residence at 10 Blue Heron Court, Medford, New Jersey 08055;

         (d) payment of all closing costs (excluding points) and reasonable fees
and expenses directly related to the Executive's purchase of a new residence in
the Washington, D.C. Metropolitan Area;

         (e) reimbursement of travel costs, lodging and meals incurred by the
Executive during the first six (6) months immediately following the date of this
Agreement, for purposes of the Executive performing his duties at the Company's
headquarters office located in Bethesda, Maryland while the Executive is still
residing in his current residence at 10 Blue Heron Court, Medford, New Jersey
08055; and

         (f) payment to the Executive of five thousand dollars ($5,000) upon the
closing of the purchase of the Executive's new residence in the Washington, D.C.
Metropolitan Area to help to offset the expenses incurred by the Executive in
his preparation of his new residence in the Washington, D.C. Metropolitan Area
for occupancy by the Executive.

         Any non-deductible portions of any payments made pursuant to Sections
3.6 (b), (c),(d) and (e) will be paid to Executive in an amount equal to (i)
such payment as may be actually due pursuant to such Sections 3.6(b), (c), (d)
and/or (e), plus (ii) any federal and state income tax imposed on Executive as a
result of such payment.

         4.       Expense Reimbursement.

         During the term of this Agreement, the Company shall reimburse the
Executive for all reasonable and necessary out-of-pocket expenses incurred by
him in connection with the performance of his duties hereunder, upon the
presentation of proper receipts or other evidence thereof in accordance with the
Company's policies and practices for senior corporate officers.

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         5.       Benefits Plans and Vacation.

         5.1 Benefit Plans. During the term of this Agreement which commences on
October 15, 2001, the Executive will be eligible to participate in all employee
benefit plans and programs (including, without limitation, the 401(k) Plan,
medical, dental, life, and disability plans) offered by the Company from time to
time to its senior corporate officers, subject to the provisions of such plans
and programs as may be in effect from time to time.

         5.2 Vacation. The Executive shall be entitled to four (4) weeks
vacation per each full year of service by Executive to the Company, subject to
the Company's policies regarding vacation time for senior corporate officers.

         6.       Termination of Employment.

         6.1 Death. In the event of the death of the Executive after his
commencement of employment with the Company on or about October 15, 2001, the
Company shall pay to the estate or other legal representative of the Executive
any accrued but unpaid portion of the base salary provided for in Section 3.1
(at the annual rate then in effect) and any bonus accrued to the date of the
Executive's death and not theretofore paid to the Executive. In the event of the
death of the Executive after his commencement of employment with the Company on
or about October 15, 2001 from a cause unknown to the Executive and the Company
as of the date of this Agreement, the Company shall also pay to the estate or
other legal representative of the Executive an additional twelve (12) months of
salary payments as a death benefit; provided, however, that in the event the
Executive commences his full-time employment with the Company on or about
October 15, 2001 and continues to be employed on a full-time basis by the
Company from that time through October 15, 2002, then from and after October 15,
2002, the aforementioned death benefit shall be increased to an amount equal to
eighteen (18) months of salary payments then applicable to the Executive. At the
election of the estate or other legal representative of the Executive, such
death benefit payments may be made in a lump sum within ninety (90) days of
election, or as continued monthly payments to be paid at the same times that
salary payments are normally paid within the Company.

         6.2 Disability. If the Executive shall become incapacitated by reason
of sickness, accident or other physical or mental disability and shall be
entitled to payment of benefits under the Company's long term disability plan,
the employment of the Executive may be terminated by the Company or the
Executive. In the event of such termination of employment, the Company shall pay
to the Executive on a monthly basis for a period of twelve (12) months following
such termination the difference between the Executive's monthly base salary
amount at the time of termination and the monthly disability pay benefits
received by the Executive during that time period; provided, however, that in
the event such termination occurs after October 15, 2002, so long as the
Executive commenced his full-time employment with the Company on or about
October 15, 2001, then in such event the Company shall pay to the Executive on a
monthly basis for a period of eighteen (18) months following such termination
the difference between the Executive's monthly base salary

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amount at the time of termination and the monthly disability pay benefits
received by the Executive during the time period.

         6.3 Due Cause. The employment of the Executive 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 only the base salary
provided for in Section 3.1 (at the annual rate then in effect) accrued to the
date of such termination and not theretofore paid to the Executive. All rights
and benefits 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. For the purposes of this Agreement, "Due Cause" shall be defined as
(a) the Executive's willful and continuing failure to perform his duties and
responsibilities under this Agreement, after being given notice in writing and
an opportunity to cure, (b) any material act of dishonesty involving the
Company, or (c) any conviction of a felony.

         6.4 Termination by the Company Without Cause. 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 6.1 (Death), 6.2 (Disability), 6.3 (Due Cause), Section
6.5 (Voluntary Termination), or Section 7 (Change of Control), the Company shall
pay to the Executive severance pay in the form of salary continuation for a
period of twelve (12) months, commencing on the date of termination, at a rate
equal to the base salary provided for in Section 3.1 (at the annual rate then in
effect); provided, however, that from and after October 15, 2002 and continuing
during the term of this Agreement, the salary continuation period shall be equal
to a period of eighteen (18) months. In addition, the Company shall pay to the
Executive any bonus provided for in Section 3.2. At the Executive's election,
the Company shall accelerate full payment of the severance pay in a lump sum,
payable within ninety (90) days of the Executive's election. During the
severance pay period, the Company shall continue to provide life, disability,
medical, and dental coverage for the Executive at the levels which were being
provided to the Executive immediately prior to the termination of his employment
(or 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 severance pay
period) on the same basis, including the Company payment of premiums and the
Company contributions, as such benefits are provided to other senior corporate
officers of the Company. In addition, the Company shall provide the Executive
with out-placement benefits commensurate with those provided to other senior
corporate officers of the Company through a vendor selected by the Company. All
rights and benefits of the Executive under the other benefit plans and programs
of the Company shall be determined in accordance with the provisions of such
plans and programs.

         6.5 Voluntary Termination. The Executive may terminate his employment
with the Company at any time upon sixty (60) days' prior written notice to the
Company. Except as otherwise provided in this Agreement, in the event of such
termination the Company shall pay to the Executive only the base salary provided
for in Section 3.1 (at the annual rate then in effect) accrued to the date

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of such termination and not theretofore paid to the Executive, and all rights
and benefits 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.

         6.6 Death Benefits. Notwithstanding anything contained in this
Agreement to the contrary, no death benefits shall be payable to the Executive
under this Agreement unless and until the Executive has passed a physical
examination with a medical doctor acceptable to the Company with no pre-existing
conditions being identified at that time nor with the Executive having been
otherwise treated prior to October 15, 2001 for any such pre-existing condition.

         6.7 Stock Options and Termination. In the event that the Executive's
employment is terminated pursuant to Sections 6.1 (Death), 6.2 (Disability), 6.4
(Without Cause), or Section 7 (Change of Control), all outstanding options
granted to the Executive shall immediately vest, and the Executive (or his
estate or other legal representative, if applicable) shall have one year from
such termination in which to exercise such options.

         7.       Change in Control and Termination Provisions.

         7.1 Termination Upon Change In Control 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 6.1 (Death), 6.2 (Disability), 6.3 (Due Cause) or 6.5 (Voluntary
Termination) of this Agreement);

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

         (c) any reduction in the sum of the Executive's annual base salary and
bonus under this Agreement as of the date immediately prior to the Change in
Control;

         (d) any failure to provide the Executive with benefits at least as
favorable as those enjoyed by similarly situated senior corporate officers at
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;

         (e) any relocation of the Executive's principal site of employment to a
location more than 25 miles from the Executive's principal site of employment as
of the date immediately prior to the Change in Control;

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

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then, at the option of the Executive, exercisable by the Executive within thirty
(30) days after the occurrence of any of the foregoing events, the Executive may
resign from employment with the Company (or, if involuntarily terminated, give
notice of intention to collect benefits under this Agreement) by delivering a
notice in writing (the "Notice of Termination") to the Company. Following
delivery of the Notice of Termination, the Executive shall be entitled to the
severance pay and benefit continuation provisions of Section 6.4 in their
entirety, provided, however, that the severance pay shall be the total of twelve
(12) months of the base pay then in effect and any bonus actually earned prior
to that time pursuant to Section 3.2, payable, at the Executive's option, either
as salary continuation for twelve (12) months, or in a lump sum, payable within
ninety (90) days of the Executive's election.

         8.       Confidential Information.

         8.1 Nondisclosure. Unless the Executive secures the Company's written
consent, the Executive will not disclose, use, disseminate, lecture upon or
publish Confidential Information (defined hereafter) of which he becomes
informed during his employment, whether or not developed by him.

         8.2 Confidential Information Defined. For the purposes of this
Agreement, "Confidential Information" shall mean information disclosed to the
Executive or known by him as a result of his employment by the Company, not
generally known in the industry, about the Company's services, products or
customers, including, but not limited to, clinical programs, procedures and
protocols, research, operating models, finance, strategic planning, client
retention, data processing, insurance plans, risk management, marketing,
contracting and selling, and employees.

         9.       Interference with the Company.

         (a) The Executive will not, (a) for a period of twelve (12) months
after termination of his employment with the Company if such termination occurs
during the first twelve (12) months of this Agreement or for a period of
eighteen (18) months if such termination occurs at any time after the first
twelve (12) months of this Agreement (the "Restrictive Period"), 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,
which is competitive with the business of the Company on the date of
termination, (ii) solicit or entice or endeavor to solicit or entice away from
the Company any director, officer, employee, agent or consultant of the Company,
either on his own account or for any person, firm, corporation or other
organization, whether or not 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, either on his own account or for any

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other person, firm, corporation or organization, or (iv) employ any person who
was a director, officer or employee of the Company, at any time during the two
(2) years preceding termination of his employment with the Company, unless such
person's employment was terminated by the Company, or any person who is or may
be likely to be in possession of any Confidential Information.

         (b) If, at the time of enforcement of any provision of Section 9(a)
above, a court or arbitrator holds that the restrictions stated therein are
unreasonable under circumstances then existing, the Company and the Executive
agree that the maximum period, scope, or geographical area reasonable under such
circumstances will be substituted for the stated period, scope or area.

         (c) 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 this Section 9. Therefore, in the event of a
breach by the Executive of any of the provisions of this Section 9, 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.

         10.      Injunctive Relief.

         In the event that the Company seeks an injunction or similar equitable
relief for the breach or threatened breach of the provisions of Section 8 or 9
of this Agreement, the Executive agrees that the Executive shall not use the
availability of arbitration in Section 15 hereof as grounds for the dismissal of
any such injunctive action.

         11.      Successors and Assigns.

         11.1 Assignment by the Company. The Company shall require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, the "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon, and inure to the benefit of, the Company, as so defined. The
Company and the Executive agree that the Company may not assign this Agreement
without the express, written consent of the Executive.

         11.2 Assignment by the Executive. The Executive may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the

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Company; provided, however, that nothing herein shall preclude one or more
beneficiaries of the Executive from receiving any amount that may be payable
following the occurrence of his legal incompetency or his death and shall not
preclude the legal representative of his estate from receiving such amount or
from assigning any right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries", as used in this Agreement, shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive (in the event of
his incompetency) or the Executive's estate.

         12.      Governing Law.

         This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware applicable to contracts to be performed entirely within such state;
provided, however, that the parties agree to jurisdiction and venue in any court
of competent jurisdiction located in the State of Maryland for purposes of any
dispute under this Agreement. In the event that a court of any jurisdiction
shall hold any of the provisions of this Agreement to be wholly or partially
unenforceable for any reason, such determination shall not bar or in any way
affect the Company's right to relief as provided for herein in the courts of any
other jurisdiction. Such provisions, as they relate to each jurisdiction, are,
for this purpose, severable into diverse and independent covenants. Service of
process on the parties hereto at the addresses set forth herein shall be deemed
adequate service of such process.

         13.      Entire Agreement.

         This Agreement contains all the understandings and representations
between the parties pertaining to the subject matter hereof and supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
by them.

         14.      Amendment, Modification, Waiver.

         No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing and signed by the Executive
and by a duly authorized representative of the Company other than the Executive.
Except as otherwise specifically provided in this Agreement, no waiver by either
party of any breach by the other party of any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time, nor shall the failure of or delay by either party in exercising
any right, power or privilege hereunder operate as a waiver thereof to preclude
any other or further exercise thereof or the exercise of any other such right,
power or privilege.

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         15.      Arbitration.

         The Company and the Executive will attempt amicably to resolve
disagreements and disputes hereunder or in connection with the employment of the
Executive by negotiation. If the matter is not amicably resolved through
negotiation, within thirty (30) days after written notice from either party, any
controversy, dispute or disagreement arising out of or relating to this
Agreement, or the breach thereof, will be subject to exclusive, final and
binding arbitration, which will be conducted in Washington, DC in accordance
with the Labor Arbitration Rules of Procedure of the American Arbitration
Association. Either party may bring a court action to compel arbitration under
this Agreement or to enforce an arbitration award. Notwithstanding anything
contained in this Agreement to the contrary, the Company may seek immediate
legal action in a court of competent jurisdiction without any need for
arbitration under this Agreement in the event of any claim of breach by the
Executive of Sections 8, 9 and/or 10 of this Agreement.

         16.      Notices.

         Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
or by overnight delivery services (e.g., Federal Express), addressed to the
party concerned at the address indicated below or at such other address as such
party may subsequently designate in writing by like notice:

         If to the Company:
                                    Hanger Orthopedic Group, Inc.
                                    Two Bethesda Metro Center, Suite 1200
                                    Bethesda, Maryland 20814
                                    Attention: Secretary

         If to the Executive:
                                    George McHenry
                                    10 Blue Heron Court
                                    Medford, New Jersey  08055

         17.      Severability.

         Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties with any such
modification to become a part hereof and treated as though originally set forth
in this Agreement. The parties further agree that any such court or arbitration
panel is expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting

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<PAGE>

any or all of the offending provision, adding additional language to this
Agreement, or by making such other modifications as it deems warranted to carry
out the intent and agreement of the parties as embodied herein to the maximum
extent permitted by law. The parties expressly agree that this Agreement as so
modified by the court or arbitration panel shall be binding upon and enforceable
against each of them. In any event, should one or more of the provisions of this
Agreement be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
hereof, and if such provision or provisions are not modified as provided above,
this Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.

         18.      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 provision 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.

         19.      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.

            [The remainder of this page is intentionally left blank]

                                       13
<PAGE>

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

HANGER ORTHOPEDIC GROUP, INC.

By: /s/ Ivan R. Sabel                             /s/ George McHenry
   ---------------------------------              ---------------------------
        Ivan R. Sabel                                 George McHenry
        Chairman, President and
        Chief Executive Officer

                                       14
<PAGE>

                                                                     EXHIBIT "A"

                    [ATTACH FORM OF 24-MONTH PROMISSORY NOTE]

                                       15EMPLOYMENT AGREEMENT

         AGREEMENT dated as of the 2nd day of January 2002, by and between
HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (the "Company"), and
THOMAS F. KIRK (the "Executive").

         WHEREAS, the Executive desires to be employed by the Company pursuant
to a five-year Employment Agreement that expires on December 31, 2006; and

         WHEREAS, the Company desires to employ the Executive and the Executive
desires to continue to accept such employment by the Company, subject to the
terms and conditions set forth below.

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

         1. Employment, Term.

         1.1 Employment. The Company agrees to employ the Executive in the
position and with the responsibilities, duties, and authority set forth in
Section 2.

         1.2 Term. The term of the Executive's employment under this Agreement
shall commence as of the date hereof, and shall terminate on the fifth
anniversary of the date hereof, unless extended or sooner terminated in
accordance with this Agreement.

         1.3 Automatic Extension. As of the first anniversary date hereof, and
as of each subsequent anniversary ("Automatic Renewal Date"), unless either
party shall have given notice of non-extension prior to such Automatic Renewal
Date, the term of this Agreement shall be extended automatically for a period of
one year.

         1.4 Office. The Executive's principal office will be in Bethesda, MD.

         2. Position, Duties.

         The Executive shall serve the Company in the position of President and
Chief Operating Officer, and shall be duly appointed a member of the Board of
Directors. The Executive shall perform, faithfully and diligently, the duties
appropriate to said position, which shall include responsibility for all of the
Company's operating units, divisions, and partially or wholly-owned
subsidiaries, and corporate staff units such as: information technology, human
resources, materials management and purchasing, real estate, legal, regulatory,
compliance, and strategic planning/corporate development, as well as those
responsibilities that shall be assigned to him from time to time by the Chief
Executive Officer and the Board of Directors of the Company. The Executive shall
devote his full business time and attention to the performance of his duties and
responsibilities hereunder.

                                       1
<PAGE>

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

         3.1 Salary. During the term of the Agreement, the Company shall pay to
the Executive a minimum base salary at the rate of $450,000 per annum, payable
in accordance with the standard payroll practices of the Company. The Executive
shall be entitled to such increases in base salary during the term hereof, as
shall be determined and approved by the Compensation Committee of the Board of
Directors of the Company in their sole discretion, taking account of the
performance of 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.

         3.2 Bonus. (a) In addition to the base salary provided for in Section
3.1, the Executive shall participate in the Company's current bonus plan for
senior corporate officers (the "Bonus Plan"), as approved by the Compensation
Committee of the Board of Directors, in each calendar year of the Company
falling during the term of this Agreement. The target bonus for Executive will
be at least 75% of base salary if performance goals are met, and up to 150% of
salary if performance goals are exceeded. The bonus shall be payable upon or
within a reasonable period of time after the receipt of the Company's audited
financial statements for the applicable calendar year in accordance with the
Company's normal practices.

         (b) In the event of termination of employment of the Executive pursuant
to Section 6.1 (Death), Section 6.2 (Disability), Section 6.4 (Without Cause),
Section 6.5 (Voluntary Termination) or Section 7 of this Agreement, and provided
that all of terms and conditions of the Plan are satisfied including, but not
limited to, the attainment of stated objectives, the Executive (or his estate or
other legal representative) shall be entitled to a pro-rated bonus in years
subsequent to 2003 for the calendar year in which such termination takes place
in amount equal to the product of (i) the bonus for such calendar year
determined pursuant to Section 3.2 (at a minimum amount of 100% of targeted
bonus), multiplied by (ii) a fraction, the numerator of which is the number of
days from the beginning of such calendar year to the date of termination, and
the denominator of which is 365. In the event of the termination of employment
of the Executive pursuant to Section 6.3 (Due Cause) of this Agreement, the
Executive shall not be entitled to a bonus for the calendar year of the Company
in which such termination takes place.

         3.3 Stock Options. (a) In recognition of the Executive's efforts during
2001 to improve shareholder value and as an incentive to have Executive join the
Company, the Company shall grant to Executive options to purchase three hundred
fifty thousand (350,000) shares of common stock, $.01 par value per share (the
"Stock"), pursuant to the terms of the 1991 Stock Option Plan, as amended, of
the Company, upon execution of this agreement, pursuant to Section 1.2 of this
agreement. Such options shall be valued at the closing price of the Company's
common stock on the day of execution of this agreement. The Company shall also
grant to Executive options to purchase a minimum of one hundred thousand
(100,000) shares of Stock, on each of the first, second, and

                                       2
<PAGE>

third anniversaries of this Agreement. Options grants subsequent to this initial
three year period shall be based upon targets adopted annually by the Board of
Directors, which are derived from management generated budgets.

         (b) The options provided in subparagraph (a) shall be evidenced by a
stock option agreement ("Option Agreement") entered into between the Executive
and the Company, which agreement shall provide for a vesting schedule of four
years, in equal parts, of the Options. Notwithstanding any provisions now or
hereafter existing under the 1991 Stock Option Plan, as amended, all options
granted pursuant to this Agreement shall vest in full in the event of the
termination of employment of the Executive pursuant to Section 6.1 (Death),
Section 6.2 (Disability), Section 6.4 (Without Cause), Section 6.5 (Voluntary
Termination), or Section 7 of this Agreement.

         (c) Notwithstanding any provisions now or hereafter existing under the
1991 Stock Option Plan, as amended, in the event of a Change in Control
(hereinafter defined), all options to purchase shares of Stock awarded to the
Executive shall become fully vested as of the date of such Change in Control.

         (d) 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 the Company
         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 the Company
         having a right to vote in elections or directors; or

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

         (iii) all or substantially all of the business and/or the Company are
         disposed of by the Company to a party or parties other than a
         subsidiary or other affiliate of the Company, pursuant to a partial or
         complete liquidation of the Company, sale of assets (including stock of
         a subsidiary of the Company) or otherwise; or

         (iv) the Board of Directors approves any of the following: the Company
         consolidates with, or merges with or into, any other person (other than
         a wholly owned subsidiary of the Company), or any other person
         consolidates with, or merges with or into, the Company, and, in
         connection therewith, all or part of the outstanding shares of common
         stock shall be changed in any

                                       3
<PAGE>

         way or converted into or exchanged for stock or other securities or
         cash or any other property.

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

         (f) Executive may participate in future awards of options to purchase
Stock in a manner consistent with any stock option plan adopted by the Company
for its senior corporate officers. The determination as to the amount of
options, if any, shall be at the sole discretion of the Board of Directors of
the Company, pursuant to Section 3.3.

         3.4 Senior Corporate Officer Benefits. The Executive shall be entitled
to participate in whatever benefit plans are now existing or hereinafter adopted
by the Company's Board of Directors for the senior corporate officers of the
Company. Upon a Change in Control, any interest, which the Executive has, in any
future Supplement Executive Retirement Plan or deferred compensation plan shall
immediately vest.

         3.5 Car Allowance and Parking. The Executive shall receive a luxury
automobile leased by the Company, under the same terms and conditions as enjoyed
by other senior corporate officers of the Company, which terms shall include
reimbursement for all fuel, toll, maintenance, insurance, and upkeep costs
associated with the vehicle. A reserved parking space shall be provided as part
of the Company's allocated parking spaces.

         3.6 Parachute Penalties. The Company agrees to provide Executive with
payment sufficient to provide a gross-up of any excise, income, and other taxes
resulting from the imposition of the parachute penalties of the Internal Revenue
Code or applicable sales tax laws.

         3.7 Local Residence. The Company agrees to provide Executive with a
leased, furnished residence, of Executive's choosing, of not less than 2,000
square feet, including all utilities, fees, and garage charges, excluding
telephones, within a three (3) mile radius of the corporate headquarters.

         3.8 Other. The Company agrees to provide Executive with a desktop and
laptop computer for his use while in the office and the local residence. In
addition, the Company shall reimburse the Executive up to $3,000 per year for
out-of-pocket expenses for financial and tax planning, and provide life
insurance payable to the Executive's beneficiary of not less than two (2) times
the Executive's base salary. The Company agrees to reimburse Executive's travel
costs between Bethesda, Maryland and the Executive's primary residence, until
the Executive occupies the local residence described in Section 3.7.

                                       4
<PAGE>

         4.       Expense Reimbursement.

         During the term of this Agreement, the Company shall reimburse the
Executive for all reasonable and necessary out-of-pocket expenses incurred by
him in connection with the performance of his duties hereunder, upon
presentation of proper accounts in accordance with the Company's policies and
practices for senior corporate officers.

         5. Pension and Welfare Benefits, and Vacation.

         5.1 Benefit Plans. During the term of this Agreement, the Executive
will be eligible to participate in all employee benefit plans and programs
(including, without limitation, 401 (k) Plan, medical, dental, life, and
disability plans of the Company) offered by the Company from time to time to its
senior corporate officers, subject to the provisions of such plans and programs
as in effect from time to time. Executive shall receive first dollar coverage of
all medical, dental, prescription, and vision benefits.

         5.2 Vacation. The Executive shall be entitled to five (5) weeks
vacation per annum, beginning in 2002.

         6. Termination of Employment.

         6.1 Death. In the event of death of the Executive, the Company shall
pay to the estate, or other legal representative of the Executive, the base
salary provided for in Section 3.1 and the Bonus provided for in Section 3.2 (at
the annual rate then in effect) accrued to the date of the Executive's death and
not theretofore paid to the Executive, and an additional twenty-four (24) months
of salary and bonus payments as a death benefit. At the election of the estate
or other legal representative, such payments may be made in a lump sum within
ninety (90) days of election, or as continued salary and bonus payments. The
additional bonus payments shall be calculated by reference to the average annual
bonus received by the Executive in the five years prior to termination in which
Executive received a bonus. In the event five (5) years are not available, the
additional bonus payments shall be calculated by reference to the average annual
bonus for the years received prior to the death of the Executive. 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.

         6.2 Disability. If the Executive shall become incapacitated by reason
of sickness, accident, or other physical or mental disability and shall be
entitled to payment of benefits under the Company's long term disability plan,
the employment of the Executive may be terminated by the Company or the
Executive. In the event of such termination, the Company shall pay to the
Executive, on a monthly basis, for a period of twenty-four (24) months following
termination, the difference between the Executive's monthly base salary at the
time of termination and the monthly disability pay benefits received by the
Executive. Executive shall also be entitled to annual bonus payments for a
period of twenty-four (24) months following termination, calculated by reference
to the average

                                       5
<PAGE>

annual bonus received by the Executive in the five (5) years prior to such
termination in which Executive received a bonus. In the event five (5) years are
not available, the additional bonus payments shall be calculated by reference to
the average annual bonus for the years received prior to the death of the
Executive. At the election of the Executive or his legal representative, such
payments may be made in a lump sum within ninety (90) days of election, or as
continued salary and bonus payments. Rights and benefits of the Executive under
the other benefit plans and programs of the Company shall be determined in
accordance with the terms and provisions of such plans and programs.

         6.3 Due Cause. The employment of 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
provided for in Section 3.1 (at the annual rate then in effect) accrued to the
date of termination and not theretofore paid to the Executive. 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 be defined as (a) the
Executive's willful and continuing failure to discharge duties and
responsibilities under this Agreement, after having been given notice in writing
and opportunity to cure, (b) any material act of dishonesty involving the
Company, or (c) conviction of a felony.

         6.4 Termination by the Company Without Cause. 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 6.1 (Death); 6.2 (Disability); 6.3 (Due Cause); or 6.5
(Voluntary Termination), the Company shall pay to the Executive severance pay in
the form of salary continuation for a period of twenty-four (24) months,
commencing on the date of termination, at a rate equal to the base salary
provided for in Section 3.1 (at the annual rate then in effect) and one-half the
bonus provided for in Section 3.2 (at the bonus level for the calendar year
preceding such termination); provided, however, that the bonus payment shall be
no less than fifty (50) percent of the targeted bonus for the calendar year
preceding such termination. At Executive's election, the Company shall
accelerate full payment of the severance pay in a lump sum, payable within
ninety (90) days of Executive's election. During the severance pay period, the
Company shall continue to provide life, disability, medical, and dental coverage
for the Executive at the levels which were being provided to the Executive
immediately prior to the termination of his employment (or 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 severance pay period) on the same basis,
including Company payment of premiums and Company contributions, as such
benefits are provided to other senior corporate officers of the Company and were
provided to the Executive prior to the termination. In addition, the Executive
will be provided with outplacement benefits commensurate with those provided to
other senior corporate officers of the Company through a vendor selected by the
Company. Rights and benefits of the Executive or transferee under the benefit
plans and programs of the Company shall be determined in accordance with the
provisions of such plans and programs.

                                       6
<PAGE>

         6.5 Voluntary Termination. Executive may terminate his employment with
the Company at any time upon sixty (60) days' prior written notice to the
Company. Except as otherwise provided in this Agreement, rights and benefits of
the Executive or his transferee under the benefit plans and programs of the
Company shall be determined in accordance with provisions of such plans and
programs.

         In the event that Company or the Board of Directors alters the scope of
Employee's position and duties as described in Section 2, without the consent of
the Employee, or Employee experiences any diminution of his base salary,
incentive bonus, stock options, or other benefits as described in Sections 3 and
5 of this Agreement, Employee may terminate his employment with the Company upon
sixty (60) days' prior written notice to the Company, and the Company shall make
payments to the Executive as described in Section 6.4, including severance pay,
all benefits, and outplacement services.

         6.6 Stock Options and Termination. In the event that Executive
terminates employment under Sections 6.1 (Death), 6.2 (Disability), 6.4 (Without
Cause), 6.5 (Voluntary Termination), or Section 7, all outstanding options
granted to Executive shall immediately vest, and Executive (or his estate or
other legal representative, if applicable) shall have one year from termination
in which to exercise such options.

         7. Change In Control and Termination Provisions.

         7.1 Termination Upon Change In Control. If within a two year period
following any Change in Control there occurs:

         (a) any termination of the Executive (other than as set forth in
Section 6.1 (Death), 6.2 (Disability), 6.3 (Due Cause), or 6.5 (Voluntary
Termination) of this Agreement;

         (b) a material diminution of the Executive's responsibilities as
described in Section 2;

         (c) any reduction in the sum of Executive's annual base salary and
bonus under the Company's Bonus Plan as of the date immediately prior to the
Change in Control;

         (d) any failure to provide the Executive with benefits at least as
favorable as those enjoyed by similarly situated senior corporate officers at
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.

                                       7
<PAGE>

         (e) any relocation of the Executive's principal site of employment to a
location more than twenty-five (25) miles from the Executive's principal place
of employment as of the date immediately prior to the Change in Control;

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

then, at the option of the Executive, exercisable by the Executive within thirty
(30) days after the occurrence of any of the foregoing events, the Executive may
resign from employment with the Company (or, if involuntarily terminated, give
notice of intention to collect benefits under this Agreement) by delivering a
notice in writing (the "Notice of Termination") to the Company, and shall be
entitled to the severance pay and benefit continuation provisions of Section 6.4
in their entirety, provided, however, that the severance pay shall be the total
of eighteen (18) months of the base pay then in effect and 150% of the targeted
bonus for the calendar year preceding such Notice of Termination, payable, at
Executive's option, either as salary continuation for eighteen (18) months, or
in a lump sum, payable within ninety (90) days of Executive's election.

         8. Confidential Information.

         8.1 Nondisclosure. Unless the Executive secures the Company's written
consent, the Executive will not disclose, use, disseminate, lecture upon, or
publish Confidential Information which he becomes informed of during his
employment, whether or not developed for him for a period of two (2) years after
termination of his employment by the Company.

         8.2 Confidential Information Defined. "Confidential Information" means
information disclosed to the Executive or known by him as a result of his
employment by the Company, not generally known in the industry, about the
Company's services, products, or customers, including, but not limited to,
clinical programs, procedures and protocols, research, operating manuals,
finance strategic planning, client retention, data processing, insurance plans,
risk management, marketing, contracting and selling and employees.

         9.       Interference With the Company.

         The Executive will not, (a) for a period of two (2) years after
termination of his employment by the Company, directly or indirectly (i) engage,
whether as principal, agent, investor, representative, stockholder (other than
as the holder of not more than five (5) percent 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, which is
competitive with the business of the Company on the date of termination, (ii)
solicit or entice or endeavor to solicit or entice way from the Company any
director, officer, employee, agent or consultant of the Company, either on his
own account or for any person, firm, corporation or other organization, whether
or not 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 with the purpose of competing with the business of the Company on the
date of termination, either on his own account or for any other person, firm,

                                       8
<PAGE>

corporation or organization; or (iv) employ any person who was a director,
officer, or employer of the Company, at any time during the two years preceding
termination of his employment with the Company, unless such person's employment
was terminated by the Company, or any person who is or may be likely to be in
possession of any Confidential Information not generally known in the industry.

         The parties hereto agree that if, in any proceeding, the Court or other
authority shall refuse to enforce covenants set forth in this Section 9, 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.

         10.      Injunctive Relief.

         In the event that the Company seeks an injunction or similar equitable
relief for the breach or threatened breach of the provisions of Sections 8 or 9
of this Agreement, the Executive agrees that the Executive shall not use the
availability of arbitration in Section 15 hereof as grounds for the dismissal of
any such injunctive action.

         11.      Successors and Assigns.

         11.1 Assignment by the Company. The Company shall require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, the "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon and inure to the benefit of, the Company, as so defined. The
Company and the Executive agree that the Company may not assign this Agreement
without the express, written consent of the Executive.

         11.2 Assignment by the Executive. The Executive may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the Company; provided, however, that nothing herein
shall preclude one or more beneficiaries of the Executive from receiving any
amount that may be payable following the occurrence of his legal incompetency or
his death and shall not preclude the legal representative of his estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of

                                       9
<PAGE>

intestacy applicable to his estate. The term "beneficiaries", as used in this
Agreement, shall mean a beneficiary or beneficiaries so designated to receive
any such amount or, if no beneficiary has been so designated, the legal
representative of the Executive (in the event of his incompetency) or the
Executive's estate.

         12. Governing Law.

         This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware applicable to contracts to performed entirely within such state. In the
event that a court of any jurisdiction shall hold any of the provisions of this
Agreement to be wholly or partially unenforceable for any reason, such
determination shall not bar or in any way affect the Company's right to relief
as provided for herein thin the courts of any other jurisdiction. Such
provisions, as they relate to each jurisdiction, are, for this purpose,
severable into diverse and independent covenants. Service of process on the
parties hereto at the addresses set forth herein shall be deemed adequate
service of process.

         13. Entire Agreement.

         This Agreement contains all the understandings and representations
between the parties pertaining to the subject matter hereof and supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
by them.

         14. Amendment, Modification, Waiver.

         No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing and signed by the Executive
and by a duly authorized representative of the Company other than the Executive.
Except as otherwise specifically provided for in this Agreement, no waiver by
either party of any breach by the other party of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time, nor shall the failure of or delay by either party in exercising
any right, power, or privilege hereunder operate as a waiver thereof to preclude
any other or further exercise thereof, or exercise of any other such right,
power, or privilege.

         15. Arbitration.

         The Company and the Executive will attempt amicably to resolve
disagreements and disputes hereunder or in connection with the employment of
Executive by negotiation. If the matter is not amicably resolved through
negotiation, within thirty (30) days after written notice from either party, any
controversy, dispute or disagreement arising out of or relating to this
Agreement, or the branch thereof, will be subject to exclusive, final, and
binding arbitration, which will be conducted in Washington, DC in accordance
with the Labor Arbitration Rules of Procedure of the American Arbitration

                                       10
<PAGE>

Association. Either party may bring a court action to compel arbitration under
this Agreement or to enforce an arbitration award.

         16. 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 designated by like notice:

         If to the Company:

         Hanger Orthopedic Group, Inc.
         2 Bethesda Metro Center, Suite 1200
         Bethesda, MD 20814

         If to the Executive:

         Thomas F.Kirk
         2616 Lighthouse Bend Drive
         Ponte Vedra Beach, FL 32082

         17. Severability

         Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties with any such
modification to become a part hereof and treated as though originally set forth
in this Agreement. The parties further agree that any such court or arbitration
panel is expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by the
court or arbitration panel shall be binding upon and enforceable against each of
them. In any event, should one or more of the provisions of this Agreement be
held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof, and
if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provisions had never been set forth herein.

                                       11
<PAGE>

         18. 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.

         19. 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.

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

                                  HANGER ORTHOPEDIC GROUP, INC.

                                  By: /s/ Ivan R. Sabel
                                      ------------------------------------------
                                        Ivan R. Sabel, Chairman and Chief
                                        Executive Officer

                                        /s/ Thomas F. Kirk
                                        --------------------------------------
                                        Thomas F. Kirk

                                       12

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