AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETE
AGREEMENT
This Amended
and Restated Employment and Non-Compete Agreement is made as of
October __, 2004 and amends and restates the Employment and
Non-Compete Agreement, dated as of January 1, 2003, between
SOUTHERN PROSTHETIC SUPPLY, INC., a Georgia corporation (the
“Company”); and RONALD N. MAY (“Employee”)
(the “Agreement”). The Company and Employee agree to
amend and restate the Agreement as follows:
1.
Employment . The Company agrees to employ Employee and
Employee accepts such employment by the Company upon the terms and
conditions set forth in this Agreement, for the period beginning on
the date of this Agreement and ending upon termination pursuant to
paragraph 4 (the “Employment Period”). The parties
acknowledge Employee’s existing employment with the
Company’s parent corporation, Hanger Orthopedic Group, Inc.
(“Hanger”), and wish to substitute this Agreement,
which sets forth Employee’s expanded duties with the Company
as well as an increase in compensation as set forth herein, in
place of all prior employment agreements between the parties,
including but not limited to the Employment and Non-Compete
Agreement dated as of November 1, 1996 between Hanger and Employee
and the Deferred Compensation Agreement between Employee and the
Company dated March 27, 1996.
2.
Compensation and Benefits .
(a)
In consideration for the valuable services to be rendered by
Employee and for Employee’s agreement not to compete against
the Company as described in paragraph 6, the Company hereby agrees
that during the year of the Employment Period during which this
amended and restated Agreement is executed, the Company will pay
Employee a bi-weekly gross salary at the minimum annual rate of
$219,502.00 per annum (the “Base Salary”), payable at
the bi-weekly gross rate of $8,442.38. Employee’s Base Salary
may, but is not required to, be increased annually in January of
each year based on an annual performance salary review as
determined in the reasonable discretion of the Company. Employee
also shall be entitled to (1) an automobile allowance in the amount
of Seven Hundred Dollars ($700.00) per month, (2) five (5) weeks of
vacation per year, and (3) sick leave, medical and other benefits
that are consistent with those received by other similarly-situated
senior executives of Hanger and its subsidiaries as determined in
the sole discretion of Hanger’s Board of Directors. Employee
shall receive life insurance in an amount equal to one (1) times
Employee’s Base Salary (in addition to the life insurance in
an amount equal to one (1) times Employee’s Base Salary
provided by the Company as part of Employee’s base benefit
program), with the premiums for such policy to be paid by the
Company, and Employee shall also receive the option to participate
in the Company’s supplemental life and accidental death and
dismemberment policies, with the premiums for such policies to be
paid by Employee, all in accordance with the terms and conditions
of such policies as generally applied by the Company.
(b)
In addition to the Base Salary, Employee may have the opportunity
to receive options to purchase stock or restricted shares of stock
of Hanger in a manner consistent with any stock option or
restricted share plan adopted by Hanger. The determination as to
the amount of stock, if any, to be purchased under such stock
option or restricted share plan shall be subject to the sole
discretion of the Board of Directors of Hanger or a committee
thereof.
(c)
Employee shall also be eligible to receive cash bonus compensation
for each full calendar year during the Employment Period (or, in
the event that Employee is employed for less than a full calendar
year in any given year during the Employment Period, for the
prorated portion of the year Employee actually is employed).
Employee’s target bonus (“Target Bonus”) is fifty
percent (50%) of the Base Salary and is contingent on the Employee
meeting certain performance criteria and Hanger and the Company
achieving certain year-end financial criteria, and, in the event
Employee exceeds certain performance criteria and the Company
exceeds certain year-end financial criteria, Employee’s
maximum bonus (“Maximum Bonus”) is one hundred percent
(100%) of the Base Salary, all to be determined in the reasonable
discretion of Hanger’s Board of Directors and its
Compensation Committee. The Employee shall be entitled to such
increases in the Target Bonus and the Maximum Bonus during the
Employment Period as shall be determined and approved by the
Compensation Committee of Hanger’s Board of Directors, in its
sole discretion, taking into account the performance of the Company
and the Employee and other factors generally considered relevant to
the salaries of executives holding similar positions with
enterprises comparable to the Company. Notwithstanding the
foregoing, in the event that the Employee, Hanger or the Company
fail to attain their minimum respective criteria in any given year,
the Board of Directors of Hanger and its Compensation Committee
may, in their reasonable discretion, decline to award any bonus to
Employee.
(d)
For all payments made or required to be made pursuant to the terms
of this Agreement, including any payments made with respect to the
Employee’s termination of employment for any reason, the
Company shall pay the Employee an amount sufficient to cover the
gross-up of any excise, income and other taxes resulting from the
imposition of the parachute penalties of the Internal Revenue Code
or applicable state tax laws.
3.
Services . During the Employment Period, Employee agrees to
devote Employee’s best efforts and all of Employee’s
business time and attention to the business affairs of the Company
(except for reasonable vacation periods subject to the approval of
the Company or reasonable periods of illness or other incapacity).
During the Employment Period, Employee agrees to serve the Company
as its President and Chief Operating Officer and to render such
services as the Company or Hanger may from time to time direct;
provided , however , that Employee recognizes and
agrees that Hanger or the Company may change Employee’s job
description as set forth in this paragraph as a result of a good
faith restructuring of the Company’s or Hanger’s
operations. During the Employment Period, Employee agrees that
Employee will not, except with the prior written consent of the
Company, become engaged in or render services for any business
other than the business of the Company.
4.
Termination . The Employment Period will continue from the
date of this Agreement unless terminated earlier by (a)
Employee’s death or permanent disability which renders
Employee unable to perform Employee’s duties hereunder (as
determined by the Company in its good faith judgment), (b) by
Employee’s resignation upon prior written notice to the
Company of sixty (60) days, (c) the Company for Cause, or (d) the
Company without Cause upon prior notice to Employee of thirty (30)
days. For purposes of this paragraph 4, “Cause” shall
mean (i) the repeated failure or refusal of Employee to follow the
lawful directives of the Company or its designee (except due to
sickness, injury or disabilities), (ii) gross or repeated
inattention to duty or any other willful, reckless or grossly
negligent act (or omission to act) by Employee, which, in the good
faith judgment of the Company, materially injures the Company,
including Employee’s repeated failure to follow the policies
and procedures of the Company, (iii) a material breach of this
Agreement by Employee, or (iv) the commission by Employee of a
felony or other crime involving moral turpitude or of an act of
financial dishonesty against the Company.
2
In the event
Employee’s employment is terminated by the Company as a
result of Employee’s permanent disability under paragraph
4(a) or without Cause under paragraph 4(d) or in the event Employee
elects to terminate his employment with the Company under paragraph
4(b) within six (6) months after the occurrence of both a Change in
Control (as defined below) and a Relocation (as defined below),
then the following severance terms shall apply: (A) as set forth in
paragraph 2 herein, Employee shall receive the Base Salary through
the date of termination of the Employment Period and the prorated
portion of the bonus compensation for the portion of the year
Employee is employed during the year in which the Employment Period
is terminated, (B) the Company shall pay to Employee a severance
payment equal to eighteen (18
|
