Item 1.01 Entry into
a Material Definitive Agreement.
On May 4, 2020, Hanger,
Inc. (the “Company”) entered into a First Amendment to Credit Agreement (the “Amendment”) among the Company,
the subsidiary guarantors party thereto, the revolving lenders party thereto and Bank of America, N.A., as agent (the “Agent”),
which amends the Credit Agreement, dated as of March 6, 2018, among the Company, the lenders from time to time party thereto and
the Agent (the “Existing Credit Agreement”).
The Amendment revises
certain provisions of the Existing Credit Agreement to, among other things, (i) increase the applicable margin on LIBOR and
base rate revolving loan borrowings by 0.25% per annum, (ii) establish a minimum LIBOR Rate of 1.0% per annum with respect to revolving
loan borrowings, (iii) increase the maximum allowable leverage ratio for covenant purposes such that a maximum consolidated
first lien net leverage ratio shall be up to 5.25 to 1.00 for the fiscal quarters ending June 30, 2020, September 30, 2020, December
31, 2020 and March 31, 2021; 5.00 to 1.00 for the fiscal quarters ending June 30, 2021 and September 30, 2021; and 4.75 to 1.00
for the fiscal quarters ending December 31, 2021 and the last day of each fiscal quarter thereafter, (iv) liberalize the leverage
ratio covenant by permitting the calculation of consolidated total debt for purposes of such covenant for the fiscal quarters ending
June 30, 2020, September 30, 2020, December 31, 2020 and March 31, 2021 to be computed net of all of the Company’s consolidated
unrestricted cash and cash equivalents (instead of the maximum of $30.0 million of such netting that otherwise applies) and
(v) permit the direct earnings contribution of certain lost revenues relating to the COVID-19 pandemic during the fiscal quarters
ending June 30, 2020 and September 30, 2020 to be added to consolidated net income for purposes of the financial covenants
subject to certain maximum Adjusted EBITDA amounts for each of these two periods.
In addition, during
the period commencing on the effective date of the Amendment (the “First Amendment Effective Date”) and ending on the
date the Company delivers a compliance certificate for the fiscal quarter ending March 31, 2021, the Amendment, among other things,
(i) disregards, where the Company represents and warrants in connection with a borrowing of revolving loans under the Existing
Credit Agreement that no material adverse effect has occurred since December 31, 2016, the impact of the COVID-19 pandemic on the
consolidated financial condition or business operations of the Company and its subsidiaries, as such impact occurred and was disclosed
to the Agent prior to the First Amendment Effective Date, for purposes of determining whether a material adverse effect has occurred
to the business, consolidated financial conditions, results of operations, assets or liabilities of the Company and its subsidiaries,
taken as a whole, (ii) precludes the ability of the Company and its subsidiaries to request incremental facilities and (iii) restricts
the ability of the Company and its subsidiaries to consummate acquisitions not financed solely with the proceeds of an offering
of the Company’s equity or other capital contribution, except that certain acquisitions are permitted after September 30,
2020 so long as, on the date the definitive agreements for an acquisition are entered into, the Company’s consolidated net
leverage ratio does not exceed 5.00 to 1.00 and its liquidity is at least $40 million.
The foregoing description
of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment,
which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.