December 6, 2007
EXHIBIT
10.1
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December
6, 2007
Xx.
Xxxxxx Xxxx
c/o
Orthofix, Inc.
The
Storrs Building, Suite 250
10115
Xxxxxx Avenue
Xxxxxxxxxxxx
Xxxxxxxx Xxxx
Xxxxxxxxxxxx,
XX 00000
Dear
Xxx:
Reference
is made to that certain Employment Agreement, dated July 13, 2006 (as modified
by this side letter, the “Agreement”), by and between Orthofix, Inc., a
Minnesota corporation (the “Company”), and Xxxxxx Xxxx (the
“Executive,” or “you”), under which the Company’s payment
obligations are guaranteed as provided therein by Orthofix International
N.V., a
Netherlands Antilles company (“Parent”). All capitalized terms
used, but not otherwise defined, herein shall have the meaning ascribed to
them
in the Agreement. This letter (“Letter”) is being delivered to
memorialize the understanding between the parties to the Agreement (the
“Parties”) with respect to the transition of your duties as Chief
Financial Officer of the Company and Parent to a new Chief Financial Officer
(“CFO”), as well as your assuming the role of Executive Vice President
–
Finance of the Company and Parent.
By
executing this Letter as provided below, the Parties hereby agree as
follows:
1. The
Company acknowledges that once the new CFO commenced employment with the
Company
on November 19, 2007 (the “Start Date”), an event constituting Good
Reason pursuant to Section 4.4 of the Agreement occurred and would permit
you to
resign for Good Reason and receive the severance payments and other benefits
described in Section 5.1 of the Agreement and elsewhere therein
(“Benefits”), unless such event was cured by the Company. Such
Benefits would include a right to (a) payment of a one-time lump sum in an
amount equal to 100% of your Base Amount (the “Good Reason Payment”), (b)
acceleration of the vesting of all stock options then held by you (the
“Acceleration”), (c) payment of a bonus (through your date of
termination) in the form of Incentive Compensation under the Bonus Plan based
on
your 2007 Goals, payable on the Severance Bonus Payment Date for the 2007
Bonus
Plan year and (d) various other benefits, including outplacement services
and
certain welfare benefits (“Other Benefits”). Receipt of the
Benefits requires your execution of a release as provided in Section 5.4
of the
Agreement and your compliance with protective provisions in Article VI of
the
Agreement, both of which obligations continue following effectiveness of
this
Letter. With respect to such Good Reason event, the Parties agree to
waive the related notice and cure periods in the Agreement and agree that
such
Good Reason event occurs as of the Start Date. Nothing in this Letter
shall otherwise modify any notice or cure provisions under the Agreement,
including requirements to give advance notice of termination by the Company
or
the Executive. The Parties further agree that the amount of the Good
Reason Payment under the Agreement is $407,726.00.
2. You
hereby agree to continue in employment and thereby waive temporarily any
and all
Benefits under the Agreement (except unpaid base salary and accrued unpaid
vacation), including the Good Reason Payment, Acceleration and Other Benefits,
in exchange for the Company offering you the opportunity to earn a retention
bonus of $150,000 (“Retention Bonus”). The Retention Bonus
will be payable on July 15, 2008, as long as you:
a. remain
an employee of the Company (or one of its affiliates) from the Start Date
through July 15, 2008 (the “Transition Period”); and
b. work
in good faith, as reasonably determined by the Company, with the new CFO
to
complete a plan for the transition of your current duties and responsibilities
to the new CFO.
The
Company agrees that during the Transition Period ending July 15, 2008, it
may
terminate your employment only for “Cause” as provided in Section 4.6 of the
Agreement.
3. During
the Transition Period, you will serve as Executive Vice President – Finance and
your duties will be as set forth by the CFO and the Chief Executive Officer
in
their sole discretion without regard to Section 1.1 or otherwise of the
Agreement, which provisions are hereby superseded. While an employee
of the Company (or one of its affiliates) during the Transition Period, you
will
continue to receive your current salary under Section 2.2 of the Agreement
and
the benefits set forth under Article III.
4. With
respect to Incentive Compensation under Section 2.3 of the Agreement, you
will
only be eligible for the earning and payment of such compensation as
follows:
a. if
you remain employed with the Company through December 31, 2007, you shall
receive your Incentive Compensation on the Severance Bonus Payment Date as
if
you had continued in the role of CFO through such date; and
b. if
you terminate employment with the Company for any reason prior to December
31,
2007, then on the Severance Bonus Payment Date you shall receive only your
Incentive Compensation through the date hereof as if your employment had
terminated under the Agreement as of the date hereof.
c. if
you remain employed with the Company on or after January 1, 2008, you will
participate in the Bonus Plan in your new role as Executive Vice
President-Finance. Your participation will be subject to the
provisions of the Bonus Plan except as those terms might be modified by the
Agreement and this Letter and will be at a level similar to that of your
peers
at the Company.
d. if
you terminate your employment after January 1, 2008, but on or before July
15,
2008 (unless you are terminated for Cause), you will receive Bonus Plan
Incentive Compensation for fiscal year 2008 through the date of the termination
of your employment as follows: you will be entitled to receive the pro rata
amount of any 2008 Bonus Plan Incentive Compensation (based on the number
of
business days you were actually employed during 2008) that you would have
received had you not terminated your employment during 2008; provided,
however, the foregoing sentence is not intended to give you greater rights
to such Incentive Compensation than a pro rata portion of what you would
ordinarily be entitled to under the Bonus Plan and such pro rata portion
shall
be paid at the time such Incentive Compensation is paid to other senior
executives of the Company in 2009.
5. The
following outlines when you would receive your Benefits (other than Incentive
Compensation, which is outlined above) and, if earned, the Retention
Bonus:
a. if
you voluntarily terminate employment with the Company before July 15, 2008,
then, in addition to any unpaid base salary and accrued unpaid vacation then
owing through the date of termination, as well as any pro rata amount of
any
Bonus Plan Incentive Compensation as provided under Section 4, following
your
termination you would receive your Good Reason Payment and Other Benefits,
but
you would not receive the Retention Bonus; the Acceleration would occur as
of
the date you terminated employment with the Company;
b. if
you die before July 15, 2008, then following your death, in addition to any
unpaid base salary for the period from the date of your death until July
15,
2008 and accrued unpaid vacation owing through the date of death, as well
as any
pro rata amount of any Bonus Plan Incentive Compensation for the fiscal year
of
your death as provided under Section 4, your beneficiary would receive your
Good
Reason Payment, Other Benefits and the Retention Bonus; the Acceleration
would
occur as of the date you died;
c. if
you remain employed by the Company (or one of its affiliates) until July
15,
2008, but do not accept a long-term role with the Company (or are not offered
a
long-term role with the Company) for any reason, then following your termination
of employment you would receive (i) your Good Reason Payment and Other Benefits;
(ii) the Retention Bonus (to be paid on or before August 1, 2008); (iii)any
unpaid base salary and accrued unpaid vacation then owing through the date
of
termination, as well as any pro rata amount of any Bonus Plan Incentive
Compensation as provided under Section 4, and the Acceleration would occur
as of
the date you terminated employment with the Company; further, the Parties
agree
that the Company is not obligated to offer, nor are you obligated to accept,
any
long-term role; and
d. if
you remain employed by the Company (or one of its affiliates) until July
15,
2008, and you accept in writing a long-term role and continued employment
with
the Company, then you would receive the Retention Bonus (to be paid on or
before
August 1, 2008), but not receive the Good Reason Payment, Other Benefits
or any
other severance payments or benefits under the Agreement as a result of the
Good
Reason event (nor will the Acceleration occur); instead, the Agreement would
remain in effect as if the Company had cured and remedied the event constituting
Good Reason in accordance with Section 4.4 of the Agreement, to the reasonable
satisfaction of the Executive, and the Executive shall have no right to
terminate his employment or receive Benefits under Sections 4.4, 5.1 or any
other provision of the Agreement, as a result of such Good Reason
event.
6. While
nothing will obligate you to remain employed with the Company after July
15,
2008, or for the Company to offer you a long-term position after July 15,
2008,
the Parties agree to work in good faith to determine to what extent and in
what
role you might remain with the Company after that date. Failure of
the Parties to determine a long-term role for the Executive will create no
liability or obligation for any of the Parties. For the avoidance of
doubt, the Agreement and its Term will cease on your last day of employment
with
the Company (or any of its affiliates) unless you continue in a long-term
role
as provided in paragraph 5(d) (other than provisions of the Agreement that
survive, which provisions shall remain in effect in accordance with their
terms).
7. Until
the earlier of (a) the end of the Transition Period and (b) your ceasing
to be
an employee of the Company (or one of its affiliates), you understand and
acknowledge that you are an at-will employee of the Company and, in the event
of
any termination of your employment by the Company or voluntarily by you,
you
would not be entitled to any sums or other payments or benefits, other than
the
Good Reason Payment, Incentive Compensation, Other Benefits, Acceleration,
and,
if earned, the Retention Bonus, all as specifically provided herein;
provided, however, that nothing in this letter shall (i) limit the
Company’s obligations under Section 7.2 of the Agreement with respect to legal
fees or (ii) your obligation to comply with the protective provisions set
forth
in Article VI of the Agreement.
8. Any
payments to be made hereunder following termination of employment will be
paid
in a lump sum as provided under the Agreement, unless expressly set forth
otherwise herein, promptly thereafter, subject to compliance with Section
409A
(“Section 409A”) of the Internal Revenue Code of 1986, as amended,
including but not limited to any requirement that such payments be delayed
for
at least six months following termination of employment. The terms
“termination” and “termination of employment,” and any variations thereof, as
used in this Letter are intended to mean a termination of employment which
constitutes a “separation from service” under Section 409A.
9. The
terms of this offer remain open for 5 days from the date of this Letter,
after
which the offer represented by this Letter will be deemed revoked.
10. As
an inducement for the Executive to enter into this Letter, the Company has
agreed to enter into an Amended and Restated Employment Agreement (the "New
Agreement") with you immediately following execution of this Letter in order
to, among others, reflect your new title and make changes in an effort to
ensure
compliance with Section 409A. Following such time, any references to the
Agreement in this Letter shall be construed as references to the New Agreement
and the exercise period for options held by you shall be governed by the
terms
of that New Agreement.
Please
confirm your agreement with and consent to the terms of this Letter by executing
the same in the space provided below. This Letter shall only be
effective as of the date it is signed by both you and the
Company. For the avoidance of doubt, this Letter represents an
amendment of the Agreement. This Letter may be executed in one or
more counterparts, each of which shall be deemed to be an original and all
of
which together shall constitute one and the same agreement. This Letter shall
be
subject to the governing law and dispute resolution provisions set forth
in the
Agreement.
(Remainder
of this page intentionally left blank)
Sincerely,
ORTHOFIX,
INC.
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By:
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/s/
Xxxxxxx X. Xxxxx
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Name:
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Xxxxxxx
X. Xxxxx
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Title:
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Secretary
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Acknowledged
and agreed to by:
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XXXXXX
XXXX
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By:
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/s/ Xxxxxx Xxxx | |
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ORTHOFIX
INTERNATIONAL N.V.
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By:
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/s/
Xxxxxxx X. Xxxxx
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Name:
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Xxxxxxx
X. Xxxxx
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Title:
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Secretary
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