AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is dated and effective as of
December 29, 2005, between Orthofix Inc., a Minnesota corporation (the
"Company") and Orthofix International N.V., a corporation organized under the
laws of the Netherlands Antilles (the "Parent"), on the one hand, and Xxxxxxx X.
Xxxxxxxx, a citizen and resident of Cornelius, North Carolina (the "Executive"),
on the other.
WHEREAS, the Parent, the Company and the Executive are currently
parties to an Employment Agreement dated as of April 15, 2005 (the "Agreement"),
which provides by its terms for its amendment to comply with applicable
provisions of Section 409A of the Internal Revenue Code (the "Code") and any
guidance issued thereunder; and
WHEREAS, the Parent, the Company and the Executive desire to amend the
Agreement to comply with applicable provisions of Code Section 409A and guidance
issued thereunder.
NOW, THEREFORE, in consideration of the recitals, mutual covenants and
agreements set forth in the Agreement and below, the parties agree as follows:
(1) All capitalized terms used but not defined herein shall have the
meaning accorded to them in the Agreement.
(2) The Agreement be and is amended in the following particulars,
effective as of December 29, 2005:
(a) By substituting for Section 4.1.1(a) of the Agreement the
following:
"(a) General. If, prior to the expiration of the Employment
Term, (i) the Executive's employment is terminated by the
Company without Cause (as defined in Section 4.3) and for a
reason other than death or disability (as described in Section
5), or (ii) the Executive resigns from his employment hereunder
for Good Reason (as defined in Section 4.4), the Executive shall
be entitled to payment no later than the Company's next
regularly scheduled payday following the date of termination (as
described in Section 4.1.2) of all (A) Base Salary due and owing
through the date of termination, (B) accrued unused vacation
then owing in accordance with the Company's then-current
policies and (C) expense reimbursements under Section 3.2. In
addition, the Executive shall receive, on the first day of the
seventh calendar month following the Executive's date of
termination (as described in Section 4.1.2), a one-time lump sum
payment (less applicable withholding taxes) in an amount equal
to the product of: (I) his monthly Base Salary at the highest
rate in effect during the three
year period immediately preceding the termination, times (II) the
number of months (including any partial month) remaining in the
Employment Term (the 'Base Salary Severance Amount'). Further, on
the date in the next fiscal year that bonuses are otherwise paid
to senior executives of the Company (the `Bonus Payment Date'),
the Executive shall be entitled to receive the pro rata amount
(based on the ratio of the number of business days he was
actually employed by the Company in the fiscal year of his
termination to the number of business days in such fiscal year)
of any bonus for the fiscal year of his termination that he would
have received had his employment not been terminated (the 'Bonus
Severance Amount', which, together with the Base Salary Severance
Amount, is referred to as the 'Severance Amount'); provided, on
the Bonus Payment Date, the Bonus Severance Amount can be
characterized as a 'short-term deferral' for purposes of IRC
Section 409A. Notwithstanding anything in the preceding sentence
to the contrary, if, on the Bonus Payment Date, the Bonus
Severance Amount cannot be characterized as a 'short-term
deferral' for purposes of IRC Section 409A, then the Bonus
Severance Amount shall be paid to the Executive in a single lump
sum payment on the first day of the seventh calendar month
following the Executive's date of termination. By way of example
of the calculation of the Severance Amount, if the Executive were
terminated under this Section 4.1.1 on the first anniversary of
the Effective Date, he would be entitled to (x) payment equal to
twelve times the highest monthly Base Salary rate in effect
during the three year period preceding his termination (less
applicable taxes) plus (y) an amount payable in the next fiscal
year (2007) equal to any bonus compensation for the number of
business days that he was employed by the Company in the fiscal
year (2006) of his termination, but only to the extent he would
have been paid a bonus had he not been terminated. Nothing in
this Section 4.1.1(a) is intended to give the Executive greater
bonus rights than a pro rata portion of what he would ordinarily
be entitled to under any bonus plan or bonus award that would
have been applicable to him had he not been terminated. The
parties intend and agree that Executive's termination shall not
be used to disqualify Executive from or make him ineligible for
any pro rata portion of any bonus he otherwise would have been
entitled to."
(b) By substituting for Section 4.1.1(c) of the Agreement the
following:
"(c) Options. Nothing in this Agreement shall be construed to
diminish or alter in an adverse manner the current rights of the
Executive provided for in the Plans or under his Award
Agreements, or any additional rights accrued by the Executive
during the Employment Term, and to which he is entitled, under
the terms of the Plans and Award Agreements, with respect to any
Options held by him in the event of (i) his termination of
employment by the Company without Cause and for a reason other
than
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death or disability or (ii) his resignation for Good Reason. In
addition to such Option rights and notwithstanding anything to
the contrary in such Plans and Award Agreements, if termination
is pursuant to this Section 4.1.1, the Executive shall become
immediately and fully vested in any outstanding unvested Options
as of and on the Executive's date of termination (as described in
Section 4.1.2) and shall be entitled to exercise his Options
until the earlier of the following: (i) the date on which the
Options would otherwise expire (for reasons other than the
termination of the Executive's employment) by their original
terms or (ii) the later to occur of (A) the 15th day of the third
month following the Options Final Exercise Date (as such term is
defined below) or (B) December 31 of the calendar year which
includes the Options Final Exercise Date. 'Options Final Exercise
Date' means the date the Options would otherwise have expired
based on the terms of the Options at the original grant date of
the Options and disregarding any subsequent extension thereof.
The Executive expressly acknowledges that the rights granted him
under this Section 4.1.1(c) are rights not otherwise available to
him prior to the date hereof, but for his execution of this
Agreement and his promises in Section 6."
(3) By substituting for Section 7.1(ii) of the Agreement the following:
"Xx. Xxxxxxx X. Xxxxxxxx
XXX
XXX
Facsimile: XXX
E-mail: XXX
(4) Except as amended herein, the Agreement shall continue unmodified
and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the date first described above.
ORTHOFIX INTERNATIONAL N.V. ORTHOFIX INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------- --------------------------------
Its: Corporate Secretary Its: Corporate Secretary
---------------------------- --------------------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
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