ex10.1
CHANGE OF CONTROL AGREEMENT
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This CHANGE OF CONTROL AGREEMENT (this "Agreement") is entered into as
of the 1 day of September, 2005 (the "Effective Date"), by and between
Orthofix, Inc., a Minnesota corporation (the "Company"), and Xxxx X. Xxxxxxxxx
(the "Employee"). Capitalized words which are not otherwise defined herein shall
have the meanings assigned to such words in Section 13 of this Agreement.
WHEREAS, the Company desires to have the benefits of the Employee's
knowledge and experience as its Chief Operating Officer located in Huntersville,
NC without distraction by employment-related uncertainties in connection with a
Change of Control or Potential Change of Control.
WHEREAS, on the Effective Date the Employee will be employed by the
Company.
WHEREAS, in conjunction with such employment on the Effective Date the
Company has agreed to provide the Employee the salary, bonus and benefits set
forth on Exhibit A, which salary, bonus and benefits shall be subject to
modification from time to time in accordance with the compensation and benefits
practices established by the Company and, as applicable, the Compensation
Committee of the Orthofix. N.V. Board, including as required to comply with
applicable law or stock exchange rules.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the parties agree as follows:
1. Payments and Benefits.
---------------------
If, during the Employee's employment with the Company, the (a)
Employee's employment is terminated by the Company without Cause prior to or
during a Change in Control Period or (b) Employee resigns for Good Reason during
a Change of Control Period, the Employee shall be entitled to the following
payments and benefits described below.
(i) The Employee shall be entitled to a lump sum severance payment
equal to the Employee's Base Amount (less applicable statutory deductions
and withholding taxes). The lump sum severance payment shall be paid within
thirty (30) days after the Employee's termination of employment or
resignation for Good Reason.
(ii) Notwithstanding the terms of any applicable plan or
arrangement to the contrary, in addition to any stock options previously
granted to the Employee that immediately prior to the two termination
events described above were vested and exercisable, the Employee shall have
immediate vesting of, and the immediate right to exercise, 10,000 stock
options theretofore granted to the Employee. The Employee must advise the
Company in writing within thirty (30) days of his date of termination which
outstanding stock options he elects for such accelerated vesting and
exerciseability as provided above. All other stock options, equity
incentive compensation or restricted stock awards shall thereafter
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vest, become exercisable, lapse or terminate, as applicable, in accordance
with the terms of their original grant following such termination.
(iii) The Employee shall be entitled, to the fullest extent
permitted by their terms, without remuneration to the Company, to
continuation or provision of basic employee group benefits that are welfare
benefits, but not pension, retirement or similar compensatory benefits, for
the Employee and the Employee's dependents substantially similar to those
they are receiving or to which they are entitled immediately prior to the
termination of the Employee's employment for the lesser of one year after
termination or until the Employee secures new employment.
2. Section 280G of the Code.
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Notwithstanding any provision of this Agreement to the contrary, if
any amount or benefit to be paid or provided under this Agreement or otherwise
would be an "Excess Parachute Payment," within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision thereto, but for the application of this sentence, then the payments
and benefits to be so paid or provided shall be reduced to the minimum extent
necessary (but in no event to less than zero), so that no portion of any such
payment or benefit as so reduced, constitutes an Excess Parachute Payment. The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the preceding
sentence shall be made at the expense of the Company, if requested by the
Employee or the Company, by the Company's independent accountants. If any
payment or benefit intended to be provided under this Agreement must be reduced
in accordance with this Section 2, the Employee shall be entitled to designate
the payments and/or benefits to be so reduced in order to give effect to this
Section 2. The Company shall provide the Employee with all information
reasonably requested by the Employee to permit the Employee to make such
designation. In the event that the Employee fails to make such designation
within ten business days of the termination of the Employee's employment with
the Company, the Company may effect such reduction in any manner it deems
appropriate.
3. Other Benefits.
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The provisions of this Agreement shall not affect the Employee's
participation in, or terminating distributions and vested rights under, any
pension, profit-sharing, insurance or other employee benefit plan of the Company
or Orthofix N.V. to which the Employee is entitled pursuant to the terms of such
plans (other than as provided under subsection (ii) of Section 1 of this
Agreement with respect to the enumerated stock options).
4. No Mitigation Obligation.
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It will be difficult, and may be impossible, for the Employee to find
reasonably comparable employment following the termination of the Employee's
employment with the Company, and the non-competition covenant contained in
Section 6 hereof will further limit the employment opportunities for the
Employee. In addition, the
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Company's severance pay policy applicable in general to its salaried employees,
does not provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, the parties hereto expressly agree that the
payment of severance compensation by the Company to the Employee in accordance
with the terms of this Agreement will be liquidated damages, and that the
Employee shall not be required to seek other employment, or otherwise, to
mitigate any payment provided for hereunder. Similarly, following such payment,
neither the Company nor Orthofix N.V. shall have any further liability or
obligation to the Employee, except as expressly provided in this Agreement.
5. No Right to Set Off.
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The Company and Orthofix N.V. shall not be entitled to set off against
amounts payable to the Employee hereunder any amounts earned by the Employee in
other employment, or otherwise, after termination of his employment with the
Company, or any amounts which might have been earned by the Employee in other
employment had he sought such other employment.
6. Competitive Activity.
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During a period ending one year following the termination of the
Employee's employment with the Company and any of its affiliates (whichever is
last), if the Employee has received or is receiving the payments and benefits
the Employee is entitled to receive under this Agreement as provided for in
subsections (i), (ii) and (iii) of Section 1 of this Agreement, the Employee
shall not, without the prior written consent of the Orthofix N.V. Board
(determined by such Board in its sole discretion), engage in any Competitive
Activity in the Prohibited Area. For purposes of this Agreement, the term (a)
"Prohibited Area" means North America, South America and the European Union
(which Prohibited Area the parties have agreed to as a result of the fact that
those are the geographic areas in which Orthofix N.V. conducts a preponderance
of its business and in which the Employee will provide substantive services) and
(b) "Competitive Activity" means the Employee's participation in the management
of any business enterprise if such enterprise engages in substantial and direct
competition with Orthofix N.V. For purposes of this Section 6 only, Orthofix
N.V. means Orthofix N.V. and its subsidiaries taken as a whole. Without
limitation, an enterprise shall be deemed to be in substantial and direct
competition with Orthofix N.V. if such enterprise's sales of any product or
service competitive with any product or service of Orthofix N.V. amounted to 25%
of such enterprise's net sales for its most recently completed fiscal year, and
if the net sales of the competing product or service of Orthofix N.V. amounted
to 25% of Orthofix N.V.'s net sales for its most recently completed fiscal year.
"Competitive Activity" shall not include:
(i) the passive ownership of publicly-traded securities in any
such enterprise and exercise of rights appurtenant thereto; or
(ii) participation in management of any such enterprise other than
in connection with the competitive operations of such enterprise.
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7. Non-Disclosure of Information.
-----------------------------
(a) For so long as the Employee is employed by the Company or any
of its affiliates, and thereafter except in the performance of the Employee's
obligations to the Company or one of its affiliates, the Employee shall not,
directly or indirectly, use or authorize the use of any confidential or other
proprietary information of the Company or one of its affiliates ("Confidential
Information"), including but not limited to trade secrets, product
specifications and ideas, manuals, systems, procedures, confidential reports,
customer lists, sales or distribution methods, patentable information and data
and financial information concerning the Company or one of its affiliates, which
Confidential Information has been made known (whether or not with the knowledge
and permission of the Company or Orthofix N.V., and whether or not developed,
devised or otherwise created in whole or in part by the efforts of the Employee)
to the Employee by reason of the Employee's activities on behalf of the Company
or one of its affiliates. The Employee shall not reveal, divulge or make known
any Confidential Information to any individual, partnership, firm, corporation,
or other business organization whatsoever (except in performance of the
Employee's obligations to the Company or one of its affiliates) without the
express prior written permission of the Company Board or the Orthofix N.V. Board
or as otherwise expressly required by operation of law.
(b) The Employee confirms that all Confidential Information is the
exclusive property of the Company or one of its affiliates. All business records
(including electronic or computer files or records), papers and documents kept
or made by the Employee relating to the business of the Company or one of its
affiliates shall be and remain the property of the Company or one of its
affiliates and shall remain in the possession of the Company or one of its
affiliates. Upon the termination of the Employee's employment with the Company,
or upon the request of the Company or Orthofix N.V. at any time, the Employee
shall promptly deliver to the Company, and shall retain no copies of, any
written materials, records (including electronic or computer files or records)
and documents made by the Employee or coming into the Employee's possession
concerning the business and affairs of the Company or one of its affiliates that
contain Confidential Information.
8. Remedies.
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Without intending to limit the remedies available to the Company or
one of its affiliates, the Employee acknowledges that a breach of any of the
covenants contained in Section 6 hereof and Section 7 hereof may result in
material irreparable injury to the Company or one of its affiliates for which
there is not adequate remedy at law, that it may not be possible to measure
damages for such injuries precisely and that, in the event of such breach or
threat thereof, the Company or one of its affiliates may be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by Section 6
hereof and Section 7 hereof or such other relief as many may be required to
specifically enforce any of the covenants in such Sections.
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9. Inventions.
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(a) The Employee shall promptly and fully disclose to the Company
any and all ideas, improvements, discoveries and inventions, whether or not they
are believed to be patentable ("Inventions"), which the Employee conceives of or
first actually reduces to practice, either solely or jointly with others, during
the Employee's employment with the Company or one of its affiliates, and which
relate to the business now or thereafter carried on or contemplated by the
Company or one of its affiliates or which result from any work performed by the
Employee for the Company or one of its affiliates.
(b) The Employee acknowledges and agrees that all Inventions shall
be the sole and exclusive property of the Company, and during the term of the
Employee's employment with the Company and thereafter, whenever requested to do
so by the Company, the Employee shall execute and assign any and all
applications, assignments and other instruments that the Company shall deem
necessary or appropriate in order to apply for and obtain Letters Patent of the
United States and/or of any foreign countries for such Inventions and in order
to assign and convey to the Company or its nominee the sole and exclusive right,
title and interest in and to such Inventions.
(c) The Company acknowledges and agrees that the provisions of
this Section 9 do not apply to an Invention (i) for which no equipment,
supplies, facility or Confidential Information of the Company or one of its
affiliates was used; (ii) that was developed entirely on the Employee's own
time; (iii) that does not relate directly to the business of the Company or one
of its affiliates or to the actual or demonstrably anticipated research or
development of the Company or one of its affiliates; and (iv) that does not
result from any work performed by the Employee for the Company or one of its
affiliates.
10. Binding Arbitration: Legal Fees and Expenses.
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It is the intent of the Company that the Employee not be required to
bear the legal fees and related expenses associated with the enforcement or
defense of the Employee's rights under this Agreement by litigation or other
legal action because having to do so would substantially detract from the
benefits intended to be extended to the Employee hereunder. Accordingly, the
parties hereto agree as follows:
(a) Any dispute or controversy arising under or in connection with
this Agreement prior to the occurrence of a Change of Control shall be resolved
exclusively by binding arbitration in Huntersville, North Carolina, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Each party shall bear his or its own costs and expenses of
arbitration, but if the Employee is the prevailing party in such arbitration, in
whole, or in part, the Company shall pay to the Employee as part of the
arbitration award to the Employee an amount equal to all attorneys' and related
fees, costs and expenses incurred by the Employee in connection with such
arbitration.
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(b) If, following the occurrence of a Change of Control, the
Employee determines, in good faith, that the Company has failed to comply with
any of its obligations under this Agreement or the Company or any other person
takes or threatens to take action to declare this Agreement void or
unenforceable, or institutes any litigation, arbitration proceeding or other
action or proceeding designed to deny, or to recover from, the Employee the
benefits provided or intended to be provided to the Employee hereunder, the
Company irrevocably authorizes the Employee from time to time to retain counsel
of the Employee's choice, at the expense of the Company as hereafter provided,
to represent the Employee in connection with the initiation or defense of any
litigation, arbitration or other legal action, whether by or against the Company
or any director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. Within ten business days after receipt from the
Employee of a request referencing this Section 10(b), the Company shall, from
time to time, pay or reimburse the Employee for fees and expenses incurred, or
reasonably anticipated to be incurred, in accordance with such request and this
Section 10(b). Without respect to whether the Employee prevails, in whole or in
part, in connection with any of the foregoing, the Company shall pay or cause to
be paid and shall be solely responsible for any and all attorneys' and related
fees and expenses incurred by the Employee in connection with any of the
foregoing, excluding any such fees and expenses related to an unsuccessful
appeal filed by the Employee of an adjudication on the merits, any motion for a
new trial filed by the Employee after such an adjudication that is denied or any
other motion filed by the Employee for reconsideration or review of such an
adjudication that is denied.
11. Withholding of Taxes.
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The Company may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or government regulation or ruling.
12. Notices.
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All notices, requests, demands, and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally or when mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
parties, their successors in interest or assignees at the following addresses or
such other addresses as the parties may designate by notice in the manner
aforesaid:
If to the Company: Orthofix, Inc.
Huntersville Business Park
The Storrs Building
00000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Executive Officer
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If to the Employee: Xxxx X. Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
13. Definitions.
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For purposes of this Agreement, the following capitalized terms have
the meanings set forth below:
(a) "Base Amount" shall mean an amount equal to (i) the average of
the Employee's annual base salary at the highest rate in effect in the 90-day
period immediately prior to the termination of the Employee's employment with
the Company and the Employee's annual base salary for the annual compensation
period immediately preceding the annual compensation period in which termination
of the Employee's employment with the Company occurs or, (ii) if greater, the
average of the Employee's annual base salary in effect immediately prior to the
Change of Control Date or Potential Change of Control Date and the Employee's
annual base salary for the annual compensation period immediately preceding the
annual compensation period in which a Change of Control or Potential Change of
Control occurs; provided, however, that if the Employee was not employed by the
Company during such immediately preceding compensation period, the amount
included pursuant to this Section 13(a) shall be the greater of the Employee's
annual base salary at the highest rate in effect in the 90-day period
immediately prior to (A) the termination of the Employee's employment with the
Company or (B) the Change of Control Date or Potential Change of Control Date.
(b) "Cause" shall mean termination of the Employee's employment
because of the Employee's: (i) involvement in fraud, misappropriation or
embezzlement related to the business or property of the Company; (ii) conviction
for, or guilty plea to, a felony or crime of similar gravity in the jurisdiction
which such conviction or guilty plea occurs; or (iii) unauthorized disclosure of
any trade secrets or other Confidential Information (except to the extent such
disclosure is expressly required under applicable law).
(c) "Change of Control" shall occur upon any of the following
events:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (A) the then outstanding shares of Orthofix N.V.'s common stock (the
"Outstanding Common Stock") or (B) the combined voting power of the then
outstanding voting securities of Orthofix N.V. entitled to vote generally
in the election of directors (the "Outstanding Voting Securities");
excluding, however, the following: (1) any acquisition directly from
Orthofix N.V., other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself
acquired directly from Orthofix N.V.; (2) any acquisition by Orthofix N.V.;
(3) any acquisition by any employee benefit plan
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(or related trust) sponsored or maintained by Orthofix N.V. or any entity
controlled by Orthofix N.V.; or (4) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this definition of Change of Control;
(ii) a change in the composition of the Orthofix N.V. Board such
that the individuals who, as of the date hereof, constitute the Orthofix
N.V. Board (such Orthofix N.V. Board shall be hereinafter referred to as
the "Incumbent Orthofix N.V. Board") cease for any reason to constitute at
least a majority of the Orthofix N.V. Board; but provided, however, for
purposes of this paragraph, that any individual who becomes a member of the
Orthofix N.V. Board subsequent to the date hereof, whose appointment,
election, or nomination for election by Orthofix N.V.'s shareholders was
approved by a vote of at least a majority of those individuals who are
members of the Orthofix N.V. Board and who were also members of the
Incumbent Orthofix N.V. Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the
Incumbent Orthofix N.V. Board; provided, further, that any such individual
whose initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Orthofix N.V. Board shall not be so considered as a member
of the Incumbent Orthofix N.V. Board;
(iii) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
Orthofix N.V. ("Corporate Transaction"); excluding, however, such a
Corporate Transaction pursuant to which all of the following conditions are
met: (A) all or substantially all of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50%
of, respectively, the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns
Orthofix N.V. or all or substantially all of Orthofix N.V.'s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Common Stock and Outstanding Voting
Securities, as the case may be; (B) no Person (other than Orthofix N.V.,
any employee benefit plan (or related trust) of Orthofix N.V. or such
corporation resulting from such Corporate Transaction) will beneficially
own, directly or indirectly, 30% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election
of directors except to the extent that such ownership existed prior to the
Corporate Transaction; and
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(C) individuals who were members of the Incumbent Orthofix N.V. Board will
constitute at least a majority of the members of the board of directors of
the corporation resulting from such Corporate Transaction;
(iv) the approval by the shareholders of Orthofix N.V. of a
complete liquidation or dissolution of Orthofix N.V;
(v) the Company is merged, consolidated or reorganized into, or
with another corporation or other legal person, or securities of the
Company are exchanged for securities of another corporation or other legal
person, and immediately after such merger, consolidation, reorganization or
exchange less than a majority of the combined voting power of the then
outstanding securities of such corporation or person immediately after such
transaction are held, directly or indirectly, in the aggregate by the
holders of securities entitled to vote generally in the election of
directors of the Company immediately prior to such transaction;
(vi) the Company, in any transaction or series of related
transactions, sells all or substantially all of its assets to any other
corporation or other legal person, and less than a majority of the combined
voting power of the then outstanding securities of such corporation or
person immediately after such sale or sales are held, directly or
indirectly, in the aggregate by the holders of securities entitled to vote
generally in the election of directors of the Company immediately prior to
such sale;
(vii) Orthofix N.V. or its affiliates shall sell or dispose of (in a
single transaction or series of related transactions) business operations
that generated two-thirds of the consolidated revenues of Orthofix N.V. and
its affiliates (determined on the basis of Orthofix N.V.'s four most
recently completed fiscal quarters for which reports have been filed under
the Exchange Act);
(viii) Orthofix N.V. files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act, disclosing
in response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of Orthofix N.V. has or
may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; notwithstanding the foregoing,
unless determined in a specific case by a majority vote of the Orthofix
N.V. Board, a "Change of Control" shall not be deemed to have occurred
solely because: (A) an entity in which Orthofix N.V. directly or indirectly
beneficially owns 50% or more of the voting securities, or any Orthofix
N.V.-sponsored employee stock ownership plan, or any other employee benefit
plan of Orthofix N.V. or the Company, either files or becomes obligated to
file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act, disclosing beneficial
ownership by form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of stock of Orthofix N.V.,
or because Orthofix N.V. reports that a change in control of Orthofix N.V.
has or may have
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occurred or will or may occur in the future by reason of such beneficial
ownership or (B) any Orthofix N.V.-sponsored employee stock ownership plan,
or any other employee benefit plan of Orthofix N.V. or the Company, either
files or becomes obligated to file a report or a proxy statement under or
in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the Exchange
Act, disclosing beneficial ownership by form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
stock of Orthofix N.V., or because Orthofix N.V. reports that a change in
control of Orthofix N.V. has or may have occurred or will or may occur in
the future by reason of such beneficial ownership; or
(ix) any other transaction or series of related transactions occur
that have substantially the effect of the transactions specified in any of
the preceding clauses in this sentence.
(d) "Change of Control Date" shall mean the date on which a Change
of Control occurs.
(e) "Change of Control Period" shall mean the twenty-four month
period commencing on the Change of Control Date; provided, however, that if the
Employee's employment with the Company terminates prior to the Change of Control
Date but on or after a Potential Change of Control Date, and it is reasonably
demonstrated that the Employee's employment was terminated (A) at the request of
the third party who has taken steps reasonably calculated to effect a Change of
Control or (B) otherwise arose in connection with or in anticipation of a Change
of Control, then the "Change of Control Period" shall mean the twenty-four month
period beginning on the date immediately prior to the date of the Employee's
termination of employment with the Company.
(f) "Company Board" shall mean the Board of Directors of the
Company.
(g) "Good Reason" shall mean the occurrence of any of the
following: (i) without the express written consent of the Employee, any duties
are assigned to the Employee that are materially inconsistent with the
Employee's position, duties and status with the Company or one of its affiliates
as contemplated by this Agreement or any higher position, duties or status as
may be assigned to Employee; (ii) any action by the Company or one of its
affiliates that results in a material adverse change in the nature or scope of
the position, duties, authorities, responsibilities or functions of the Employee
with the Company or one of its affiliates, except for strategic reallocations of
the personnel reporting to the Employee; (iii) the base annual salary of the
Employee is reduced, unless the reduction is a general reduction (on the same
percentage basis) affecting the base salaries of substantially all other
executive officers of the Company; (iv) there is a change or termination of the
Employee's right to participate, on a basis substantially consistent with
practices applicable to executive officers of the Company generally on the
Effective Date, in any bonus, incentive, profit-sharing, stock option,
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stock purchase, stock appreciation, discretionary pay or similar policy, plan,
program or arrangement of the Company (but nothing herein shall limit the
discretionary rights of the Company Board or Orthofix N.V. Board under any such
policy, plan, program or arrangement); or (v) there is a termination or denial
of the Employee's right, on a basis substantially consistent with practices
applicable generally to executive officers of the Company on the Effective Date,
to participate in and receive service credit for benefits as provided under, all
life, accident, medical payment, health and disability insurance, retirement,
pension, salary continuation, expense reimbursement and other employee benefit
and perquisite policies, plans, programs and arrangements that generally are
made available to executive officers of the Company, except for any arrangements
that the Company Board or Orthofix N.V. Board adopt for select employees to
compensate them for special or extenuating circumstances.
(h) "Orthofix N.V." shall mean Orthofix International N.V., a
corporation organized under the laws of Netherlands Antilles.
(i) "Orthofix N.V. Board" shall mean the Board of Directors of
Orthofix N.V.
(j) "Potential Change of Control" shall mean the earliest to occur
of: (i) the date on which Orthofix N.V. executes an agreement or letter of
intent, the consummation of the transactions described in which would result in
the occurrence of a Change of Control or (ii) the date on which the Orthofix
N.V. Board approves a transaction or series of transactions, the consummation of
which would result in a Change of Control, and ending when, in the opinion of
the Orthofix N.V. Board, Orthofix N.V. or the respective third party has
abandoned or terminated any Potential Change of Control.
(k) "Potential Change of Control Date" shall mean the date on
which a Potential Change of Control occurs; provided, however, such date shall
become null and void when, in the opinion of the Orthofix N.V. Board, Orthofix
N.V. or the respective third party has abandoned or terminated any Potential
Change of Control.
(l) For purposes of Section 1(a) above, Employee's employment
shall also be deemed "terminated by the Company without Cause" upon (1) a
failure by the Company (A) to maintain Employee's position, duties, authorities,
responsibilities or functions as Chief Operating Officer, or those of any higher
position to which Employee may be elected, or (B) to provide by January 1, 2006
or within a reasonable time thereafter, that all operating units shall report to
Employee; or (2) if any individual other than Xxxxxxx X. Xxxxxxxxx or Employee
is elected or otherwise becomes President or Chief Executive Officer of the
Company.
14. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without giving effect to the principles
of conflict of laws of such State.
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15. Validity.
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The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. Any
provision of this Agreement held to be invalid or unenforceable shall be
reformed to the extent necessary to make it valid and enforceable.
16. Requirements of Law.
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If any provision of this Agreement contravenes the final regulations
or regulations anticipated to be promulgated under Section 409A of the Code or
any other guidance from the United States Department of Treasury ("Treasury"),
the Company may reform this Agreement or any provision hereof or incorporate the
necessary provisions to maintain to the maximum extent practicable the original
intent of the provision without violating the provisions of Section 409A of the
Code to the extent that the Company, in its discretion, shall determine.
17. Entire Agreement.
----------------
This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof, superseding all negotiations,
prior discussions, offer letters, preliminary agreements and employment
arrangements between the Employee and the Company or Orthofix N.V. or any of
their subsidiaries, affiliates or other related entities. This Agreement may not
be amended, nor may any of its provisions be waived, except in writing executed
by the parties hereto; provided, however, that the Company shall be permitted to
unilaterally amend this Agreement to comply with any legal requirements or to
ensure that any amounts hereunder are not subject to federal, state or local
income tax prior to payments (including, without limitation, any amendment to
the definition of "Change of Control" or "Potential Change of Control" or
related definitions based on the Treasury regulations under Section 409A of the
Code or instituting a six-month waiting period for a distribution if required).
18. Effect on Successors in Interest.
--------------------------------
This Agreement shall inure to the benefit of and be binding upon the
heirs, administrators, executors and successors of each of the parties hereto,
including without limitation any person acquiring, directly or indirectly, all
or substantially all of the business and/or assets of the Company or one of its
affiliates by purchase, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed the "Company" for purposes of this
Agreement). This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in this Section 18. Without limiting the generality of the foregoing,
the Employee's right to receive payments hereunder shall not be assignable,
transferable or delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer under the Employee's will or by the laws of
descent and distribution and, in the
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event of any attempted assignment or transfer contrary to this Section 18, the
Company shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
19. No Employment Agreement.
-----------------------
Except as expressly provided herein, this Agreement is a change of
control agreement only and the Employee understands and acknowledges that it is
not and shall not be construed as an employment agreement. This Agreement is
only intended to provide for the benefits enumerated herein following a
termination of the Employee's employment by the Company without Cause or as a
result of the Employee resigning for Good Reason during a Change of Control
Period. The Employee acknowledges that he is an at-will employee of the Company
only. Nothing in this Agreement shall (a) confer upon the Employee any right to
continue to serve the Company, Orthofix N.V. or any affiliate thereof or (b)
affect the right of the Company, Orthofix N.V. or any affiliate thereof to
terminate the Employee's employment with or without notice and with or without
Cause.
20. Effectiveness.
-------------
This Agreement shall be effective upon the Effective Date once signed
by all parties.
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This Agreement is executed and delivered as of the Effective Date.
ORTHOFIX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Director
XXXX X. XXXXXXXXX
/s/ Xxxx X. Xxxxxxxxx
-------------------------
Guaranty by Orthofix International N.V.
Orthofix International N.V. joins in this Agreement for the sole
purposes of guaranteeing the obligations of Orthofix, Inc. to pay, provide, or
reimburse the Employee for all cash or other benefits provided for in this
Agreement, including the provision of all benefits in the form of, or related
to, securities of Orthofix International N.V. or options thereon.
ORTHOFIX INTERNATIONAL N.V.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and CEO
EXHIBIT A
---------
1. Annual Base Salary - $340,000 per year as of the Effective Date paid
pursuant to the Company's customary payroll practices.
2. Bonus - Up to 45% per year payable in the following fiscal year based on
the achievement of bonus criteria established by the Compensation Committee of
the Orthofix N.V. Board and as shall be determined from time to time by such
committee.
3. Stock Option Grant - 60,000 stock options in Orthofix N.V. to be granted
under the Orthofix N.V. 2004 Long Term Incentive Plan ("LTIP"), which stock
options shall vest in annual increments of 20,000 beginning on the first
anniversary of the Employee's date of employment. The grants shall be made in
accordance with the terms of the LTIP and related stock option agreement. Such
stock options have been approved by the Compensation Committee of the Orthofix
N.V. Board and require the Employee to execute Orthofix N.V.'s stock option
agreement under the LTIP. The Employee may be granted additional options on an
annual basis as determined from time to time by the Compensation Committee of
the Orthofix N.V. Board in accordance with its compensation and option grant
policies and in compliance with applicable law and stock exchange rules.
4. Vacation - 4 weeks per year in accordance with the Company's vacation
practice.
5. Automotive Allowance - $900 per month in accordance with the terms for
automotive allowances applicable to other senior executives of the Company.
6. Other benefits - Inclusion of the Employee, to the extent eligible
thereunder by virtue of his position, tenure, salary, and other qualifications,
in all employee benefit plans, programs or arrangements established by the
Company or Orthofix N.V. for, or made available to, their senior executives,
including any 401(k) plan and health and disability plans.
7. Relocation Allowance - A relocation allowance of $60,000 (after taxes)
in order to facilitate the Employee's relocation from Boston, MA to
Huntersville, NC.
8. Tax Preparation Allowance - Reimbursement to the Employee annually of
the reasonable costs related to the preparation of his state and federal income
tax returns in accordance with the tax preparation allowance and policies
applicable to other senior executives of the Company.
