EMPLOYMENTAGREEMENT
EXHIBIT
10.1
EMPLOYMENTAGREEMENT
This
Employment Agreement (the “Agreement”), entered into effective as of
November 19, 2007 (the “Effective Date”), is by and between
Orthofix Inc., a Minnesota corporation (the “Company”), and Xxxxxxx X.
Xxxxx, an individual (the “Executive”).
PRELIMINARY
STATEMENTS
A.
The Company and the Executive desire to enter into this written employment
agreement to memorialize the terms of their relationship in order to retain
the
long-term services of the Executive.
B.
The Executive desires to render such services, upon the terms and conditions
contained herein.
C.
The Company is a subsidiary of Orthofix International N.V., a
corporation organized under the laws of the Netherlands Antilles (the “Parent”)
for whom Executive will also perform services as contemplated hereby, and
under
certain compensation plans of which Executive shall be eligible to receive
compensation, and Parent is agreeing to provide such compensation and guarantee
the Company’s payment obligations hereunder.
D.
Capitalized terms used herein and not otherwise defined
have the meaning for them set forth on Exhibit A attached hereto and
incorporated herein by reference.
The
parties, intending to be legally bound, hereby agree as follows:
I. EMPLOYMENT
AND DUTIES
1.1 Duties. The
Company hereby employs the Executive as an employee, and the Executive agrees
to
be employed by the Company, upon the terms and conditions set forth
herein. While serving as an employee of the Company, the Executive
shall serve as Senior Vice President, Chief Financial Officer, Treasurer
and
Assistant Secretary of the Company, and be appointed to serve as Senior Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary of
the
Parent. The Executive shall be the senior most financial officer of
the Company and Parent and shall have such power and authority and perform
such
duties, functions and responsibilities as are associated with and incident
to
such positions, and as the Parent Board may from time to time require of
him;
provided, however, that such authority, duties, functions and responsibilities
are commensurate with the power, authority, duties, functions and
responsibilities generally performed by chief financial officers of public
companies which are similar in size and nature to, and the financial position
of, the Parent Group, including, but not limited to, appropriate involvement
in
meetings of and exposure to the Parent Board and its committees. The
Executive also agrees to serve, if elected, as an officer or director of
any
other direct or indirect subsidiary of the Parent, in each such case at no
compensation in addition to that provided for in this Agreement, but the
Executive serves in such positions solely as an accommodation to the Company
and
such positions shall grant him no rights hereunder (including for purposes
of
the definition of Good Reason).
1
1.2 Services. During
the Term (as defined in Section 1.3), and excluding any periods of vacation,
sick leave or disability, the Executive agrees to devote his full business
time,
attention and efforts to the business and affairs of the
Company. During the Term, it shall not be a violation of this Section
1.2 for the Executive to (a) serve on civic or charitable boards or committees
(but not corporate boards), (b) deliver lectures or fulfill speaking engagements
or (c) manage personal investments, so long as such activities do not interfere
with the performance of the Executive’s responsibilities in accordance with this
Agreement. The Executive must request the Parent Board’s prior
written consent to serve on a corporate board, which consent shall be at
the
Parent Board’s reasonable discretion and only so long as such service does not
interfere with the performance of his responsibilities hereunder.
1.3 Term
of Employment. The term of this Agreement shall commence on the
Effective Date and shall continue until 11:59 p.m. Eastern Time on April
1, 2009
(the “Initial Term”) unless sooner terminated or extended as provided
hereunder. This Agreement shall automatically renew for up to two
additional one-year periods on each of April 1, 2009 and April 1, 2010,
respectively (each such extension, the “Renewal Term”), unless either
party gives the other party written notice of its or his election not to
extend
such employment at least 180 days prior to April 1, 2009 and April 1, 2010,
respectively. Further, if a Change of Control occurs when less than
two full years remain in the Initial Term or during any Renewal Term, this
Agreement shall automatically be extended for two years only from the Change
of
Control Date and thereafter shall terminate on the second anniversary of
the
Change of Control Date in accordance with its terms. The Initial
Term, together with any Renewal Term or extension as a result of a Change
of
Control, are collectively referred to herein as the “Term.” In the
event that the Executive continues to be employed by the Company after the
Term,
unless otherwise agreed by the parties in writing, such continued employment
shall be on an at-will, month-to-month basis upon terms agreed upon at such
time
without regard to the terms and conditions of this Agreement and this Agreement
shall be deemed terminated at the end of the Term, regardless of whether
such
employment continues at-will, other than Articles VI and VII, which shall
survive the termination or expiration of this Agreement for any
reason.
II. COMPENSATION
2.1 General. The
base salary and Incentive Compensation (as defined in Section 2.3.) payable
to
the Executive hereunder, as well as any stock-based compensation, including
stock options, stock appreciation rights and restricted stock grants, shall
be
determined from time to time by the Parent Board and paid pursuant to the
Company’s customary payroll practices or in accordance with the terms of the
applicable stock-based Plans (as defined in Section 2.4). The Company
shall pay the Executive in cash, in accordance with the normal payroll practices
of the Company, the base salary and Incentive Compensation set forth
below. For the avoidance of doubt, in providing any compensation
payable in stock, the Company may withhold, deduct or collect from the
compensation otherwise payable or issuable to the Executive a portion of
such
compensation to the extent required to comply with applicable tax laws to
the
extent such withholding is not made or otherwise provided for pursuant to
the
agreement governing such stock-based compensation.
2.2
Base Salary. The Executive shall
be paid a base salary of no less than $29,166.66 per month ($350,000 on an
annualized basis) while he is employed by the Company during the Term; provided,
however, that nothing shall prohibit the Company from reducing the base salary
as part of an overall cost reduction program that affects all senior executives
of the Parent Group and does not disproportionately affect the Executive,
so
long as such reductions do not reduce the base salary to a rate that is less
than 90% of the minimum base salary amount set forth above (or, if the minimum
base salary amount has been increased during the Term, 90% of such increased
amount). The base salary shall be reviewed annually by the Parent
Board for increase (but not decrease, except as permitted above) as part
of its
annual compensation review, and any increased amount shall become the base
salary under this Agreement.
2
2.3
Bonus or other Incentive Compensation. With respect to
each fiscal year of the Company during the Term, the Executive shall be eligible
to receive annual bonus compensation in an amount based on reasonable goals
for
the earning of such compensation as may be determined by the Parent Board
from
time to time (the “Goals”). Amounts that may be earned upon
attainment of all reasonably achievable annual Goals will be targeted to
equal
not less than 45% of the annual base salary in such fiscal year. The
amount of any actual payment under the Bonus Plan will depend upon the
achievement (or not) of the various performance metrics comprising the Goals,
with an opportunity to earn maximum annual bonus compensation of not less
than
67.5% of annual base salary in such fiscal year under Parent’s Executive Annual
Incentive Plan or any successor plan or as may be determined by the Parent
Board
from time-to-time (the “Bonus Plan”). Amounts will be less than
either such target if the Goals are not met as set forth under the terms
of the
plan. Amounts payable under the Bonus Plan shall be determined by the
Parent Board and shall be payable following such fiscal year and no later
than
two and one-half months after the end of such fiscal year. In
addition, the Executive shall be eligible to receive such additional bonus
or
incentive compensation as the Parent Board may establish from time to time
in
its sole discretion. Any bonus or incentive compensation under this
Section 2.3 under the Bonus Plan or otherwise is referred to herein as
“Incentive Compensation.” Stock-based compensation shall not be
considered Incentive Compensation under the terms of this Agreement unless
the
parties expressly agree otherwise in writing.
2.4
Stock Compensation. The Executive
shall be eligible to receive stock-based compensation, whether stock options,
stock appreciation rights, restricted stock grants or otherwise, under the
Parent’s Amended and Restated 2004 Long Term Incentive Plan (the “LTIP”) or
other stock-based compensation plans as Parent may establish from time to
time
(collectively, the “Plans”). The Executive shall be considered for
such grants no less often than annually as part of the Parent Board’s annual
compensation review, but any such grants shall be at the sole discretion
of the
Parent Board. As an inducement for him to enter into this Agreement, on the
date
of his commencing employment with the Company (the “Start Date”), the Executive
shall be granted (a) 125,000 stock options, which stock options shall vest
in
one-third increments beginning on the first anniversary of the Start Date
and
(b) 25,000 stock options, all of which 25,000 stock options shall vest on
the
third anniversary of the Start Date. Both such stock option grants shall
be
subject in all respects to the terms and conditions of the related stock
option
agreements evidencing the stock options, which shall be executed by the
Executive and Parent on or about the Start Date. The exercise price of the
stock
options shall be determined as of the Start Date based on the fair market
value
of the Parent’s common stock in accordance with the Parent’s stock option grant
policies.
III. EMPLOYEE
BENEFITS
3.1
General. Subject only to any post-employment
rights under Article V, so long as the Executive is employed by the Company
pursuant to this Agreement, he shall be eligible for the following benefits
to
the extent generally available to senior executives of the Company or by
virtue
of his position, tenure, salary and other qualifications. Any
eligibility shall be subject to and in accordance with the terms and conditions
of the Company’s benefits policies and applicable plans (including as to
deductibles, premium sharing, co-payments or other cost-splitting
arrangements).
3
3.2
Savings and Retirement Plans. The Executive shall be entitled
to participate in, and enjoy the benefits of, all savings, pension, salary
continuation and retirement plans, practices, policies and programs available
to
senior executives of the Company.
3.3
Welfare and Other Benefits. The Executive and/or the
Executive’s eligible dependents, as the case may be, shall be entitled to
participate in, and enjoy the benefits of, all welfare benefit plans, practices,
policies and programs provided by the Company (including without limitation,
medical, prescription, drug, dental, disability, salary continuance, group
life,
dependent life, accidental death and travel accident insurance plans and
programs) and other benefits (including, without limitation, executive physicals
and tax and financial planning assistance) at a level that is available to
other
senior executives of the Company.
3.4
Vacation. The Executive shall be entitled to four weeks
paid vacation per 12-month period.
3.5
Expenses. The Executive shall be entitled to
receive prompt reimbursement for all reasonable business-related expenses
incurred by the Executive in performing his duties under this
Agreement. Reimbursement of the Executive for such expenses will be
made upon presentation to the Company of expense vouchers that are in sufficient
detail to identify the nature of the expense, the amount of the expense,
the
date the expense was incurred and to whom payment was made to incur the expense,
all in accordance with the expense reimbursement practices, policies and
procedures of the Company.
3.6
Key Man Insurance. The Company shall be entitled to
obtain a “key man” or similar life or disability insurance policy on the
Executive, and neither the Executive nor any of his family members, heirs
or
beneficiaries shall be entitled to the proceeds thereof. Such
insurance shall be available to offset any payments due to the Executive
pursuant to Section 5.1 of this Agreement due to his death or
Disability.
IV. TERMINATION
OF EMPLOYMENT
4.1
Termination by Mutual Agreement. The Executive’s
employment may be terminated at any time during the Term by mutual written
agreement of the Company and the Executive.
4.2
Death. The Executive’s
employment hereunder shall terminate upon his death.
4.3
Disability. In the event the Executive incurs a
Disability for a continuous period exceeding 90 days or for a total of 180
days
during any period of 12 consecutive months, the Company may, at its election,
terminate the Executive’s employment during the Term by delivering a Notice of
Termination (as defined in Section 4.8) to the Executive 30 days in advance
of
the date of termination.
4
4.4
Good Reason. The Executive may terminate his employment at any time
during the Term for Good Reason by delivering a Notice of Termination to
the
Company 30 days in advance of the date of termination; provided, however,
that
the Executive agrees not to terminate his employment for Good Reason until
the
Executive has given the Company at least 30 days’ in which to cure the
circumstances set forth in the Notice of Termination constituting Good Reason
and if such circumstances are not cured by the 30th day, the Executive’s
employment shall terminate on such date. If the circumstances
constituting Good Reason are remedied within the cure period to the reasonable
satisfaction of the Executive, such event shall no longer constitute Good
Reason
for purposes of this Agreement and the Executive shall thereafter have no
further right hereunder to terminate his employment for Good Reason as a
result
of such event. Unless
the Executive provides written notification of an event described in the
definition of Good Reason within 90 days after the Executive has actual
knowledge of the occurrence of any such event, the Executive shall be deemed
to
have consented thereto and such event shall no longer constitute Good Reason
for
purposes of this Agreement.
4.5 Termination
without Cause. The Company may terminate the Executive’s employment at any
time during the Term without Cause by delivering to the Executive a Notice
of
Termination 30 days in advance of the date of termination; provided that
as part
of such notice the Company may request that the Executive immediately tender
the
resignations contemplated by Section 4.9 and otherwise cease performing his
duties hereunder. The Notice of Termination need not state any reason
for termination and such termination can be for any reason or no
reason. The date of termination shall be the date set forth in the
Notice of Termination.
4.6
Cause. The Company may terminate the Executive’s employment at any time
during the Term for Cause by delivering a Notice of Termination to the
Executive. The Notice of Termination shall include a copy of a resolution
duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Parent Board, at a meeting of the Parent Board called and
held
for such purpose, finding that in the good faith opinion of the Parent Board
an
event constituting Cause has occurred and specifying the particulars
thereof. A Notice of Termination for Cause may not be delivered
unless in conjunction with such Parent Board meeting the Executive was given
reasonable notice and the opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Parent Board prior to such
vote. If the event constituting Cause for termination is other than
as a result of a breach or violation by the Executive of any provision of
Article VI and only if the event constituting Cause is curable, then the
Executive shall have 30 days from the date of the Notice of Termination to
cure
such event described therein to the reasonable satisfaction of the Parent
Board
in its sole discretion and, if such event is cured by the Executive within
the
cure period, such event shall no longer constitute Cause for purposes of
this
Agreement and the Company shall thereafter have no further right to terminate
the Executive’s employment for Cause as a result of such event. The
Executive shall have no other rights under this Agreement to cure an event
that
constitutes Cause. Unless the Company provides written notification
of an event described in the definition of Cause within 90 days after the
Company knows or has reason to know of the occurrence of any such event,
the
Company may not terminate the Executive for Cause unless such event is recurring
or uncurable. Knowledge shall mean actual knowledge of the Parent
Board or the Company’s senior executives.
4.7
Voluntary Termination. The Executive may
voluntarily terminate his employment at any time during the Term by delivering
to the Company a Notice of Termination 30 days in advance of the date of
termination (a “Voluntary Termination”). For purposes of this Agreement, a
Voluntary Termination shall not include a termination of the Executive’s
employment by reason of death or for Good Reason, but shall include voluntary
termination upon retirement in accordance with the Company’s retirement
policies. A Voluntary Termination shall not be considered a breach or other
violation of this Agreement.
5
4.8
Notice of Termination. Any termination of employment under
this Agreement by the Company or the Executive requiring a notice of termination
shall require delivery of a written notice by one party to the other party
(a
“Notice of Termination”). A Notice of Termination must indicate the specific
termination provision of this Agreement relied upon and the date of termination.
It must also set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination, other than in the event of a Voluntary
Termination or termination without Cause. The date of termination
specified in the Notice of Termination shall comply with the time periods
required under this Article IV, and may in no event be earlier than the date
such Notice of Termination is delivered to or received by the party getting
the
notice. If the Executive fails to include a date of termination in
any Notice of Termination he delivers, the Company may establish such date
in
its sole discretion. No Notice of Termination under Section 4.4 or
4.6 shall be effective until the applicable cure period, if any, shall have
expired without the Company or the Executive, respectively, having corrected
the
event or events subject to cure to the reasonable satisfaction of the other
party. The terms “termination” and “termination of employment,” as
used herein are intended to mean a termination of employment which constitutes
a
“separation from service” under Section 409A.
4.9
Resignations. Upon ceasing to be
an employee of the Company for any reason, or earlier upon request by the
Company pursuant to Section 4.5, the Executive agrees to immediately tender
written resignations to the Company with respect to all officer and director
positions he may hold at that time with any member of the Parent
Group.
V. PAYMENTS
ON TERMINATION
5.1
Death; Disability; Resignation for Good Reason; Termination
without Cause. If at any time during the Term the Executive’s
employment with the Company is terminated pursuant to Section 4.2, 4.3, 4.4
or
4.5, the Executive shall be entitled to the following only:
(a) any unpaid
base salary and accrued unpaid vacation then owing through the date of
termination or Incentive Compensation that is as of such date actually earned
or
owing under Article II, but not yet paid to the Executive, which amounts
shall
be paid to the Executive within 30 days of the date of termination; provided,
however, the Executive shall be entitled to receive the pro rata amount of
any
Bonus Plan Incentive Compensation for the fiscal year of his termination
of
employment (based on the number of business days he was actually employed
by the
Company during the fiscal year in which the termination of employment occurs)
that he would have received had his employment not been terminated during
such
year. Nothing in the foregoing sentence is intended to give the Executive
greater rights to such Incentive Compensation than a pro rata portion of
what he
would ordinarily be entitled to under the Bonus Plan Incentive Compensation
that
would have been applicable to him had his employment not been terminated,
it
being understood that Executive’s termination of employment shall not be used to
disqualify Executive from or make him ineligible for a pro rata portion of
the
Bonus Plan Incentive Compensation to which he would otherwise have been
entitled. The pro rata portion of Bonus Plan Incentive Compensation
shall, subject to Section 7.16, be paid at the time such
Incentive Compensation is paid to senior executives of the Company (“Severance
Bonus Payment Date”).
6
(b) a one-time
lump sum severance payment in an amount equal to 100% of the Executive’s Base
Amount. The lump sum severance payment shall be paid within 30 days
after the date of termination, subject, in the case of termination other
than as
a result of the Executive’s death, to Section 7.16.
(c) all stock
options, stock appreciation rights or similar stock-based rights previously
granted to the Executive shall vest in full and be immediately exercisable.
Any
risk of forfeiture included in restricted or other stock grants previously
made
to the Executive shall immediately lapse. If the Executive’s
employment is terminated pursuant to Section 4.4 or 4.5, the Executive shall
have until the earlier of the latest date that his stock option or stock
appreciation right would otherwise expire or 10 years from the original date
of
the grant of his option or stock appreciation right to exercise any outstanding
stock options or stock appreciation rights. Such vesting and
extension shall occur notwithstanding any provision in any Plans or related
grant documents which provides a shorter period for exercise upon termination
by
the Company without Cause (which for this purpose shall include a termination
by
the Executive for Good Reason), and with respect to lapsing, notwithstanding
anything to the contrary in any Plans or grant documents.
(d) to the
fullest extent permitted by the Company’s then-current benefit plans,
continuation of coverage (including family coverage) under basic employee
group
benefits that are welfare benefits (such as group health and group life
benefits), but not pension, retirement, profit-sharing, severance or similar
compensatory benefits, for the Executive and the Executive’s eligible dependents
substantially similar to coverage they were receiving or which they were
entitled to immediately prior to the termination of the Executive’s employment
for the lesser of 12 months after termination or until the Executive secures
coverage from new employment and the period of COBRA health care continuation
coverage provided under Section 4980B of the Code shall run concurrently
with
the foregoing 12 month period. In order to receive such benefits, the
Executive or his eligible dependents must continue to make any required
co-payments, deductibles, premium sharing or other cost-splitting arrangements
the Executive was otherwise paying immediately prior to the date of termination
and nothing herein shall require the Company to be responsible for such
items. If Executive is a “specified employee” under Section 409A, the
full cost of the continuation or provision of employee group welfare benefits
(other than medical or dental benefits) shall be paid by Executive until
the
earliest to occur of (i) Executive’s death or (ii) the first day of the seventh
month following Executive’s termination of employment, and such cost shall be
reimbursed by the Company to, or on behalf of, Executive in a lump sum cash
payment on the earlier to occur of Executive’s death or the first day of the
seventh month following Executive’s termination of employment, except that, as
provided above, Executive shall not receive reimbursement for any required
co-payments, deductibles, premium sharing or other cost-splitting arrangements
the Executive was otherwise paying immediately prior to the date of
termination.
(e) payment or
reimbursement to the Executive of the costs and expenses of any executive
outplacement firm selected by the Executive in an amount not to exceed $25,000
during the 24-month period following his date of termination. The
Executive shall provide the Company with reasonable documentation of such
costs
and expenses.
7
In
the
event the Executive’s termination is pursuant to Section 4.2, in lieu of a lump
sum payment, the Executive’s heirs, beneficiaries, or personal representatives,
as applicable, shall receive (i) salary-related portions of the Base Amount
on
regular payroll dates of the Company until the first anniversary of the date
of
termination of the Executive and (ii) Incentive Compensation-related portions
of
the Base Amount on the dates that such Incentive Compensation is actually
paid
by the Company to its senior executives. Further, any payments by the
Company under Section 5.1(b) above pursuant to a termination under Section
4.2
or 4.3 shall be reduced by any payments received by the Executive pursuant
to
any of the Company’s employee welfare benefit plans providing for payments in
the event of death or Disability.
5.2 Termination
for Cause; Voluntary Termination. If at any time during the Term
the Executive’s employment with the Company is terminated pursuant to Section
4.6 or 4.7, the Executive shall be entitled to only the following:
(a) any unpaid
base salary and accrued unpaid vacation then owing through the date of
termination or Incentive Compensation that is as of such date actually earned
or
owing under Article II, but not yet paid to the Executive, which amounts
shall
be paid to the Executive within 30 days of the date of
termination. Nothing in this provision is intended to imply that the
Executive is entitled to any partial or pro rata payment of Incentive
Compensation on termination unless the Bonus Plan expressly provides as much
under its specific terms.
(b) whatever
rights, if any, that are available to the Executive upon such a termination
pursuant to the Plans or any award documents related to any stock-based
compensation such as stock options, stock appreciation rights or restricted
stock grants. This Agreement does not grant any greater rights with respect
to
such items than provided for in the Plans or the award documents in the event
of
any termination for Cause or a Voluntary Termination.
5.3 Termination
following Change of Control. The Executive shall have no specific
right to terminate this Agreement or right to any severance payments or other
benefits solely as a result of a Change of Control or Potential Change of
Control. However, if during a Change of Control Period during the
Term, (a) the Executive terminates his employment with the Company pursuant
to
Section 4.4, or (b) the Company terminates the Executive’s employment pursuant
to Section 4.5, the lump sum severance payment under Section 5.1 shall be
increased from 100% of the Base Amount to 150% times the Base Amount and
the
period for continuation of benefits under Section 5.1 shall be increased
to 18
months from 12 months. The terms and rights with respect to such
payments shall otherwise be governed by Section 5.1. No other rights
result from termination during a Change of Control Period; provided, however,
that nothing in this Section 5.3 is intended to limit or impair the rights
of
the Executive under the Plans or any documents evidencing any stock-based
compensation awards in the event of a Change of Control if such Plans or
award
documents grant greater rights than are set forth herein.
5.4
Release. The Company’s obligation to
pay or provide any benefits to the Executive following termination (other
than
in the event of death pursuant to Section 4.2) is expressly subject to the
requirement that he execute and not breach or rescind a release relating
to
employment matters and the circumstances surrounding his termination in favor
of
the members of the Parent Group and their officers, directors and related
parties and agents, in a form acceptable to the Company at the time of
termination of employment.
8
5.5
Other Benefits. Except as expressly provided
otherwise in this Article V, the provisions of this Agreement shall not affect
the Executive’s participation in, or terminating distributions and vested rights
under, any pension, profit-sharing, insurance or other employee benefit plan
of
the Parent Group to which the Executive is entitled pursuant to the terms
of
such plans, or expense reimbursements he is otherwise entitled to under Section
3.5.
5.6
No Mitigation. It will be
difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the termination of the Executive’s employment,
and the protective provisions under Article VI contained herein will further
limit the employment opportunities for the Executive. In addition,
the 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 in accordance
with
the terms of this Agreement will be liquidated damages, and that the Executive
shall not be required to seek other employment, or otherwise, to mitigate
any
payment provided for hereunder.
5.7
Limitation; No Other Rights. Any amounts due or payable
under this Article V are in the nature of severance payments or liquidated
damages, or both, and the Executive agrees that such amounts shall fully
compensate the Executive, his dependents, heirs and beneficiaries and the
estate
of the Executive for any and all direct damages and consequential damages
that
they do or may suffer as a result of the termination of the Executive’s
employment, or both, and are not in the nature of a
penalty. Notwithstanding the above, no member of the Parent Group
shall be liable to the Executive under any circumstances for any consequential,
incidental, punitive or similar damages. The Executive expressly
acknowledges that the payments and other rights under this Article V shall
be
the sole monies or other rights to which the Executive shall be entitled
to and
such payments and rights will be in lieu of any other rights or remedies
he
might have or otherwise be entitled to. In the event of any
termination under this Article V, the Executive hereby expressly waives any
rights to any other amounts, benefits or other rights, including without
limitation whether arising under current or future compensation or severance
or
similar plans, agreements or arrangements of any member of the Parent Group
(including as a result of changes in (or of) control or similar transactions),
unless Executive’s entitlement to participate or receive benefits thereunder has
been expressly approved by the Parent Board. Similarly, no one in the
Parent Group shall have any further liability or obligation to the Executive
following the date of termination, except as expressly provided in this
Agreement.
5.8
No Right to Set Off. The Company shall not be entitled
to set off against amounts payable to the Executive hereunder any amounts
earned
by the Executive in other employment, or otherwise, after termination of
his
employment with the Company, or any amounts which might have been earned
by the
Executive in other employment had he sought such other employment.
5.9
Adjustments Due to Excise Tax.
(a) If
it is determined that any amount or benefit to be paid or payable to the
Executive under this Agreement or otherwise in conjunction with his employment
(whether paid or payable or distributed or distributable pursuant to the
terms
of this Agreement or otherwise in conjunction with his employment) would
give
rise to liability of the Executive for the excise tax imposed by Section
4999 of
the Code, as amended from time to time, or any successor provision (the “Excise
Tax”), then the amount or benefits payable to the Executive (the total value
of
such amounts or benefits, the “Payments”) shall be reduced by the Company to the
extent necessary so that no portion of the Payments to the Executive is subject
to the Excise Tax. Such reduction shall only be made if the net
amount of the Payments, as so reduced (and after deduction of applicable
federal, state, and local income and payroll taxes on such reduced Payments
other than the Excise Tax (collectively, the “Deductions”)) is greater than the
excess of (1) the net amount of the Payments, without reduction (but after
making the Deductions) over (2) the amount of Excise Tax to which the Executive
would be subject in respect of such Payments.
9
(b) In
the event it is determined that the Excise Tax may be imposed on the Executive
prior to the possibility of any reductions being made pursuant to Section
5.9(a), the Company and the Executive agree to take such actions as they
may
mutually agree in writing to take to avoid any such reductions being made
or, if
such reduction is not otherwise required by Section 5.9(a), to reduce the
amount
of Excise Tax imposed.
(c) The
independent public accounting firm serving as the Company's auditing firm,
or
such other accounting firm, law firm or professional consulting services
provider of national reputation and experience reasonably acceptable to the
Company and Executive (the “Accountants”) shall make in writing in good faith
all calculations and determinations under this Section 5.9, including the
assumptions to be used in arriving at any calculations. For purposes
of making the calculations and determinations under this Section 5.9, the
Accountants and each other party may make reasonable assumptions and
approximations concerning the application of Section 280G and Section
4999. The Company and Executive shall furnish to the Accountants and
each other such information and documents as the Accountants and each other
may
reasonably request to make the calculations and determinations under this
Section 5.9. The Company shall bear all costs the Accountants incur
in connection with any calculations contemplated hereby.
VI. PROTECTIVE
PROVISIONS
6.1 Noncompetition. Without
the prior written consent of the Parent Board (which may be withheld in the
Parent Board’s sole discretion), so long as the Executive is an employee of the
Company or any other member of the Parent Group and for a one-year period
thereafter, the Executive agrees that he shall not anywhere in the Prohibited
Area, for his own account or the benefit of any other, engage or participate
in
or assist or otherwise be connected with a Competing Business. For
the avoidance of doubt, the Executive understands that this Section 6.1
prohibits the Executive from acting for himself or as an officer, employee,
manager, operator, principal, owner, partner, shareholder, advisor, consultant
of, or lender to, any individual or other Person that is engaged or participates
in or carries out a Competing Business or is actively planning or preparing
to
enter into a Competing Business. The parties agree that such
prohibition shall not apply to the Executive’s passive ownership of not more
than 5% of a publicly-traded company.
10
6.2 No
Solicitation or Interference. So long as the Executive is an
employee of the Company or any other member of the Parent Group (other than
while an employee acting solely for the express benefit of the Parent Group)
and
for a one-year period thereafter, the Executive shall not, whether for his
own
account or for the account or benefit of any other Person, throughout the
Prohibited Area:
(a) request,
induce or attempt to influence (i) any customer of any member of the Parent
Group to limit, curtail, cancel or terminate any business it transacts with,
or
products or services it receives from or sells to, or (ii) any Person employed
by (or otherwise engaged in providing services for or on behalf of) any member
of the Parent Group to limit, curtail, cancel or terminate any employment,
consulting or other service arrangement, with any member of the Parent Group.
Such prohibition shall expressly extend to any hiring or enticing away (or
any
attempt to hire or entice away) any employee or consultant of the Parent
Group.
(b) solicit
from or sell to any customer any products or services that any member of
the
Parent Group provides or is capable of providing to such customer and that
are
the same as or substantially similar to the products or services that any
member
of the Parent Group, sold or provided while the Executive was employed with,
or
providing services to, any member of the Parent Group.
(c) contact
or solicit any customer for the purpose of discussing (i) services or products
that are competitive with and the same or closely similar to those offered
by
any member of the Parent Group or (ii) any past or present business of any
member of the Parent Group.
(d) request,
induce or attempt to influence any supplier, distributor or other Person
with
which any member of the Parent Group has a business relationship or to limit,
curtail, cancel or terminate any business it transacts with any member of
the
Parent Group.
(e) otherwise
interfere with the relationship of any member of the Parent Group with any
Person which is, or within one-year prior to the Executive’s date of termination
was, doing business with, employed by or otherwise engaged in performing
services for, any member of the Parent Group.
The
one-year post employment period herein shall be extended to 18 months if
the
Executive’s termination is pursuant to Section 5.3.
6.3
Confidential
Information. During the period of the Executive’s employment with
the Company or any member of the Parent Group and at all times thereafter,
the
Executive shall hold in secrecy for the Company all Confidential Information
that may come to his knowledge, may have come to his attention or may have
come
into his possession or control while employed by the Company (or otherwise
performing services for any member of the Parent
Group). Notwithstanding the preceding sentence, the Executive shall
not be required to maintain the confidentiality of any Confidential Information
which (a) is or becomes available to the public or others in the industry
generally (other than as a result of disclosure or inappropriate use, or
caused,
by the Executive in violation of this Section 6.3) or (b) the
Executive is compelled to disclose under any applicable laws, regulations
or
directives of any government agency, tribunal or authority having jurisdiction
in the matter or under subpoena. Except as expressly required in the
performance of his duties to the Company under this Agreement, the Executive
shall not use for his own benefit or disclose (or permit or cause the disclosure
of) to any Person, directly or indirectly, any Confidential Information unless
such use or disclosure has been specifically authorized in writing by the
Company in advance. During the Executive’s employment and as
necessary to perform his duties under Section 1.2, the Company will provide
and grant the Executive access to the Confidential Information. The
Executive recognizes that any Confidential Information is of a highly
competitive value, will include Confidential Information not previously provided
the Executive and that the Confidential Information could be used to the
competitive and financial detriment of any member of the Parent Group if
misused
or disclosed by the Executive. The Company promises to provide access
to the Confidential Information only in exchange for the Executive’s promises
contained herein, expressly including the covenants in Sections 6.1, 6.2
and
6.4.
11
6.4
Inventions.
(a) The
Executive 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”), that the Executive conceives of or first actually
reduces to practice, either solely or jointly with others, during the
Executive’s employment with the Company or any other member of the Parent Group,
and that relate to the business now or thereafter carried on or contemplated
by
any member of the Parent Group or that result from any work performed by
the
Executive for any member of the Parent Group.
(b) The
Executive acknowledges and agrees that all Inventions shall be the sole and
exclusive property of the Company (or member of the Parent Group) and are
hereby
assigned to the Company (or applicable member of the Parent
Group). During the term of the Executive’s employment with the
Company (or any other member of the Parent Group) and thereafter, whenever
requested to do so by the Company, the Executive shall take such action as
may
be requested to 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 any other member of the Parent Group) or their nominees 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 6.4 do
not
apply to an Invention: (i) for which no equipment, supplies, or facility
of any
member of the Parent Group or Confidential Information was used; (ii) that
was
developed entirely on the Executive’s own time and does not involve the use of
Confidential Information; (iii) that does not relate directly to the business
of
any member of the Parent Group or to the actual or demonstrably anticipated
research or development of any member of the Parent Group; and (iv) that
does
not result from any work performed by the Executive for any member of the
Parent
Group.
6.5
Return of Documents and Property. Upon
termination of the Executive’s employment for any reason, the Executive (or his
heirs or personal representatives) shall immediately deliver to the Company
(a) all documents and materials containing Confidential Information
(including without limitation any “soft” copies or computerized or electronic
versions thereof) or otherwise containing information relating to the business
and affairs of any member of the Parent Group (whether or not confidential),
and
(b) all other documents, materials and other property belonging to any
member of the Parent Group that are in the possession or under the control
of
the Executive.
12
6.6
Reasonableness;
Remedies. The Executive acknowledges that each of the
restrictions set forth in this Article VI are reasonable and necessary for
the
protection of the Company’s business and opportunities (and those of the Parent
Group) and that a breach of any of the covenants contained in this Article
VI
would result in material irreparable injury to the Company and the other
members
of the Parent Group for which there is no adequate remedy at law and that
it
will not be possible to measure damages for such injuries
precisely. Accordingly, the Company and any member of the Parent
Group shall be entitled to the remedies of injunction and specific performance,
or either of such remedies, as well as all other remedies to which any member
of
the Parent Group may be entitled, at law, in equity or otherwise, without
the
need for the posting of a bond or by the posting of the minimum bond that
may
otherwise be required by law or court order.
6.7
Extension;
Survival. The Executive and the Company agree that the time
periods identified in this Article VI will be stayed, and the Company’s
obligation to make any payments or provide any benefits under Article V shall
be
suspended, during the period of any breach or violation by the Executive
of the
covenants contained herein. The parties further agree that this
Article VI shall survive the termination or expiration of this Agreement
for any
reason. The Executive acknowledges that his agreement to each of the
provisions of this Article VI is fundamental to the Company’s willingness to
enter into this Agreement and for it to provide for the severance and other
benefits described in Article V, none of which the Company was required to
do
prior to the date hereof. Further, it is the express intent and
desire of the parties for each provision of this Article VI to be enforced
to
the fullest extent permitted by law. If any part of this Article VI,
or any provision hereof, is deemed illegal, void, unenforceable or overly
broad
(including as to time, scope and geography), the parties express desire is
that
such provision be reformed to the fullest extent possible to ensure its
enforceability or if such reformation is deemed impossible then such provision
shall be severed from this Agreement, but the remainder of this Agreement
(expressly including the other provisions of this Article VI) shall remain
in
full force and effect.
VII. MISCELLANEOUS
7.1
Notices. Any
notice required or permitted under this Agreement shall be given in writing
and
shall be deemed to have been effectively made or given if personally delivered,
or if sent via U.S. mail or recognized overnight delivery service or sent
via
confirmed e-mail or facsimile to the other party at its address set forth
below
in this Section 7.1, or at such other address as such party may designate
by written notice to the other party hereto. Any effective notice hereunder
shall be deemed given on the date personally delivered, three business days
after mailed via U.S. mail or one business day after it is sent via overnight
delivery service or via confirmed e-mail or facsimile, as the case may be,
to
the following address:
13
If
to the
Company:
Orthofix
Inc.
Attn:
General Counsel
The
Storrs Building
Suite
250
00000
Xxxxxx Xxx.
Xxxxxxxxxxxx,
XX 00000
Facsimile: 000-000-0000
E-mail:
xxxxxxxx@xxxxxxxx.xxx
With
a
copy which shall not constitute notice to:
Xxxxx
& XxXxxxxx LLP
Pennzoil
Place, South Tower
000
Xxxxxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000-0000
Attention:
Xxxxxxxx X. Xxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
E-mail:
Xxxxxxxx.X.Xxxxxx@Xxxxxxxx.xxx
If
to the
Executive:
At
the
most recent address on file with the Company
With
a
copy which shall not constitute notice to:
Vedder,
Price, Xxxxxxx & Kammholz, P.C.
000
Xxxxx
XxXxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxx.xxx
7.2
Legal Fees.
(a) The
Company shall pay all reasonable legal fees and expenses of the Executive’s
counsel in connection with the preparation and negotiation of this
Agreement.
(b) It
is the intent of the Company that the Executive not be required to bear the
legal fees and related expenses associated with the enforcement or defense
of
the Executive's rights under this Agreement by litigation, arbitration or
other
legal action because having to do so would substantially detract from the
benefits intended to be extended to the Executive hereunder. Accordingly,
the
parties hereto agree that any dispute or controversy arising under or in
connection with this Agreement shall be resolved exclusively and finally
by
binding arbitration in Boston, Massachusetts, 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. The Company shall be responsible for its own fees,
costs and expenses and shall pay to the Executive an amount equal to all
reasonable attorneys' and related fees, costs and expenses incurred by the
Executive in connection with such arbitration unless the arbitrator determines
that the Executive (a) did not commence or engage in the arbitration with
a
reasonable, good faith belief that his claims were meritorious or (b) the
Executive’s claims had no merit and a reasonable person under similar
circumstances would not have brought such claims. If there is any
dispute between the Company and the Executive as to the payment of such fees
and
expenses, the arbitrator shall resolve such dispute, which resolution shall
also
be final and binding on the parties, and as to such dispute only the burden
of
proof shall be on the Company.
14
7.3 Severability. If
an arbitrator or a court of competent jurisdiction determines that any term
or
provision hereof is void, invalid or otherwise unenforceable, (a) the
remaining terms and provisions hereof shall be unimpaired and (b) such
arbitrator or court shall replace such void, invalid or unenforceable term
or
provision with a term or provision that is valid and enforceable and that
comes
closest to expressing the intention of the void, invalid or unenforceable
term
or provision. For the avoidance of doubt, the parties expressly intend that
this
provision extend to Article VI of this Agreement.
7.4 Entire
Agreement. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof and shall supersede any
and
all previous contracts, arrangements or understandings between the Company,
the
Parent and the Executive relating to the Executive’s employment by the
Company. Nothing in this Agreement shall modify or alter or impair
any of the Executive’s rights under the Plans or related award
agreements. In the event of any conflict between this Agreement and
any other agreement between the Executive and the Company (or any other member
of the Parent Group), this Agreement shall control.
7.5
Amendment; Modification. Except for
increases in Base Salary, and adjustments with respect to Incentive
Compensation, made as provided in Article II, this Agreement may be amended
at
any time only by mutual written agreement of the Executive and the Company;
provided, however, that, notwithstanding any other provision of this Agreement
or the Plans (or any award documents under the Plans), the Company may reform
this Agreement, the Plans (or any award documents under the Plans) or any
provision thereof (including, without limitation, an amendment instituting
a
six-month waiting period before a distribution) or otherwise as contemplated
by
Section 7.16 below.
7.6
Withholding. The Company shall be entitled to
withhold, deduct or collect or cause to be withheld, deducted or collected
from
payment any amount of withholding taxes required by law, statutory deductions
or
collections with respect to payments made to the Executive in connection
with
his employment, termination (including Article V) or his rights hereunder,
including as it relates to stock-based compensation.
7.7
Representations.
(a) The
Executive hereby represents and warrants to the Company that (i) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not
conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or
by
which he is bound, and (ii) upon the execution and delivery of this Agreement
by
the Company, this Agreement shall be the valid and binding obligation of
the
Executive, enforceable in accordance with its terms. The Executive
hereby acknowledges and represents that he has consulted with legal counsel
regarding his rights and obligations under this Agreement and that he fully
understands the terms and conditions contained herein.
15
(b) The
Company hereby represents and warrants to the Executive that (i) the execution,
delivery and performance of this Agreement by the Company do not and shall
not
conflict with, breach, violate or cause a default under any material contract,
agreement, instrument, order, judgment or decree to which the Company is
a party
or by which it is bound and (ii) upon the execution and delivery of this
Agreement by the Executive, this Agreement shall be the valid and binding
obligation of the Company, enforceable in accordance with its
terms.
7.8
Governing Law; Jurisdiction. This Agreement shall be
construed, interpreted, and governed in accordance with the laws of the State
of
Massachusetts without regard to any provision of that State’s rules on the
conflicts of law that might make applicable the law of a jurisdiction other
than
that of the State of Massachusetts. Except as otherwise provided in
Section 7.2, all actions or proceedings arising out of this Agreement shall
exclusively be heard and determined in state or federal courts in the State
of
Massachusetts having appropriate jurisdiction. The parties expressly
consent to the exclusive jurisdiction of such courts in any such action or
proceeding and waive any objection to venue laid therein or any claim for
forum
nonconveniens.
7.9
Successors. This Agreement shall be binding upon and inure to
the benefit of, and shall be enforceable by the Executive, the Company, and
their respective heirs, executors, administrators, legal representatives,
successors, and assigns. In the event of a Business Combination (as
defined in clause (iii) of Change of Control), the provisions of this Agreement
shall be binding upon and inure to the benefit of the parent or entity resulting
from such Business Combination or to which the assets shall be sold or
transferred, which entity from and after the date of such Business Combination
shall be deemed to be the Company for purposes of this Agreement. In
the event of any other assignment of this Agreement by the Company, the Company
shall remain primarily liable for its obligations hereunder; provided, however,
that if the Company is financially unable to meet its obligations hereunder,
the
Parent shall assume responsibility for the Company’s obligations hereunder
pursuant to the guaranty provision following the signature page
hereof. The Executive expressly acknowledges that the Parent and
other members of the Parent Group (and their successors and assigns) are
third
party beneficiaries of this Agreement and may enforce this Agreement on behalf
of themselves or the Company. Both parties agree that there are no
third party beneficiaries to this Agreement other than as expressly set forth
in
this Section 7.9.
7.10 Nonassignability. Neither
this Agreement nor any right or interest hereunder shall be assignable by
the
Executive, his beneficiaries, dependents or legal representatives without
the
Company’s prior written consent; provided, however, that nothing in this Section
7.10 shall preclude (a) the Executive from designating a beneficiary to receive
any benefit payable hereunder upon his death or (b) the executors,
administrators or other legal representatives of the Executive or his estate
from assigning any rights hereunder to the Person(s) entitled
thereto.
7.11 No
Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation
in
favor of any third party, or to execution, attachment, levy or similar process
or assignment by operation of law in favor of any third party, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void and
of
no effect.
16
7.12 Waiver. No
term or condition of this Agreement shall be deemed to have been waived,
nor
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only
as
to the specific term or condition waived and shall not constitute a waiver
of
such term or condition for the future or as to any act other than that
specifically waived.
7.13 Construction. The
headings of articles or sections herein are included solely for convenience
of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement. References to days found herein shall be actual
calendar days and not business days unless expressly provided
otherwise.
7.14 Counterparts. This
Agreement may be executed by any of the parties hereto in counterparts, each
of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
7.15 Effectiveness.
This Agreement shall be effective upon the Effective Date when signed by
the
Executive and the Company. If the Executive does not commence employment
with
the Company by the Start Date for any reason, this Agreement shall be void
and
of no force or effect.
7.16 Code
Section 409A.
(a) It is the
intent of the parties that payments and benefits under this Agreement comply
with Section 409A and, accordingly, to interpret, to the maximum extent
permitted, this Agreement to be in compliance therewith. If the
Executive notifies the Company in writing (with specificity as to the
reason therefore) that the Executive believes that any provision of this
Agreement (or of any award of compensation, including equity compensation
or
benefits) would cause the Executive to incur any additional tax or interest
under Section 409A and the Company concurs with such belief or the Company
(without any obligation whatsoever to do so) independently makes such
determination, the parties shall, in good faith, reform such provision to
try to
comply with Code Section 409A through good faith modifications to the minimum
extent reasonably appropriate to conform with Code Section 409A. To
the extent that any provision hereof is modified by the parties to try to
comply
with Code Section 409A, such modification shall be made in good faith and
shall,
to the maximum extent reasonably possible, maintain the original intent of
the
applicable provision without violating the provisions of Code Section
409A. Notwithstanding the foregoing, the Company shall not be
required to assume any economic burden in connection therewith.
(b) If the
Executive is deemed on the date of “separation from service” to be a “specified
employee” within the meaning of that term under Section 409A(a)(2)(B), then with
regard to any payment or the provision of any benefit that is specified as
subject to this Section, such payment or benefit shall be made or provided
at
the date which is the earlier of (A) the expiration of the six (6)-month
period
measured from the date of such “separation from service” of the Executive, and
(B) the date of the Executive’s death (the “Delay Period”). Upon the
expiration of the Delay Period, all payments and benefits delayed pursuant
to
this Section 7.16 (whether they would have otherwise been payable in a single
sum or in installments in the absence of such delay) shall be paid or reimbursed
to the Executive in a lump sum, and any remaining payments and benefits due
under this Agreement shall be paid or provided in accordance with the normal
payment dates specified for them herein. If a payment is to be made
promptly after a date, it shall be made within sixty (60) days
thereafter.
17
(c) Any
expense reimbursement under this Agreement shall be made promptly upon
Executive’s presentation to the Company of evidence of the fees and expenses
incurred by the Executive and in all events on or before the last day of
the
taxable year following the taxable year in which such expense was incurred
by
the Executive, and no such reimbursement or the amount of expenses eligible
for
reimbursement in any taxable year shall in any way affect the expenses
eligible for reimbursement in any other taxable year, except for (i) the
limit on the amount of outplacement costs and expenses reimbursable pursuant
to
Section 5.1(c) and (ii) any limit on the amount of expenses that may be
reimbursed under an arrangement described in Code Section 105(b).
7.17 Survival. Except
as provided in Section 1.3 with respect to expiration of the Term, Articles
VI
and VII shall survive the termination or expiration of this Agreement for
any
reason.
18
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
|
ORTHOFIX
INC.
|
EXECUTIVE
|
||
|
/s/Xxxx
Xxxxxxxxx
|
/s/
Xxxxxxx X. Xxxxx
|
||
|
Name:
|
Xxxx
Xxxxxxxxx
|
Xxxxxxx
X. Xxxxx, an individual
|
|
|
Title:
|
Chief
Executive Officer
|
||
Guaranty
by Parent
Parent
(Orthofix International N.V.) is not a party to this Agreement, but joins
in
this Agreement for the sole purpose of guaranteeing the obligations of the
Company to pay, provide, or reimburse the Executive 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 Parent and to elect or appoint
Executive to the positions with Parent and provide Executive with the authority
relating thereto as contemplated by Section 1.1 of this Agreement, and to
ensure
the Parent Board will take the actions required of it hereby.
ORTHOFIX
INTERNATIONAL N.V.
|
/s/
Xxxx Xxxxxxxxx
|
||
|
Name:
|
Xxxx
Xxxxxxxxx
|
|
|
Title:
|
Chief
Executive Officer
|
|
19
EXHIBIT
A
Definitions
For
purposes of this Agreement, the
following capitalized terms have the meanings set forth below:
“Base
Amount” shall mean an amount equal to the sum
of:
(i)
the
Executive’s annual base salary at the highest annual rate in effect at any time
during the Term; and
(ii)
the
greater of (i) the Executive’s target bonus under Section 2.3 in effect during
the fiscal year in which termination of employment occurs, or (ii) the average
of the Incentive Compensation (as defined in Section 2.3) actually earned
by the
Executive (A) with respect to the two consecutive annual Incentive Compensation
periods ending immediately prior to the year in which termination of the
Executive’s employment with the Company occurs or, (B) if greater, with respect
to the two consecutive annual Incentive Compensation periods ending immediately
prior to the Change of Control Date or the Potential Change of Control Date;
provided, however, that if the Executive was not eligible for
Incentive Compensation for such two consecutive Incentive Compensation periods,
the amount included pursuant to this clause (ii) shall be the Incentive
Compensation paid to the Executive for the most recent annual Incentive
Compensation Period. In the event the Incentive Compensation paid to
the Executive for any such prior Incentive Compensation period represented
a pro
rated full-year amount because the Executive was not employed by the Company
for
the entire Incentive Compensation period, the Incentive Compensation paid
to the
Executive for such period for purposes of this clause (ii) shall be an amount
equal to such pro-rated full-year amount.
“Cause”
shall mean termination of the Executive’s employment because of the
Executive’s: (i) involvement in fraud,
misappropriation or embezzlement related to the business or property of the
Company; (ii) conviction for, or guilty plea to, or plea of nolo contendere
to,
a felony or crime of similar gravity in the jurisdiction in which such
conviction or guilty plea occurs; (iii) intentional wrongful disclosure of
Confidential Information or other intentional wrongful violation of Article
VI; (iv) willful and continued failure by the Executive to follow the
reasonable instructions of the Parent Board or Chief Executive Officer; (v)
willful commission by the Executive of acts that are dishonest and demonstrably
and materially injurious to a member of the Parent Group, monetarily or
otherwise; (vi) willful or material violation of, or willful or material
noncompliance with, any securities law, rule or regulation or stock exchange
listing rule adversely affecting the Parent Group including without limitation
(a) if the Executive has undertaken to provide any certification or related
back-up material required for the chief and principal executive and financial
officers to provide a certification required under the Xxxxxxxx-Xxxxx Act
of
2002, including the rules and regulations promulgated thereunder (the
“Xxxxxxxx-Xxxxx Act”), and he willfully or materially fails to take
reasonable and appropriate steps to determine whether or not the certificate
or
related back-up material was accurate or otherwise in compliance with the
requirements of the Xxxxxxxx-Xxxxx Act or (b) the Executive’s willful or
material failure to establish and administer effective systems and controls
applicable to his area of responsibility necessary for the Parent to timely
and
accurately file reports pursuant to Section 13 or 15(d) of the Exchange
Act. No act or omission shall be deemed willful or material for
purposes of this definition if taken or omitted to be taken by Executive
in a
good faith belief that such act or omission to act was in the best interests
of
the Parent Group or if done at the express direction of the Parent
Board.
20
“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 Exchange Act) of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the Exchange Act), in any individual
transaction or series of related transactions, of 50% or more of either (A)
the
then outstanding shares of common stock of Parent (the “Outstanding Common
Stock”) or (B) the combined voting power of the then outstanding voting
securities of Parent entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”); excluding, however,
the following: (1) any acquisition directly from Parent, other than
an acquisition by virtue of the exercise of a conversion privilege unless
the
security being so converted was itself acquired directly from Parent; (2)
any
acquisition by Parent; (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Parent or any entity controlled
by
Parent; 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 Parent Board such that the individuals who
as
of the Effective Date constitute the Parent Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Parent Board;
provided, however, for purposes of this paragraph, that any
individual who becomes a member of the Parent Board subsequent to the Effective
Date, whose appointment, election, or nomination for election by Parent’s
shareholders was approved by a vote of at least a
majority of those individuals who are members of the
Parent Board and who were also members of the Incumbent Board (or deemed
to be
such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but providedfurther 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 Parent Board shall not be so considered as a member of the Incumbent
Board;
(iii) consummation
of a reorganization, merger, consolidation or other business combination
or the
sale or other disposition of all or substantially all of the assets of Parent
(including assets that are shares held by Parent in its subsidiaries) (any
such
transaction, a “Business Combination”); expressly excluding,
however, any such Business Combination pursuant to which
all of the
following conditions are met: (A) all or substantially all of
the Person(s) who are the beneficial owners of the Outstanding Common Stock
and
Outstanding Voting Securities, respectively, immediately prior to such Business
Combination will beneficially own, directly or indirectly, more than 50%
of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding voting securities entitled to vote generally in
the
election of directors, as the case may be, of the entity resulting from such
Business Combination (including, without limitation, an entity which as a
result
of such transaction owns Parent or all or substantially all of Parent’s assets
either directly or through one or more subsidiaries) in substantially the
same
proportions as their ownership, immediately prior to such Business Combination,
of the Outstanding Common Stock and Outstanding Voting Securities, as the
case
may be, (B) no Person (other than Parent, any employee benefit plan (or
related trust) of Parent or such entity resulting from such Business
Combination) will beneficially own, directly or indirectly, 50% or more of,
respectively, the outstanding shares of common stock of the entity resulting
from such Business Combination or the combined voting power of the outstanding
voting securities of such entity entitled to vote generally in the election
of
directors except to the extent that such ownership existed prior to the Business
Combination, and (C) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors
of
the entity resulting from such Business Combination;
21
(iv) the
approval by the shareholders of Parent of a complete liquidation or dissolution
of Parent;
(v) the
Parent Group (or any of them) 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 the Parent Group (determined on the basis
of
Parent’s four most recently completed fiscal quarters for which reports have
been filed under the Exchange Act) and such disposal shall not be exempted
pursuant to clause (iii) of this definition of Change of Control;
(vi) Parent
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
of
control of Parent has or may have occurred or will or may occur in the future
pursuant to any then-existing agreement or transaction; notwithstanding the
foregoing, unless determined in a specific case by a majority vote of the
Parent
Board, a “Change of Control” shall not be deemed to have occurred solely
because: (A) an entity in which Parent directly or indirectly
beneficially owns 50% or more of the voting securities, or any Parent-sponsored
employee stock ownership plan, or any other employee plan of Parent 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,
disclosing beneficial ownership by it of shares of stock of Parent, or because
Parent reports that a change of control of Parent has or may have occurred
or
will or may occur in the future by reason of such beneficial ownership or
(B)
any Parent-sponsored employee stock ownership plan, or any other employee
plan
of Parent 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, disclosing beneficial ownership by it of shares of stock of
Parent, or because Parent reports that a change of control of Parent has
or may
have occurred or will or may occur in the future by reason of such beneficial
ownership; or
(vii) 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 definition.
Notwithstanding
the above definition of Change of Control, the Parent Board, in its sole
discretion, may determine that a Change of Control has occurred for purposes
of
this Agreement, even if the events giving rise to such Change of Control
are not
expressly described in the above definition.
“Change
of Control Date” shall mean the date on which a
Change of Control occurs.
“Change
of Control Period” shall mean the
24 month period commencing on the Change of Control Date;
provided, however, if the Company terminates the Executive’s
employment with the Company prior to the Change of Control Date but on or
after
a Potential Change of Control Date, and it is reasonably demonstrated that
the
Executive’s (i) employment was terminated at the request of an unaffiliated
third party who has taken steps reasonably calculated to effect a Change
of
Control or (ii) termination of employment otherwise arose in connection
with or in anticipation of the Change of Control, then the “Change of Control
Period” shall mean the 24 month period beginning on
the date immediately prior to the date of the Executive’s termination of
employment with the Company.
22
“Code”
shall mean the Internal Revenue Code of 1986, as amended.
“Competing
Business” means any business or activity that (i)
competes with any member of the Parent Group for which the Executive performed
services or the Executive was involved in for purposes of making strategic
or
other material business decisions and involves (ii) (A) the same or
substantially similar types of products or services (individually or
collectively) manufactured, marketed or sold by any member of the Parent
Group
during Term or (B) products or services so similar in nature to that of any
member of the Parent Group during Term (or that any member of the Parent
Group
will soon thereafter offer) that they would be reasonably likely to displace
substantial business opportunities or customers of the Parent
Group.
“Confidential
Information” shall include Trade Secrets and
includes information acquired by the Executive in the course and scope of
his
activities under this Agreement, including information acquired from third
parties, that (i) is not generally known or disseminated outside the Parent
Group (such as non-public information), (ii) is designated or marked by any
member of the Parent Group as “confidential” or reasonably should be considered
confidential or proprietary, or (iii) any member of the Parent Group indicates
through its policies, procedures, or other instructions should not be disclosed
to anyone outside the Parent Group. Without limiting the foregoing
definitions, some examples of Confidential Information under this Agreement
include (a) matters of a technical nature, such as scientific, trade or
engineering secrets, “know-how”, formulae, secret processes, inventions, and
research and development plans or projects regarding existing and prospective
customers and products or services, (b) information about costs, profits,
markets, sales, customer lists, customer needs, customer preferences and
customer purchasing histories, supplier lists, internal financial data,
personnel evaluations, non-public information about medical devices or products
of any member of the Parent Group (including future plans about them),
information and material provided by third parties in confidence and/or with
nondisclosure restrictions, computer access passwords, and internal market
studies or surveys and (c) and any other information or matters of a similar
nature.
“Disability”
as used in this Agreement shall have the meaning given that term by any
disability insurance the Company carries at the time of termination that
would
apply to the Executive. Otherwise, the term “Disability” shall mean the
inability of the Executive to perform his duties and responsibilities under
this
Agreement as a result of a physical or mental illness, disease or personal
injury he has incurred. Any dispute as to whether or not the Executive has
a
“Disability” for purposes of this Agreement shall be resolved by a
physician reasonably satisfactory to the Parent Board and the Executive (or
his
legal representative, if applicable). If the Parent Board and the Executive
(or
his legal representative, if applicable) are unable to agree on a physician,
then each shall select one physician and those two physicians shall pick
a third
physician and the determination of such third physician shall be binding
on the
parties.
“Exchange
Act” shall mean the Securities Exchange Act of
1934, as amended.
“Good
Reason” shall mean the occurrence of any of the
following without the written consent of the Executive: (i) any
duties, functions or responsibilities are assigned to the Executive that
are
materially inconsistent with the Executive’s duties, functions or
responsibilities with the Company or the Parent as contemplated or permitted
by
Section 1.1; (ii) any action by the Company or the Parent that results in
a
material adverse change in the nature or scope of the position, power, duties,
functions, responsibilities or authorities of the Executive with the Company
or
the Parent from those contemplated or permitted by Section 1.1; (iii) the
base
salary of the Executive is reduced, unless a reduction in accordance with
Section 2.2; (iv) there is a material adverse change or termination of the
Executive’s right to participate, on a basis substantially consistent with
practices applicable to senior executives of the Company generally, in any
bonus, incentive, profit-sharing, stock option, stock purchase, stock
appreciation, restricted stock, discretionary pay or similar policy, plan,
program or arrangement of the Company, or any material adverse failure to
provide the compensation and benefits contemplated by Sections 2.3, 2.4 and
Article III, except where necessary to avoid the imposition of any additional
tax under Section 409A of the Code; (v) there is a material termination or
denial of the Executive’s right, on a basis substantially consistent with
practices applicable generally to senior executives of the Company, 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 and
perquisite policies, plans, programs and arrangements that generally are
made
available to senior executives of the Company, except for any arrangements
that
the Parent Board adopts for select senior executives to compensate them for
special or extenuating circumstances or as needed to comply with applicable
law
or as necessary to avoid the imposition of any additional tax under Section
409A, or (vi) any material breach by the Company of its representations under
Section 7.7(b), or the guaranty by Parent on the signature page of the
Agreement.
23
“Parent”
shall mean Orthofix International N.V., an entity organized under
the
laws of the Netherlands Antilles.
“Parent
Board” shall mean the Board of Directors of
Parent. Any obligation of the Parent Board other than termination for
Cause under this Agreement may be delegated to an appropriate committee of
the
Parent Board, including its compensation committee, and references to the
Parent
Board herein shall be references to any such committee, as
appropriate.
“Parent
Group” shall mean Parent, together with its
subsidiaries including the Company.
“Person”
shall
include individuals or entities
such as corporations, partnerships, companies, firms, business organizations
or
enterprises, and governmental or quasi-governmental bodies.
“Potential
Change of Control” shall mean the earliest to
occur of: (i) the date on which Parent 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
Parent 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 Parent Board, the Parent (or the Company) or the respective third party
has
abandoned or terminated any Potential Change of Control.
“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 Parent Board,
the Parent (or the Company) or the respective third party has abandoned or
terminated any Potential Change of Control.
“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 the members of the
Parent
Group conduct a preponderance of their business and in which the Executive
provides substantive services to the benefit of the Parent Group.
24
“Section
409A” shall mean Section 409A of the Code and
regulations promulgated thereunder (and any similar or successor federal
or
state statute or regulations).
“Trade
Secrets” are information of special value, not
generally known to the public that any member of the Parent Group has taken
steps to maintain as secret from Persons other than those selected by any
member
of the Parent Group.
25
