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EXHIBIT 10.3

Nonqualified Stock Option Agreement under
the Orthofix International N.V.
Amended and Restated 2004 Long-Term Incentive Plan

This Option Agreement (the “Agreement”) is made this __ day of __________ 20__
(the “Grant Date”) between Orthofix International N.V., a Netherlands Antilles
company (the “Company”), and the person signing this Agreement adjacent to the
caption “Optionee” on the signature page hereof (the “Optionee”). Capitalized
terms used and not otherwise defined herein shall have the meanings attributed
thereto in the Orthofix International N.V. Amended and Restated 2004 Long-Term
Incentive Plan (the “Plan”).

WHEREAS, pursuant to the Plan, the Company desires to afford the Optionee the
opportunity to purchase Common Shares on the terms and conditions set forth
herein;

NOW, THEREFORE, in connection with the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto agree as
follows:

1.   Grant of Option. Subject to the provisions of this Agreement and the Plan,
the Company hereby grants to the Optionee the right and option (the “Option”) to
purchase ________ Common Shares at an exercise price of $__.__ per share (the
“Exercise Price”).

2.   Incorporation of Plan. The Optionee acknowledges receipt of the Plan, a
copy of which is annexed hereto, and represents that he or she is familiar with
its terms and provisions and hereby accepts this Option subject to all of the
terms and provisions of the Plan and all interpretations, amendments, rules and
regulations which may, from time to time, be promulgated and adopted pursuant to
the Plan. The Plan is incorporated herein by reference. In the event of any
conflict or inconsistency between the Plan and this Agreement, the Plan shall
govern and this Agreement shall be interpreted to minimize or eliminate any such
conflict or inconsistency.

3.   Nature of the Option. The Option shall be a Nonqualified Stock Option.

4.   Vesting. Subject to earlier termination in accordance with the Plan or this
Agreement and the terms and conditions herein or therein, the Option shall vest
and become exercisable with respect to one-hundred percent (100%) of the shares
covered thereby on the third anniversary of the Grant Date.

5.   Term. The Option shall expire and no longer be exercisable 10 years from
the Grant Date, subject to earlier termination in accordance with the Plan or
this Agreement; provided, however: (i) if the termination date falls on a date
on which the exercise of the Option would violate any applicable federal, state,
local or foreign law, such termination date shall be extended to 30 days after
the first date that exercise of the Option would no longer violate any
applicable federal, state, local or foreign law, and (ii) if the termination
date falls on a date on which the Optionee is prohibited by Company policy in
effect on such date from engaging in transactions in the Company’s securities,
such termination date shall be extended to the first date that the Optionee is
permitted to engage in transaction in the Company’s securities under such
Company policy so long as such extension does not cause the Option to become
subject to Code Section 409A or violate any other applicable law.

 
 

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6.   Termination of Employment.

(a)     General. A termination of employment shall be deemed to have occurred if
the Optionee is no longer employed by, or otherwise providing services to, the
Company or any of its Subsidiaries for any reason. The Committee shall have
discretion to determine whether an authorized leave of absence (as a result of
disability or otherwise) shall constitute a termination of employment for
purposes of the Plan and this Agreement.

(b)     Termination of Employment Other than for Cause, Death, Permanent
Disability or Voluntary Termination – No Optionee Employment Agreement.  If,
prior to vesting, the Optionee's employment is terminated or the Optionee
retires in accordance with the Company’s retirement policies, the Option shall
be considered vested and be immediately exercisable as of the date of such
termination of employment with respect to the aggregate number of Common Shares
as to which the Option would have been vested as of December 31 of the year in
which such termination of employment occurs.  The Optionee shall have the right,
subject to the other terms and conditions set forth in this Agreement and the
Plan, to exercise the Option, to the extent it has vested as of the date of such
termination of employment, at any time within 180 days after the date of such
termination of employment, subject to the earlier expiration of the Option as
provided in Section 5 hereof. To the extent the vested portion of the Option is
not exercised within such 180 day period, the Option shall be cancelled and
revert back to the Company and the Optionee shall have no further right or
interest therein. The unvested portion of any Option shall be cancelled and
revert back to the Company as of the date of the Optionee's termination of
employment and the Optionee shall have no further right or interest
therein.  This Section 6(b) only applies if the Optionee does not have an
Employment Agreement.  In no event shall this Section apply if termination is
(i) for Cause, (ii) by reason of death or Permanent Disability or (iii) as a
result of a Voluntary Termination.

(c)     Termination of Employment Other than for Cause, Death, Permanent
Disability or Voluntary Termination – Optionee has Employment Agreement.
Notwithstanding Section 6(b) above, in the event the Optionee has an Employment
Agreement and, prior to vesting, the Optionee's employment is terminated or the
Optionee retires in accordance with the Company’s retirement policies, then the
Option shall be considered vested in full and be immediately exercisable as of
the date of such termination of employment.  For the avoidance of doubt, a
resignation by the Optionee for “good reason” or words of similar meaning under
any Employment Agreement shall constitute a termination subject to the terms and
provisions of this Section 6(c) and upon such event the Option shall be
considered vested in full and be immediately exercisable as of the date of such
termination of employment.  The Optionee shall have the right, subject to the
other terms and conditions set forth in this Agreement and the Plan, to exercise
the Option until the expiration of the Option as provided in Section 5 hereof.
To the extent the vested portion of the Option is not exercised within such
period, the Option shall be cancelled and revert back to the Company and the
Optionee shall have no further right or interest therein.  In no event shall
this Section apply if termination is (i) for Cause, (ii) by reason of death or
Permanent Disability or (iii) as a result of a Voluntary Termination.

(d)     Termination of Employment for Cause; Voluntary Termination. If, prior to
vesting, (i) the Optionee's employment with the Company and its Subsidiaries is
terminated by the Company or any of its Subsidiaries for Cause, or (ii) Optionee
terminates employment under circumstances constituting a Voluntary Termination,
the unvested portion of the Option shall be cancelled and revert back to the
Company as of the date of such termination of employment, and the Optionee shall
have no further right or interest therein unless the Committee in its sole
discretion shall determine otherwise. The Optionee shall have the right, subject
to the other terms and conditions set forth in this Agreement and the Plan, to
exercise the Option, to the extent it has vested as of the date of termination
of employment, at any time within three months after the date of such
termination, subject to the earlier expiration of the Option as provided in
Section 5 hereof.

 
 

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(e)     Termination of Employment for Death or Permanent Disability.  If the
Optionee's employment with the Company and its Subsidiaries terminates by reason
of death or Permanent Disability, the Option shall automatically vest and become
immediately exercisable in full as of the date of such termination of
employment.  The Option shall remain exercisable by the Optionee, a Permitted
Transferee (as defined in Section 11 hereof), a transferee under a domestic
relations order, or the Optionee's estate, personal representative or
beneficiary, as applicable, at any time within 12 months after the date of such
termination of employment, subject to the earlier expiration of the Option as
provided in Section 5 hereof. To the extent the Option is not exercised within
such 12 month period, the Option shall be cancelled and revert back to the
Company and the Optionee, Permitted Transferee, transferee under a domestic
relations order, or the Optionee’s estate, personal representative or
beneficiary, as applicable, shall have no further right or interest therein.

(f)     Effect of Employment Agreements Generally.  Terms of an Employment
Agreement expressly defining whether and in what manner (including upon
termination of employment) the unvested portion of an Option shall vest, be
exerciseable or be cancelled shall control over the terms of this Agreement.

7.   Change in Control. Upon the occurrence of a Change in Control, the Option
shall automatically vest and become immediately exercisable in full and shall
remain exercisable in accordance with the terms of Section 6 hereof, subject to
the earlier expiration of the Option as provided in Section 5 hereof.

8.   Method of Exercising Option.

(a)     Notice of Exercise. Subject to the terms and conditions of this
Agreement, the Option may be exercised by written or electronic notice to the
Company, from the Optionee, a Permitted Transferee, a transferee pursuant to a
domestic relations order, or following the Optionee’s death, the Optionee’s
estate, personal representative, or beneficiary, as applicable, and stating the
number of Common Shares in respect of which the Option is being exercised. Such
notice shall be accompanied by payment of the Exercise Price for all Common
Shares purchased pursuant to the exercise of such Option. The date of exercise
of the Option shall be the later of (i) the date on which the Company receives
the notice of exercise or (ii) the date on which the conditions set forth in
Sections 8(b) and 8(e) are satisfied. Notwithstanding any other provision of
this Agreement, the Optionee may not exercise the Option and no Common Shares
will be issued by the Company with respect to any attempted exercise when such
exercise is prohibited by law or any Company policy then in effect. The Option
may not be exercised at any one time as to less than 100 shares (or such number
of shares as to which the Option is then exercisable if less than 100). In no
event shall the Option be exercisable for a fractional share.

(b)     Payment. Prior to the issuance of the Common Shares pursuant to Section
8(e) hereof in respect of which all or a portion of the Option shall have been
exercised, the Optionee shall have paid to the Company the Exercise Price for
all Common Shares purchased pursuant to the exercise of such Option. Payment may
be made by personal check, bank draft or postal or express money order (such
modes of payment are collectively referred to as “cash”) payable to the order of
the Company in U.S. dollars. Payment may also be made in mature Common Shares
owned by the Optionee, or in any combination of cash or such mature shares as
the Committee in its sole discretion may approve. The Company may also permit
the Optionee to pay for such Common Shares by directing the Company to withhold
Common Shares that would otherwise be received by the Optionee, pursuant to such
rules as the Committee may establish from time to time. In the discretion of the
Committee, and in accordance with rules and procedures established by the
Committee, the Optionee may be permitted to make a “cashless” exercise of all or
a portion of the Option.

 
 

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(c)     Shareholder Rights. The Optionee shall have no rights as a shareholder
with respect to any Common Shares issuable upon exercise of the Option until the
Optionee shall become the holder of record thereof, and no adjustment shall be
made for dividends or distributions or other rights in respect of any Common
Shares for which the record date is prior to the date upon which the Optionee
shall become the holder of record thereof.

(d)     Limitation on Exercise. The Option shall not be exercisable unless the
offer and sale of Common Shares pursuant thereto has been registered under the
Securities Act of 1933, as amended (the “1933 Act”), and qualified under
applicable state “blue sky” laws or the Company has determined that an exemption
from registration under the 1933 Act and from qualification under such state
“blue sky” laws is available.

(e)     Issuance of Common Shares. Subject to the foregoing conditions, as soon
as is reasonably practicable after its receipt of a proper notice of exercise
and payment of the Exercise Price for all Common Shares purchased pursuant to
the exercise of such Option, the Company shall either: (i) deliver or cause to
be delivered to the Optionee (or a Permitted Transferee, a transferee under a
domestic relations order, or following the Optionee's death, the Optionee's
estate, personal representative or beneficiary, as applicable) one or more share
certificates for the appropriate number of Common Shares issued in connection
with such exercise (less any Common Shares withheld under Section 10 below), or
(ii) cause its third-party recordkeeper to credit an account established and
maintained in the name of the Optionee (or a Permitted Transferee, a transferee
under a domestic relations order, or following the Optionee's death, the
Optionee's estate, personal representative or beneficiary, as applicable) with
the number of Common Shares issued in connection with such exercise (less any
Common Shares withheld under Section 10 below); provided, however, that an
actual share certificate shall be delivered if requested by the Optionee (or a
Permitted Transferee, a transferee under a domestic relations order, or
following the Optionee's death, the Optionee's estate, personal representative
or beneficiary, as applicable). Such Common Shares shall be fully paid and
nonassessable and shall be issued in the name of the Optionee (or a Permitted
Transferee, a transferee under a domestic relations order, or following the
Optionee's death, the Optionee's estate, personal representative or beneficiary,
as applicable).

9.   Adjustment of and Changes in Common Shares. In the event of any merger,
consolidation, recapitalization, reclassification, stock dividend, extraordinary
dividend, or other event or change in corporate structure affecting the Common
Shares, the Committee shall make such adjustments, if any, as it deems
appropriate in the number and class of shares subject to, and the exercise price
of, the Option. The foregoing adjustments shall be determined by the Committee
in its sole discretion.

10.     Tax Withholding. The Company shall have the right, prior to the issuance
of any Common Shares upon full or partial exercise of the Option (whether by the
Optionee or any Permitted Transferees, a transferee under a domestic relations
order, or following the Optionee’s death, the Optionee’s estate, personal
representative, or beneficiary, as applicable), to require the Optionee to remit
to the Company any amount sufficient to satisfy the minimum required federal,
state or local tax withholding requirements, as well as all applicable
withholding tax requirements of any other country or jurisdiction. The Company
may permit the Optionee to satisfy, in whole or in part, such obligation to
remit taxes, by directing the Company to withhold Common Shares that would
otherwise be received by the Optionee, pursuant to such rules as the Committee
may establish from time to time. The Company shall also have the right to deduct
from all cash payments made pursuant to, or in connection with, the Option, the
minimum federal, state or local taxes required to be withheld with respect to
such payments.

 
 

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11.     Transfers. Unless the Committee determines otherwise after the Grant
Date, the Option shall not be transferable other than by will or by the laws of
descent and distribution or pursuant to a domestic relations order; provided,
however, the Option may be transferred to the Optionee's family members or to
one or more trusts or partnerships established in whole or in part for the
benefit of one or more of such family members (collectively, the “Permitted
Transferees”). Any Option transferred to a Permitted Transferee shall be further
transferable only by will or the laws of descent and distribution or, for no
consideration, to another Permitted Transferee of the Optionee. The Committee
may in its discretion permit transfers of Options other than those contemplated
by this Section 11.

12.     Option Exercisable Only by the Optionee. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or by a Permitted
Transferee to whom such Option has been transferred in accordance with Section
11.

13.      Prohibition on Repricing.  The Agreement may not be amended to (a)
reduce the Exercise Price of the Option granted hereunder, nor (b) cancel or
replace the Option  hereunder with an Option having a lower exercise price.

14.     Miscellaneous Provisions.

(a)     Notices. Any notice required by the terms of this Agreement shall be
delivered or made electronically, over the Internet or otherwise (with request
for assurance of receipt in a manner typical with respect to communications of
that type), or given in writing.  Any notice given in writing shall be deemed
effective upon personal delivery or upon deposit with the United States Postal
Service, by registered or certified mail, with postage and fees prepaid, and
shall be addressed to the Company at its principal executive office and to the
Optionee at the address that he or she has most recently provided to the
Company.   Any notice given electronically shall be deemed effective on the date
of transmission.

(b)     Headings. The headings of sections and subsections are included solely
for convenience of reference and shall not affect the meaning of the provisions
of this Agreement.

(c)     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

(d)     Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties hereto with regard to the subject matter hereof.
They supersede all other agreements, representations or understandings (whether
oral or written and whether express or implied) that relate to the subject
matter hereof.  In the event the Optionee has an Employment Agreement with the
Company, any conflicts or ambiguities shall be resolved first by reference to
the Plan, then the Employment Agreement and finally to this Agreement.  In the
event such conflict or ambiguity cannot be resolved by reference to the Plan,
reference shall be made to the Employment Agreement.  Finally, and only in the
event such conflict or ambiguity cannot be resolved by reference to the Plan and
Employment Agreement, reference shall be made to this Agreement.

 
 

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(e)     Amendments. The Board and the Committee shall have the power to alter or
amend the terms of the Option as set forth herein from time to time, in any
manner consistent with the provisions of Sections 16 and 19 of the Plan, and any
alteration or amendment of the terms of the Option by the Board or the Committee
shall, upon adoption, become and be binding on all persons affected thereby
without requirement for consent or other action with respect thereto by any such
person. The Committee shall give notice to the Optionee of any such alteration
or amendment as promptly as practicable after the adoption thereof. The
foregoing shall not restrict the ability of the Optionee and the Board or the
Committee by mutual written consent to alter or amend the terms of the Option in
any manner which is consistent with the Plan.

(f)      Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto and may only be
amended by written agreement of the parties hereto.

(g)     Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the choice
of law provisions thereof.

(h)     No Employment or Other Rights. This Option grant does not confer upon
the Optionee any right to be continued in the employment of, or otherwise
provide services to, the Company or any Subsidiary or other affiliate thereof,
or interfere with or limit in any way the right of the Company or any Subsidiary
or other affiliate thereof to terminate such Optionee’s employment at any
time.  For purposes of this Agreement only, the term “employment” shall include
circumstances under which Optionee provides consulting or other services to the
Company or any of its Subsidiaries as an independent contractor, but such
Optionee is not, nor shall be considered, an employee; provided, however,
nothing in this Section 14(h) or this Agreement shall create an employment
relationship between such person and the Company or its applicable Subsidiary,
as the usages described in this Section are for convenience only.

15.     Definitions. For purposes of this Agreement, the following capitalized
words shall have the meanings set forth below.

“Cause” shall mean termination of the Optionee's employment because of the
Optionee'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 in which such
conviction or guilty plea occurs, (iii) unauthorized disclosure of any trade
secrets or other confidential information relating to the Company's business and
affairs (except to the extent such disclosure is required under applicable law),
or (iv) such other circumstances constituting a termination for cause under any
Employment Agreement.

“Change in Control” shall mean:

(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 50% or more of either (A) the
then outstanding shares of the Company's common stock (the “Outstanding Common
Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”);  excluding,  however, the
following: (1) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company; (2)
any acquisition by the Company; (3) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any entity
controlled by the Company; 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; or

 
 

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(ii)     a change in the composition of the Board such that the individuals who,
as of the date hereof, constitute the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided,  however, for purposes of this
paragraph, that any individual who becomes a member of the Board subsequent to
the date hereof, whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of those individuals
who are members of the 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  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 Board shall not be so considered as a member of the Incumbent Board; or

(iii)    consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(“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 the Company
or all or substantially all of the Company'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 the Company, any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 50% 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 (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 corporation resulting from such Corporate Transaction;
 
 
 

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(iv)    the approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or

(v)     any similar or other definition contained in any Employment Agreement
(even if broader than as defined above).

“Committee” shall mean the Compensation Committee of the Board or such other
committee appointed by the Board to administer the Plan

“Employment Agreement” shall mean a written employment, change in control or
change of control agreement between the Optionee and the Company and/or a
Subsidiary.  Employment Agreement expressly does not include any offer letter,
at-will employment arrangements or an employment or similar agreement entered
into outside the United States solely for purposes of complying with local law
requirements with respect to employment.  For purposes of this Agreement only
and subject to Section 14(h), the term “Employment Agreement” shall include a
written agreement under which the Optionee provides consulting or other services
as an independent contractor to the Company.
 
“Permanent Disability” shall mean termination of the Optionee's employment as a
result of a physical or mental incapacity which substantially prevents the
Optionee from performing his or her duties as an employee and that has continued
for at least 180 days and can reasonably be expected to continue indefinitely.
Any dispute as to whether or not the Optionee is disabled within the meaning of
the preceding sentence shall be resolved by a physician selected by the
Committee.

“Voluntary Termination” shall occur when the Optionee voluntarily ceases
employment with, or the provision of services to, the Company and its
Subsidiaries for any reason or no reason (e.g., the Optionee elects to cease
being an employee or provide consulting services or the Optionee resigns or
quits).  For the avoidance of doubt, a Voluntary Termination shall not occur as
a result of termination of employment as a result of death, Permanent Disability
(as provided hereunder), or termination for “good reason” or similar words (as
permitted hereunder and pursuant to an Employment Agreement) or as the result of
the Optionee’s retirement in accordance with the Company’s retirement policies.

 
 

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EXECUTED as of the date first written above.

COMPANY:
 
ORTHOFIX INTERNATIONAL N.V.
         
By:  
 
   
Name:  Alan W. Milinazzo
   
Title:  Chief Executive Officer
     
OPTIONEE:
       
By:  
 
   
Name:  [        ]
   
Title:  [        ]

 
 

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