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Exhibit 10.8
 

ORTHOFIX DEFERRED
COMPENSATION PLAN

Effective January 1, 2007
 
 

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ORTHOFIX DEFERRED
COMPENSATION PLAN

Effective January 1, 2007
 
ARTICLE I
 
PURPOSE AND EFFECTIVE DATE
 
1.1.   Purpose. This plan is intended to allow a select group of key management
or other highly compensated employees and directors of the Company to defer the
receipt of compensation that would otherwise be payable to them. The terms of
this Plan are intended to, and shall be interpreted and applied so as to, comply
in all respects with the provisions of Code Section 409A and regulations and
rulings thereunder.
 
1.2.    Effective Date. This Plan shall be effective as of January 1, 2007.
 
ARTICLE II
 
Definitions
 
For ease of reference, the following definitions will be used in the Plan:

2.1.   Account.“Account” means the account maintained on the books of the
Company used solely to calculate the amount payable to each Participant who
defers Compensation under this Plan and shall not constitute or be treated as a
separate fund of assets.
 
2.2.   Beneficiary.“Beneficiary” means the person, persons or entity designated
in writing by the Participant to receive payments under this Plan in the event
of the Participant’s death as provided in Article VII.
 
2.3.   Board.“Board” means the board of directors of the Company.
 
2.4.   Bonus Deferral Commitment.“Bonus Deferral Commitment” means that portion
of bonus compensation, or other incentive compensation as may be designated by
the Plan Administrator from time-to-time as eligible for deferral hereunder, for
which a Participant has made an election to defer receipt pursuant to Article
IV.
 
2.5.   Change in Control. “Change in Control” means a change in the ownership or
effective control of the Parent Company, the Company and/or any Subsidiary, or
in the ownership of a substantial portion of the assets of the Parent Company,
the Company and/or any Subsidiary as defined under Code Section 409A or any
regulations or other guidance issued thereunder; provided, however, that a
Change in Control of any such entity shall only be taken into account with
respect to a particular Participant if such Participant performed services for
the entity experiencing the Change in Control at the time of such Change in
Control.
 
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2.6.   Code.“Code” means the Internal Revenue Code of 1986, as amended (and any
regulations thereunder).
 
2.7.   Company.“Company” means Orthofix Holdings, Inc., a Delaware corporation,
or any successor thereto.
 
2.8.   Compensation.“Compensation” means compensation for services performed, as
may be designated by the Plan Administrator from time-to-time as eligible for
deferral. This includes a Participant’s (i) base salary as in effect from time
to time during a Plan Year, and (ii) bonuses earned during a Plan Year.
Compensation also includes all fees payable to Directors, including the retainer
for service as a Director, any fee paid to the Director for service on any
committee, and meeting fees. In no event shall any of the following items be
treated as Compensation hereunder: (i) payments from this Plan or any other
nonqualified deferred compensation plan; (ii) any form of non-cash compensation
or benefits, including short and long term disability payments, group life
insurance premiums, income from the exercise of nonqualified stock options, from
the disqualifying disposition of incentive stock options, or realized upon
vesting of restricted stock or the delivery of shares in respect of restricted
stock units (or other similar items of income related to equity compensation
grants or exercises); (iii) expense reimbursements; (iv) severance payments, or
(vii) any other payments or benefits other than normal Compensation as
determined by the Plan Administrator in its sole discretion.
 
2.9.   Compensation Deferral.“Compensation Deferral” means that portion of
Compensation as to which a Participant has made an annual irrevocable election
to defer receipt pursuant to Article IV. A Participant’s Compensation Deferral
may consist of a Salary Deferral Commitment, a Bonus Deferral Commitment, a
Director’s Fees Deferral Commitment, or a combination or other commitment as may
be designated by the Plan Administrator from time-to-time, as applicable to the
Participant.
 
2.10.         Director. “Director” means any non-employee member of the Board or
the board of directors of the Parent Company or any Subsidiary.
 
2.11.     Director’s Fees Deferral Commitment. “Director’s Fees Deferral
Commitment” means that portion of a Director’s fees for which a Participant has
made an election to defer receipt pursuant to Article IV.
 
2.12.     Disability.“Disability” means (i) with respect to a Participant that
is an employee, that a Participant has been determined to be disabled for
purposes of receiving a benefit under the Company’s insured long-term disability
plan, and (ii) with respect to a Participant that is a Director, that a
Participant has been determined to be disabled for purposes of receiving a
benefit under the disability insurance provisions of the Social Security Act.
 
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2.13.     Elective Deferral Account. “Elective Deferral Account” means the
Account or Accounts maintained in accordance with Section 5.2 with respect to
any elective Compensation Deferrals made under this Plan. A Participant’s
Elective Deferral Account shall be utilized solely as a device for the
determination and measurement of the amounts to be paid to the Participant
pursuant to this Plan and shall not constitute or be treated as a separate fund
of assets.
 
2.14.    Measurement Funds.“Measurement Funds” means one or more of the
independently established funds or indices that are identified by the Plan
Administrator. These Measurement Funds are used solely to calculate the earnings
that are credited to each Participant’s Account(s) in accordance with Article V
below, and do not represent any beneficial interest on the part of the
Participant in any asset or other property of the Company, the Parent Company or
any Subsidiary. The determination of the increase or decrease in the performance
of each Measurement Fund shall be made by the Plan Administrator in its
reasonable discretion. Measurement Funds may be replaced, new funds may be
added, or both, from time to time in the discretion of the Plan Administrator.
 
2.15.     Orthofix. “Orthofix” means Orthofix, Inc., a Minnesota corporation, or
any successor thereto.
 
2.16.     Parent Company. “Parent Company” means Orthofix International N.V., a
corporation organized under the laws of Netherlands Antilles.
 
2.17.     Participant. “Participant” means any employee or Director who
satisfies the eligibility requirements set forth in Article III. In the event of
the death or incompetency of a Participant, the term means his or her
Beneficiary, personal representative or guardian.
 
2.18.     Participation Agreement. “Participation Agreement” means the
authorization form that an eligible employee or Director files with the Plan
Administrator to elect a Compensation Deferral under the Plan for a Plan Year.
 
2.19.     Plan.“Plan” means this Plan, entitled the Orthofix Deferred
Compensation Plan, as amended from time to time.
 
2.20.     Plan Administrator. “Plan Administrator” means the board of directors
of Orthofix, or a person or committee appointed by the board of directors of
Orthofix to administer this Plan pursuant to Article VIII.
 
2.21.     Plan Year.“Plan Year” means the twelve (12) month period beginning on
each January 1 and ending on the following December 31.
 
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2.22.     Retirement.“Retirement” means a separation from service with the
Parent Company, the Company or any Subsidiary after attaining age fifty-five
(55); provided, however, that a transfer between one or more of the Parent
Company, the Company and/or any Subsidiary shall not be deemed to be a
separation from service for purposes of this definition.
 
2.23.     Salary Deferral Commitment. “Salary Deferral Commitment” means that
portion of salary compensation for which a Participant has made an election to
defer receipt pursuant to Article IV.
 
2.24.     Subsidiary. “Subsidiary” means any subsidiary or affiliate of the
Company or the Parent Company, or any subsidiary or affiliate of such subsidiary
or affiliate, that has been approved by the Company for participation in this
Plan and which has taken appropriate action to become an adopting employer of
this Plan.
 
2.25.     Unforeseeable Emergency.“Unforeseeable Emergency” means a severe
financial hardship to the Participant resulting from an illness or accident of
the Participant, the Participant’s spouse, or a dependent (as defined in Code
Section 152(a)) of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.
 
ARTICLE III
 
Eligibility and Participation
 
3.1.   Eligibility. An employee of the Parent Company, Company and/or any
Subsidiary shall be eligible to participate in this Plan if the employee is a
management or highly compensated employee and is named by the Board or its
designee to be a Participant in this Plan. All Directors shall also be eligible
to participate in this Plan as of the Effective Date or, if first elected as a
Director following the Effective Date, as of the date elected. An individual
shall remain a Participant until that individual has received full payment of
all amounts credited to the Participant’s Account.
 
3.2.   Participation. An eligible employee or Director may elect to enter into a
Salary Deferral Commitment and/or a Director’s Fees Deferral Commitment with
respect to any Plan Year by submitting a Participation Agreement to the Plan
Administrator by December 31 (or such earlier date established by the Plan
Administrator) of the calendar year immediately preceding the Plan Year. An
eligible employee may elect to enter into a Bonus Deferral Commitment with
respect to bonus Compensation earned during any Plan Year by submitting a
Participation Agreement to the Plan Administrator by December 31 (or such
earlier date established by the Plan Administrator) of the calendar year
immediately preceding the Plan Year. With respect to any bonus Compensation that
satisfies the definition of “performance based compensation” for purposes of
Code Section 409A, an eligible employee may elect to enter into a Bonus Deferral
Commitment by submitting a Participation Agreement to the Plan Administrator no
later than six (6) months prior to the end of the period in which the
performance-based compensation that is the subject of the Bonus Deferral
Commitment is earned (or such earlier date established by the Plan
Administrator). Any Participation Agreement shall only be effective if entered
into in a manner consistent with the provisions of Code Section 409A.
 
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3.3.   Partial Year Participation. If an employee or Director first becomes
eligible to participate during a calendar year, the employee or Director must
submit a Participation Agreement to the Plan Administrator no later than thirty
(30) days following the date the employee or Director becomes eligible to
participate in the Plan. Such Participation Agreement shall be effective only
with respect to Compensation earned for services to be performed subsequent to
the election and deferred in a manner consistent with the provisions of Code
Section 409A.
 
ARTICLE IV
 
Elective Deferrals
 
4.1.   Amount of Deferral Election. A Participant may elect a Compensation
Deferral in the Participation Agreement as follows:
 
(a)    Salary Deferral Commitment. A Salary Deferral Commitment shall be related
to the salary payable by the Company to the Participant for services performed
during the Plan Year. The amount to be deferred shall be stated as a percentage
of the salary to be earned during the Plan Year, as a flat dollar amount from
any salary earned during the Plan Year, or in such other form as allowed by the
Plan Administrator.
 
(b)    Bonus Deferral Commitment. The amount to be deferred shall be stated as a
percentage of any bonus earned during the Plan Year, as a flat dollar amount
from any bonus earned during the Plan Year, or in such other form as allowed by
the Plan Administrator.
 
(c)    Director’s Fees Deferral Commitment. The amount to be deferred shall be
stated as a percentage of any fees earned during the Plan Year, as a flat dollar
amount from any fees earned during the Plan Year, or in such other form as
allowed by the Plan Administrator.
 
4.2.   Deferral Limits. The following limitations shall apply to Compensation
Deferrals:
 
(a)    Minimum. The minimum deferral amount for a Salary, Bonus or Director’s
Fees Deferral Commitment shall be two thousand dollars ($2,000) per Plan Year.
If the Compensation Deferral is a Bonus Deferral Commitment, the $2,000 minimum
shall be calculated as a percentage of targeted incentive bonus.
 
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(b)    Maximum. The maximum deferral amount for a Salary Deferral Commitment
shall be eighty percent (80%). The maximum deferral amount for a Bonus Deferral
Commitment or a Director’s Fees Deferral Commitment shall be one hundred percent
(100%) of any such bonus or fees to be earned during the Plan Year.
 
(c)    Changes in Minimum or Maximum. The Plan Administrator may amend the Plan
to change the minimum or maximum deferral amounts from time to time by giving
written notice to all Participants. No such change may affect a Compensation
Deferral made prior to the Plan Administrator’s action unless otherwise required
by law.
 
4.3.   Treatment under Qualified Plan. Amounts deferred under this Plan will not
constitute compensation for any Company-sponsored qualified retirement plan.
 
4.4.   Period of Commitment. A Participant’s Participation Agreement as to a
Compensation Deferral shall remain in effect only for the immediately succeeding
Plan Year (or the remainder of the current year, as applicable). As of December
31 of the calendar year during which an election is made (or as of the end of
the 30 day enrollment period for a newly eligible employee or Director), the
Participation Agreement shall be irrevocable for the succeeding Plan Year (or
portion thereof, with respect to a newly eligible employee or Director).
Notwithstanding the above, the Participation Agreement shall be terminated if a
distribution is made to a Participant as a result of an Unforeseeable Emergency
pursuant to Section 6.8 or if such termination is required for the Participant
to be able to obtain a hardship distribution under a qualified plan with a
qualified cash or deferred arrangement under Code Section 401(k). Any resumption
of the Participant’s deferrals under this Plan shall be made only at the
election of the Participant in accordance with Article III herein.
 
4.5.   Change of Status. If a Participant no longer meets the eligibility
criteria set forth in Section 3.1, the Participant’s most recent Compensation
Deferral shall terminate with respect to Compensation earned after the effective
date of such determination, and the employee or Director shall thereafter be
prohibited from making Compensation Deferrals unless and until he or she meets
the eligibility criteria in the future.
 
ARTICLE V
 
Participant Accounts
 
5.1.   Establishment of Accounts. For record keeping purposes only, an Account
shall be maintained for each Participant to reflect his or her Elective Deferral
Account. Separate sub-accounts, as may be allowed from time-to-time in the sole
discretion of the Plan Administrator, shall be maintained to the extent
necessary to properly reflect the Participant’s election of Measurement Funds
and distribution elections.
 
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5.2.   Crediting Compensation Deferrals to Elective Deferral Account. The Plan
Administrator shall credit Compensation Deferrals to the Participant’s Elective
Deferral Account as soon as practicable after the date on which such
Compensation would otherwise have been paid, in accordance with the
Participant’s election. Any withholding of taxes or other amounts which is
required by federal, state, or local law with respect to Compensation Deferrals
shall be withheld from the Participant’s non-deferred Compensation to the
maximum extent possible with any excess reducing the amount deferred.
 
5.3.   Earnings (or Losses) on Account. Participants must designate, on a
Participation Agreement or by such other means as may be established by the Plan
Administrator, the portion of the contributions to their Account that shall be
allocated among the various Measurement Funds. If a Participant fails to
designate any Measurement Funds, contributions to a Participant’s Account shall
be allocated to one or more default Measurement Funds as determined by the Plan
Administrator in its sole discretion and Participant shall be deemed, for all
purposes of the Plan, to have designated such default Measurement Funds. A
Participant’s Account shall be credited with all deemed earnings (or losses)
generated by the Measurement Funds, as designated by the Participant, on each
business day for the sole purpose of determining the amount of earnings to be
credited or debited to such Account as if the designated balance of the Account
had been invested in the applicable Measurement Fund. Notwithstanding that the
rates of return credited to Participant’s Account are based upon the actual
performance of the corresponding Measurement Funds, the Company shall not be
obligated to invest any amount credited to a Participant’s Account under this
Plan in such Measurement Funds or in any other investment funds. Upon notice to
the Plan Administrator in the manner it prescribes, a Participant may
reallocate, on a daily basis, the Funds to which his or her Account is deemed to
be allocated. Changes made while the New York Stock Exchange is open will be
effective at the end of the day on which the change was made. Changes made when
the New York Stock Exchange is closed will be effective at the end of the next
day on which the New York Stock Exchange is open.
 
5.4.   Valuation of Account. The value of a Participant’s Account as of any date
shall equal the amounts theretofore credited to such Account, including any
earnings (positive or negative) deemed to be earned on such Account in
accordance with Section 5.3, less any payments made to the Participant or the
Participant’s Beneficiary pursuant to this Plan, and any forfeitures or Plan
expenses allocated to the Participant’s Account by the Plan Administrator, in
its sole discretion.
 
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5.5.   Vesting of Accounts. Participants shall be one-hundred percent vested in
their Elective Deferral Accounts at all times.
 
5.6.   Statement of Account. The Plan Administrator shall provide or make
available to each Participant (including electronically), not less frequently
than annually, a statement in such form as the Plan Administrator deems
desirable setting forth the balance of his or her Account.
 
5.7.   Payments from Account. Any payment made to or on behalf of a Participant
from his or her Account in an amount which is less than the entire balance of
his or her Account shall be made pro rata from each of the Measurement Funds to
which such Account is then allocated.
 
ARTICLE VI
 
Payments to Participants
 
6.1.   Distributions. It is intended that distributions under this Plan be made
in accordance with the requirements of Code Section 409A.
 
6.2.   Specified Time or Fixed Schedule. A Participant may elect in his or her
initial Participation Agreement to receive his or her Account, or a sub-account
thereof (as may be provided by the Plan Administrator from time-to-time), in a
single lump sum payment as of the date specified in the Participation Agreement
or in annual installments, over a one, three, five or ten year period, beginning
as of the year specified in the Participation Agreement. Any lump sum payment
shall be made under this Plan as of the date specified by the Participant or as
soon thereafter as reasonably practicable. Any installment payment to be made
under this Plan shall be made as soon as reasonably practicable following
January 1 of the year specified in the Participation Agreement. Such election
shall be made in a manner that satisfies Code Section 409A with regard to the
timing of participant elections. Notwithstanding the foregoing, if the
Participant has a separation from service for any reason other than the
Participant’s Disability or death before the scheduled payment date for a lump
sum or one or more installment payments, and the Participant does not again
perform services for the Parent Company, the Company and/or any Subsidiary
before the last day of the year in which such separation occurs, such payment
shall instead be made, or shall commence, as set forth in Sections 6.3 and 6.5.
If the Participant experiences a Disability or has a separation from service by
reason of his or her death before the scheduled payment date for a lump sum or
one or more installment payments, such payment shall instead be made, or shall
continue, as set forth in Sections 6.6 and 6.7.
 
6.3.   Separation from Service. Upon a Participant’s separation from service
with the Company, including termination of service as a Director, for any reason
except Disability, Change in Control or death, the Participant shall receive
payment of the Participant’s Account in the form and manner set forth in Section
6.5. Benefits payable in a lump sum and the first installment of any benefits
payable in installments shall be paid as soon as practicable after January 1 of
the year following the year in which Participant’s separation from service date
occurs. Future annual installment benefits shall be paid annually as soon as
practicable after January 1 of each subsequent year. Notwithstanding the above,
if the Participant again performs services for the Company before the last day
of the year in which such separation occurred, he or she shall be treated as if
the separation never occurred.
 
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6.4.   Change in Control. Notwithstanding any other provision of this Plan to
the contrary, upon a Change in Control, the Participant shall become entitled to
receive payment of the Participant’s Elective Deferral Account in the form and
manner set forth in Section 6.5. Benefits payable in a lump sum and the first
installment of any benefits payable in installments shall be paid as of the
effective date of the Change in Control. Future annual installment benefits
shall be paid annually as soon as practicable after January 1 of each subsequent
year.
 
6.5.   Form of Payment. Subject to the requirements of Code Section 409A,
benefits payable under Sections 6.3 and 6.4 shall be payable in the following
form:
 
(a)    Termination Prior to Retirement. Benefits payable as a result of
separation from service prior to Retirement shall be paid in a lump sum,
regardless of whether the Participant has a different election on file with the
Plan Administrator.
 
(b)    Termination Due to Retirement or Following a Change in Control. Benefits
payable as a result of separation from service due to Retirement or following a
Change in Control shall be paid in the form elected by the Participant in his or
her Participation Agreement. Options for form of payment shall include:
 
(i)    A single lump sum payment, or
 
(ii)   Substantially equal annual installments over a one, three, five, or ten
year period. The Participant’s Account shall continue to accrue earnings (or
losses) as measured by the Measurement Funds during the payment period on the
unpaid balance in the Participant’s Accounts.
 
6.6.   Disability. Upon the Disability of a Participant, the Participant shall
be paid the balance in his or her Account in the form of a lump sum payment,
with such payment to be made as soon as practicable after the Participant’s
Disability has been determined.
 
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6.7.   Death.
 
(a)    Upon the death of a Participant prior to termination of employment or
service as a Director, the Company shall pay to the Participant’s Beneficiary
the balance in his or her Account in the form of a lump sum payment, with such
payment to be made as soon as practicable after the Participant’s death.
 
(b)    Upon the death of a Participant after benefit payments have commenced,
the Participant’s Beneficiary shall receive the remaining unpaid balance in the
Participant’s Accounts in the same manner as the Participant was being paid
prior to the Participant’s death; provided, however, that any benefits payable
hereunder to a trust or estate shall be made in a lump sum.
 
6.8.   Unforeseeable Emergency. Upon a finding that a Participant has suffered
an Unforeseeable Emergency as defined under Section 2.23 of the Plan, the Plan
Administrator may, in its sole discretion, make distributions from the
Participant’s Elective Deferral Account. A Participant requesting a distribution
as a result of an Unforeseeable Emergency shall apply in writing to the Plan
Administrator and shall provide such additional information as the Plan
Administrator may require. The amount of the withdrawal shall be limited to the
amount necessary to satisfy such emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the
participant’s assets (to the extent the liquidation of such assets would not
itself cause severe financial hardship). Upon requesting a distribution due to
an Unforeseeable Emergency, the Participant shall be required to change the
investment direction of the Participant’s Accounts to the money market fund.
Immediately following a distribution due to an Unforeseeable Emergency, or the
determination by the Plan Administrator not to authorize the distribution, the
Participant may change the investment direction pursuant to Section 5.3. If a
distribution is made due to an Unforeseeable Emergency in accordance with this
Section 6.8, the Participant’s deferrals under this Plan shall cease in their
entirety. Any resumption of the Participant’s deferrals under this Plan shall be
made only at the election of the Participant in accordance with Article III
herein.
 
6.9.   Change in Election. A Participant may change the payment date and/or the
form of an existing payment election made under Section 6.2 for a Plan Year by
filing a new payment election, in the form specified by the Plan Administrator,
at least twelve (12) months prior to the original payment date (in the case of
installment payments, the date of the first scheduled installment payment),
provided that such new election delays the payment year by at least five (5)
years from the original payment year. In no event shall the new payment election
take effect until at least twelve (12) months after the date on which the
election is made. A Participant may not change the payment date or form of
payment with respect to any Accounts, or sub-accounts as the case may be,
payable at Retirement, once elected.
 
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6.10.     Small Accounts. Notwithstanding any election made under this Plan, if
the total value of the Participant’s Account on the Participant’s Retirement
date is less than $25,000, then the Participant’s Account shall be paid to the
Participant in one lump sum as soon as practicable after January 1 of the year
following the year in which the Participant Retires.
 
6.11.     Valuation of Payments. Any lump sum benefit owed under this Article VI
shall be payable in an amount equal to the value of the Participant’s Account
(or relevant portion thereof) as of January 1 in the year in which payment is to
be made. The first annual installment payment in a series of installment
payments shall be equal to (i) the value of the Participant’s Account (or
relevant portion thereof) as of January 1 in the year in which payment is to be
commenced, divided by (ii) the number of installment payments elected by the
Participant. The remaining installments shall be paid in an amount equal to the
value of such Accounts (or relevant portion thereof) as of January 1 in the year
in which each payment is to be made, divided by the number of remaining unpaid
installment payments.
 
6.12.     Delay of Payment for Specified Employees. Notwithstanding any
provision of this Plan to the contrary, in the case of any Participant who is a
“specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), no
distribution under this Plan may be made, or may commence, before the date which
is 6 months after the date of such Participant’s “separation from service”
within the meaning of Code Section 409A(a)(2)(A)(i). The foregoing sentence
shall not apply in the case of a distribution made in connection with the
Disability or death of a Participant or upon the occurrence of a Change in
Control.
 
6.13.     Withholding Taxes. The Company may make such provisions and take such
action as it may deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation of any govern-mental
authority, whether federal, state or local, to withhold in connection with any
benefits under the Plan, including, but not limited to, the withholding of
appropriate sums from any amount otherwise payable to the Participant (or his or
her Beneficiary). Each Participant, however, shall be responsible for the
payment of all individual tax liabilities relating to any such benefits.
 
6.14.     Effect of Payment. The full payment of the applicable benefit under
this Article VI shall completely discharge all obligations on the part of the
Company to the Participant (and each Beneficiary) with respect to the operation
of this Plan, and the Participant’s (and Beneficiary’s) rights under this Plan
shall terminate.
 
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ARTICLE VII
 
Beneficiary Designation

7.1.   Beneficiary Designation. Subject to Section 7.3, each Participant shall
have the right, at any time, to designate one (1) or more persons or an entity
as Beneficiary (both primary as well as contingent) to whom benefits under this
Plan shall be paid in the event of such Participant’s death prior to complete
distribution of the Participant’s Accounts. Each Beneficiary designation shall
be in a written form prescribed by the Plan Administrator and shall be effective
only when filed with the Plan Administrator during the Participant’s lifetime.
 
7.2.   Changing Beneficiary. Subject to Section 7.3, any Beneficiary designation
may be changed by a Participant without the consent of the previously named
Beneficiary by the filing of a new Beneficiary designation with the Plan
Administrator. The filing of a new properly completed Beneficiary designation
shall cancel all Beneficiary designations previously filed.
 
7.3.   Community Property. If the Participant resides in a community property
state, any Beneficiary designation shall be valid or effective only as permitted
under applicable law.
 
7.4.   No Beneficiary Designation. If any Participant fails to designate a
Beneficiary in the manner provided in Section 7.1, if the Beneficiary
designation is void under Section 7.3, or if the Beneficiary designated by a
deceased Participant dies before the Participant or before complete distribution
of the Participant’s Accounts, the Participant’s Beneficiary shall be the person
in the first of the following classes in which there is a survivor:
 
(a)    The Participant’s spouse;
 
(b)    The Participant’s children in equal shares, except that if any of the
children predeceases the Participant but leaves issue surviving, then such issue
shall take, by right of representation, the share the parent would have taken if
living; or
 
(c)    The Participant’s estate.
 
ARTICLE VIII
 
Administration
 
8.1.   Plan Administrator. The Plan Administrator shall be the board of
directors of Orthofix, or a person or committee appointed by the board of
directors of Orthofix to administer the Plan. The Plan Administrator shall have
full discretionary power and authority to interpret the Plan, to prescribe,
amend and rescind any rules, forms and procedures as it deems necessary or
appropriate for the proper administration of the Plan and to make any other
determinations, including factual determinations, and take such other actions as
it deems necessary or advisable in carrying out its duties under the Plan.
 
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8.2.   Agents. The Plan Administrator may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may, from time
to time, consult with counsel who may be counsel to Orthofix.
 
8.3.   Binding Effect of Decisions. All decisions and determinations by the Plan
Administrator shall be final, conclusive and binding on the Parent Company, the
Company, any Subsidiary, Participants, Beneficiaries and any other persons
having or claiming an interest hereunder.
 
8.4.   Indemnification of Plan Administrator. The Company shall indemnify and
hold the Plan Administrator harmless against any and all claims, loss, damage,
expense or liability arising from any action or failure to act with respect to
this Plan due to the Plan Administrator’s service as such, except in the case of
gross negligence or willful misconduct by the Plan Administrator or as expressly
provided by statute.
 
ARTICLE IX
 
Claims Procedures
 
9.1.   Claim. A Participant who believes that he or she is being denied a
benefit to which he or she is entitled under the Plan may file a written request
for such benefit with the Plan Administrator, setting forth his or her claim for
benefits.
 
9.2.   Claim Decision. The Plan Administrator shall reply to any claim filed
under Section 9.1 within 90 days of receipt, unless it determines to extend such
reply period for an additional 90 days for reasonable cause. If the claim is
denied in whole or in part, such reply shall include a written explanation,
using language calculated to be understood by the Participant, setting forth:
 
(a)    the specific reason or reasons for such denial;
 
(b)    the specific reference to relevant provisions of this Plan on which such
denial is based;
 
(c)    a description of any additional material or information necessary for the
Participant to perfect his or her claim and an explanation why such material or
such information is necessary;
 
(d)    appropriate information as to the steps to be taken if the Participant
wishes to submit the claim for review;
 
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(e)    the time limits for requesting a review under Section 9.3 and for review
under Section 9.4 hereof; and
 
(f)    the Participant’s right to bring an action for benefits under Section 502
of ERISA.
 
9.3.   Request for Review. Within 60 days after the receipt by the Participant
of the written explanation described above, the Participant may request in
writing that the Plan Administrator review its determination. The Participant or
his or her duly authorized representative may, but need not, review the relevant
documents and submit issues and comment in writing for consideration by the Plan
Administrator. If the Participant does not request a review of the initial
determination within such 60-day period, the Participant shall be barred and
estopped from challenging the determination.
 
9.4.   Review of Decision. After considering all materials presented by the
Participant, the Plan Administrator will render a written decision, setting
forth the specific reasons for the decision and containing specific references
to the relevant provisions of this Plan on which the decision is based. The
decision on review shall normally be made within 60 days after the Plan
Administrator’s receipt of the Participant’s claim or request. If an extension
of time is required for a hearing or other special circumstances, the
Participant shall be notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the relevant Plan provisions
and the Participant’s right to bring an action for benefits under Section 502 of
ERISA. All decisions on review shall be final and shall bind all parties
concerned.
 
ARTICLE X
 
Miscellaneous
 
10.1.     Unfunded Plan. This Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group of
“management or highly compensation employees” within the meaning of Sections
201, 301, and 401 of the Employee Retirement Income Security act of 1974, as
amended (“ERISA”), and therefore to be exempt from the provisions of Parts 2, 3,
and 4 of Title I of ERISA. Accordingly, the Plan shall terminate and no further
benefits shall be paid hereunder if it is determined by a court of competent
jurisdiction or by an opinion of counsel that the Plan constitutes an employee
pension benefit plan within the meaning of Section 3(2) of ERISA which is not so
exempt.
 
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10.2.     Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors, and assigns shall have no legal or equitable rights, interest
or claims in any property or assets of the Parent Company, the Company, or any
Subsidiary nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts, or the proceeds
therefrom owned or which may be acquired by the Parent Company, the Company or
any Subsidiary. Except as may be provided in Section 10.3, such policies,
annuity contracts or other assets of the Parent Company, the Company or any
Subsidiary shall not be held under any trust for the benefit of Participants,
their Beneficiaries, heirs, successors or assigns, or held in any way as
collateral security for the fulfilling of the obligations of the Parent Company,
the Company or any Subsidiary under this Plan. Any and all of the Parent
Company, the Company or any Subsidiary’s assets and policies shall be, and
remain, the general, unpledged, unrestricted assets of the Parent Company, the
Company or the Subsidiary. The Parent Company, the Company or any Subsidiary’s
obligation under the Plan shall be that of an unfunded and unsecured promise to
pay money in the future.
 
10.3.     Trust Fund. Each adopting employer shall be responsible for the
payment of all benefits provided under the Plan. At its discretion, an adopting
employer or the Company, acting on behalf of all adopting employers, may
establish one or more grantor trusts, with such trustees as the Board may
approve, for the purpose of providing for the payment of such benefits. Such
trust or trusts may be irrevocable, but the assets thereof shall be subject to
the claims of the adopting employer’s or the Company’s creditors, as the case
may be. To the extent any benefits provided under the Plan are actually paid
from any such trust, the adopting employer and/or the Company shall have no
further obligation with respect thereto, but to the extent not so paid, such
benefits shall remain the obligation of, and shall be paid by, the adopting
employer or the Company.
 
10.4.     Protective Provisions. Each Participant and Beneficiary shall
cooperate with the Plan Administrator by furnishing any and all information
requested by the Plan Administrator in order to facilitate the payment of
benefits hereunder. If a Participant or Beneficiary refuses to cooperate with
the Plan Administrator, the Company shall have no further obligation to the
Participant or Beneficiary under the Plan, other than payment of the
then-current balance of the Participant’s Account in accordance with prior
elections.
 
10.5.     Inability to Locate Participant or Beneficiary. If the Plan
Administrator is unable to locate a Participant or Beneficiary within two years
following the date the Participant was to commence receiving payment, the entire
amount allocated to the Participant’s Account shall be forfeited. If, after such
forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without interest or earnings from the date payment
was to commence pursuant to Article VI.
 
10.6.     No Contract of Employment. Neither the establishment of the Plan, nor
any modification thereof, nor the creation of any fund, trust or account, nor
the payment of any benefits shall be construed as giving any Participant or any
person whosoever, the right to be retained in the service of the Parent Company,
the Company and/or any Subsidiary, and all Participants and other employees
shall remain subject to discharge to the same extent as if the Plan had never
been adopted.
 
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10.7.     No Limitation on Company Actions. Nothing contained in the Plan shall
be construed to prevent the Parent Company, the Company and/or any Subsidiary
from taking any action which is deemed by it to be appropriate or in its best
interest. No Participant, Beneficiary, or other person shall have any claim
against the Parent Company, the Company and/or any Subsidiary as a result of
such action.
 
10.8.     Obligations to Company. If a Participant becomes entitled to a payment
of benefits under the Plan, and if at such time the Participant has out-standing
any debt, obligation, or other liability representing an amount owing to the
Parent Company, the Company and/or any Subsidiary, then the Parent Company, the
Company and/or any Subsidiary may offset such amount owed to it against the
amount of benefits otherwise distributable. Such determination shall be made by
the Plan Administrator in its sole discretion.
 
10.9.     No Liability for Action or Omission. Neither the Parent Company, the
Company, any Subsidiary nor any Director, officer or employee of the Parent
Company, the Company and/or any Subsidiary shall be responsible or liable in any
manner to any Participant, Beneficiary or any person claiming through them for
any benefit or action taken or omitted in connection with the granting of
benefits, the continuation of benefits, or the interpretation and administration
of this Plan.
 
10.10.   Nonalienation of Benefits. Except as otherwise specifically provided
herein, all amounts payable hereunder shall be paid only to the person or
persons designated by the Plan and not to any other person or corporation. No
part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall such accounts of a Participant be subject to execution by
levy, attachment, or garnishment or by any other legal or equitable proceeding,
nor shall any such person have any right to alienate, anticipate, commute,
pledge, encumber, or assign any benefits or payments hereunder in any manner
whatsoever. If any Participant, Beneficiary or successor in interest is
adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any payment from the Plan, voluntarily or
involuntarily, the Plan Administrator, in its discretion, may cancel such
payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Plan Administrator
shall direct. Notwithstanding the foregoing, all or a portion of a Participant’s
Account may be awarded to an “alternate payee” (within the meaning of Section
206(d)(3)(K) of ERISA) if and to the extent so provided in a judgment, decree or
order that, in the Plan Administrator’s sole discretion, would meet the
applicable requirements for qualification as a “qualified domestic relations
order” (within the meaning of Section 206(d)(3)(B)(i) of ERISA) if the Plan were
subject to the provisions of Section 206(d) of ERISA.
 
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10.11.   Liability for Benefit Payments. The obligation to pay or provide for
payment of a benefit hereunder to any Participant or his or her Beneficiary
shall, at all times, be the sole and exclusive liability and responsibility of
the adopting employer of the particular Participant.
 
10.12.   Governing Law. This Plan shall be construed in accordance with and
governed by the laws of the State of Texas to the extent not superseded by
federal law, without reference to the principles of conflict of laws.
 
10.13.   Severability of Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and this Plan shall be construed and enforced as if
such provisions had not been included.
 
10.14.   Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
 
10.15.   Gender, Singular and Plural. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, as the identity
of the person or persons may require. As the context may require, the singular
may read as the plural and the plural as the singular.
 
10.16.   Notice. Any notice or filing required or permitted to be given to the
Plan Administrator under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Plan Administrator,
c/o Orthofix, Inc., 1720 Bray Central Drive, McKinney, Texas 75069 or to such
other person or entity as the Plan Administrator may designate from time to
time. Any notice required or permitted to be given to the Participant under the
Plan shall be sufficient if in writing and hand delivered, or sent by registered
or certified mail, to the Participant at his or her address as on file with the
Parent Company, the Company or any Subsidiary, as the case may be. Any such
notices shall be deemed given as of the date of delivery, or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
 
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10.17.   Amendment and Termination. The Plan may be amended, suspended, or
terminated at any time by the Company or by the Plan Administrator in its sole
discretion; provided, however, that no such amendment, suspension or termination
shall result in any reduction in the value of a Participant’s Accounts
determined as of the effective date of such amendment. In addition, the Plan,
and/or the terms of any election made hereunder, may be amended at any time and
in any respect by the Company or by the Plan Administrator if and to the extent
recommended by counsel in order to avoid the imposition of any additional tax
under Code Section 409A. In the event of any suspension or termination of the
Plan, payment of Participants’ Accounts shall be made under and in accordance
with the terms of the Plan and the applicable elections (except that the Plan
Administrator may determine, in its sole discretion, to accelerate payments to
all Participants if and to the extent that such acceleration is permitted under
Code Section 409A and regulations thereunder).
 
 

   
ORTHOFIX HOLDINGS, INC.
       
By:  
/s/ Alan W. Milinazzo
       
Title:  
Director
       
Date:  
January 1, 2007

 
 
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