Exhibit 10.4


    
      

    


    EMPLOYMENT
      AGREEMENT

    


    This
      Employment Agreement (the “Agreement”),
      entered into July 13, 2006 (the “Effective
      Date”),
      is by
      and between Orthofix Inc., a Minnesota corporation (the “Company”),
      and
      Michael M. Finegan, 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 Vice
      President of Corporate Development of the Company, and be appointed to serve
      as
      Vice President of Corporate Development of the Parent. The Executive 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 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
      vice presidents of corporate development of
      companies which are similar in size and nature to, and the financial position
      of, the Parent Group. 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).


    
      
        
        

      

      
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    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 Board’s prior written consent to serve on a corporate
      board, which consent shall be at the 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 additional one-year periods on each of the third and
      fourth anniversaries of the Effective Date (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 the third and fourth
      anniversary dates, 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 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.


    
      
        
        

      

      
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    2.2   Base
      Salary.
      The
      Executive shall be paid a base salary of no less than $20,416.66 per month
      ($245,000 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 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.

    


    2.3   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 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 35% 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 52.5% 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 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 Board and shall be payable 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
      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 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
      Board’s annual compensation review, but any such grants shall be at the sole
      discretion of the Board.

    


    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).


    
      
        
        

      

      
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    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 4 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. 


    
      
        
        

      

      
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    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 Board,
      at
      a meeting of the Board called and held for such purpose, finding that in the
      good faith opinion of the 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 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 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 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 Board or the Company’s senior
      executives.


    
      
        
        

      

      
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      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.

    

    


    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.

    


    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 be
      paid at the time such Incentive Compensation is paid to senior executives of
      the
      Company (“Severance
      Bonus Payment Date”),
      provided with respect to termination of employment for reasons other than death,
      the payment at such time can be characterized as a “short-term deferral” for
      purposes of Section 409A, or if the payment cannot be so characterized, such
      payment shall be made on the later of the Severance Bonus Payment Date or the
      first day of the seventh calendar month following the Executive’s date of
      termination.

     


    
      
        
        

      

      
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    (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; provided,
      however,
      that
      such payment shall be delayed until the first day of the seventh month following
      the date of termination (unless termination is as a result of the Executive’s
      death) if the payment would otherwise be expected to trigger imposition of
      the
      additional tax under Section 409A.

     

    (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. To the extent permitted by Section
      409A and subject to the earlier expiration of the option or stock appreciation
      right at the expiration of its term, if the Executive’s employment is terminated
      pursuant to Section 4.4 or 4.5, the Executive shall have until the later of
      (i)
      December 31 of the calendar year that his options or stock appreciation rights
      would otherwise expire due to his termination or (ii) two and one-half months
      after the date his options or stock appreciation rights would otherwise expire
      due to his termination 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 Section 409A and 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.

     

    
      
        
        

      

      
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    (e)    to
      the
      fullest extent permitted by Section 409A without triggering imposition of the
      additional tax thereunder, 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.

     

    In
      the
      event the Executive’s termination is pursuant to Section 4.2 or 4.3, in lieu of
      a lump sum payment, the Executive or his heirs, beneficiaries, personal
      representatives, or guardians, 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;
      provided,
      however,
      that
      such payment shall be delayed until the first day of the seventh month following
      the date of termination if the payment would otherwise be expected to trigger
      imposition of the additional tax under Section 409A; provided further, that
      all
      such delayed payments will be paid on the first day of the seventh month
      following the date of termination. 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.


    
      
        
        

      

      
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    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. 

    


    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 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.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    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 in a manner mutually agreeable to the parties in writing 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. 

    


    (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.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    VI.    PROTECTIVE
      PROVISIONS

    


    6.1   Noncompetition.
      Without
      the prior written consent of the Board (which may be withheld in the 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. 

    


    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.


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (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.

    


    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.


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (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. 

    


    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. 


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    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:

    


    If
      to the
      Company:

    


    Orthofix
      Inc.

    Attn:
      General Counsel

    The
      Storrs Building

    Suite
      250

    10115
      Kincey Ave.

    Huntersville,
      NC 28078

    


    Facsimile:
      704-948-2690

    E-mail:
      raykolls@orthofix.com 

    With
      a
      copy which shall not constitute notice to: 

    


    Baker
      & McKenzie LLP

    Pennzoil
      Place, South Tower

    711
      Louisiana, Suite 3400

    Houston,
      Texas 77002-2746

    Attention:
      Jonathan B. Newton

    Telephone
      No.: (713) 427-5000

    Facsimile
      No.: (713) 427-5099

    E-mail:
      Jonathan.B.Newton@Bakernet.com


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    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, Kaufman & Kammholz, P.C.

    222
      North
      LaSalle Street

    Chicago,
      Illinois 60601

    Attention:
      Thomas P. Desmond

    Telephone
      No.: (312) 609-7647

    Facsimile
      No.: (312) 609-5005

    E-mail:
      tdesmond@vedderprice.com

    


    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 Huntersville, North Carolina, in accordance with the
      rules of the American Arbitration Association then in effect. Judgment may
      be
      entered on the arbitrator's award in any court having jurisdiction. 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.

    


    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.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    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, expressly including the
      Prior Agreement, which Prior Agreement is hereby terminated in its entirety
      and
      of no further force and effect. The Executive expressly acknowledges that he
      has
      no further rights, and hereby waives or forfeits any and all rights he may
      have
      or may have had, under the Prior Agreement as a result of its termination
      hereby, and neither the Company nor any member of the Parent Group shall have
      any obligation to make any payments or satisfy any other liability to him
      thereunder. Nothing in this Agreement shall modify or alter the Indemnity
      Agreement dated July 18, 2006, by and between Parent and the Executive (the
      “Indemnity
      Agreement”)
      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, the Plans (or any award
      documents under the Plans) or the Indemnity Agreement to the contrary, if
any
      provision of this Agreement, the Plans (or any award documents under the Plans)
      or the Indemnity Agreement contravenes the final regulations or regulations
      anticipated to be promulgated under Section 409A or any other guidance from
      the
      United States Department of Treasury with respect to 409A, the Company may
      reform this Agreement, the Plans (or any award documents under the Plans),
      the
      Indemnity Agreement or any provision thereof (including,
      without limitation, an amendment instituting
      a six-month waiting period before
      a
      distribution) or
      otherwise incorporate the necessary provisions to maintain to the maximum extent
      practicable the original intent of the provision without violating the
      provisions of Section 409A to the extent that the Company, in its reasonable
      discretion, shall determine. 

    


    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.


    
      
        
        

      

      
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    (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 North Carolina 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 North Carolina.
       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 North Carolina 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.


    
      
        
        

      

      
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    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.

    


    7.16 
         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. 


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      parties have executed this Agreement as of the Effective Date.

    


    


    
      	
              ORTHOFIX
                INC.

            	 	
              EXECUTIVE

            
	 	 	 
	
              /s/
                Alan W. Milinazzo

            	 	/s/
              Michael M. Finegan
	 	 	
              Michael
                M. Finegan

            
	
              Name:

            	Alan
              W. Milinazzo	 	 
	
              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 Board will take the actions required of it hereby.

    


    


    


    
      	
              ORTHOFIX
                INTERNATIONAL N.V.

            
	 
	
               /s/
                James F. Gero

            	 
	 	 	 
	
              Name:

            	James
              F. Gero	 
	
              Title:

            	Chairman
              of the Board of Directors	 


    

    



    
      
        
        

      

      
        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.
      

     

    “Board”
      shall
      mean the Board of Directors of Parent. Any obligation of the Board other than
      termination for Cause under this Agreement may be delegated to an appropriate
      committee of the Board, including its compensation committee, and references
      to
      the Board herein shall be references to any such committee, as
      appropriate.

     

    “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 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 Sarbanes-Oxley Act of 2002, including the
      rules
      and regulations promulgated thereunder (the “Sarbanes-Oxley
      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 Sarbanes-Oxley
      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 Board.

     

    
      
        
        

      

      
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    “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 Board such that the individuals who as of the
      Effective Date constitute the Board (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 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 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;

     

    
      
        
        

      

      
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    (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;

     

    (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 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

     

    
      
        
        

      

      
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    (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 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. 

     

    “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.

     

    
      
        
        

      

      
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    “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 Board and the Executive (or his legal representative, if
      applicable). If the 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
      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 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; (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 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.


    
      
        
        

      

      
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    “Parent”
      shall
      mean Orthofix International N.V., an entity organized under the laws of the
      Netherlands Antilles.

     

    “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 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 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 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.

     

    “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