Exhibit 10.2


    
      

    

    
       

      EMPLOYMENT
        AGREEMENT

      


      This
        Employment Agreement (the “Agreement”),
        entered into July 13, 2006, effective as of April 1, 2006 (the “Effective
        Date”),
        is by
        and between Orthofix Inc., a Minnesota corporation (the “Company”),
        and
        Thomas Hein, an individual (the “Executive”).
        

      


      PRELIMINARY
        STATEMENTS

      


      A.    The
        Company and the Executive are parties to an Employment Agreement, dated as
        of
        March 1, 2003 (the “Prior
        Agreement”),
        but
        desire to terminate the Prior Agreement and 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 and the Executive agree and acknowledge that pursuant to this Agreement
        the Executive will receive consideration and other benefits over and above
        that
        which he was entitled to receive under the Prior Agreement and over and above
        that which he would otherwise be entitled to receive as compensation for
        services performed for the Company.

      


      D.    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.

      


      E.    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, Chief Financial Officer, Treasurer and Assistant Secretary of
        the
        Company, and be appointed to serve as Vice President, Chief Financial Officer,
        Treasurer and Assistant Secretary 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
        chief financial officers 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).


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      


      1.2   Services.
        During
        the Term (as defined in Section 1.3), and excluding any periods of vacation,
        sick leave or disability, the Executive agrees to devote his full business
        time,
        attention and efforts to the business and affairs of the Company. During
        the
        Term, it shall not be a violation of this Section 1.2 for the Executive to
        (a)
        serve on civic or charitable boards or committees (but not corporate boards),
        (b) deliver lectures or fulfill speaking engagements or (c) manage personal
        investments, so long as such activities do not interfere with the performance
        of
        the Executive’s responsibilities in accordance with this Agreement. The
        Executive must request the 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.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      


      2.2   Base
        Salary.
        The
        Executive shall be paid a base salary of no less than $22,531.25 per month
        ($270,375 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 40% 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 60% 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).


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      


      3.2   Savings
        and Retirement Plans.
        The
        Executive shall be entitled to participate in, and enjoy the benefits of,
        all
        savings, pension, salary continuation and retirement plans, practices, policies
        and programs available to senior executives of the Company.

      


      3.3   Welfare
        and Other Benefits.
        The
        Executive and/or the Executive’s eligible dependents, as the case may be, shall
        be entitled to participate in, and enjoy the benefits of, all welfare benefit
        plans, practices, policies and programs provided by the Company (including
        without limitation, medical, prescription, drug, dental, disability, salary
        continuance, group life, dependent life, accidental death and travel accident
        insurance plans and programs) and other benefits (including, without limitation,
        executive physicals and tax and financial planning assistance) at a level
        that
        is available to other senior executives of the Company.

      


      3.4   Vacation.
        The
        Executive shall be entitled to 3 weeks paid vacation per 12-month period.
        

      


      3.5   Expenses.
        The
        Executive shall be entitled to receive prompt reimbursement for all reasonable
        business-related expenses incurred by the Executive in performing his duties
        under this Agreement. Reimbursement of the Executive for such expenses will
        be
        made upon presentation to the Company of expense vouchers that are in sufficient
        detail to identify the nature of the expense, the amount of the expense,
        the
        date the expense was incurred and to whom payment was made to incur the expense,
        all in accordance with the expense reimbursement practices, policies and
        procedures of the Company. 

      


      3.6   Key
        Man Insurance.
        The
        Company shall be entitled to obtain a “key man” or similar life or disability
        insurance policy on the Executive, and neither the Executive nor any of his
        family members, heirs or beneficiaries shall be entitled to the proceeds
        thereof. Such insurance shall be available to offset any payments due to
        the
        Executive pursuant to Section 5.1 of this Agreement due to his death or
        Disability. 

      


      IV.    TERMINATION
        OF EMPLOYMENT

       

      4.1   Termination
        by Mutual Agreement.
        The
        Executive’s employment
        may be terminated at any time during the Term by mutual written agreement
        of the
        Company and the Executive.

      


      4.2   Death.
        The
        Executive’s employment hereunder shall terminate upon his death.

      


      4.3   Disability.
        In the
        event the Executive incurs a Disability for a continuous period exceeding
        90
        days or for a total of 180 days during any period of 12 consecutive months,
        the
        Company may, at its election, terminate the Executive’s employment during the
        Term by delivering a Notice of Termination (as defined in Section 4.8) to
        the
        Executive 30 days in advance of the date of termination. 


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      


      4.4   Good
        Reason.
        The
        Executive may terminate his employment at any time during the Term for Good
        Reason by delivering a Notice of Termination to the Company 30 days in advance
        of the date of termination; provided,
        however,
        that
        the Executive agrees not to terminate his employment for Good Reason until
        the
        Executive has given the Company at least 30 days’ in which to cure the
        circumstances set forth in the Notice of Termination constituting Good Reason
        and if such circumstances are not cured by the 30th
        day, the
        Executive’s employment shall terminate on such date. If the circumstances
        constituting Good Reason are remedied within the cure period to the reasonable
        satisfaction of the Executive, such event shall no longer constitute Good
        Reason
        for purposes of this Agreement and the Executive shall thereafter have no
        further right hereunder to terminate his employment for Good Reason as a
        result
        of such event. Unless
        the Executive provides written notification of an event described in the
        definition of Good Reason within 90 days after the Executive has actual
        knowledge of the occurrence of any such event, the Executive shall be deemed
        to
        have consented thereto and such event shall no longer constitute Good Reason
        for
        purposes of this Agreement. 

      


      4.5   Termination
        without Cause.
        The
        Company may terminate the Executive’s employment at any time during the Term
        without Cause by delivering to the Executive a Notice of Termination 30 days
        in
        advance of the date of termination; provided that as part of such notice
        the
        Company may request that the Executive immediately tender the resignations
        contemplated by Section 4.9 and otherwise cease performing his duties hereunder.
        The Notice of Termination need not state any reason for termination and such
        termination can be for any reason or no reason. The date of termination shall
        be
        the date set forth in the Notice of Termination. 

      


      4.6   Cause.
        The
        Company may terminate the Executive’s employment at any time during the Term for
        Cause by delivering a Notice of Termination to the Executive. The Notice
        of
        Termination shall include a
        copy of
        a resolution duly adopted by the affirmative vote of not less than a majority
        of
        the entire membership of the 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.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      


      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.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (b)    a
        one-time lump sum severance payment in an amount equal to 100% of the
        Executive’s Base Amount. The lump sum severance payment shall be paid within 30
        days after the date of termination; 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.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (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.


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      


      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. 

      


      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. 


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      


      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 August 1, 2005, 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.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        (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.


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      


      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.

      


      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. 



      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      


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

      


      
        	
                ORTHOFIX
                  INC.

              	 	
                EXECUTIVE

              
	 	 	 
	
                /s/
                  Alan W. Milinazzo

              	 	/s/
                Thomas Hein
	 	 	
                Thomas
                  Hein

              
	
                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 chief and principal financial
        officers certifications
        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.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      “Change
        of Control”
        shall
        occur upon any of the following events:

       

      (i)    the
        acquisition by any individual, entity or group (within the meaning of Section
        13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within
        the
        meaning of Rule 13d-3 promulgated under the Exchange Act), in any individual
        transaction or series of related transactions, of 50% or more of either (A)
        the
        then outstanding shares of common stock of Parent (the “Outstanding
        Common Stock”)
        or (B)
        the combined voting power of the then outstanding voting securities of Parent
        entitled to vote generally in the election of directors (the “Outstanding
        Voting Securities”);
        excluding,
        however,
        the
        following: (1) any acquisition directly from Parent, other than an acquisition
        by virtue of the exercise of a conversion privilege unless the security being
        so
        converted was itself acquired directly from Parent; (2) any acquisition by
        Parent; (3) any acquisition by any employee benefit plan (or related trust)
        sponsored or maintained by Parent or any entity controlled by Parent; or
        (4) any acquisition pursuant to a transaction which complies with clauses
        (A), (B) and (C) of subsection (iii) of this definition of Change of
        Control;

       

      (ii)   a
        change
        in the composition of the 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;

       

      (iii)   consummation
        of a reorganization, merger, consolidation or other business combination
        or the
        sale or other disposition of all or substantially all of the assets of Parent
        (including assets that are shares held by Parent in its subsidiaries) (any
        such
        transaction, a “Business
        Combination”);
        expressly
        excluding,
        however,
        any
        such Business Combination pursuant to which all of the following conditions
        are
        met: (A) all or substantially all of the Person(s) who are the beneficial
        owners of the Outstanding Common Stock and Outstanding Voting Securities,
        respectively, immediately prior to such Business Combination will beneficially
        own, directly or indirectly, more than 50% of, respectively, the outstanding
        shares of common stock, and the combined voting power of the outstanding
        voting
        securities entitled to vote generally in the election of directors, as the
        case
        may be, of the entity resulting from such Business Combination (including,
        without limitation, an entity which as a result of such transaction owns
        Parent
        or all or substantially all of Parent’s assets either directly or through one or
        more subsidiaries) in substantially the same proportions as their ownership,
        immediately prior to such Business Combination, of the Outstanding Common
        Stock
        and Outstanding Voting Securities, as the case may be, (B) no Person (other
        than Parent, any employee benefit plan (or related trust) of Parent or such
        entity resulting from such Business Combination) will beneficially own, directly
        or indirectly, 50% or more of, respectively, the outstanding shares of common
        stock of the entity resulting from such Business Combination or the combined
        voting power of the outstanding voting securities of such entity entitled
        to
        vote generally in the election of directors except to the extent that such
        ownership existed prior to the Business Combination, and (C) individuals
        who were members of the Incumbent Board will constitute at least a majority
        of
        the members of the board of directors of the entity resulting from such Business
        Combination;

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

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

       

      (v)    the
        Parent Group (or any of them) shall sell or dispose of, in a single transaction
        or series of related transactions, business operations that generated two-thirds
        of the consolidated revenues of the Parent Group (determined on the basis
        of
        Parent’s four most recently completed fiscal quarters for which reports have
        been filed under the Exchange Act) and such disposal shall not be exempted
        pursuant to clause (iii) of this definition of Change of Control; 

       

      (vi)   Parent
        files a report or proxy statement with the Securities and Exchange Commission
        pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule
        14A
        (or any successor schedule, form or report or item therein) that a change
        of
        control of Parent has or may have occurred or will or may occur in the future
        pursuant to any then-existing agreement or transaction; notwithstanding the
        foregoing, unless determined in a specific case by a majority vote of the
        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

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      (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.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      “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.


      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      


      “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