ex10_1.htm


    
      

    

    

      EXHIBIT
        10.1

       

      
        	
                 

              


      

      


      


      December
        6, 2007

       

       

      Mr.
        Thomas Hein

      c/o
        Orthofix, Inc.

      The
        Storrs Building, Suite 250

      10115
        Kincey Avenue

      Huntersville
        Business Park

      Huntersville,
        NC 28078

      


      Dear
        Tom:

      


      Reference
        is made to that certain Employment Agreement, dated July 13, 2006 (as modified
        by this side letter, the “Agreement”), by and between Orthofix, Inc., a
        Minnesota corporation (the “Company”), and Thomas Hein (the
“Executive,” or “you”), under which the Company’s payment
        obligations are guaranteed as provided therein by Orthofix International
        N.V., a
        Netherlands Antilles company (“Parent”).  All capitalized terms
        used, but not otherwise defined, herein shall have the meaning ascribed to
        them
        in the Agreement.  This letter (“Letter”) is being delivered to
        memorialize the understanding between the parties to the Agreement (the
“Parties”) with respect to the transition of your duties as Chief
        Financial Officer of the Company and Parent to a new Chief Financial Officer
        (“CFO”), as well as your assuming the role of Executive Vice President
–
Finance of the Company and Parent.

      


      By
        executing this Letter as provided below, the Parties hereby agree as
        follows:

      


      1.           The
        Company acknowledges that once the new CFO commenced employment with the
        Company
        on November 19, 2007 (the “Start Date”), an event constituting Good
        Reason pursuant to Section 4.4 of the Agreement occurred and would permit
        you to
        resign for Good Reason and receive the severance payments and other benefits
        described in Section 5.1 of the Agreement and elsewhere therein
        (“Benefits”), unless such event was cured by the Company.  Such
        Benefits would include a right to (a) payment of a one-time lump sum in an
        amount equal to 100% of your Base Amount (the “Good Reason Payment”), (b)
        acceleration of the vesting of all stock options then held by you (the
“Acceleration”), (c) payment of a bonus (through your date of
        termination) in the form of Incentive Compensation under the Bonus Plan based
        on
        your 2007 Goals, payable on the Severance Bonus Payment Date for the 2007
        Bonus
        Plan year and (d) various other benefits, including outplacement services
        and
        certain welfare benefits (“Other Benefits”).  Receipt of the
        Benefits requires your execution of a release as provided in Section 5.4
        of the
        Agreement and your compliance with protective provisions in Article VI of
        the
        Agreement, both of which obligations continue following effectiveness of
        this
        Letter.  With respect to such Good Reason event, the Parties agree to
        waive the related notice and cure periods in the Agreement and agree that
        such
        Good Reason event occurs as of the Start Date.  Nothing in this Letter
        shall otherwise modify any notice or cure provisions under the Agreement,
        including requirements to give advance notice of termination by the Company
        or
        the Executive.  The Parties further agree that the amount of the Good
        Reason Payment under the Agreement is $407,726.00.


      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      2.           You
        hereby agree to continue in employment and thereby waive temporarily any
        and all
        Benefits under the Agreement (except unpaid base salary and accrued unpaid
        vacation), including the Good Reason Payment, Acceleration and Other Benefits,
        in exchange for the Company offering you the opportunity to earn a retention
        bonus of $150,000 (“Retention Bonus”).  The Retention Bonus
        will be payable on July 15, 2008, as long as you:

      


      a.           remain
        an employee of the Company (or one of its affiliates) from the Start Date
        through July 15, 2008 (the “Transition Period”); and

      


      b.           work
        in good faith, as reasonably determined by the Company, with the new CFO
        to
        complete a plan for the transition of your current duties and responsibilities
        to the new CFO.

      


      The
        Company agrees that during the Transition Period ending July 15, 2008, it
        may
        terminate your employment only for “Cause” as provided in Section 4.6 of the
        Agreement.

      


      3.           During
        the Transition Period, you will serve as Executive Vice President – Finance and
        your duties will be as set forth by the CFO and the Chief Executive Officer
        in
        their sole discretion without regard to Section 1.1 or otherwise of the
        Agreement, which provisions are hereby superseded.  While an employee
        of the Company (or one of its affiliates) during the Transition Period, you
        will
        continue to receive your current salary under Section 2.2 of the Agreement
        and
        the benefits set forth under Article III.

      


      4.           With
        respect to Incentive Compensation under Section 2.3 of the Agreement, you
        will
        only be eligible for the earning and payment of such compensation as
        follows:

      


      a.           if
        you remain employed with the Company through December 31, 2007, you shall
        receive your Incentive Compensation on the Severance Bonus Payment Date as
        if
        you had continued in the role of CFO through such date; and

      


      b.           if
        you terminate employment with the Company for any reason prior to December
        31,
        2007, then on the Severance Bonus Payment Date you shall receive only your
        Incentive Compensation through the date hereof as if your employment had
        terminated under the Agreement as of the date hereof.

      


      c.           if
        you remain employed with the Company on or after January 1, 2008, you will
        participate in the Bonus Plan in your new role as Executive Vice
        President-Finance.  Your participation will be subject to the
        provisions of the Bonus Plan except as those terms might be modified by the
        Agreement and this Letter and will be at a level similar to that of your
        peers
        at the Company.

      


      d.           if
        you terminate your employment after January 1, 2008, but on or before July
        15,
        2008 (unless you are terminated for Cause), you will receive Bonus Plan
        Incentive Compensation for fiscal year 2008 through the date of the termination
        of your employment as follows: you will be entitled to receive the pro rata
        amount of any 2008 Bonus Plan Incentive Compensation (based on the number
        of
        business days you were actually employed during 2008) that you would have
        received had you not terminated your employment during 2008; provided,
        however, the foregoing sentence is not intended to give you greater rights
        to such Incentive Compensation than a pro rata portion of what you would
        ordinarily be entitled to under the Bonus Plan and such pro rata portion
        shall
        be paid at the time such Incentive Compensation is paid to other senior
        executives of the Company in 2009.

      


      5.           The
        following outlines when you would receive your Benefits (other than Incentive
        Compensation, which is outlined above) and, if earned, the Retention
        Bonus:

      


      a.           if
        you voluntarily terminate employment with the Company before July 15, 2008,
        then, in addition to any unpaid base salary and accrued unpaid vacation then
        owing through the date of termination, as well as any pro rata amount of
        any
        Bonus Plan Incentive Compensation as provided under Section 4, following
        your
        termination you would receive your Good Reason Payment and Other Benefits,
        but
        you would not receive the Retention Bonus; the Acceleration would occur as
        of
        the date you terminated employment with the Company;


      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      b.           if
        you die before July 15, 2008, then following your death, in addition to any
        unpaid base salary for the period from the date of your death until July
        15,
        2008 and accrued unpaid vacation owing through the date of death, as well
        as any
        pro rata amount of any Bonus Plan Incentive Compensation for the fiscal year
        of
        your death as provided under Section 4, your beneficiary would receive your
        Good
        Reason Payment, Other Benefits and the Retention Bonus; the Acceleration
        would
        occur as of the date you died;

      


      c.           if
        you remain employed by the Company (or one of its affiliates) until July
        15,
        2008, but do not accept a long-term role with the Company (or are not offered
        a
        long-term role with the Company) for any reason, then following your termination
        of employment you would receive (i) your Good Reason Payment and Other Benefits;
        (ii) the Retention Bonus (to be paid on or before August 1, 2008); (iii)any
        unpaid base salary and accrued unpaid vacation then owing through the date
        of
        termination, as well as any pro rata amount of any Bonus Plan Incentive
        Compensation as provided under Section 4, and the Acceleration would occur
        as of
        the date you terminated employment with the Company; further, the Parties
        agree
        that the Company is not obligated to offer, nor are you obligated to accept,
        any
        long-term role; and

      


      d.           if
        you remain employed by the Company (or one of its affiliates) until July
        15,
        2008, and you accept in writing a long-term role and continued employment
        with
        the Company, then you would receive the Retention Bonus (to be paid on or
        before
        August 1, 2008), but not receive the Good Reason Payment, Other Benefits
        or any
        other severance payments or benefits under the Agreement as a result of the
        Good
        Reason event (nor will the Acceleration occur); instead, the Agreement would
        remain in effect as if the Company had cured and remedied the event constituting
        Good Reason in accordance with Section 4.4 of the Agreement, to the reasonable
        satisfaction of the Executive, and the Executive shall have no right to
        terminate his employment or receive Benefits under Sections 4.4, 5.1 or any
        other provision of the Agreement, as a result of such Good Reason
        event.

      


      6.           While
        nothing will obligate you to remain employed with the Company after July
        15,
        2008, or for the Company to offer you a long-term position after July 15,
        2008,
        the Parties agree to work in good faith to determine to what extent and in
        what
        role you might remain with the Company after that date.  Failure of
        the Parties to determine a long-term role for the Executive will create no
        liability or obligation for any of the Parties.  For the avoidance of
        doubt, the Agreement and its Term will cease on your last day of employment
        with
        the Company (or any of its affiliates) unless you continue in a long-term
        role
        as provided in paragraph 5(d) (other than provisions of the Agreement that
        survive, which provisions shall remain in effect in accordance with their
        terms).

      


      7.           Until
        the earlier of (a) the end of the Transition Period and (b) your ceasing
        to be
        an employee of the Company (or one of its affiliates), you understand and
        acknowledge that you are an at-will employee of the Company and, in the event
        of
        any termination of your employment by the Company or voluntarily by you,
        you
        would not be entitled to any sums or other payments or benefits, other than
        the
        Good Reason Payment, Incentive Compensation, Other Benefits, Acceleration,
        and,
        if earned, the Retention Bonus, all as specifically provided herein;
provided, however, that nothing in this letter shall (i) limit the
        Company’s obligations under Section 7.2 of the Agreement with respect to legal
        fees or (ii) your obligation to comply with the protective provisions set
        forth
        in Article VI of the Agreement.

      


      8.           Any
        payments to be made hereunder following termination of employment will be
        paid
        in a lump sum as provided under the Agreement, unless expressly set forth
        otherwise herein, promptly thereafter, subject to compliance with Section
        409A
        (“Section 409A”) of the Internal Revenue Code of 1986, as amended,
        including but not limited to any requirement that such payments be delayed
        for
        at least six months following termination of employment.  The terms
“termination” and “termination of employment,” and any variations thereof, as
        used in this Letter are intended to mean a termination of employment which
        constitutes a “separation from service” under Section 409A.


      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      9.           The
        terms of this offer remain open for 5 days from the date of this Letter,
        after
        which the offer represented by this Letter will be deemed revoked.

      


      10.         As
        an inducement for the Executive to enter into this Letter, the Company has
        agreed to enter into an Amended and Restated Employment Agreement (the "New
        Agreement") with you immediately following execution of this Letter in order
        to, among others, reflect your new title and make changes in an effort to
        ensure
        compliance with Section 409A. Following such time, any references to the
        Agreement in this Letter shall be construed as references to the New Agreement
        and the exercise period for options held by you shall be governed by the
        terms
        of that New Agreement.

       

      Please
        confirm your agreement with and consent to the terms of this Letter by executing
        the same in the space provided below.  This Letter shall only be
        effective as of the date it is signed by both you and the
        Company.  For the avoidance of doubt, this Letter represents an
        amendment of the Agreement.  This Letter may be executed in one or
        more counterparts, each of which shall be deemed to be an original and all
        of
        which together shall constitute one and the same agreement. This Letter shall
        be
        subject to the governing law and dispute resolution provisions set forth
        in the
        Agreement.

       

      (Remainder
        of this page intentionally left blank)


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      


      Sincerely,

      


      ORTHOFIX,
        INC.

      


      


      
        	
                By:

              	
                /s/
                  Raymond C. Kolls

              	 
	
                Name:

              	
                Raymond
                  C. Kolls

              	 
	
                Title:

              	
                Secretary

              	 
	  	 
	  	 
	
                Acknowledged
                  and agreed to by:

              	 
	  	 
	  	 
	
                THOMAS
                  HEIN 

              	 
	  	 
	  	 
	
                By:
                  

              	/s/
                Thomas Hein	 
	  	 
	  	 
	
                ORTHOFIX
                  INTERNATIONAL N.V.

              	 
	  	 
	  	 
	
                By:

              	
                /s/
                  Raymond C. Kolls

              	 
	
                Name:

              	
                Raymond
                  C. Kolls

              	 
	
                Title:

              	
                Secretary