Document:

ex10_26.htm

    
      

    

    Exhibit 10.26

    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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr.
Thomas Hein

    December
6, 2007

    Page 2 of
6

    

    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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr.
Thomas Hein

    December
6, 2007

    Page 3 of
6

    

    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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr.
Thomas Hein

    December
6, 2007

    Page 4 of
6

    

    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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr.
Thomas Hein

    December
6, 2007

    Page 5 of
6

    

    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)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr.
Thomas Hein

    December
6, 2007

    Page 6 of
6

    

    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:
Secretaryex10_27.htm

    
      

    

    Exhibit
10.27

    

    

    FIRST
AMENDMENT

    TO

    ORTHOFIX
INC. EMPLOYEE STOCK PURCHASE PLAN

    

    WHEREAS, Orthofix Inc. (the
“Company”) maintains the Orthofix Inc. Employee Stock Purchase Plan (the “Plan”)
for the benefit of its eligible employees; and

     

    WHEREAS, it now is considered
desirable to amend the Plan to make it a short term deferral plan for purposes
of Section 409A of the Internal Revenue Code and to make certain other technical
changes;

     

    NOW, THEREFORE, by virtue and
in exercise of the power reserved to the Board of Directors of the Company by
Section 8(c) of the Plan, the Plan be and is hereby amended, effective as of
December 1, 2007, in the following particulars:

     

    1.            
By substituting the following for Section 2(i) of the Plan:

     

    “(i)           “Plan Year” means the
period with respect to which the Plan is administered, which, prior to December
31, 2007, is the 12-month period beginning on July 1 and ending on June 30 and
which, on and after January 1, 2008, shall be the 12-month period beginning on
January 1 and ending on December 31; provided, however, that there
shall be a short Plan Year beginning on July 1, 2007 and ending on December 31,
2007.”

    

    2.            
By substituting the following for Section 3 of the Plan:

    

    “3.           Eligibility

     

      
 Each Employee shall be eligible to participate in the Plan on the first
day of any Plan Year, provided that he or she is actively employed on such
day.”

    

    3.            
By substituting the following for Section 4(a) of the Plan:

     

    “(a)           An
eligible Employee shall become a Participant for any Plan Year by electing to
contribute to the Plan, through payroll deductions, either a fixed amount or a
percentage of his or her compensation for the Plan Year; provided, however, that such
fixed amount or percentage shall not be less than 1% nor more than 25% of his or
her compensation for the Plan Year.  For purposes of the Plan, an
Employee’s compensation shall mean (i) for non-commissioned employees, his or
her regular salary or straight-time wages, overtime, bonuses, and all other
forms of compensation, excluding any car allowance or relocation expense
reimbursements; and (ii) for commissioned employees, his or her commissions,
guaranteed payments, overtime, bonuses, and all other forms of compensation,
excluding any car allowance or relocation expense reimbursements.  An
Employee’s election to participate in the Plan for any Plan Year shall be in
writing on an authorized form and shall be made in accordance with procedures
established by the Committee from time to time.  A Participant must
complete a new election with respect to each Plan Year in order to participate
in the Plan for such Plan Year. ”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    4.            
By substituting the following for the last sentence of Section 4(c) of the
Plan:

     

    “A
Participant who elects to withdraw from the Plan shall receive, in lieu of any
other benefits under the Plan, the following: (i) a refund of his or her
contributions as soon as practicable following the date of withdrawal from the
Plan, and in any event no later than the date that is two and one-half months
following the last day of the Plan Year in which such Participant withdrew from
the Plan, and (ii) a refund of the interest accrued through the date of payment
at the rate in effect at the bank or other financial institution holding
Participant contributions, which refund of accrued interest shall be paid
immediately following the end of the Plan Year in which such Participant
withdrew from the Plan, and in any event no later than the date that is two and
one-half months following the last day of such Plan Year.”

    

    5.            
By substituting the following for the first sentence of Section 4(d) of the
Plan:

    

    “An
Employee’s participation in the Plan shall terminate upon his or her termination
of employment or death.  An Employee’s participation in the Plan
shall, unless otherwise required by applicable law, terminate upon his or her
leave of absence or absence from active employment for any other reason only if
such Employee does not continue to make contributions to the Plan during such
leave in accordance with procedures established by the Committee.”

    

    6.            
By deleting Section 4(e) of the Plan in its entirety.

    

    7.            
By substituting the following for Section 5(a) of the Plan:

    

    “(i)           As
soon as practicable following the last day of each Plan Year, but in any event
no later than the date that is two and one-half months following the last day of
such Plan Year, the Committee shall distribute to each Employee who was a
Participant for the entire Plan Year a certificate or certificates representing
the number of whole shares of Orthofix Stock determined by dividing (i) the
amount of the Employee’s contributions for the Plan Year plus interest on such
contributions through the end of the Plan Year by (ii) with respect to each
Employee who is an officer or director of the Company or who is a beneficial
owner of 10% or more of any class of equity security of Orthofix International
N.V. registered under Section 12 of the Securities Exchange Act of 1934 as
amended (as such terms are defined under such Act and the rules and regulations
promulgated thereunder), the Fair Market Value of the Orthofix Stock on the
first day of the Plan Year, and with respect to any other Employee, 85% of the
Fair Market Value of the Orthofix Stock on the first day of the Plan Year. If
the first day of the Plan Year is not a business day, the Fair Market Value of
the Orthofix Stock shall be determined as of the nearest preceding business day.
Cash in the amount of any fractional share shall be paid to the Participant by
check as soon as practicable following the last day of each Plan Year, but in
any event, no later than the date that is two and one-half months following the
last day of such Plan Year.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the Board
of Directors of the Company has caused this amendment to be executed by a duly
authorized officer of the Company this 11th day of December, 2007.

    

    
      	 
      	
              Orthofix
      Inc.

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Alan W. Milinazzo

            
	 
      	 
      	 
      
	 
      	
              Its:

            	
              Chief Executive
  Officer

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