AMENDED AND
RESTATED
ORTHOFIX DEFERRED
COMPENSATION PLAN
Effective January 1,
2009
ARTICLE I
PURPOSE AND EFFECTIVE
DATE
1.1.
Purpose . This plan, which was originally
established effective January 1, 2007, and which is hereby amended
and restated effective January 1, 2009, is intended to allow a
select group of key management or other highly compensated
employees and directors of the Company to defer the receipt of
compensation that would otherwise be payable to them. The terms of
this Plan are intended to, and shall be interpreted and applied so
as to, comply in all respects with the provisions of Code Sections
409A and 457A and regulations, rulings and guidance
thereunder.
1.2.
Effective Date . This amended and restated Plan
shall be effective as of January 1, 2009.
ARTICLE II
Definitions
For
ease of reference, the following definitions will be used in the
Plan:
2.1.
Account . “Account” means the account
maintained on the books of the Company used solely to calculate the
amount payable to each Participant who defers Compensation under
this Plan and shall not constitute or be treated as a separate fund
of assets. One or more Accounts or sub-accounts may be
maintained under the Plan with respect to any Participant or Former
Participant, including an Account or sub-account to separately
reflect deferrals of Ineligible Compensation made prior to the
Effective Date or to separately reflect deferrals of Compensation
made prior to the Effective Date.
2.2.
Beneficiary . “Beneficiary” means the
person, persons or entity designated in writing by the Participant
to receive payments under this Plan in the event of the
Participant’s death as provided in Article VII.
2.3.
Board . “Board” means the board of
directors of the Company.
2.4.
Bonus Deferral Commitment . “Bonus Deferral
Commitment” means that portion of bonus Compensation, or
other incentive Compensation as may be designated by the Plan
Administrator from time-to-time as eligible for deferral hereunder,
for which a Participant has made an election to defer receipt
pursuant to Article IV.
2.5.
Change in Control . “Change in
Control” means a change in the ownership or effective control
of the Parent Company, the Company and/or any Subsidiary, or in the
ownership of a substantial portion of the assets of the Parent
Company, the Company and/or any Subsidiary, as described under Code
Section 409A or any regulations or other guidance issued
thereunder; provided, however, that a Change in Control of any such
entity shall only be taken into account with respect to a
particular Participant if such Participant performed services for
the entity experiencing the Change in Control at the time of such
Change in Control.
2.6.
Code . “Code” means the Internal
Revenue Code of 1986, as amended (and any regulations
thereunder).
2.7.
Company . “Company” means Orthofix
Holdings, Inc., a Delaware corporation, or any successor
thereto.
2.8.
Compensation . “Compensation” means
compensation for services performed, as may be designated by the
Plan Administrator from time-to-time as eligible for
deferral. This includes a Participant’s (i) base
salary as in effect from time to time during a Plan Year, and (ii)
bonuses earned during a Plan Year. Compensation also
includes all fees payable to Directors, including the retainer for
service as a Director, any fee paid to the Director for service on
any committee, and meeting fees. In no event shall any
of the following items be treated as Compensation
hereunder: (i) payments from this Plan or any other
nonqualified deferred compensation plan; (ii) any form of non-cash
compensation or benefits, including short and long term disability
payments, group life insurance premiums, income from the exercise
of nonqualified stock options, from the disqualifying disposition
of incentive stock options, or realized upon vesting of restricted
stock or the delivery of shares in respect of restricted stock
units (or other similar items of income related to equity
compensation grants or exercises); (iii) expense reimbursements;
(iv) severance payments; or (vii) any other payments or benefits
other than normal Compensation as determined by the Plan
Administrator in its sole discretion.
2.9.
Compensation Deferral . “Compensation
Deferral” means that portion of Compensation as to which a
Participant has made an annual irrevocable election to defer
receipt pursuant to Article IV. A Participant’s
Compensation Deferral may consist of a Salary Deferral Commitment,
a Bonus Deferral Commitment, a Director’s Fees Deferral
Commitment, or a combination or other commitment as may be
designated by the Plan Administrator from time-to-time, as
applicable to the Participant.
2.10.
Director . “Director” means any
non-employee member of the Board or the board of directors of the
Parent Company or any Subsidiary.
2.11.
Director’s Fees Deferral Commitment
. “Director’s Fees Deferral
Commitment” means that portion of a Director’s
Compensation for which a Participant has made an election to defer
receipt pursuant to Article IV. As of the Effective
Date, Director’s Fees Deferral Commitments are not permitted
or allowed under the Plan for Compensation earned on or after
January 1, 2009.
2.12.
Disability . “Disability” means (i)
with respect to a Participant that is an employee, that a
Participant has been determined to be disabled for purposes of
receiving a benefit under the Company’s insured long-term
disability plan, provided that the definition of
“disability” applied under such disability insurance
plan complies with the requirements of Code Section 409A and the
regulations and other guidance issued thereunder, (ii) with respect
to a Participant that is a Director, that a Participant has been
determined to be disabled for purposes of receiving a benefit under
the disability insurance provisions of the Social Security
Act.
2.13.
Elective Deferral Account . “Elective
Deferral Account” means the Account or Accounts maintained in
accordance with Section 5.2 with respect to any elective
Compensation Deferrals made under this Plan. A
Participant’s Elective Deferral Account shall be utilized
solely as a device for the determination and measurement of the
amounts to be paid to the Participant pursuant to this Plan and
shall not constitute or be treated as a separate fund of
assets. One or more Elective Deferral Accounts or
sub-accounts may be maintained under the Plan with respect to any
Participant or Former Participant, including an Elective Deferral
Account or sub-account to separately reflect deferrals of
Ineligible Compensation made prior to the Effective Date or to
separately reflect deferrals of Compensation made prior to the
Effective Date.
2.14.
Former Participant . “Former
Participant” means any Director or employee who does not
satisfy the eligibility requirements set forth in Article
III on or after the Effective Date, but who has an Elective
Deferral Account under the Plan for Compensation deferrals made
prior to the Effective Date. An employee Participant who
performs services for the Parent Company as well as for the Company
or any Subsidiary shall be considered a Former Participant solely
with respect to such employee Participant’s Elective Deferral
Account, or sub-account or portion thereof, if any, attributable to
deferrals of Ineligible Compensation made prior to the Effective
Date. A Former Participant shall be considered a
Participant under the Plan until the balance of his or her Elective
Deferral Account is distributed, except that a Former Participant
shall not be eligible to make Compensation deferrals with respect
to Ineligible Compensation after the Effective Date.
2.15.
Ineligible Compensation . “Ineligible
Compensation” means compensation relating to services
performed for the benefit or on behalf of the Parent Company as
determined by the Plan Administrator in its sole discretion
regardless of whether the cost of such compensation is actually
borne by the Parent Company. To the extent any Participant
performs such services for the Parent Company as well as for the
Company or any Subsidiaries, the determination of what portion of
such compensation shall be considered Ineligible Compensation will
also be made by the Plan Administrator in its sole
discretion.
2.16.
Measurement Funds . “Measurement
Funds” means one or more of the independently established
funds or indices that are identified by the Plan
Administrator. These Measurement Funds are used solely
to calculate the earnings that are credited to each
Participant’s Account(s) in accordance with Article V below,
and do not represent any beneficial interest on the part of the
Participant in any asset or other property of the Company, the
Parent Company or any Subsidiary. The determination of
the increase or decrease in the performance of each Measurement
Fund shall be made by the Plan Administrator in its reasonable
discretion. Measurement Funds may be replaced, new funds
may be added, or both, from time to time in the discretion of the
Plan Administrator.
2.17.
Orthofix . “Orthofix” means Orthofix,
Inc., a Minnesota corporation, or any successor thereto.
2.18.
Parent Company . “Parent Company” means
Orthofix International N.V., a corporation organized under the laws
of Netherlands Antilles.
2.19.
Participant . “Participant”
means any employee or Director who satisfies the eligibility
requirements set forth in Article III. In the event of
the death or incompetency of a Participant, the term means his or
her Beneficiary, personal representative or guardian.
2.20.
Participation Agreement . “Participation
Agreement” means the authorization form that an eligible
employee or Director files with the Plan Administrator to elect a
Compensation Deferral under the Plan for a Plan Year.
2.21.
Plan . “Plan” means this Plan,
entitled the Orthofix Deferred Compensation Plan, as amended from
time to time.
2.22.
Plan Administrator . “Plan
Administrator” means the board of directors of Orthofix, or a
person or committee appointed by the board of directors of Orthofix
to administer this Plan pursuant to Article VIII.
2.23.
Plan Year . “Plan Year” means the
twelve (12) month period beginning on each January 1 and ending on
the following December 31.
2.24.
Retirement . “Retirement” means a
Separation from Service with the Parent Company, the Company or any
Subsidiary after attaining age fifty-five (55).
2.25.
Salary Deferral Commitment . “Salary
Deferral Commitment” means that portion of salary
Compensation for which a Participant has made an election to defer
receipt pursuant to Article IV.
2.26.
Separation from Service . “Separation from
Service” means a termination of employment with the Company,
the Parent Company or any Subsidiary that constitutes a
“separation from service” under Code Section 409A and
the regulations and guidance issued thereunder.
2.27.
Subsidiary . “Subsidiary” means any
subsidiary or affiliate of the Company or the Parent Company, or
any subsidiary or affiliate of such subsidiary or affiliate, that
has been approved by the Company for participation in this Plan and
which has taken appropriate action to become an adopting employer
of this Plan.
2.28.
Unforeseeable Emergency .
“Unforeseeable Emergency” means a severe
financial hardship to the Participant resulting from an illness or
accident of the Participant, the Participant’s spouse, or a
dependent (as defined in Code Section 152(a)) of the Participant,
loss of the Participant’s property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.
2.29.
U.S. Taxpayer . “U.S. Taxpayer” means
any individual who is subject to any internal revenue tax of the
United States.
ARTICLE III
Eligibility and
Participation
3.1.
Eligibility . An employee of the Parent Company,
Company and/or any Subsidiary shall be eligible to participate in
this Plan if the employee is a management or highly compensated
employee and is named by the Board or its designee to be a
Participant in this Plan. An individual shall remain a
Participant until that individual has received full payment of all
amounts credited to the Participant’s
Account. Prior to the Effective Date, Directors were
eligible to participate in the Plan; however, notwithstanding any
other provision of this Plan to the contrary, effective as of the
Effective Date, no Director shall be eligible to defer Compensation
hereunder, and no employee who is a U.S.
Taxpayer who performs services for the Parent Company (and receives
Ineligible Compensation) shall be eligible to defer such Ineligible
Compensation. To the extent any such Director previously
participated in this Plan, the provisions of Section 6.14 regarding
Former Participants shall apply. With respect to any
employee Participant who made Compensation Deferrals with respect
to Ineligible Compensation prior to the Effective Date, the
provisions of Section 6.14 regarding Former Participants shall
apply to such employee Participant’s Elective Deferral
Account, or portion thereof, attributable to such deferrals of
Ineligible Compensation made prior to the Effective Date but shall
not apply to his or her Elective Deferral Account, or portion
thereof, attributable to deferrals of Compensation (other than
Ineligible Compensation).
3.2.
Participation . An eligible employee may elect to
enter into a Salary Deferral Commitment with respect to any Plan
Year by submitting a Participation Agreement to the Plan
Administrator by December 31 (or such earlier date established by
the Plan Administrator) of the calendar year immediately preceding
the Plan Year. An eligible employee may elect to enter
into a Bonus Deferral Commitment with respect to bonus Compensation
earned during any Plan Year by submitting a Participation Agreement
to the Plan Administrator by December 31 (or such earlier date
established by the Plan Administrator) of the calendar year
immediately preceding the Plan Year. With respect to any
bonus Compensation that satisfies the definition of
“performance based compensation” for purposes of Code
Section 409A, an eligible employee may elect to enter into a Bonus
Deferral Commitment by submitting a Participation Agreement to the
Plan Administrator no later than six (6) months prior to the end of
the period in which the performance-based Compensation that is the
subject of the Bonus Deferral Commitment is earned (or such earlier
date established by the Plan Administrator). Any
Participation Agreement shall only be effective if entered into in
a manner consistent with the provisions of Code Section
409A.
3.3.
Partial Year Participation . If an
employee first becomes eligible to participate during a calendar
year, the employee must submit a Participation Agreement to the
Plan Administrator no later than thirty (30) days following the
date the employee becomes eligible to participate in the
Plan. Such Participation Agreement shall be effective
only with respect to Compensation earned for services to be
performed subsequent to the election and deferred in a manner
consistent with the provisions of Code Section 409A.
ARTICLE IV
Elective Deferrals
4.1.
Amount of Deferral Election . A Participant may
elect a Compensation Deferral in the Participation Agreement as
follows:
(a)
Salary Deferral Commitment . A Salary Deferral
Commitment shall be related to the salary payable by the Company to
the Participant for services performed during the Plan Year. The
amount to be deferred shall be stated as a percentage of the salary
to be earned during the Plan Year, as a flat dollar amount from any
salary earned during the Plan Year, or in such other form as
allowed by the Plan Administrator.
(b)
Bonus Deferral Commitment . The amount to be
deferred shall be stated as a percentage of any bonus earned during
the Plan Year, as a flat dollar amount from any bonus earned during
the Plan Year, or in such other form as allowed by the Plan
Administrator.
(c)
Director’s Fees Deferral Commitment . The
amount to be deferred shall be stated as a percentage of any fees
earned during the Plan Year, as a flat dollar amount from any fees
earned during the Plan Year, or in such other form as allowed by
the Plan Administrator. As of the Effective Date,
deferral of Director’s Fees earned on or after January 1,
2009, is not permitted or allowed under the Plan.
4.2.
Deferral Limits . The following limitations shall
apply to Compensation Deferrals:
(a)
Minimum . The minimum deferral amount for a
Salary or Bonus Deferral Commitment shall be two thousand dollars
($2,000) per Plan Year. If the Compensation Deferral is
a Bonus Deferral Commitment, the $2,000 minimum shall be calculated
as a percentage of targeted incentive bonus.
(b)
Maximum . The maximum deferral amount for a
Salary Deferral Commitment shall be eighty percent
(80%). The maximum deferral amount for a Bonus Deferral
Commitment shall be one hundred percent (100%) of any such bonus to
be earned during the Plan Year. Notwithstanding the
foregoing provisions of this Section 4.2(b), the maximum deferral
amount for a Salary or Bonus Deferral Commitment for Compensation
earned during 2009 is fifty percent (50%).
(c)
Changes in Minimum or Maximum . The Plan
Administrator may amend the Plan to change the minimum or maximum
deferral amounts from time to time by giving written notice to all
Participants. No such change may affect a Compensation
Deferral made prior to the Plan Administrator’s action unless
otherwise required by law.
4.3.
Treatment under Qualified Plan . Amounts deferred
under this Plan will not constitute compensation for any
Company-sponsored qualified retirement plan.
4.4.
Period of Commitment . A Participant’s
Participation Agreement as to a Compensation Deferral shall remain
in effect only for the immediately succeeding Plan Year (or the
remainder of the current year, as applicable). As of
December 31 of the calendar year during which an election is made
(or as of the end of the 30 day enrollment period for a newly
eligible employee), the Participation Agreement shall be
irrevocable for the succeeding Plan Year (or portion thereof, with
respect to a newly eligible employee). Notwithstanding
the above, the Participation Agreement shall be terminated if a
distribution is made to a Participant as a result of an
Unforeseeable Emergency pursuant to Section 6.8 or if such
termination is required for the Participant to be able to obtain a
hardship distribution under a qualified plan with a qualified cash
or deferred arrangement under Code Section 401(k). Any
resumption of the Participant’s deferrals under this Plan
shall be made only at the election of the Participant in accordance
with Article III herein.
4.5.
Change of Status . If a Participant no longer
meets the eligibility criteria set forth in Section 3.1, the
Participant’s most recent Compensation Deferral shall
terminate with respect to Compensation earned after the effective
date of such determination, and the employee or Director shall
thereafter be prohibited from making Compensation Deferrals unless
and until he or she meets the eligibility criteria in the
future.
ARTICLE V
Participant
Accounts
5.1.
Establishment of Accounts . For record keeping
purposes only, an Account shall be maintained for each Participant
to reflect his or her Elective Deferral
Account. Separate sub-accounts, as may be allowed from
time-to-time in the sole discretion of the Plan Administrator,
shall be maintained to the extent necessary to properly reflect the
Participant’s election of Measurement Funds and distribution
elections.
5.2.
Crediting Compensation Deferrals to Elective Deferral
Account . The Plan Administrator shall credit
Compensation Deferrals to the Participant’s Elective Deferral
Account as soon as practicable after the date on which such
Compensation would otherwise have been paid, in accordance with the
Participant’s election. Any withholding of taxes
or other amounts which is required by federal, state, or local law
with respect to Compensation Deferrals shall be withheld from the
Participant’s non-deferred Compensation to the maximum extent
possible with any excess reducing the amount deferred.
5.3.
Earnings (or Losses) on Account . Participants
must designate, on a Participation Agreement or by such other means
as may be established by the Plan Administrator, the portion of the
contributions to their Account that shall be allocated among the
various Measurement Funds. If a Participant fails to
designate any Measurement Funds, contributions to a
Participant’s Account shall be allocated to one or more
default Measurement Funds as determined by the Plan Administrator
in its sole discretion and Participant shall be deemed, for all
purposes of the Plan, to have designated such default Measurement
Funds. A Participant’s Account shall be credited
with all deemed earnings (or losses) g
