ORTHOFIX INTERNATIONAL N.V
EXECUTIVE SHARE OPTI0N PLAN
* * *
ARTICLE I
Purpose
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The Orthofix International N.V. Executive Share Option Plan (the
"Plan") is intended as an incentive to encourage the continued employment and
increase the proprietary interest of certain directors, officers and key
employees of Orthofix International N.V. (the "Company") and its subsidiaries.
The Plan is designed to grant such directors, officers and key employees the
opportunity to share in the Company's long-term success through ownership of
common shares, par value $0.10 per share (the "Common Shares") of the Company,
and to afford them the opportunity for additional compensation related to the
value Common Shares.
The word "Company", when used in the Plan with reference to the
employment of Optionees (as hereinafter defined), shall include subsidiaries of
the Company. The word "subsidiary", when used in the Plan shall mean any
subsidiary corporation of the Company within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code").
Options to acquire Common Shares ("Options") granted under the Plan are
not intended to qualify as, and may not be designated as, "incentive stock
options" within the meaning of Section 422 of the Code.
ARTICLE II
Administration
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The Plan shall be administered by the Board of Directors of the Company
(the "Board"), or a committee selected by the Board from among its members,
which committee shall have the administrative powers granted to the Board
hereunder.
Subject to the provisions of the Plan, the Board shall have sole
authority, in its absolute discretion: (a) to determine which of eligible
persons shall be granted Options; (b) to determine the times when Options shall
be granted and the number of Common Shares to be subject to Options; (c) to
determine the Option price of the Common Shares subject to each Option; (d) to
determine the time or times when each Option becomes exercisable, the duration
of the exercise period and any other restrictions on the exercise of Options
issued hereunder; (e) to prescribe the form or forms of the Option agreements
under the Plan (which forms shall be consistent with the terms of the Plan but
need not be identical and may contain such terms as the Board may deem
appropriate to carry out the purposes of the Plan); (f) to determine the nature
of any rights and restrictions to be imposed on Common Shares subject to Options
issued hereunder; (g) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan; (h) to
construe and interpret the Plan, the Option agreements under the Plan and the
rules and regulations adopted from time to time, if any; and (i) to make all
other determinations deemed necessary or advisable for the administration of the
Plan but in no event shall any such actions referred to in (a) through (i)
hereof adversely affect the rights of an optionee over Options previously
granted.
ARTICLE III
Common Shares
-------------
Common Shares subject to Options granted under the Plan shall be
authorized but unissued Common Shares. Under the Plan, the total number of
Common Shares which may be purchased pursuant to Options granted hereunder shall
not exceed, in the aggregate, 1,750,000, except as such number of Common Shares
shall be adjusted in accordance with the provisions of ARTICLE IX hereof.
Each Option granted under the Plan shall be evidenced by an Option
agreement between the Company and the Optionee containing such provisions, not
inconsistent with the Plan, as may be determined by the Board.
The number of Common Shares available for grant of Options under the
Plan shall be decreased by the sum of the number of Common Shares with respect
to which Options have been issued and are then outstanding and the number of
Common Shares issued upon exercise of Options. In the event that any outstanding
Option for any reason expires, lapses, or is cancelled prior to the end of the
period during which Options may be granted, the Common Shares called for by the
unexercised portion of such Option may again be subject to an option under the
Plan.
ARTICLE IV
Eligibility of Participants
---------------------------
Directors, officers and key employees of the Company who have been
selected by the Board ("Optionees") shall be eligible to receive grants of
Options under the Plan.
ARTICLE V
Option Price
------------
The Option price of each Option granted under the Plan shall be
determined by the Board; provided, however, that the Option price per Common
Share shall not be less than the lesser of (i) the fair market value of one
Common Share at the time the Option is granted, and (ii) 120% of the price to
the public in the offering registered on Form F-1, File No. 33-46255 (the "IPO
Price") (as adjusted in accordance with ARTICLE IX).
At any time when the Common Shares are quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
fair market value of Common Shares as of any date shall be deemed to be the mean
betweeen the last quoted bid and asked prices on NASDAQ on the immediately
preceding date, or, if not quoted on that day, then on the last preceding date
on which such Common Shares were quoted. If the Common Shares are listed on one
or more national securities exchanges the fair market value of Common Shares as
of any date shall be deemed to be the mean between the highest and lowest sale
prices reported on the principal national securities exchange on which such
Common Shares are listed and traded on the immediately preceding date, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported. If the Common Shares are not quoted on NASDAQ or
listed on an exchange, or representative quotes are not otherwise available, the
fair market value of the Common Shares shall mean the amount determined by the
Board to be the fair market value based upon a good faith attempt to value the
Common Shares accurately.
ARTICLE VI
Terms and Conditions of Options
-------------------------------
Options granted under the Plan shall vest and become exercisable in
such installments as the Board shall determine at the time of grant. Options may
be exercisable in whole or in part and if an Option is exercisable in part, the
portion thereof which is exercisable and not exercised shall remain exercisable.
The term of Options granted hereunder shall be set by the Board at the
time of grant. Options may provide that if, prior to expiration of the Option
term, the Optionee shall cease to be employed by the Company for any reason,
such Option shall remain exercisable by the Optionee for such period of time as
the Board may determine.
For purposes of the Plan, in the case of an Optionee who is a
non-employee director of the Company, references to employment herein shall be
deemed to refer to such Optionee's service to the Company in such capacity.
ARTICLE VII
Payment for Common Shares
-------------------------
Payment for Common Shares acquired pursuant to an Option granted
hereunder shall be made in full upon exercise of the Option, in immediately
available funds in United States dollars, by certified or bank cashier's check
or by such other means, or combination of means, as the Board may determine,
including, but not limited to, the tendering by the Optionee's previously owned
Common Shares. Payment in full shall include payment of any amounts required
under paragraph (b) of ARTICLE XVII.
ARTICLE VIII
Non-Transferability of Option Rights
------------------------------------
During the lifetime of an Optionee, Options granted to such Optionee
shall be exercisable only by him. No Option shall be transferable, except by
will or the laws of descent and distribution.
ARTICLE IX
Adjustment of and Changes in Common Snares
------------------------------------------
In the event of any merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, distribution of property, special
cash dividend, or other change in corporate structure affecting the Common
Shares, the Board shall make such equitable adjustments, if any, as it deems
appropriate in the number and class of shares subject to, and the exercise price
of, outstanding Options granted under the Plan or available to be granted under
the Plan. The foregoing equitable adjustments shall be determined by the Board
in its sole discretion.
ARTICLE X
No Obligation to Exercise Option
--------------------------------
Granting of an Option shall impose no obligation on the recipient to
exercise such Option.
ARTICLE XI
Rights as a Shareholder
-----------------------
An Optionee shall have no rights as a shareholder with respect to any
Common Shares covered by his Option until such person shall have become the
holder of record of such Common Shares, and such person shall not be entitled to
any dividends or distributions or other rights in respect of such Common Shares
for which the record date is prior to the date on which such person shall have
become the holder of record thereof, except as otherwise provided in ARTICLE IX.
ARTICLE XII
Employment Rights
-----------------
No Provision of the Plan or any Option granted hereunder shall confer
on an Optionee ant right to continue in the employ of the Company, or to
interfere in any way with the right of the Company to terminate the Optionee's
employment at any time.
ARTICLE XIII
Compliance with Law
-------------------
The Company is relieved from any liability for the non-issuance or
non-transfer or any delay in the issuance or transfer of any Common Shares
subject to Options under the Plan which results from the inability of the
Company to obtain, or from any delay in obtaining, from any regulatory body
having jurisdiction or authority, any requisite approval to issue or transfer
any such Common Shares if counsel for the Company deems such approval necessary
for lawful issuance or transfer thereof.
ARTICLE XIV
Cancellation of Options
-----------------------
The Board in its discretion may, with the written consent of an
Optionee, cancel any outstanding Option held by such Optionee.
ARTICLE XV
Effective Date; Expiration Date of Plan
---------------------------------------
The Plan shall become effective upon approval by the shareholders of
the Company. The expiration date of the Plan, after which no Options may be
granted hereunder, shall be the tenth (10th) anniversary of the date of such
approval.
ARTICLE XVI
Amendment or Discontinuance of Plan
-----------------------------------
The Board may terminate, amend or modify the Plan in its sole
discretion at any time or from time to time; provided however, that no such
action shall, without the consent of the Optionee affected thereby, adversely
affect the rights of any Optionee with respect to Options granted prior to such
termination, amendment or modification.
ARTICLE XVII
Miscellaneous
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(a) Options shall be evidenced by Option agreements (which need not be
identical) in such forms as the Board may from time to time approve. Such
agreements shall not be inconsistent with the terms and conditions of the Plan
and may provide that the grant of any Option under the Plan and Common Shares
acquired pursuant to the Plan shall be subject to such other conditions as the
Board determines appropriate, including, without limitation, provisions to
assist the Optionee in financing the purchase of Common Shares through the
exercise of Options, provisions for the forfeiture of, or restrictions on,
resale or other disposition of Common Shares under the Plan, provisions giving
the Company the right to repurchase Common Shares acquired under the Plan in the
event the Optionee elects to dispose of such Common Shares, and provisions to
comply with any applicable securities laws and tax withholding requirements. The
options shall also be entered in a register, kept by or on behalf of the Board.
(b) The Company may, in its discretion, require that an Optionee pay to
the Company, at the time of grant or exercise of Options, such amount as the
Company deems necessary to satisfy its obligations to withhold U.S. Federal,
state, or local income or other taxes, or taxes of any other jurisdiction,
incurred by reason of such grant, exercise or the transfer of Common Shares
acquired thereupon.
(c) If the Board shall find that any person to whom any amount is
payable under the plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due to such person or his
estate (unless a prior claim therefor has been made by a duly appointed legal
representative), may, if the Board so directs the Company, be paid to his
spouse, child, relative, an institution maintaining or having custody of such
person, or any other person deemed by the Board to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Board and the Company therefor.
(d) The Plan shall be governed by and construed in accordance with the
internal laws of the Netherlands Antilles without reference to rules relating
to conflict of law.
(e) No provision af the Plan shall require the Company, for the purpose
of satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Optioneees shall have no
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employeees under general law.
(f) Each member of the Board shall be fully justified in relying,
acting or failing to act, and shall not be liable for having so relied, acted or
failed to act in good faith, upon any report made by the independent public
accountant of the Company and upon any other information furnished in
connection with the Plan by any person or persons other than such member.
(g) Except as otherwise specifically provided in the relevant plan
document, no payment under the Plan shall be taken into account in determining
any benefits under any pension, retirement, profit-sharing, group insurance or
other benefit plan of the Company.
(h) The expenses of administering the Plan shall be borne by the
Company.
(i) Masculine pronouns and other words of masculine gender shall refer
to both men and women.
SHARE OPTION AGREEMENT UNDER
THE ORTHOFIX INTERNATIONAL N.V.
EXECUTIVE SHARE OPTION PLAN
---------------------------
This Option Agreement (the "Agreement") is made effective as of the
31st day of March, 1992, between Orthofix International N.V., a Netherlands
Antilles company (the "Company"), and the person signing this Agreement adjacent
to the caption "Optionee" on the signature page hereof (the "Optionee").
Capitalized terms used and not otherwise defined herein shall have the meanings
attributed thereto in the Orthofix International N.V. Executive Share Option
Plan (the "Plan").
WHEREAS, pursuant to the Plan, the Company desires to afford the
Optionee the opportunity to purchase Common Shares on the terms and conditions
set forth herein;
NOW, THEREFORE, in connection with the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Options. The Company hereby grants to the Optionee the
right and option (the "Option") to purchase up to, but not exceeding in the
aggregate, _______ Common Shares, on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each Common Share covered by
the Option shall be 120% of the IPO Price.
3. Term and Vesting of the Option.
(a) Service Shares.
(i) Vesting. Subject to Section (4) hereof, the Option, to the
extent of 50% of the Common Shares covered thereby (the "Service Shares"),
shall vest and become exercisable, on a cumulative basis, as to 20% of the
Service Shares on and after the first anniversary of the date hereof, and
as to an additional 20% of the Service Shares on and after each of the
second, third, fourth and fifth anniversaries of the date hereof; provided
that, with respect to each such installment, the Optionee remains in the
employ of the Company as of such anniversary.
(ii) Term. The term of the Option with respect to the Service Shares
shall be six (6) years from the date hereof, subject to earlier
termination in accordance with Section 4 hereof.
(b) Performance Shares.
(i) Vesting. Subject to Section 4 hereof, the Option, to the extent of
50% of the Common Shares covered thereby (the "Performance Shares"), shall
vest and become exercisable on the tenth anniversary of the date hereof,
provided that the Optionee remains in the employ of the Company as of such
anniversary, and provided, further, that vesting with respect to
Performance Shares may be accelerated in accordance with Section 3(b)(ii)
hereof.
(ii) Accelerated Vesting of Performance Shares.
(A) Subject to Section 3(b)(ii)(B) and Section 4 hereof, the
Option shall vest and become exercisable, on a cumulative basis, with
respect to 25% of the Performance Shares when the average fair market value
of the Common Shares (determined in accordance with Article V of the Plan)
over a period of 180 consecutive days (based on the days within such
180-day period for which price quotes are available on NASDAQ, or, if the
Common Shares are listed on a national securities exchange, the days for
which prices are reported) (the "Average Price") attains a 100% multiple of
the IPO Price, and with respect to an additional 25% of the Performance
Shares each time the Average Price attains an additional 100% multiple of
the IPO Price.
(B) Section 3(b)(ii)(A) hereof notwithstanding, and subject
to Section 4 hereof, the Option shall vest and become exercisable with
respect to not more than 25% of the Performance Shares for each full year
of the Optionee's employment with the Company commencing with the date
hereof.
(iii) Term. The term of the Option with respect to the Performance
Shares shall be eleven (11) years from the date hereof, subject to earlier
termination in accordance with Section 4 hereof.
4. Termination of Employment.
(a) Without Cause or for Good Reason. In the event the Optionee's
employment with the Company is terminated by the Company without "Cause," or by
the Optionee for "Good Reason," (i) with respect to the Service Shares, the
Optionee shall be treated for vesting purposes as if he had continued in the
employ of the Company until the anniversary of the date hereof next succeeding
such termination, and (ii) with respect to the Performance Shares, the Optionee
shall be treated for vesting purposes as if he had continued in the employ of
the
Company until the later of (A) the fourth anniversary of the date hereof, and
(B) the actual date of such termination. In either event, the Option, to the
extent exercisable at the time of termination of employment (after giving effect
to this Section 4(a)), shall remain so exercisable for a period of 180 days
after such termination, and shall thereafter terminate.
For purposes of this Agreement, "Cause" and "Good Reason" shall have
the meanings given such terms in the Employment Agreement between the Optionee
and the Company dated as of March 31, 1992 (the "Employment Agreement").
(b) Death or Disability. In the event the Optionee's employment
with the Company is terminated by reason of death or permanent disability
(within the meaning of Section 5.2 of the Employment Agreement), the Option, to
the extent exercisable at the time of termination of employment, shall remain so
exercisable for a period of twelve months after such termination, and shall
thereafter terminate.
(c) For Cause or without Good Reason. In the event the Optionee's
employment with the Company is terminated by the Company for Cause, or by the
Optionee without Good Reason, the Option, to the extent exercisable at the time
of termination of employment, shall remain so exercisable for a period of 90
days after such termination, and shall thereafter terminate.
(d) Changes in the Average Price occurring after termination of the
Optionee's employment with the Company shall not be considered in determining
the vesting of Performance Shares under Section 3(b)(ii) hereof.
(e) The word "Company" as used in this Section 4 shall include any
subsidiary corporation of the Company within the meaning of Section 424(f) of
the Code.
5. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company at
its offices located at 7 Abraham de Veerstraat, Curacao, Netherlands Antilles.
Such notice shall state the election to exercise the Option and the number of
Common Shares in respect of which the Option is being exercised, and shall be
signed by the person or persons so exercising the Option. Such notice shall be
accompanied by payment of (a) the full purchase price of such Common Shares in
accordance with Article VII of the Plan, and (b) any withholding or other taxes
due by reason of such exercise, in accordance with paragraph (b) of Article XVII
of the Plan.