Document:

Exhibit 10.5

 

TORNIER, INC.

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into effective as of September 5,
2006, between Tornier, Inc., a Delaware corporation (the “Company”),
and Rob Ball (the “Vice President of Global Research and Development”).

 

R E C I T A L S:

 

WHEREAS, the Company
recognizes that the future growth, profitability and success of the Company’s
business will be substantially and materially enhanced by the employment of the
Executive by the Company; and

 

WHEREAS, the Company desires
to employ the Executive and the Executive has indicated his willingness to
provide his services to the Company, on the terms and conditions set forth
herein;

 

NOW, THEREFORE, on the basis
of the foregoing premises and in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:

 

Section 1.  Employment.  The Company hereby agrees to employ the
Executive and the Executive hereby accepts employment with the Company, on the
terms and subject to the conditions hereinafter set forth.  The Executive shall serve as the Vice
President of Global Research and Development, and in such capacity, shall
report directly to the President and Chief Executive Officer and shall have
such duties as are typically performed by the Vice President of Global Research
and Development of a corporation. The Executive shall take the office of Vice
President of Global Research and Development effective September 5, 2006. The
principal location of the Executive’s employment shall be at the Company’s
principal executive office located in Minnesota, although the Executive
understands and agrees that he may be required to travel from time to time for
Company business reasons.

 

Section 2.  Term. 
Unless terminated pursuant to Section 6 hereof, the Executive’s
employment hereunder shall commence on the date hereof and shall continue
during the period ending on the third anniversary of the date hereof (the “Initial
Term”).  Thereafter, the Executive’s
employment term shall extend automatically for consecutive periods of one year
unless either party shall provide notice of termination not less than sixty
(60) days prior to an anniversary date of this Agreement.  The Initial Term, together with any extension
pursuant to this Section 2, is referred to herein as the “Employment
Term.”  The Employment Term shall
terminate upon any termination of the Executive’s employment pursuant to Section 6.

 

Section 3.  Compensation.  During the Employment Term, the Executive
shall be entitled to the following compensation and benefits:

 

 

(a) 
Salary.  As compensation for the
performance of the Executive’s services hereunder, the Company shall pay to the
Executive a base salary (the “Salary”) of $220,000 per year (which is
not subject to a cap or a maximum) with increases, if any, as may be approved
by the Board of Directors or the Compensation Committee of the Board.  The Salary shall be payable in accordance
with the customary payroll practices of the Company as the same shall exist
from time to time.  In no event shall the
Salary be decreased during the Employment Term.

 

(b) 
Bonus.  During the Employment
Term, in addition to Salary, the Executive shall be eligible to participate in
such bonus plans as may be adopted from time to time by the Board of Directors
for other officers of the Company (the “Bonus”) for each such calendar
year ending during the Employment Period; provided that, unless the Board of
Directors or the Compensation Committee of the Board determines otherwise, the
Executive must be employed on the last day of such calendar year in order to
receive the Bonus attributable thereto.  The
bonus of the Vice President of Global Research and Development shall be
initially targeted at 35% of his base salary at 100% achievement.  The Executive’s entitlement to the Bonus for
any particular calendar year shall be based on the attainment of performance
objectives established by the President and CEO or the Compensation Committee
of the Board in any such bonus plan.  In
no event shall the bonus target be decreased during the employment term.

 

(c) 
Benefits.  Except as otherwise
provided in this Agreement, in addition to the Salary and Bonus, if any, the
Executive shall be entitled during the Employment Term to participate in health,
insurance, retirement, disability, and other benefit programs provided to other
officers of the Company on terms no less favorable than those available to the
other officers of the Company.  The
Executive shall also be entitled to the same number of vacation days, holidays,
sick days and other benefits as are generally allowed to other senior
executives of the Company in accordance with the Company’s policies in effect
from time to time.  The Vice President of
Global Research and Development shall be initially entitled to 4 weeks of
accrued vacation for immediate use under this Agreement.

 

(d)  Stock Options.  The Executive shall be granted stock options
(the “Option”) to acquire 250,000 of the shares of Common Stock of TMG
B.V., a company organized under the laws of the Netherlands (the “Parent
Corporation”) at a price equal to Fair Market Value in effect on the Price
Date.  All of the terms and conditions
relating to the Option, including the vesting and expiration dates, are set
forth in the Stock Option Agreements executed by the Parent Corporation and the
Executive (the “Stock Option Agreements”).

 

Section 4.  Exclusivity.  During the Employment Term, the Executive
shall devote his full time to the business of the Company and its subsidiaries,
shall faithfully serve the Company and its subsidiaries, shall in all respects
conform to and comply with the lawful and reasonable directions and
instructions given to him by the President and CEO in accordance with the terms
of this Agreement, shall use his best efforts to promote and serve the
interests of the Company and its subsidiaries and shall not engage in any other
business activity, whether or not such activity shall be engaged in for
pecuniary profit, except that the Executive may (i) participate in the
activities of professional trade organizations related to the business of the
Company and its subsidiaries, (iii) participate in the activities on non
profit organizations (iii) 

 

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engage in personal investing
activities and (iv) serve on the
board of directors of not more than one (1) other companies whose
businesses are not in competition with the business interests of the Company or
any of its subsidiaries or affiliates, provided that the activities set
forth in these clauses (i), (ii), (iii) and (iv), either singly or in the
aggregate, do not interfere in any material respect with the services to be
provided by the Executive hereunder.

 

Section 5.  Reimbursement for Expenses.  During the Employment Term, the Executive is
authorized to incur reasonable expenses in the discharge of the services to be
performed hereunder, including expenses for travel, entertainment, lodging and
similar items in accordance with the Company’s expense reimbursement policy, as
the same may be modified by the Company from time to time.  The Company shall reimburse the Executive for
all such proper expenses upon presentation by the Executive of itemized
accounts of such expenditures in accordance with the financial policy of the
Company, as in effect from time to time.

 

Section 6.  Termination and Default.

 

(a) 
Death.  The Executive’s employment
shall automatically terminate upon his death and upon such event, the Executive’s
estate shall be entitled to receive the amounts specified in Section 6(e) below.

 

(b) 
Disability.  If the Executive is
unable to perform the duties required of him under this Agreement because of
illness, incapacity, or physical or mental disability, the Employment Term
shall continue and the Company shall pay all compensation required to be paid
to the Executive hereunder, unless the Executive is disabled such that the
Executive would be entitled to receive disability benefits under the Company’s
long-term disability plan, or if no such plan exists, the Executive is unable
to perform the duties required of him under this Agreement for an aggregate of
180 days (whether or not consecutive) during any 12-month period during the
term of this Agreement, in which event the Executive’s employment shall
terminate.

 

(c) 
Cause.  The Company may terminate
the Executive’s employment at any time, with or without Cause.  In the event of termination pursuant to this Section 6(c) for
Cause (as defined below), the Company shall deliver to the Executive written
notice setting forth the basis for such termination, which notice shall
specifically set forth the nature of the Cause which is the reason for such
termination.  Termination of the
Executive’s employment hereunder shall be effective upon delivery of such
notice of termination.  For purposes of
this Agreement, “Cause” shall mean: 
(i) the Executive’s failure (except where due to a disability
contemplated by subsection (b) hereof), neglect or refusal to perform his
duties hereunder which failure, neglect or refusal shall not have been
corrected by the Executive within 30 days of receipt by the Executive of
written notice from the Company of such failure, neglect or refusal, which
notice shall specifically set forth the nature of said failure, neglect or
refusal, (ii) any willful or intentional act of the Executive that has the
effect of injuring the reputation or business of the Company or its affiliates
in any material respect; (iii) any continued or repeated absence from the
Company, unless such absence is (A) approved or excused by the Board of
Directors or (B) is the result of the Executive’s illness, disability or
incapacity (in which event the provisions of Section 6(b) hereof
shall control); (iv) use of illegal drugs by the Executive or repeated
drunkenness; (v) 

 

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conviction of the Executive
for the commission of a felony; or (vi) the commission by the Executive of
an act of fraud or embezzlement against the Company.

 

(d) 
Resignation.  The Executive shall
have the right to terminate his employment at any time by giving notice of his
resignation.

 

(e) 
Payments.  In the event that the
Executive’s employment terminates for any reason, the Company shall pay to the
Executive all amounts and benefits accrued but unpaid hereunder through the
date of termination in respect of Salary or unreimbursed expenses, including
accrued and unused vacation.  In
addition, in the event the Executive’s employment is terminated by the Company
without Cause, whether during or upon expiration of the then current term of
this Agreement, in addition to the amounts specified in the foregoing sentence,
(i) the Executive shall continue to receive the Salary (less any
applicable withholding or similar taxes) at the rate in effect hereunder on the
date of such termination periodically, in accordance with the Company’s
prevailing payroll practices, for a period of twelve (12) months following the
date of such termination (the “Severance Term”) and (ii) to the
extent permissible under the Company’s health and welfare plans, the Executive
shall continue to receive any health and welfare benefits provided to him as of
the date of such termination in accordance with Section 3(c) hereof
during the Severance Term, on the same basis and at the same cost as during the
Employment Term.  Further, in the event
the Executive’s employment is terminated without Cause by reason of the Company
having notified the Executive that this Agreement will not be extended pursuant
to Section 2, the Executive shall be entitled to receive a pro-rated
amount of the Bonus in a lump sum based on the Executive’s period of employment
during the calendar year in which such termination occurs (less any applicable
withholding or similar taxes).  Following
the end of the Severance Term, the Executive shall be entitled to elect health
care continuation coverage permitted under Section 601 through 608 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
as if his employment had then terminated. 
In the event the Executive accepts other full time employment or engages
in his own business prior to the last date of the Severance Term, the Executive
shall forthwith notify the Company and the Company shall be entitled to set off
from amounts and benefits due the Executive under this Section 6(e) (other
than in respect of the Bonus) the amounts paid to and benefits received by the
Executive in respect of such other employment or business activity.  Amounts owed by the Company in respect of the
Salary, Bonus or reimbursement for expenses under the provisions of Section 5
hereof shall, except as otherwise set forth in this Section 6(e), be paid
promptly upon any termination.  The
payments and benefits to be provided to the Executive as set forth in this Section 6(e) in
the event the Executive’s employment is terminated by the Company without
Cause:  (i)  shall be lieu of any
and all benefits otherwise provided under any severance pay policy, plan or
program maintained from time to time by the Company for its employees, and (ii) 
shall not be paid to the extent that Executive’s employment is terminated
following a Change in Control under circumstances entitling the Executive to
the benefits described in Section 6(f).

 

(f)            Change in
Control Benefit. In the event that the Executive’s employment is
terminated by the Company without Cause or by the Executive for Good Reason, as
defined below, during the 12-month period immediately following a Change in
Control, as defined below, whether during or upon expiration of the then
current term of this Agreement:  (i) the
Company shall pay to the Executive all amounts and benefits accrued but unpaid
hereunder 

 

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through the date of
termination in respect of Salary or unreimbursed expenses, including accrued
and unused vacation (less any applicable withholding or similar taxes), (ii) all
unvested shares that are subject to the Options shall become immediately vested
and exercisable as set forth in the Stock Option Agreements, (iii) the
Company shall pay to Executive a lump sum payment equal to 12 months of his
Salary at the rate in effect hereunder on the date of such termination, plus
his full target Bonus for the year in which the Change in Control occurs (less
any applicable withholding or similar taxes), and (iv) to the extent
permissible under the Company’s health and welfare plans, the Executive shall
continue to receive, at the Company’s cost, any health and welfare benefits
provided to him as of the date of such termination for the 12-month period
following his termination of employment. 
Following the end of the 12-month period described in clause (iv) of
the preceding sentence, the Executive shall be entitled to elect health care
continuation coverage permitted under Sections 601 through 608 of ERISA as if his
employment with the Company then terminated.

 

For purposes of this Agreement, “Change in
Control” shall mean:

 

(i)  The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more (on a fully diluted basis)
of either (A) the then outstanding shares of common stock of the Parent
Corporation, taking into account as outstanding for this purpose such common
stock issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to acquire
such common stock (the “Outstanding Parent Corporation Common Stock”) or
(B) the combined voting power of the then outstanding voting securities of
the Parent Corporation entitled to vote generally in the election of directors
(the “Outstanding Parent Corporation Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (x) any acquisition by the
Parent Corporation or any “affiliate” of the Parent Corporation, within the meaning
of 17 C.F.R. § 230.405 (an “Affiliate”), (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Parent
Corporation or any Affiliate of the Parent Corporation, (z) any
acquisition by any corporation or business entity pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (ii) of
this Section 6(f) (persons and entities described in clauses (x), (y) and
(z) being referred to herein as “Permitted Holders”); or

 

(ii)  The consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Parent Corporation (a “Business Combination”), in
each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Parent Corporation Common Stock and
Outstanding Parent Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Parent Corporation
or all or substantially all of the Parent Corporation’s assets either 

 

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directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Parent Corporation Common Stock and Outstanding Parent Corporation
Voting Securities, as the case may be, and (B) no Person (excluding any
Permitted Holder) beneficially owns, directly or indirectly, 50% or more (on a
fully diluted basis) of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination, taking into
account as outstanding for this purpose such common stock issuable upon the
exercise of options or warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such common stock, or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business Combination
were members of the incumbent Board of Directors of the Parent Corporation at
the time of the execution of the initial agreement providing for such Business
Combination; or

 

(iii)  Approval by the shareholders of the Parent Corporation of a
complete liquidation or dissolution of the Parent Corporation; or

 

(iv)  The sale of at least 80% of the assets of the Parent
Corporation to an unrelated party, or completion of a transaction having a
similar effect; or

 

(v)  The individuals
who on the date of this Agreement constitute the Board of Directors of the
Parent Corporation thereafter cease to constitute at least a majority thereof;
provided that any person becoming a member of the Board of Directors of the
Parent Corporation subsequent to the date of this Agreement and whose election
or nomination was approved by either (A) a vote of at least two-thirds of
the directors who then comprised the Board of Directors of the Parent
Corporation immediately prior to such vote or (B) the Nominating Committee
of the Board of Directors of the Parent Corporation shall be considered a
member of the Board of Directors of the Parent Corporation on the date of this
Agreement.

 

For purposes of this Agreement, “Good Reason” shall mean,
without the Executive’s prior written consent, (i) a substantial
diminution in the Executive’s authority, duties or responsibilities as in
effect prior to the Change in Control, (ii) a reduction by the Company in
the Executive’s base Salary or Bonus as in effect immediately prior to the
Change in Control or as thereafter increased, (iii) the failure by the
Company to cover the Executive under employee benefit plans that, in the
aggregate, provide substantially similar benefits to the Executive and/or his
family and dependents at a substantially similar total cost to the Executive
(e.g., premiums, deductibles, co-pays, out of pocket maximums, required
contributions, taxes and the like) relative to the benefits and total costs
under such benefit plans in which the Executive (and/or his family or
dependents) was participating at any time during the 90-day period immediately
preceding the Change in Control, or (iv) the Company’s requiring the
Executive to be based at any office or location that is more than fifty (50)
miles further from the office or location thereof immediately preceding a
Change in Control; provided, however, Good Reason shall not
include any of the circumstances or events described herein unless the
Executive has first provided written notice of such circumstance or event and
the Company has not corrected such circumstance or event within thirty (30)
days of receipt by the Company of such written notice from the Executive.

 

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(g) 
Survival of Operative Sections. 
Upon any termination of the Executive’s employment, the provisions of
Sections 6(e), 6(f), and 7 through 18 of this Agreement shall survive to the
extent necessary to give effect to the provisions thereof.

 

Section 7.  Secrecy and Non-Competition.

 

(a) 
No Competing Employment.  The
Executive acknowledges that the agreements and covenants contained in this Section 7
are essential to protect the value of the Company’s, or any of its subsidiaries’ or affiliates’, business and assets and
by his current employment with the Company and its subsidiaries, the Executive
has obtained and will obtain such knowledge, contacts, know-how, training and
experience and there is a substantial probability that such knowledge, know-how,
contacts, training and experience could be used to the substantial advantage of
a competitor of the Company or any of
its subsidiaries or affiliates and to the Company’s, or any of its subsidiaries’ or affiliates’,
substantial detriment.  Therefore, the
Executive agrees that for the period commencing on the date of this Agreement
and ending on the first anniversary of the termination of the Executive’s
employment hereunder (such period is hereinafter referred to as the “Restricted
Period”) with respect to any State in which the Company is engaged in
business during the Employment Term, the Executive shall not participate or
engage, directly or indirectly, for himself or on behalf of or in conjunction
with any person, partnership, corporation or other entity, whether as an
employee, agent, officer, director, partner or joint venturer, in any business
activities if such activity consists of any activity undertaken or expressly
contemplated to be undertaken by the Company or any of its subsidiaries or by
the Executive at any time during the last three (3) years of the
Employment Term.  The foregoing
restrictions contained in this Section 7(a) shall not prevent the
Executive from accepting employment with a large diversified organization with
separate and distinct divisions that do not compete, directly or indirectly,
with the Company or any of its
subsidiaries or affiliates, so long as prior to accepting such
employment the Company receives separate written assurances from the
prospective employer and from the Executive, satisfactory to the Company, to
the effect that the Executive will not render any services, directly or
indirectly, to any division or business unit that competes, directly or
indirectly, with the Company or any of
its subsidiaries or affiliates. 
During the Restricted Period, the Executive will inform any new
employer, prior to accepting employment, of the existence of this Agreement and
provide such employer with a copy of this Agreement.

 

(b) 
Nondisclosure of Confidential Information.  The Executive, except in connection with his employment
hereunder, shall not disclose to any person or entity or use, either during the
Employment Term or at any time thereafter, any information not in the public
domain or generally known in the industry that the Company any of its subsidiaries or affiliates
treats as confidential or proprietary, in any form, acquired by the Executive
while employed by the Company or any predecessor to the Company’s business or,
if acquired following the Employment Term, such information which, to the
Executive’s knowledge, has been acquired, directly or indirectly, from any
person or entity owing a duty of confidentiality to the Company or any of its
subsidiaries or affiliates, relating to the Company, its subsidiaries or
affiliates, including but not limited to information regarding customers,
vendors, suppliers, trade secrets, training programs, manuals or materials,
technical information, contracts, systems, procedures, mailing lists, know-how,
trade names, improvements, price lists, financial or other data 

 

7

 

(including the revenues,
costs or profits associated with any of the Company’s, or any of its subsidiaries’ or affiliates’,
products or services), business plans, code books, invoices and other financial
statements, computer programs, software systems, databases, discs and
printouts, plans (business, technical or otherwise), customer and industry
lists, correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used in the business of the
Company or any subsidiaries or affiliates thereof.  The Executive agrees and acknowledges that
all of such information, in any form, and copies and extracts thereof, are and
shall remain the sole and exclusive property of the Company any of its subsidiaries or affiliates,
and upon termination of his employment with the Company, the Executive shall
return to the Company any of its
subsidiaries or affiliates the originals and all copies of any such
information provided to or acquired by the Executive in connection with the
performance of his duties for the Company, and shall return to the Company any of its subsidiaries or affiliates
all files, correspondence and/or other communications received, maintained
and/or originated by the Executive during the course of his employment.

 

(c) 
No Interference.  During the
Restricted Period, the Executive shall not, whether for his own account or for
the account of any other individual, partnership, firm, corporation or other
business organization (other than the Company), directly or indirectly solicit,
endeavor to entice away from the Company or any of its subsidiaries or affiliates, or otherwise directly
interfere with the relationship of the Company or any of its subsidiaries or affiliates with any person who, to the
knowledge of the Executive, is employed by or otherwise engaged to perform
services for the Company or any of its
subsidiaries or affiliates (including, but not limited to, any
independent sales representatives or organizations) or who is, or was within
the then most recent twelve-month period, a customer or client of the Company,
its predecessors or any of its
subsidiaries or affiliates.  The
placement of any general classified or “help wanted” advertisements and/or
general solicitations to the public at large shall not constitute a violation
of this Section 7(c) unless the Executive’s name is contained in such
advertisements or solicitations.

 

(d) 
Inventions, etc.  The Executive
hereby sells, transfers and assigns to the Company or any of its subsidiaries or affiliates or to any person or entity
designated by the Company all of the entire right, title and interest of the
Executive in and to all inventions, ideas, disclosures and improvements,
whether patented or unpatented, and copyrightable material, made or conceived
by the Executive, solely or jointly, during his employment by the Company which
relate to methods, apparatus, designs, products, processes or devices, sold,
leased, used or under consideration or development by the Company or any of its subsidiaries or affiliates,
or which otherwise relate to or pertain to the business, functions or
operations of the Company or any of its
subsidiaries or affiliates or which arise from the efforts of the
Executive during the course of his employment for the Company.  The Executive shall communicate promptly and
disclose to the Company, in such form as the Company requests, all information,
details and data pertaining to the aforementioned inventions, ideas,
disclosures and improvements; and the Executive shall execute and deliver to
the Company such formal transfers and assignments and such other papers and
documents as may be necessary or required of the Executive to permit the
Company or any of its subsidiaries or
affiliates or any person or entity designated by the Company to file and
prosecute the patent applications and, as to copyrightable material, to obtain 

 

8

 

copyright thereof.  Any invention relating to the business of the
Company or any of its subsidiaries or
affiliates and disclosed by the Executive within one year following the
termination of his employment with the Company shall be deemed to fall within
the provisions of this paragraph unless proved to have been first conceived and
made following such termination.  The
foregoing requirements of this Section 7(d) shall not apply to any
invention for which no equipment, supplies, facility or trade secret
information of the Company was used and which was developed entirely on the
Executive’s own time, and (i) which does not relate directly to the
Company’s, or any of its subsidiaries’
or affiliates’, business or to the Company’s, or any of its subsidiaries’ or affiliates’, actual or demonstrably
anticipated research or development, or (ii) which does not result from
any work the Executive performed for the Company or any of its subsidiaries or affiliates.

 

Section 8.  Injunctive Relief.  Without intending to limit the remedies
available to the Company or any of its
subsidiaries or affiliates, the Executive acknowledges that in the event
of a breach of any of the covenants contained in Section 7 hereof may result
in material irreparable injury to the Company or its subsidiaries or affiliates
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction, without the
necessity of proving irreparable harm or injury as a result of such breach or
threatened breach of Section 7 hereof, restraining the Executive from
engaging in activities prohibited by Section 7 hereof or such other relief
as may be required specifically to enforce any of the covenants in Section 7
hereof.

 

Section 9.  Representations and Warranties of the
Executive.  The Executive represents
and warrants to the Company as follows:

 

(a) 
This Agreement, upon execution and delivery by the Executive, will be duly
executed and delivered by the Executive and (assuming due execution and
delivery hereof by the Company) will be the valid and binding obligation of the
Executive enforceable against the Executive in accordance with its terms.

 

(b) 
Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in
accordance with its terms and conditions by the Executive (i) requires the
approval or consent of any governmental body or of any other person or (ii) conflicts
with or results in any breach or violation of, or constitutes (or with notice
or lapse of time or both would constitute) a default under, any agreement,
instrument, judgment, decree, order, statute, rule, permit or governmental
regulation applicable to the Executive. 
Without limiting the generality of the foregoing, the Executive is not a
party to any non-competition, non-solicitation, no hire or similar agreement
that restricts in any way the Executive’s ability to engage in any business or
to solicit or hire the employees of any person. 
With the exception of any agreements signed with his former employer
KMI.

 

9

 

The representations and
warranties of the Executive contained in this Section 9 shall survive the
execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby.

 

Section 10.  Representations and Warranties of the
Company.  The Company represents and
warrants to the Executive as follows:

 

(a) 
This Agreement, upon execution and delivery by the Company, will be duly
executed and delivered by the Company and (assuming due execution and delivery
hereof by the Executive) will be the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

 

(b) 
Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the performance of this Agreement in
accordance with its terms and conditions by the Company (i) requires the
approval or consent of any governmental body or of any other person or (ii) conflicts
with or results in any breach or violation of, or constitutes (or with notice
or lapse of time or both would constitute) a default under, any agreement,
instrument, judgment, decree, order, statute, rule, permit or governmental
regulation applicable to the Company.

 

The representations and
warranties of the Company contained in this Section 10 shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.

 

Section 11.  Successors and Assigns; No Third-Party
Beneficiaries.  This Agreement shall
inure to the benefit of, and be binding upon, the successors and assigns of
each of the parties, including, but not limited to, the Executive’s heirs and
the personal representatives of the Executive’s estate; provided, however,
that neither party shall assign or delegate any of the obligations created
under this Agreement without the prior written consent of the other party.  Notwithstanding the foregoing, the Company
shall have the unrestricted right to assign this Agreement and to delegate all
or any part of its obligations hereunder to any of its subsidiaries or affiliates,
but in such event such assignee shall expressly assume all obligations of the
Company hereunder and the Company shall remain fully liable for the performance
of all of such obligations in the manner prescribed in this Agreement.  Nothing in this Agreement shall confer upon
any person or entity not a party to this Agreement, or the legal representatives
of such person or entity, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.

 

Section 12.  Waiver and Amendments.  Any waiver, alteration, amendment or
modification of any of the terms of this Agreement shall be valid only if made
in writing and signed by the parties hereto; provided, however,
that any such waiver, alteration, amendment or modification is consented to on
the Company’s behalf by the Board of Directors. 
No waiver by either of the parties hereto of their rights hereunder
shall be deemed to constitute a waiver with respect to any subsequent
occurrences or transactions hereunder unless such waiver specifically states
that it is to be construed as a continuing waiver.

 

10

 

Section 13.  Severability and Governing Law.  The Executive acknowledges and agrees that
the covenants set forth in Section 7 hereof are reasonable and valid in
geographical and temporal scope and in all other respects.  If any of such covenants or such other
provisions of this Agreement are found to be invalid or unenforceable by a
final determination of a court of competent jurisdiction (a) the remaining
terms and provisions hereof shall be unimpaired and (b) the invalid or
unenforceable term or provision shall be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED,
HOWEVER, THE PROVISIONS OF THIS AGREEMENT RELATING TO THE OPTION UNDER SECTION 3(d) HEREOF
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.

 

Section 14.  Notices.

 

(a)  All communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by overnight courier or by registered or certified mail, postage
prepaid:

 

(i)  If to the Executive,
at such other address as the Executive may have furnished the Company in
writing, and

 

(ii)  If to the
Company, at Minnesota Headquarters, marked for the attention of the Chief
Executive Officer, or at such other address as it may have furnished in writing
to the Executive.

 

(b)  Any notice so
addressed shall be deemed to be given: 
if delivered by hand, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the
date of such mailing.

 

Section 15.  Section Headings.  The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof, affect the meaning or interpretation of this
Agreement or of any term or provision hereof.

 

Section 16.  Entire Agreement.  This Agreement, including the Exhibits
hereto, constitutes the entire understanding and agreement of the parties
hereto regarding the employment of the Executive.  This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this
Agreement.

 

Section 17.  Severability.  In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent 

 

11

 

jurisdiction, such
determination shall not effect the remaining provisions of this Agreement which
shall remain in full force and effect.

 

Section 18.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

 

[Remainder of Page Intentionally Left Blank]

 

12

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

 

	
   

  	
  TORNIER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Doug Kohrs

  
	
   

  	
   

  	
  Name: Doug Kohrs

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROB BALL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rob BallExhibit 10.6

 

SEPARATION AGREEMENT

 

2/19/2010

 

THIS SEPARATION AGREEMENT
(this “Agreement”) is made and entered into by and between Michael Doty, a
resident of Minnesota (“Executive”), and Tornier, Inc. (the “Company”).

 

BACKGROUND

 

A.            Executive has been employed by the Company as its
Chief Financial Officer, pursuant to an Employment Agreement effective as of February 5,
2007 (the “Employment Agreement”).

 

B.            In connection with his employment with the Company,
Executive was granted stock options to purchase shares of common stock of TMG
B.V., the parent corporation of the Company, pursuant to the TMG B.V. Stock
Option Plan (the “Plan”) and Option Agreements dated as of February 5,
2007, April 24, 2008, and May 1, 2009 (the “Option Agreements”).

 

C.            Executive’s employment with the Company will terminate
at the initiative of the Company, without Cause, effective February 19,
2010 (the “Separation Date”).

 

D.            In connection with such termination, Executive will be
eligible for certain severance pay and benefits pursuant to the Employment
Agreement; the parties have agreed to additional terms and conditions relating
to the termination of Executive’s employment, as set forth in this Agreement.

 

 

NOW THEREFORE, in
consideration of the mutual promises and provisions contained in this Agreement
and the Release referred to below, the parties, intending to be legally bound,
agree as follows:

 

AGREEMENTS

 

1.             Termination
of
Employment.  Executive
acknowledges and confirms the termination of his employment with the Company,
effective on the Separation Date.  The
parties agree that such termination is a termination by the Company without
Cause, as specified in the Employment Agreement.  Executive’s employment will end as of the
Separation Date without further action by either party.  Executive hereby resigns from any and all
officer or other positions he may hold with the Company or any of its
affiliates and as a fiduciary of any benefit plans sponsored by the Company,
effective as of the Separation Date.

 

2.             Expense Reimbursement.  The Company
will reimburse Executive for his regular and necessary business expenses
incurred through the Separation Date in accordance with the Company’s regular policies
and practices.  Executive will submit all
requests for reimbursement to the Company by March 15, 2010, and the
Company will reimburse approved expenses within 30 days thereafter.

 

3.             Severance Payments.  Following the
Separation Date, and pursuant to Section 6(e) of the Employment
Agreement, the Company will provide Executive with the payments and other
consideration set forth in such paragraph with respect to a termination by the
Company without Cause, subject to all the terms and conditions of the
Employment Agreement.  Executive
acknowledges that he is eligible for a bonus for 2009, as approved by the
Company’s Board of Directors, payable in the same manner and at the same time
as any 

 

2

 

bonuses for 2009 are paid
to other executives of the Company, and that he is not eligible for any bonus
for 2010.

 

4.             Amendment of Option
Agreements.  Subject to satisfaction of all of the conditions set
forth in paragraph 5 of this Agreement, the Company will cause the Option
Agreements to be amended to extend the period during which Executive may
exercise his options to purchase shares of common stock under the Option
Agreements to August 19, 2011.  Upon
any such amendment, all other terms and conditions of the Option Agreements
shall remain in full force and effect.  
The Company agrees that if its securities are not publicly traded on a
national securities exchange on or before February 19, 2011, the Company
will discuss in good faith with Executive whether any further amendment to the
Option Agreements should be made.

 

5.             Conditions.  The Option
Agreements shall be amended as described in paragraph 4 of this Agreement if
and only if:  (a) Executive signs a
release of claims in the form attached to this Agreement as Exhibit A (the
“Release”) on or within 21 days after the Separation Date, (b) Executive
does not take any action to rescind the Release within the rescission period
described in the Release, and (c) the Committee (as defined in the Plan)
has approved the amendment extending the exercise period in accordance with the
Plan.

 

6.             Stock Options.   Executive
agrees and acknowledges that, effective as of the Separation Date, the Options
listed below reflect the only equity-based interests Executive will have with
the Company.  The Options shall continue
to be exercisable at the times and in the manner provided by the Option
Agreements and the Plan, subject to any amendment occurring in accordance with
paragraph 4 of this Agreement.

 

3

 

	
   

  	
   

  	
  Exercise Price

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

  	
  Per Share

  	
   

  	
  Number of Shares

  	
   

  	
  Amount Exercisable

  	
   

  
	
  2/5/2007

  	
   

  	
  $

  	
  4.63

  	
   

  	
  350,000

  	
   

  	
  262,500

  	
   

  
	
  4/24/2008

  	
   

  	
  $

  	
  5.66

  	
   

  	
  150,000

  	
   

  	
  65,625

  	
   

  
	
  5/1/2009

  	
   

  	
  $

  	
  5.66

  	
   

  	
  50,000

  	
   

  	
  12,500

  	
   

  

 

7.             Continuing Obligations
Under the Employment Agreement.  Executive specifically affirms and
acknowledges his continuing obligations under the Employment Agreement,
including without limitation Sections 7 and 8 of the Employment Agreement.  Such provisions of the Employment Agreement
that by their terms continue after termination of Executive’s employment are
not affected by this Agreement shall continue in full force and effect.

 

8.             Records,
Documents,
and
Property.  Executive affirms that no later than the
Separation Date he will deliver to the Company any and all Company records
and any and all Company property in his possession or under his control,
including without limitation manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, printouts, computer disks, computer
tapes, digital media, source codes, data, tables, calculations, or copies
thereof, all confidential information of the Company, including, but not
limited to, all documents that in whole or in part contain any confidential
information, and all equipment, personal computers, laptops, printers,
telephones, and pagers, which in any of such cases are in his possession or
under his control.

 

9.             Confidentiality.  The provisions
of this Agreement and the Release (collectively “Confidential Separation
Information”) will be forever treated by Executive as confidential.  Accordingly, Executive will not disclose
Confidential Separation Information 

 

4

 

to anyone at any time,
except to his immediate family, his attorneys, his accountants or tax advisors,
or his financial planners.

 

10.          Full Compensation.  Executive
understands and agrees that the consideration provided by the Company under
this Agreement will fully compensate Executive for and extinguish any and all
of the potential claims Executive is releasing in the Release, including without
limitation, his claims for attorneys’ fees and costs and any and all claims for
any type of legal or equitable relief.

 

11.          No Admission of Wrongdoing.  Executive
understands that this Agreement does not constitute an admission that the
Company has violated any local ordinance, state or federal statute, or
principle of common law, or that the Company has engaged in any unlawful or
improper conduct toward Executive. 
Executive will not characterize this Agreement or the payment of any
money or other consideration in accordance with this Agreement as an admission
that the Company has engaged in any unlawful or improper conduct toward him or
treated him unfairly.

 

12.          Authority.  Executive
represents and warrants that he has the authority to enter into this Agreement
and the Release, and that no causes of action, claims, or demands released
pursuant to this Agreement and the Release have been assigned to any person or
entity not a party to this Agreement and the Release.

 

13.          Legal Representation.  Executive acknowledges
that he has been advised by the Company to consult with his own attorney before
executing this Agreement and the Release, that he has had a full opportunity to
consider this Agreement and the Release, that he has had a full opportunity to
ask any questions that he may have concerning this Agreement, the Release, or
the settlement of his potential claims against the Company and 

 

5

 

others, and that he has
not relied upon any statements or representations made by the Company or its
agents, written or oral, other than the statements and representations that are
explicitly set forth in this Agreement and the Release.

 

14.          Assignment.  This Agreement
shall not be assignable, in whole or in part, by Executive without the prior
written consent of the Company.  The
Company may assign its rights and obligations under this Agreement, and
Executive hereby consents to any such assignment.

 

15.          Entire Agreement.  This
Agreement, the Release, the Employment Agreement, the Option Agreements, the
Plan and any qualified employee benefit plans sponsored by the Company in which
Executive is a participant are intended to define the full extent of the
legally enforceable undertakings of the parties, and no promises or representations,
written or oral, that are not set forth explicitly in this Agreement, the
Release, the Employment Agreement, the Option Agreements, the Plan, or any
qualified employee benefit plans sponsored by the Company in which Executive is
a participant are intended by either party to be legally binding.  All other agreements and understandings
between the parties are hereby cancelled, terminated, and superseded.

 

16.          Amendments.  No amendment or modification of this
Agreement or the Release shall be deemed effective unless made in writing and
signed by the parties hereto.

 

17.          Headings.  The descriptive headings of the paragraphs
and subparagraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.

 

6

 

18.          Counterparts.  This Agreement
may be executed simultaneously in two or more counterparts, each of which will
be deemed an original, but all of which together will constitute one and the
same instrument.

 

19.          Governing Law.  This Agreement
and the Release will be interpreted and construed in accordance with, and any
dispute or controversy arising from any breach or asserted breach of this
Agreement or the Release will be governed by, the laws of the State of Minnesota.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement on the date stated
below.

 

 

	
  Dated: March 11, 2010

  	
  /s/ Michael Doty

  
	
   

  	
  Michael Doty

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: March 11,
  2010

  	
  TORNIER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Douglas W. Kohrs

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
  President & CEO

  

 

7

 

RELEASE BY MICHAEL DOTY

 

Definitions.  I intend all
words used in this Release to have their plain meanings in ordinary
English.  Specific terms that I use in
this Release have the following meanings:

 

A.                                   I, me, and my include both me and anyone
who has or obtains any legal rights or claims through me.

 

B.                                     Tornier means Tornier, Inc., any company related to
Tornier, Inc. in the present or past (including without limitation any of
their predecessors, parents, subsidiaries, affiliates, joint venture partners
and divisions), and any successors of Tornier, Inc.

 

C.                                     Company means Tornier; the present and past officers,
directors, committees, and employees of Tornier; any company providing
insurance to Tornier in the present or past; the present and past employee
benefit plans sponsored or maintained by Tornier (other than multiemployer
plans) and the present and past fiduciaries of such plans; the attorneys for
Tornier; and anyone who acted on behalf of Tornier or on instructions from
Tornier.

 

D.                                    Agreement means the Separation Agreement between Tornier and me
dated February 19, 2010, including all of the documents attached to the
Agreement.

 

E.                                      My Claims mean all of my rights that I now have to any relief
of any kind from the Company, whether or not I now know about those rights,
including without limitation:

 

1.                                       all claims arising out of or relating to
my employment with Tornier or the termination of that employment;

 

2.                                       all claims arising out of or relating to the
statements, actions, or omissions of the Company;

 

3.                                       all claims for any alleged unlawful
discrimination, harassment, retaliation or reprisal, or other alleged unlawful
practices arising under the laws of the United States or any other country or
of any state, province, municipality, or other unit of government, including
without limitation, claims under Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
Family and Medical Leave Act,  42 U.S.C. §
1981, the Employee Retirement Income Security Act, the Equal Pay Act, the
Worker Adjustment and Retraining Notification Act, the Sarbanes-Oxley Act, the
Lilly Ledbetter Fair Pay Act of 2009, the Genetic Information Nondiscrimination
Act, the Minnesota Human Rights Act, the Fair Credit Reporting Act, and workers’
compensation non-interference or non-retaliation statutes (such as Minn. Stat.
§ 176.82);

 

A-1

 

4.                                       all claims for alleged wrongful
discharge; breach of contract; breach of implied contract; failure to keep any
promise; breach of a covenant of good faith and fair dealing; breach of
fiduciary duty; estoppel; my activities, if any, as a “whistleblower”;
defamation; infliction of emotional distress; fraud; misrepresentation;
negligence; harassment; retaliation or reprisal; constructive discharge;
assault; battery; false imprisonment; invasion of privacy; interference with
contractual or business relationships; any other wrongful employment practices;
and violation of any other principle of common law;

 

5.                                       all claims for compensation of any kind,
including without limitation, bonuses, commissions, stock-based compensation or
stock options, vacation pay, relocation expenses, perquisites, and expense
reimbursements;

 

6.                                       all claims for back pay, front pay,
reinstatement, other equitable relief, compensatory damages, damages for
alleged personal injury, liquidated damages, and punitive damages; and

 

7.                                       all claims for attorneys’ fees, costs,
and interest.

 

However, My Claims
do not include any claims that the law does not allow to be waived, any claims
that may arise after the date on which I sign this Release, or any claims for
breach of the Agreement.

 

Agreement
to Release My Claims.  I will receive consideration from Tornier as
set forth in the Agreement if I sign and do not rescind this Release as
provided below.  I understand and
acknowledge that the consideration is in addition to anything of value that I
would be entitled to receive from Tornier if I did not sign this Release or if
I rescinded this Release.  In exchange for that consideration I give up
and release all of My Claims.  I will not
make any demands or claims against the Company for compensation or damages
relating to My Claims.  The
consideration that I am receiving is a fair compromise for the release of My
Claims.

 

Additional
Agreements and Understandings.  Even though Tornier will provide
consideration for me to settle and release My Claims, the Company does not
admit that it is responsible or legally obligated to me.  In fact, the Company denies that it is
responsible or legally obligated to me for My Claims, denies that it engaged in
any unlawful or improper conduct toward me, and denies that it treated me
unfairly.

 

Confidentiality.  I
understand that the terms of this Release are confidential and that I may not
disclose those terms to any person except under the circumstances described in
the Agreement.

 

Advice to
Consult with an Attorney.  I understand and acknowledge that I am hereby
being advised by the Company to consult with an attorney prior to signing this
Release and I have done so.  My decision
whether to sign this Release is my own voluntary decision made with full
knowledge that the Company has advised me to consult with an attorney.

 

A-2

 

Period to Consider the Release.  I understand that I have 21  days from my last day of employment with Tornier, not
counting the last day of employment, to consider whether I wish to sign this
Release.  If I sign this Release before
the end of the 21-day period, it will be my voluntary decision to do so because
I have decided that I do not need any additional time to decide whether to sign
this Release.  The Company need not
accept this Release of I sign it on or before my last day of employment.

 

My Right to Rescind this Release.  I understand that I may rescind this Release
at any time within 15 days after I sign it, not counting the day upon which I
sign it.  This Release will not become
effective or enforceable unless and until the 15-day rescission period has
expired without my rescinding it.

 

Procedure for Accepting or
Rescinding the Release.  To accept the
terms of this Release, I must deliver the Release, after I have signed and dated
it, to Tornier by hand or by mail within the 21-day period that I have to
consider this Release.  To rescind my
acceptance, I must deliver a written, signed statement that I rescind my
acceptance to Tornier by hand or by mail within the 15-day rescission
period.  All deliveries must be made to
Tornier at the following address:

 

Douglas Kohrs

Tornier, Inc.

7701 France Avenue South

Suite 600

Edina, MN  55435

 

If I choose to deliver my
acceptance or the rescission of my acceptance by mail, it must be postmarked
within the period stated above and properly addressed to Tornier at the address
stated above.

 

Interpretation of the Release. 
This Release should be interpreted as broadly as possible to achieve my
intention to resolve all of My Claims against the Company.  If this Release is held by a court to be
inadequate to release a particular claim encompassed within My Claims, this
Release will remain in full force and effect with respect to all the rest of My
Claims.

 

My Representations.  I
am legally able and entitled to receive the consideration being provided to me
in settlement of My Claims.  I have not
been involved in any personal bankruptcy or other insolvency proceedings at any
time since I began my employment with Tornier. 
No child support orders, garnishment orders, or other orders requiring
that money owed to me by Tornier be paid to any other person are now in effect.

 

I represent and confirm
that I have been fully paid for all wages, overtime, commissions, bonuses, and
other compensation that I earned during my employment with Tornier or that were
due to me in connection with the termination of that employment.

 

I also represent and
confirm that during my employment with Tornier I received all leaves of
absences that I requested and to which I was entitled under the Family and
Medical Leave Act or any other law.

 

A-3

 

I have read this Release
carefully.  I understand all of its
terms.  In signing this Release, I have
not relied on any statements or explanations made by the Company except as
specifically set forth in the Agreement and the Release signed by Tornier.  I am voluntarily releasing My Claims against
the Company.  I intend this Release and
the Agreement to be legally binding.

 

 

	
  Dated:

  	
  3/11/2010

  	
   

  	
  /s/ Michael Doty

  
	
   

  	
   

  	
  Michael Doty

  

 

A-4

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