Document:

Exhibit 10.3

 

TORNIER, INC.

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into effective as of April 28,
2008, between Tornier, Inc., a Delaware corporation (the “Company”),
and Andy Joiner (the “Vice President and General Manager of U.S. Commercial
Operations”).

 

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 and General Manager of U.S. Commercial Operations, 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 and
General Manager of U.S. Commercial Operations of a corporation. The Executive
shall take his office of Vice President and General Manager of U.S. Commercial
Operations effective April 28, 2008. 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 will
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 $290,000 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 and General Manager of U.S. Commercial Operations shall
be initially targeted at 50% 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 and General Manager of U.S. Commercial Operations 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 

 

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Company and its
subsidiaries, (iii) participate in the activities on non profit
organizations (iii) engage in personal investing activities and (iv) serve on the board of directors of
not more than two (2) 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 

 

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6(b) hereof shall
control); (iv) use of illegal drugs by the Executive or repeated
drunkenness; (v) 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

 

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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 (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 

 

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owns
the Parent Corporation or all or substantially all of the Parent Corporation’s
assets either 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 

 

6

 

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.

 

(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, 

 

7

 

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 (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 

 

8

 

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
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.

 

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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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ANDY JOINER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Andy JoinerExhibit 10.4

 

PERMANENT EMPLOYMENT CONTRACT

 

Between the TORNIER SAS company - rue Doyen Gosse - 38330 ST ISMIER,
registered under URSSAF identification number (Social
Security Contribution Collection Office number) n°38010115190711,
represented by M. GAILLOT Nicolas, acting as Human Resources Director, and M.
EPINETTE Stéphan, living 372, Chemin du Robiat - 69259 POLEYMIEUX AUX MONTS D’OR,
French citizen

 

It has been agreed and decided the
following:

 

Being said that the relations between
the two parties are governed by the following provisions, and as indicative
guide, by the metallurgy engineers and senior executive national collective
agreement, which is available for M. EPINETTE Stéphan at the Human Resources
Service.

 

Engagement

 

TORNIER SAS company has decided to employ for an open ended contract M. EPINETTE Stéphan, under the condition
that M. EPINETTE Stephan declares to be free of any engagement and not be bound
by any non competition clause nor to be stricken by any prohibition or
disability likely to invalidate his engagement.

 

M. EPINETTE Stephan will be employed as
a Commercial Vice president responsible for Europe and Asia-Pacific Operations.

 

Duration and Trial period

 

The term of employment shall be commencing at
the earliest, at a date which still has to be defined, and will become firm
only after a 3 months trial period, renewable once if needed for an identical
period after written agreement between the parties. Concerning an effective
training period, suspension periods which would occur will extend the
stipulated period. During the trial period, each party can terminate the
employment contract complying this the collective agreement provisions.

 

Nomenclature

 

The importance of the duties and
responsibilities assigned to M. EPINETTE Stephan, which imply independent
skills for his organization of working time in order to accomplish his mission
and the autonomy M. EPINETTE Stephan is granted in the decision process, imply
his functions come within the executive staff category within the meaning of
article L.3111-2 of the French Employment code and of article 15 of metallurgy
national agreement of 28th of July 1998 relating to decrease in
working time.

 

As a consequence, M. EPINETTE Stephan,
is considered under the III B - index 180 conventional classification grade
within the meaning of the metallurgy engineers and senior executives national
collective agreement.

 

M. EPINETTE Stephan is not subject to
the statutory working hours scheme and in this regard does not benefit from any
additional days off provided by any specific working time organizations related
to decrease in working time.

 

Lump sum compensation

 

On the date hereof, the salary, payable
in installments in accordance with customary metallurgy engineers and senior
executive national collective agreement amounts to 4.308 euros per months.

 

M. EPINETTE Stephan will be granted a
lump sum amount of compensation that it would be required to pay senior
executives as counterpart of his mission, with no link between the amount and
the time allocated to his work.

 

This monthly compensation amounts to
16.667 euros (gross salary) on a twelve months period, which amounts to 200.004
euros per annum (gross salary).

 

 

It is specified that the senior
executive category to which M. EPINETTE Stephan belongs is not caught by the
scope of annual bonus.

 

Nevertheless, M. EPINETTE Stephan, as
senior executive receives an annual bonus which amounts 30% of the annual
compensation. Such provision is applicable to the whole managing members of the
company.

 

By way of illustration for the year
2008, this bonus rewards the results obtained on the basis of three equal
criterions : financial performance of the Group, achievement of personal goals
and capacity for team working. Financial performance are divided in three
chapters : annual turnover, operating result and total value of stocks.
Achievement of personal goals a compelled in 10 measurable points.

 

For the year 2009, it has been provided
that only two criterions will be applicable : financial performance of the
Group and achievement of personal goals for par value.

 

For the year 2010, par values will be
reconsidered such as the financial performance of the Group ratio will amount
for 2/3 and achievement of personal goals amount for 1/3.

 

For the year 2008, bonus is granted on a
pro rata temporis basis.

 

The bonus is paid during the month of
February, following the end of the financial year to which it is referred.

 

M. EPINETTE Stephan receives all the
benefits of the retirement and welfare pension schemes in force within the
company.

 

M. EPINETTE Stephan cannot enjoy
different benefits or refuse to pay different contributions than under those
schemes which are currently provided at the company level or could be provided
in the future, such as the advantage and contribution provided or expected in
the future subject to rate modification.

 

Expenses

 

M. EPINETTE Stephan shall be entitled to
reimbursement by the company, against appropriate vouchers or other receipts
for business expenses, in accordance with the company’s policies then
applicable to senior executives:

 

· Use of a cellular
telephone

· Provision of a
laptop computer

· TORNIER SAS places
at the disposal of M. EPINETTE Stephan a company car. Since the company car
will have been allocated, M. EPINETTE Stephan will not use his personal car for
business expenses anymore. In this regard, benefit in kind will be calculated
in line with the applicable scale in rate.

 

Other expenses such as travels (train, hotel, flights) to assist to meetings will be reimbursed against appropriate vouchers or other receipts, and client invitations, within the limit of the annual budget allocated with the Commercial Direction.
 
M. EPINETTE Stephan will refrain from taking, for his personal use or for unauthorized expenses, any devices, facilities, document, copies, reproduction of documents or software belonging to the company or to clients for whom he is working or tasks carried out by him.
 
M. EPINETTE Stephan declares not to hold, on the date hereof, any interest or investment within competing companies, directly or indirectly, including by intermediary.
 
2

 

Obligations as regards discretion and
professional confidentiality - compliance with the TORNIER’s Values Guide

 
M. EPINETTE Stephan agrees that he shall have to retain, during or after the termination of this contract, absolute discretion and confidentiality, especially concerning facts, documents, files, prices within the company vis-à-vis anybody outside the TORNIER SAS company.  The same obligations will be applicable to methods and technical processes M. EPINETTE Stephan may have to know about in the course of his employment.
 
Furthermore, M. EPINETTE Stephan commits to comply with the Code of conduct described within the TORNIER’s Values Guide receipt whereof is hereby by him acknowledged.
 

Non compete clause

 

Taking into consideration the specific functions assigned to M. EPINETTE Stephan such as the direct contact with the clients of the TORNIER SAS company, commercial information, and knowledge of the channel of distribution and the selling methods of the company, the highly competitive nature of the market and the company’s business, M. EPINETTE Stephan  agrees in case of breach of his contract, and outside a trial period, for any reason and by either party responsible:
 
· not to enter any competitor directly or indirectly to commence or expand any relationship of the same nature with any competitor in line with the activity of the TORNIER SAS company. “Activity of a same nature” will stand for activities such as commercial management, sales, sales promotion or strategic marketing.
 
· not to participate or engage directly or indirectly, either individually or thought an intermediary, for his own account or for a third party, in any activity of company created or to be created, likely to compete the activities of the TORNIER SAS company, such as processing, selling, marketing of products of services for orthopedic surgery.
 
The non compete clause is limited for a non-renewable period of 1 year after termination of the employment contract, starting from the actual end of his actual employment, i.e., at the end of the notice period, if the notice period is executed, or starting from the date M. EPINETTE Stephan cease to work for the Company, if the notice period is not executed, that is to say after notice of dismissal or at the date M. EPINETTE Stephan falls vacant is the notice of dismissal is not applied, and will apply to the geographical area he had been in charge of.
 
If M. EPINETTE Stephan violates his obligation, he shall have to pay a fixed and irreducible allowance, a sum equal to the amount of wages, less the social security payments, he will have received during the last 12 months before termination of his contract, without prejudice to the rights of the company to seek additional penalties with regard to such violation.
 
As a counterpart, M. EPINETTE Stephan will receive during the period the non compete clause is applicable a monthly allowance equal to the average compensation received during his past 12 months within the company.  In case M. EPINETTE Stephan fails to comply with this provision, TORNIER SAS company will be exempted from its commitment to pay this special monthly compensation
 
TORNIER SAS can release M. EPINETTE Stephan of this clause and at the same time be exempted from its commitment to pay the special monthly compensation, at any moment during the course of execution of the contract, or in case of termination under condition, in this case will have to communicate with registered letter with a form for acknowledgment of receipt, within 8 days following giving notice termination of the employment contract.
 
Such provision does not apply in case of termination of the employment contract during the trial period.
 
Termination
 
Unless the trial period as set above, each party can terminate unilaterally the contractual relationship, only in respect of :
 
· the legal/conventional procedure
 
3

 
· legal/conventional mutual notice period, except in case of negligence or force majeure.
 
At expiration of the contract for any reason or after notification of dismissal or resignation in the case of release of execution of the period of notice, M. EPINETTE Stephan will give back spontaneously all the belongings, files, documents, realization which could have been given to him during the exercise of his mission, and so as all the copies and reproduction.
 
Compensation for damages in case of breach of contract following a change in control
 
In the case where, during the execution of the employment contract and within a period of 12 months following the change in control, as defined as the following, M. EPINETTE Stephan will be subject to resignation on another ground than negligence or serious misconduct, in order to repair the damage suffered by M. EPINETTE Stephan, he will be granted a fixed allowance which amounts 12 month gross reference wage.
 
The reference wage amounts to the twelfth gross salary of the last twelve months before resignation, or following the most interesting formula for the employee, the third of the three last months, it being understood that in any case, any premium or bonus allocated to the employee during this period, must be calculated prorata temporis.
 
This compensation may include a compensation for resignation arising from legal or conventional provision applied by the company (it being said that it does not include notice compensatory damages, nor paid annual leave compensatory damages, nor a potential financial compensation due to the non-competition clause).
 
M. EPINETTE Stephan will receive the maximum gross bonus he is eligible for as regards his part to the realization of his individual targets during the year the change in control occurred.
 
Subject to the employee’s document production attesting his admission and maintenance within the unemployment insurance system, M. EPINETTE Stephan will be allowed to benefit the maintenance of the disability, invalidity, death regime and healthcare regime applicable. The entire funding of those provisions will be borne by the company during a period of 12 months from the effective date of the breach of contract.
 
“Change in Control” is defined as any of the following: (The assumptions referred to below are related to a change in control of the parent company in the United States under United States corporate law).
 

(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 (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, 

 

4

 

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 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.

 

Unavailability
 

In case of unavailability, M. EPINETTE Stephan
will inform the company management directly or through an intermediary without
delay and will justify in writing the reason and the expected duration of his
absence within 48 hours after the cessation of work, except force majeure
cases.

 

Information

 

M. EPINETTE Stephan, as senior
executive, benefits, concerning the occupational social protection system of a
supplementary and complementary retirement scheme and of a welfare plan and
medical expenses.

 

The description of the benefits and
financing in force are given to M. EPINETTE Stephan.

 

This Agreement is drawn up in duplicate.

 

5

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