Document:

exv10w4

 

Exhibit 10.4

CHANGE IN CONTROL AGREEMENT

     This agreement, made and entered into this 19th day of December, 2002, by and
between Pi Medical, Inc., a Minnesota corporation now renamed Restore Medical, Inc. (the
“Company”), with its principal offices at 2800 Patton Road, Roseville, Minnesota 55113, and Edward
W. Numainville (the “Employee”), residing at 13848 Holly St. N.W., Andover, MN 55304.

     WHEREAS, this Agreement is intended to specify the financial arrangements that the Company
will provide to the Employee upon the Employee’s separation from employment with the Company under
any of the circumstances described herein; and

     WHEREAS, the Agreement is entered into by the Company in the belief that it is in the best
interest of the Company to provide stable conditions of employment for the Employee notwithstanding
the possibility, threat, or occurrence of certain types of changes in control, thereby enhancing
the Company’s ability to attract and retain highly qualified people; and

     NOW, THEREFORE, in lieu of the foregoing recitals and in consideration of the mutual
covenants, promises, payments and undertakings of the parties hereto, the parties agree as follows:

     1. Term of Agreement. The Employee shall be employed on an at-will basis. This Agreement is
not, and shall not be construed as, an employment contract affecting in any way the duration of the
Employee’s employment or any terms and conditions thereof except those set forth herein. The
Employee and the Company may terminate their employment relationship at any time, for any reason,
or for no reason. Nothing in this Agreement shall alter any previous agreements between the
parties pertaining to confidentiality or ownership of inventions. This Agreement will expire on
December 19, 2005.

     2. Termination of Employment.

          (a) Prior to a Change in Control. Prior to a Change in Control (as defined in section 3(a)
hereof, the Company may terminate the Employee from employment with the Company at-will with or
without Cause (as defined in section 3(c) hereof), at any time.

          (b) After a Change in Control.

               (i) From and after the date of a Change in Control (as defined in section 3(a) hereof) during
the term of this Agreement, the Company shall not terminate the Employee from employment with the
Company except as provided in this section 2(b), or as a result of the Employee’s Disability (as
defined in section 3(d) hereof) or his death.

               (ii) From and after the date of Change in Control (as defined in section 3(a) hereof) during
the term of the Agreement, the Company shall have the right to
terminate the Employee from employment with the Company at any time during the term of this
Agreement for Cause (as defined in section 3(c) hereof), by written notice to the Employee,
specifying the particulars of the conduct of the Employee forming the basis for such termination.

 

 

               (iii) From and after the date of a Change in Control (as defined in section 3(a) hereof)
during the term of the Agreement: (a) the Company shall have the right to terminate the Employee’s
employment without Cause (as defined in section 3(c) hereof), at any time; and (b) the Employee
shall, upon the occurrence of such termination by the Company without Cause or upon the voluntary
termination of the Employee’s employment by the Employee for Good Reason (as defined in section
3(b) hereof), be entitled to receive the benefits provided in section 4 hereof. The Employee shall
evidence a voluntary termination for Good Reason by written notice to the Company given within ten
(10) days after the date of the occurrence of any event that the Employee knows or should need only
identify the Employee and set forth in reasonable detail the facts and circumstances claimed by the
Employee to constitute Good Reason. Any notice given by the Employee pursuant to this section 2
shall be effective ten (10) days after the date it is given by the Employee. For purposes of this
Section 2(b)(iii), an offer of employment from an acquiring company shall be deemed to be a
termination if such offer requires Employee to relocate more than 100 miles from Employee’s current
residence.

     3. Definitions.

          (a) A “Change in Control” shall mean:

               (i) A change on control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), whether or not the Company is then subject to such reporting
requirement;

               (ii) The public announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the Company or any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that such person
has become the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act)
directly or indirectly, of securities of the Company representing twenty percent (20%) or more of
the combined voting power of the Company’s then outstanding securities;

               (iii) The Continuing Directors cease to constitute a majority of the Company’s Board of
Directors;

               (iv) The shareholders of the Company approve: (a) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant to which shares of
Company stock would be converted into cash, securities, or other property, other than a merger of
the Company in which shareholders immediately prior to the merger have the same proportionate
ownership of stock of the surviving corporation immediately after the merger; (b) any sale, lease,
exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company; or (c) any
plan of liquidation or dissolution of the Company; or

               (v) The majority of the Continuing Directors (as defined in section 3(e) hereof) determine in
their sole and absolute discretion that there has been a Change in Control of the Company.

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          (b) “Good Reason” shall mean the occurrence of any of the following events, except for the
occurrence of such an event in connection with the termination or reassignment of the Employee’s
employment by the Company for Cause (as defined in section 3(c) hereof), for Disability (as defined
in section 3(d) hereof), or for death:

               (i) The assignment to the Employee of employment responsibilities which are not of comparable
responsibility and status as the employment responsibilities held by the Employee immediately prior
to Change in Control (as defined in section 3(a) hereof);

               (ii) Any unreasonable reduction by the Company in the Employee’s base salary as in effect
immediately prior to the change in control;

               (iii) The failure by the Company to obtain, as specified in section 7(a) hereof, an assumption
of the obligations of the Company to perform this Agreement by any successor to the Company; or

               (iv) Any other material breach of the Agreement by the Company which is not cured within
thirty (30) days after written notice thereof from the Employee.

          (c) “Cause” shall mean termination by the Company of the Employee’s employment based upon:

               (i) Repeated violations by the Employee of any of his duties or his repeated failures or
omissions to carry out lawful and reasonable orders which, in the reasonable judgment of the
Company, are willful and deliberate and which are not cured within a reasonable period after the
Employee’s receipt of written notice thereof from the Company;

               (ii) Any act or acts of personal dishonesty by the Employee and intended to result in the
personal enrichment of the Employee at the expense of the Company;

               (iii) Any willful and deliberate misconduct that is materially and demonstrably injurious to
the Company; or

               (iv) Any criminal indictment, presentment, or conviction for a felony, whether or not the
Company is the victim of such offense.

          (d) “Disability” shall mean any physical or mental condition which causes the Employee to fail
or render services to the Company over a period of ninety (90) days during any one hundred eighty
(180) day period. The existence or nonexistence of the Employee’s disability will be determined in
good faith by the Board of Directors after notice in writing given to the Employee at least thirty
(30) days prior to such determination. During such thirty (30) day
period, the Employee shall be permitted to make a presentation to the Board of Directors for
its consideration.

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          (e) “Continuing Director” shall mean any person who is a member of the Board of Directors of
the Company, while such person is a member of the Board of Directors, who is not an Acquiring
Person, or a representative of an Acquiring Person or any such Affiliate or Associate, and who:

               (i) was a member of the Board of Directors on the date of this Agreement as first written
above; or

               (ii) subsequently becomes a member of the Board of Directors, if such person’s initial
nomination for election or initial election to the Board of Directors is recommended or approved by
a majority of the Continuing Directors. For purposes of this section 3(e), “Acquiring Person”
shall mean any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) who
or which, together with all Affiliates and Associates of such person, is the “beneficial owner” (as
defined in Rule 13-d-3 promulgated under the Exchange Act), directly or indirectly, of securities
of the Company representing twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding securities, but shall not include the Company, any subsidiary of the
Company, or any entity holding shares of common stock organized, appointed, or established for, or
pursuant to the terms of, any such plan; and “Affiliate” and “Associate” shall have the respective
meanings described to such terms in Rule 12-b-2 promulgated under the Exchange Act.

     4. Benefits Upon Termination Under section 2(b)(iii).

          (a) Upon the termination (voluntary or involuntary) of the employment of the Employee pursuant
to section 2(b)(iii) hereof, the Company shall pay to the Employee, in lieu of any further base
salary or bonus payments to the Employee for periods subsequent to the date that the termination of
the Employee’s employment becomes effective, as severance pay,

	 	1.	 	During the first six months following
termination, continued compensation payable on the Company’s normal
employee pay periods with monthly amounts of such payments equal to the
Employee’s average total monthly compensation (as in effect in the
month preceding the month in which the termination becomes effective or
as in effect in the month preceding the Change in Control, whichever is
higher) without any reduction for other employment income earned by
Employee during the first six months following termination; and
	 
	 	2.	 	During the second six months following
termination, continued compensation payable on the Company’s normal
employee pay periods with monthly amounts of such payments equal to the
Employee’s average total monthly compensation (as in effect in the
month preceding the month in which the termination becomes
effective or as in effect in the month preceding the Change in
Control, whichever is higher) less other employment income earned by
Employee during the pay periods.

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          (b) For purposes of this Agreement, total monthly compensation shall include the Employee’s
salary and any bonus to which the Employee is otherwise entitled, pro rated for such period, and
any such bonus will be calculated as if it were paid out at one hundred percent (100%) of any bonus
plan covering the Employee. All payments to the Employee subject to this section 4 shall be
subject to any applicable payroll or other taxes required by law to be withheld.

          (c) During the period of time in which payments are being made under this Section 4, the
Company will continue to provide the Employee with medical and group life insurance benefits in
effect at the time of termination.

          (d) Company may, at its sole option and discretion, pre-pay any or all payments of Section
2(a) as lump-sum payments.

     5. Successors and Binding Agreement.

          (a) The Company will require any successor (whether direct or indirect) by purchase, merger,
consolidation, or otherwise to all or substantially all of the business and/or of the assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee the compensation from the
Company in the same amount and on the same terms as the Employee would be entitled hereunder if the
Employee terminated his employment after a Change in Control for Good Reason, except that, for
purposes of implementing the foregoing, the date on which any such succession becomes effective
shall be deemed the date that the termination of the Employee’s employment becomes effective. As
used in this Agreement, “Company” shall mean the Company and any successor to its business and/or
assets which executes and delivers the Agreement provided for in this section 7(a) or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) The Agreement is personal to the Employee, and the Employee may not assign or transfer any
part of his rights or duties hereunder, or any compensation due to him hereunder, to any other
person. Notwithstanding the foregoing, this Agreement shall enure to the benefit of, and be
enforceable by, the Employee’s personal or legal representatives, executors, administrators, heirs,
distributees, devicees, and legatees.

     6. Limitation of Damages. If for any reason the Employee believes the severance provisions of
this Agreement have not been properly adhered to by the Company, and if, pursuant to section 9
hereof, it is determined that the Company has not, in fact, properly adhered to the severance
provisions of
this Agreement, the sole and exclusive remedy to which the Employee is entitled is the
severance payment to which he is entitled under the provisions of this Agreement.

     7. Dispute Resolution. Except as provided in Subsection 9(d) hereof, any controversy, claim,
or dispute arising out of or relating to the making, performance, breach, termination, expiration,
application, or meaning of this Agreement shall be resolved exclusively

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by arbitration before the
American Arbitration Association in Minneapolis, Minnesota, pursuant to the American Arbitration
Association’s rules then in effect.

          (a) The decision of the arbitrator(s) shall be final and binding on both parties. Judgment on
the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
In the event of submission of any dispute to arbitration, each party shall, not later than thirty
(30) days prior to the date set for hearing, provide to the other party and to the arbitrator(s) a
copy of all exhibits upon which the party intends to rely at the hearing and a list of all persons
whom the party intends to call as witnesses at the hearing.

          (b) The arbitrator(s) shall strictly adhere to the sole and exclusive remedy set forth in
section 8 hereof and may not award or assess punitive damages against either party.

          (c) Each party shall bear its own costs and expenses of the arbitration and one-half (1/2) of
the fees and costs of the arbitrator(s).

          (d) This section 9 shall have no application to claims by the Company asserting violation of
or seeking to enforce, by injunction or otherwise, the terms of sections 5 or 6 hereof. Such
claims may be maintained by the Company in a lawsuit in a court of competent jurisdiction.

     8. Modification; Waiver. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in a writing signed by the
Employee and such officer as may be specifically designated by the Board of Directors of the
Company. No waiver by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.

     9. Notice. All notices, requests, demands, and all other communications required or permitted
by either party to the other party by this Agreement (including, without limitation, any notice of
termination of employment) shall be in writing and shall be deemed to have been duly given when
delivered personally or received by certified or registered mail, return receipt requested, postage
prepaid, at the address of the other party as first written above (directed to the attention of the
Board of Directors in the case of the Company). Either party hereto may change its
address for purposes of this section 11 by giving fifteen (15) days’ prior written notice to
the other party hereto.

     10. Severability. If any term or provision of this Agreement or the application hereof to any
person or circumstances shall to any extent be invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to persons or circumstances other than those
as to which it is held invalid or unenforceable shall not be effected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

     11. Governing Law. This Agreement has been executed and delivered in the State of Minnesota
and shall in all respects be governed by, and construed and enforced in accordance

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with, the laws
of the State of Minnesota, including all matters of construction, validity, and performance.

     12. Effect of Agreement; Entire Agreement. The Company and the Employee understand and agree
that this Agreement is intended to reflect their agreement only with respect to the subject matter
hereof and is not intended to create any obligation on the part of either party to continue
employment. This Agreement supersedes any and all other oral or written agreements or policies
made relating to the subject matter hereof and constitutes the entire agreement of the parties
relating to the subject matter hereof; provided that this Agreement shall not supersede or limit in
any way the Employee’s rights under any benefit plan, program, or arrangements in accordance with
their terms.

     IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date
first written above.

Restore Medical, Inc. (a/k/a Pi Medical, Inc.)

	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Susan L. Critzer
	 	 	 	/s/ Edward W. Numainville	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Susan Critzer, its President
	 	 	 	Edward W. Numainville	 	 

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AMENDMENT AGREEMENT

     For good and valuable consideration, the sufficiency and receipt of which is hereby
acknowledged, Restore Medical, Inc., 2800 Patton Road, St. Paul, MN 55113 and Edward W. Numainville
hereby agree to amend the December 19, 2002 Change In Control Agreement between the parties as
follows:

In paragraph 1, “Term of Agreement”, the last sentence of the paragraph is amended to read,
“This Agreement will expire on December 31, 2006.”

The December 19, 2002 Change In Control Agreement is unchanged in all other respects.

Agreed to by:

	 	 	 	 	 	 	 	 	 	 	 
	RESTORE MEDICAL, INC	 	 	 	EDWARD W. NUMAINVILLE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Susan Critzer
	 	 	 	By:
	 	/s/ Edward W. Numainville	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Susan Critzer, its CEO
	 	 	 	 	 	Edward W. Numainville, personally	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: April 27, 2004	 	 	 	Date: April 29, 2004	 	 

8exv10w5

 

Exhibit 10.5

SEPARATION AGREEMENT

     This Separation Agreement and Mutual Release (“Agreement”) is made and entered into by and
between Restore Medical Inc. (“RMI”), a Delaware corporation located at 2800 Patton Road, St. Paul,
Minnesota 55113 and Susan L. Critzer (“Critzer”) who resides at 9 Spyglass, Dellwood, Minnesota
55110.

WITNESSETH:

     WHEREAS, Critzer is the President and Chief Executive Officer of RMI;

     WHEREAS, RMI and Critzer have mutually agreed to the terms related to the termination of
Critzer’s employment with RMI effective as of December 31, 2004, or upon an alternative mutually
agreed upon date following RMI’s hiring of a new President and Chief Executive Officer, whichever
is later;

     WHEREAS, this Agreement is intended to replace and supercede that certain Change in Control
and Severance Agreement dated March 30, 2004, by and between RMI and Critzer;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged,

     IT IS AGREED, by and between the undersigned, as follows:

     1. Separation from Employment. Effective as of December 31, 2004, or upon an
alternative mutually agreed upon date following RMI’s hiring of a new President and Chief Executive
Officer, whichever is later (the “Separation Date”), Critzer’s employment with RMI will terminate.
Following the Separation Date, all Critzer’s benefits and privileges of employment will end except
as provided in Paragraph 3 of this Agreement. Critzer and RMI further agree that the Change in
Control and Severance Agreement dated March 30, 2004, by and between RMI and Critzer is terminated
and superceded by this Agreement and is null and void.

     2. Critzer’s Transition Assistance Duties Prior to the Separation Date. Prior to the
Separation Date, Critzer will continue to perform her duties as President and CEO of RMI and, upon
the hiring of a new President and Chief Executive Officer, her duties shall be to assist in the new
President and CEO’s orientation, to facilitate a smooth transition, and to perform any and all
other duties as she may be directed to do from time to time by RMI’s Board of Directors.

     Prior to the Separation Date, RMI shall continue to pay Critzer her current Base Salary
(annualized at $315,000/year as of the date of this Agreement) in periodic installments in
accordance with the standard payroll practices of RMI in effect from time to time, and Critzer
shall continue to be entitled to all benefits currently provided to her as a full-time employee of
RMI up through the Separation Date.

 

 

     3. Payments and Benefits to Critzer. Provided this Agreement is executed and Critzer
has not revoked and/or rescinded it in accordance with Paragraph 7, RMI will provide the following
payments and benefits to Critzer:

	 	(a)	 	Following the Separation Date, RMI shall pay Critzer $315,000
subject to usual payroll withholding, to be paid in approximately equal
periodic installments over twelve months in accordance with the standard
payroll practices of RMI in effect from time to time, commencing with the first
payment on January 15, 2005, and the last payment on December 31, 2005) or upon
an alternative mutually agreed upon schedule. In addition, Critzer shall
participate in any bonus plan offered to other executives or managers of RMI
during her employment. A bonus to be paid to her under said plan shall be pro
rated for the period of her employment and shall be paid within 30 days after
her employment ends.
	 
	 	(b)	 	Effective as of the Separation Date, RMI agrees to provide
Critzer and her current family members with continued group health coverage,
including medical and dental coverage, as otherwise required under applicable
stated continuation law and the Consolidated Omnibus Budget Reconciliation Act
of 1986, 29 U.S.C. §§ 1161-1168; 26 U.S.C. § 4980B(f), as amended, and all
applicable regulations (referred to collectively as “COBRA”). RMI will pay the
total applicable premium cost for such medical and dental COBRA continuation
coverage for Critzer and her family for a period of up to 12 months commencing
on the Separation Date provided, however, that RMI’s obligation to pay for such
premiums shall terminate if (i) Critzer or her husband becomes covered under
another company’s like benefit plan; (ii) Critzer is eligible (whether or not
covered) under Medicare; or (iii) Critzer dies. After expiration of the 12
month period in which RMI pays the above-described premiums, if necessary,
Critzer will be responsible for payment of such premiums for as long a period
as is allowable under applicable law (for purposes of calculating the total
continuation coverage period under COBRA such coverage period shall commence as
of the Separation Date).
	 
	 	(c)	 	Effective as of the Separation Date, RMI agrees to continue to
pay Critzer’s group term life insurance premiums for a period of twelve months
with the payment of such premiums and such coverage terminating on December 31,
2005, or upon an alternative mutually agreed upon date;
	 
	 	(d)	 	Pursuant to the terms and conditions set forth in Critzer’s
applicable stock option agreements with RMI, RMI agrees that, notwithstanding
anything to the contrary set forth in such stock option agreements or RMI’s
1999 Omnibus Stock Plan, as amended, during the five-year period following the
Separation Date, Critzer shall be permitted to exercise 100% of all stock
options granted to Critzer prior to March 30, 2004 (i.e., 150,000 shares of RMI
common stock) and 50% of all options granted on or after

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	 	 	 	March 30, 2004 (i.e., 126,000 shares of RMI common stock). The parties
hereto agree and acknowledge that, with respect to any stock options
previously granted to Critzer that were intended by the parties to be
treated as “incentive stock options” within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, such stock options, to the
extent they may be exercised by Critzer more than 90 days following the
Separation Date shall be treated as non-qualified stock options,
notwithstanding any provision in Critzer’s stock option agreements to the
contrary.

     4. Continuing Obligations Under Nondisclosure and Noncompetition Agreement. Critzer
acknowledges and agrees that in the course of her employment with RMI, she has had access to
confidential information and trade secrets relating to the business affairs of RMI and/or related
companies and entities. Critzer agrees that all terms of the Nondisclosure and Noncompetition
Agreement between RMI and her attached hereto as Exhibit A shall continue in full force and effect
in accordance with its terms and shall not be limited, superceded or in another way affected by
this Agreement.

     5. Return of Proprietary Company Property and Other Company Property. Critzer agrees
that all property in her possession belonging to RMI, including without limitation, all documents,
reports, manuals, memoranda, computer print-outs, customer lists, credit cards, keys,
identification, products, access cards, and all other property relating in any way to the business
of RMI are the exclusive property of RMI, even if Critzer authored, created or assisted in
authoring or creating such property. Critzer agrees that he shall return to RMI all such documents
and property prior to the Separation Date in order to be eligible to receive the benefits described
in Paragraph 3 of this Agreement. Notwithstanding the foregoing, Critzer shall be permitted to
keep her cellular phone, phone number, and phone account. Such cell phone account shall be
transferred to Critzer personally on or about the Separation Date. Critzer agrees to accept such
transfer or RMI may cancel such cell phone account. Following such transfer, Critzer shall be
responsible for all cell phone charges.

     6. Acceptance Period. The terms of this Agreement will be open for acceptance by
Critzer for a period of 21 calendar days (“the Acceptance Period”) during which time she may
consider whether or not to accept this Agreement and seek counsel to advise her regarding this
Agreement. Critzer agrees that any changes to this Agreement, material or immaterial during the
Acceptance Period, will not restart the Acceptance Period. Critzer further understands that she is
not required to take the entire 21-day period to decide whether she wishes to execute this
Agreement and that she may do so on an accelerated basis without prejudice to her own or RMI’s
rights under this Agreement.

     7. Right to Revoke and Rescind. Critzer has the right to revoke or rescind this
Agreement within 15 calendar days following her signing of it.

     Any revocation or rescission of this Agreement must be in writing and hand-delivered to RMI,
or, if sent by mail, postmarked within the applicable time period and sent by certified mail,
return receipt requested. Any revocation or rescission must be delivered or sent to the following

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address: Mark Knudson, Executive Chairman, Board of Directors, Restore Medical Inc., 2800
Patton Road, St. Paul, Minnesota, 55113.

     In the event that Critzer revokes or rescinds (that is cancels) this Agreement, it shall be
null and void and neither Critzer nor RMI shall have any rights or obligations under this
Agreement.

     8. Critzer’s Release of RMI. In exchange for the payments and benefits specified in
this Agreement, Critzer, for and on behalf of herself and her heirs, administrators, executors,
successors and assigns, agrees to, and hereby does, release, acquit, and forever discharge RMI and
its affiliates, subsidiaries, and related companies, and the former, current, and future directors,
officers, members, agents, attorneys, servants, independent contractors and employees (the
“Released Parties”), from any and all claims, whether direct or indirect, fixed or contingent,
known or unknown, which Critzer ever had, has, or may claim to have, for, upon, or by reason of any
matter, act or thing up through the date of his execution of this Agreement, including but not
limited to: any cause of action Critzer could have asserted in any litigation against any of the
Released Parties; any cause of action or claim relating to Critzer’s association with or employment
by RMI; any cause of action relating to any statements or actions by any of the Released Parties;
and/or any cause of action or claim relating to the termination of Critzer’s employment.

     This General Release specifically encompasses, but is not limited to, claims that could be
brought under Title VII, 42 U.S.C. § 2000(e) et seq., as amended by the Civil Rights Act of 1991;
the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act), 29
U.S.C. § 621 et seq.; the Americans With Disabilities Act, 42 U.S.C. §§ 12101-12213; the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq.; the Fair Labor Standards Act, 29
U.S.C. § 201, et seq.; the National Labor Relations Act, 29 U.S.C. § 151, et seq., the Worker
Adjustment Retraining and Notification Act, 29 U.S.C. § 2101, et seq., the Family Medical Leave
Act, 29 U.S.C. § 2601 et seq., the Minnesota Human Rights Act, Minn. Stat. § 363.01, et seq., Minn.
Stat. § 181.01 et seq., Minn. Stat. § 176.82, any other statutes providing rights and protections
of any kind for employees working in the state of Minnesota, and any other federal or state
statute, or local ordinance, including any claims for attorneys’ fees, liquidated damages, punitive
damages, costs or disbursements that could be awarded in connection with these or any other
statutory claims.

     This General Release also specifically encompasses any and all claims grounded in contract or
tort theories, including, but not limited to: breach of contract; tortious interference with
contractual relations; promissory estoppel; breach of the implied covenant of good faith and fair
dealing; breach of employee handbooks, manuals or other policies; wrongful discharge; wrongful
discharge in violation of public policy; assault; battery; fraud; false imprisonment; invasion of
privacy; intentional or negligent misrepresentation; defamation, including libel and slander,
discharge defamation and self-defamation; intentional or negligent infliction of emotional
distress; negligence; breach of fiduciary duty; negligent hiring, retention or supervision;
whistleblower claims; and/or any other contract or tort theory based on either intentional or
negligent conduct of any kind, including any attorneys’ fees, liquidated damages, punitive damages,
costs or disbursements that could be awarded in connection with these or any other common law
claims.

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     Critzer understands and agrees that she is not releasing or waiving her right to receive any
vested benefits to which she is entitled under RMI’s 401(k) plan. Her rights to receive benefits
under RMI’s 401(k) plan, if any, shall be governed by the terms of the plan, and nothing in this
Agreement is intended to alter the terms of that plan.

     Notwithstanding the foregoing, Critzer does not release any statutory or other rights she may
have to be indemnified for or to be defended against any claims that may be brought against her as
a result of acts she allegedly undertook or failed to undertake during her employment with RMI.

     9. RMI’s Release of Critzer. RMI and its affiliates, subsidiaries, and related
companies, and their former, current, and future owners, shareholders, directors, officers,
members, agents, insurers, assigns, representatives, attorneys, servants, independent contractors
and employees hereby does release, acquit, and forever discharge Critzer and her attorneys, agents,
personal representatives, heirs, and assigns (“the Released Critzer Parties”), of and from any and
all actions, causes of action, liabilities, suits, debts, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, guaranties, promises, damages, judgments, claims
and demands whatsoever, in law or in equity, whether direct or indirect, fixed or contingent, known
or unknown, asserted or unasserted, suspected or unsuspected, which RMI may now have or hereafter
have or claim to have against the Released Critzer Parties arising up through the date of her
signature on this Agreement.

     10. Confidentiality. Critzer agrees to keep the terms of this Agreement confidential.
Critzer agrees not to disclose any information concerning this Agreement to any person, including
any present or former employees of RMI. These confidentiality provisions are subject to the
following exceptions: Critzer may disclose this Agreement to her attorneys, accountants, tax
advisors or spouse or in the course of legal proceedings involving RMI, or in response to a court
order, subpoena or inquiry by a government agency. RMI agrees to keep this Agreement confidential
except that it may disclose the contents of this Agreement to those with a business need to know
and as required by law.

     11. No Admission. This Agreement is not an admission by RMI that it has acted
wrongfully toward Critzer or anyone else, and shall not be interpreted as such.

     12. No Assignment. This Agreement is personal to Critzer and may not be assigned by
her. The payments to be provided to Critzer as set forth in Paragraph 3 of this Agreement shall be
made to Critzer’s estate in the event of Critzer’s death prior to Critzer’s receipt of such
payments.

     13. Governing Law; Severability. This Agreement shall be governed by the laws of the
State of Minnesota. If any part of this Agreement is construed to be in violation of any law, such
part shall be modified to achieve the objective of the parties to the fullest extent permitted and
the balance of this Agreement shall remain in full force and effect.

     14. Entire Agreement. Critzer agrees that this Agreement, and all agreements
referenced in this Agreement (i.e., the “Nondisclosure and Noncompetition Agreement”) except for
those expressly revoked herein (i.e., the “Change in Control and Severance Agreement dated

5

 

March 30, 2004”), contains the entire agreement between Critzer and RMI with respect to
Critzer’s employment and separation from employment and that there are no promises or
understandings outside of this Agreement with respect to Critzer’s employment or Critzer’s
separation from employment with RMI. Any modification of or addition to this Agreement must be in
a writing signed by Critzer and RMI.

     15. Venue. Any action at law, suit in equity, or judicial proceeding arising
directly, indirectly, or otherwise in connection with, out of, related to or from this Agreement or
any provision hereof, shall be litigated only in the federal or state courts of the State of
Minnesota, and Critzer waives any right she may have to transfer or change the venue of any
litigation brought against Critzer by RMI.

     16. Waivers. No failure on the part of either party to exercise, and no delay in
exercising, any right or remedy pursuant to this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy granted hereby or by an related
document or by law.

     17. Captions and Headings. The captions and section headings used in this Agreement
are for convenience of reference only, and shall not affect the construction or interpretation of
this Agreement or any of the provisions hereof.

     18. Counterparts. This Agreement may be simultaneously executed in any number of
counterparts, and such counterparts executed and delivered, each as an original, shall constitute
but one in the same instrument.

     19. Acknowledgement. CRITZER AFFIRMS THAT SHE HAS READ THIS AGREEMENT. CRITZER IS
HEREBY ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT. CRITZER AGREES THAT
THE PROVISIONS OF THIS AGREEMENT ARE UNDERSTANDABLE TO HER AND THAT SHE HAS ENTERED INTO THIS
AGREEMENT FREELY AND VOLUNTARILY.

	 	 	 	 	 
	 	 	 
	Dated:          August 13, 2004 	/s/ Susan L. Critzer
 	 
	 	          Susan L. Critzer 	 
	 	 	 
	 

	 	 	 	 	 
	Dated:          August 13, 2004 	RESTORE MEDICAL INC.

 	 
	 	By  /s/ Mark B. Knudson
 	 
	 	Its Executive Chair 	 
	 	 	 
	 

6

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