Document:

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EXHIBIT 10.17

CHANGE IN CONTROL AGREEMENT

     This Change in Control Agreement (“Agreement”) is made effective as of March 13, 2006, by and
between Restore Medical Inc., a Minnesota corporation (the “Company”), and John Foster, an
individual resident of Minnesota (the “Employee”).

     WHEREAS, the Company desires to employ Employee as its Senior Vice President of Commercial
Operations, and Employee desires to accept such employment and designation, both subject to the
terms and conditions of this Agreement;

     WHEREAS, the parties have decided it is in their mutual best interests to memorialize in
writing certain terms and conditions of the employment relationship between them; and

     WHEREAS, Employee understands that nothing in this Agreement creates any guarantee of
continuous employment with the Company, and that Employee’s employment may be terminated by either
the Company or Employee at any time, upon such notice as may be required in this Agreement;

     NOW, THEREFORE, in consideration of Employee’s employment with the Company and the foregoing
premises, the mutual covenants set forth below, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company and Employee agree as follows.

     1. Term of Agreement. As set forth herein, the parties’ respective obligations under
this Agreement shall commence on March 13, 2006, and shall extend indefinitely until this Agreement
is terminated by either party according to Section 4 below (the “Term”), provided, however, that
any provision in this Agreement that by its terms survives expiration of this Agreement shall so
survive and Employee shall continue to be bound by the terms of each such provision for the time
period set forth therein. 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. As set
forth below, the Employee and the Company may terminate their employment relationship at any time,
for any reason or for no reason, with cause or without cause.

     2. Position and Duties. During the Term, the Employee agrees to serve as Senior Vice
President of Commercial Operations, subject and reporting to the President and Chief Executive
Officer (“CEO”). The Employee agrees to perform such reasonable duties and responsibilities as are
customary for the Employee’s position and such other duties and responsibilities that may be
assigned by the President and CEO from time to time. During the Term, the Employee agrees to serve
Company faithfully and to the best of the Employee’s ability and to devote the Employee’s full
business time, attention and efforts to the business and affairs of Company (exclusive of any
period of vacation, sick, disability, or other leave to which Employee is entitled) during normal
business hours. The principal place of employment and the location of Employee’s principal
office and normal place of work shall be within the Minneapolis-St. Paul Metropolitan Area.
Employee will be expected to travel to other locations, as necessary, in the performance of
Employee’s duties during the term of this Agreement.

 

 

     3. Compensation and Benefits.

     (a) Base Salary. During the Term, the Company shall pay the Employee a “Base
Salary” of $17,853.33 monthly, which equates to an annualized Base Salary of $214,240.00,
paid in accordance with the Company’s regular payroll procedures, policies, and practices
and subject to all required deductions, withholdings, and reporting obligations. Employee’s
Base Salary may be reviewed by the Company from time to time for potential increases on the
basis of the Employee’s performance and the financial standing of the Company.

     (b) Additional Performance Incentive. In addition to Base Salary, the Employee
will be eligible to receive an additional performance incentive pursuant to the Company’s
Management Incentive Plan, as such plan may be amended from time to time. Employee’s target
bonus under the Management Incentive Plan shall be 25% of Base Salary. The details of
Employee’s eligibility for and receipt of this additional performance incentive shall be
governed by the terms and conditions of the Management Incentive Plan.

     (c) Other Employee Benefits. During the Employee’s employment with the
Company, the Employee shall be entitled to participate in the retirement and health and
welfare benefits offered generally by the Company to its employees, including medical,
dental, flexible spending account, group life, group disability, and 401(k), to the extent
that the Employee’s position, tenure, salary, health, and other qualifications make the
Employee eligible to participate. The Employee’s participation in such benefits shall be
subject to the terms of the applicable plans, as the same may be amended from time to time.
The Company does not guarantee the adoption or continuance of any particular employee
benefit during the Employee’s employment, and nothing in this Agreement is intended to, or
shall in any way restrict the right of the Company, to amend, modify or terminate any of its
benefits during the Term of this Agreement. The Employee also will be eligible for the
benefits described in the Company’s Executive Compensation Plan, subject to the terms of
such Plan, as the same may be amended from time to time. The value of any such benefits the
Employee receives shall be imputed and reported to the Employee as income, as required.

     4. Termination of Employment.

     (a) By the Company, at Any Time, With Cause. At any time during the Term, the
Company may terminate the Employee’s employment for Cause. In the event of a termination
with Cause, the Company’s obligations to the Employee hereunder shall
terminate, except as to amounts already vested or earned by but unpaid to the Employee
as of the date of termination.

     (b) By the Company, at Any Time Prior to a Change in Control, Without Cause.
The Company may terminate the Employee’s employment at any time without Cause. In the event
such a termination without Cause occurs at any time prior to a Change in Control occurring
during the Term, in addition to amounts already vested or earned by but unpaid to the
Employee as of the date of termination, the Employee shall

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be entitled to receive six (6) months Base Salary continuation, paid according to the Company’s normal payroll schedule and
subject to all required withholdings and reporting obligations. The Company shall also
provide the Employee and his current family members with continued group health coverage,
including medical and dental coverage, as otherwise required under applicable 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”). Provided that Employee makes the necessary COBRA elections, the Company will
pay the total applicable premium cost for such medical and dental COBRA continuation
coverage for Employee and his family for a period of up to 6 months commencing on the date
of termination of employment; provided, however, that the Company’s obligation to pay for
such premiums shall terminate if (i) Employee or his wife becomes covered under another
company’s like benefit plan; (ii) Employee is eligible (whether or not covered) under
Medicare; or (iii) Employee dies. Such COBRA premiums paid on Employee’s behalf will be
imputed to Employee as income, as required by law. After expiration of the 6 month period
in which the Company pays the above-described premiums, if necessary, Employee will be
responsible for payment of such premiums for as long a period as is allowable under
applicable law.

     (c) By the Company, at Any Time Following a Change in Control, Without Cause.
In the event that a termination without Cause occurs following the closing date of the last
transaction necessary to effect a Change in Control occurring during the Term, in addition
to amounts already vested or earned by but unpaid to the Employee as of the date of
termination, the Employee shall be entitled to receive twelve (12) months Base Salary
continuation, paid according to the Company’s normal payroll schedule and subject to all
required withholdings and reporting obligations. The Company shall also provide the
Employee and his current family members with continued group health coverage, including
medical and dental coverage, as otherwise required under applicable 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”).
Provided that Employee makes the necessary COBRA elections, the Company will pay the total
applicable premium cost for such medical and dental COBRA continuation coverage for Employee
and his family for a period of up to 12 months commencing on the date of termination of
employment; provided, however, that the Company’s obligation to pay for such premiums shall
terminate if (i) Employee or his wife becomes covered under another company’s like benefit
plan; (ii) Employee is eligible (whether or not covered) under Medicare; or (iii) Employee
dies. Such COBRA premiums paid on Employee’s behalf will be imputed to Employee as income,
as required by law. After expiration of the 12 month period in which the Company pays the above-described premiums, if necessary, Employee will be
responsible for payment of such premiums for as long a period as is allowable under
applicable law.

     (d) By the Employee, at Any Time Following a Change in Control, as the Result of a
Constructive Termination. In the event that a Constructive Termination occurs at any
time during the Term and following the closing date of the last transaction necessary to
effect a Change in Control occurring during the Term, in addition to

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amounts already vested
or earned by but unpaid to the Employee as of the date of termination, the Employee shall be
entitled to receive twelve (12) months Base Salary continuation, paid according to the
Company’s normal payroll schedule and subject to all required withholdings and reporting
obligations. The Company shall also provide the Employee and his current family members
with continued group health coverage, including medical and dental coverage, as otherwise
required under applicable 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”). Provided that Employee
makes the necessary COBRA elections, the Company will pay the total applicable premium cost
for such medical and dental COBRA continuation coverage for Employee and his family for a
period of up to twelve (12) months commencing on the date of termination of employment;
provided, however, that the Company’s obligation to pay for such premiums shall terminate if
(i) Employee or his wife becomes covered under another company’s like benefit plan; (ii)
Employee is eligible (whether or not covered) under Medicare; or (iii) Employee dies. Such
COBRA premiums paid on Employee’s behalf will be imputed to Employee as income, as required
by law. After expiration of the 12-month period in which the Company pays the
above-described premiums, if necessary, Employee will be responsible for payment of such
premiums for as long a period as is allowable under applicable law.

     (e) Due to Employee’s Death or Disability. This Agreement shall terminate
immediately upon the Employee’s death or upon a finding by the Company’s Board of Directors,
in its sole discretion and subject to applicable law, that the Employee is unable to carry
out the Employee’s essential job functions to any substantial degree by reason of Disability
(as defined in Section 6(d) below). In either such case, the Company’s obligations to the
Employee hereunder shall terminate, except as to amounts already vested or earned by but
unpaid to Employee as of that date.

     5.  Section 409A Compliance. The Company will, to the extent necessary and only to
the extent necessary, modify the timing of delivery of severance benefits if the Company determines
that the timing would subject the severance benefits to any additional tax or interest assessed
under Section 409A of the Internal Revenue Code. In such event, the payments will occur as soon as
practicable without causing the severance benefits to trigger such additional tax or interest under
Section 409A of the Internal Revenue Code.

     6. Definitions.

     (a) A “Change in Control” shall be deemed to have occurred if:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who did not own
shares of the capital stock of the Company on the date of grant of the Option shall,
together with his, her or its “Affiliates” and “Associates” (as such terms are
defined in Rule 12b-2 promulgated under the Exchange Act), become the “Beneficial
Owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company

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representing 50% or more of the
combined voting power of the Company’s then outstanding securities (any such person
being hereinafter referred to as an “Acquiring Person”);

     (ii) The “Continuing Directors” (as hereinafter defined) shall cease to
constitute a majority of the Company’s Board of Directors; or

     (iii) There should occur (A) any consolidation or merger involving the Company
and the Company shall not be the continuing or surviving corporation or the shares
of the Company’s capital stock shall be converted into cash, securities or other
property; provided, however, that this subclause (A) shall not apply
to a merger or consolidation in which (i) the Company is the surviving corporation
and (ii) the shareholders of the Company immediately prior to the transaction have
the same proportionate ownership of the capital stock of the surviving corporation
immediately after the transaction; (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 liquidation or dissolution of the Company.

     (b) “Termination” shall mean separation from service as defined by Section 409A of the
Internal Revenue Code.

     (c) “Constructive Termination” 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 or due to the Employee’s
death or disability or otherwise approved by the Employee in writing:

     (i) A material diminution in the Employee’s job responsibilities or duties as
they existed immediately prior to a Change in Control;

     (ii) A reduction by the Company in the Employee’s Base Salary as in effect
immediately prior to a Change in Control;

     (iii) Relocation, following a Change in Control, of the Company’s principal
office more than 40 miles from its current location; or

     (iv) Any other material breach of this Agreement by the Company, following a
Change in Control, which is not cured within 30 days after written notice thereof
from the Employee.

     (d) “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;

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     (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.

     (e) “Disability” shall mean any physical or mental condition which causes the Employee
to fail to perform the Employee’s essential job functions on behalf of the Company over a
period of 90 days during any 180 day period. The existence or nonexistence of the
Employee’s disability will be determined in good faith and subject to applicable law by the
Board of Directors, after giving notice in writing to the Employee at least 30 days prior to
such determination. During such 30 day period, the Employee shall be permitted to make a
presentation to the Board of Directors for its consideration.

     (f) “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 5(e), “Affiliate” and “Associate” shall have the respective meanings
described to such terms in Rule 12-b-2 promulgated under the Exchange Act.

     7. Successors and Binding Agreement.

     (a) This Agreement may be transferred, in whole or in part, by the Company to its
successors and assigns, and the Employee will remain bound to fulfill the Employee’s
obligations hereunder. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or substantially all of the
business or assets of the Company expressly to 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 to obtain such assumption and agreement prior
to the effective date of any such succession shall be a breach of this Agreement and shall
entitled Employee to the rights and benefits from the Company in the same amount and on the
same terms as if Employee’s employment had been terminated by the Company, within twelve
(12) months following a Change in Control, without Cause.

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     (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 inure
to the benefit of, and be enforceable by, the Employee’s personal or legal representatives,
executors, administrators, heirs, distributees, devicees, and legatees.

     8. 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
Sections 9 and 13 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 the Employee is entitled under the provisions of this
Agreement, which, in the case of stock options, means the right to exercise such options according
to the original terms of the grant but not a monetary payment in lieu of such stock options.

     9. 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 by arbitration
before the American Arbitration Association in Minneapolis, Minnesota, pursuant to the American
Arbitration Association’s rules then in effect. In the event that Employee terminates employment
claiming Constructive Termination, which claim is disputed by the Company, or the Company
terminates Employee’s employment for Cause, which claim is disputed by Employee, Employee shall
receive severance benefits at 50% of the specified rate until the dispute is resolved in
arbitration or for 12 months, whichever comes first. If Employee prevails in such a dispute, the
Company shall pay full severance benefits to Employee, less any partial severance benefits already
paid. If the Company prevails, the Company’s obligation to pay Employee severance benefits
immediately shall cease and Employee shall repay any severance benefits already paid and agree
to a lien on any shares held by Employee in the Company to secure this repayment obligation,
with the exact number of shares subject to the lien determined based on the most recent fair market
value determination done by or on behalf of the Board. In either case, the duration of any of the
applicable restrictive covenants described in Section 8(d) below shall run from the original date
of termination.

     (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 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. The
arbitrator shall, however, have the authority to award the prevailing party its reasonable
attorneys’ fees incurred in the arbitration.

     (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).

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     (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 the
Nondisclosure and Noncompetition Agreement (“Nondisclosure Agreement”) between the parties,
which Nondisclosure Agreement, to the extent not inconsistent with any of the provisions in
this Agreement, is hereby incorporated by reference and made a part of this Agreement. Such
claims may be maintained by the Company in a lawsuit in a court of competent jurisdiction.

     10. 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.

     11. 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 listed below:

	 	 	 	 	 
	If to:	 	Restore Medical, Inc.
	 	 	2800 Patton Road
	 	 	St. Paul, MN 55113
	 	 	Attention: Board of Directors
	 
	 	 	 	 
	 

	 	If to:
	 	Employee
	 

	 	 	 	9549 Hillingdon Rd
	 

	 	 	 	Woodbury, Minnesota 55125

     Either party hereto may change its address for purposes of this Section 11 by giving 15 days’
prior written notice to the other party hereto.

     12. 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.

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

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     14. 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. Nor shall this Agreement supersede or limit in any way the Employee’s
obligations and the Company’s rights under the parties’ prior Nondisclosure Agreement, as
incorporated by reference in Section 9(d) above.

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

Restore Medical Inc.

	 	 	 	 	 
	By:

	 	/s/ J. Robert Paulson, Jr.
	 	/s/ John Foster
	 

	 	 
	 	 
	 

	 	Name: J. Robert Paulson, Jr.
	 	John Foster
	 

	 	Title: President & CEO	 	 

9exv10w18

 

EXHIBIT 10.18

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO (1) REGISTRATION IN COMPLIANCE WITH SUCH ACT AND SUCH STATE LAWS OR (2) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.

RESTORE MEDICAL, INC.

CONVERTIBLE PROMISSORY NOTE

 

			
	$675,000.00
	 	October 31, 2002

as amended June 12, 2003 and December 9, 2003

     For Value Received, the undersigned Restore Medical, Inc. (f/k/a Pi Medical, Inc.), a
Minnesota corporation (the “Company”), hereby promises to pay to the order of Venturi I, LLC
(“Holder”), at its principal office at 2800 Patton Road, St. Paul, Minnesota 55113, the principal
sum of Six Hundred Seventy-Five Thousand and 00/100 Dollars ($675,000.00). Interest shall be
payable on the unpaid principal balance of this Note, computed on the basis of actual number of
days elapsed and a year of 360 days, from the date hereof at the rate of 12% per annum. Unless
converted as provided below, the outstanding principal of, and interest accrued on, this Note will
mature and shall be due and payable on December 31, 2003 (the “Maturity Date”). This Note may be
prepaid, at the option of the Company, without penalty in whole or in part at any time and from
time to time after issue and prior to the Maturity Date.

     In the event of an equity financing by the Company, all of the outstanding principal of and
interest accrued on this Note shall automatically convert into the securities offered in such
financing, at a conversion price equal to the offering price per share in such financing.

     The Company shall pay all expenses, court costs and reasonable attorneys’ fees which may be
incurred in connection with the collection of or attempts to collect any amounts due under this
Note.

     The Company hereby waives presentment of this Note, demand, protest, dishonor and notice of
dishonor.

     This Note shall be governed by the laws of the State of Minnesota without regard to its
conflicts of laws rules.

     Amendment. This Note is intended to amend by substitution the Note dated as of October 31,
2002, as amended June 12, 2003, made by the Company in favor of Venturi I, LLC.

	 	 	 	 	 
	 	RESTORE MEDICAL, INC.

 	 
	 	By  	/s/  Susan L. Critzer
 	 
	 	 	Name:  	Susan L. Critzer 	 
	 	 	Title:  	President

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