Document:

exv10w3

 

Exhibit 10.3A

EMPLOYMENT AND CHANGE IN CONTROL SUPPLEMENTAL AGREEMENT

     This Employment and Change in Control Supplemental Agreement (“Supplemental Agreement”) is
made effective as of March 15, 2006, by and between Restore Medical Inc., a Minnesota corporation
(the “Company”), and J. Robert Paulson, an individual resident of Minnesota (the “Employee”).

     WHEREAS, the parties executed an Employment and Change in Control Agreement (“Original
Agreement”) on April 11, 2005;

     WHEREAS, the parties have decided it is in their mutual best interests to modify certain terms
of that Original Agreement; and

     WHEREAS, the parties desire that the portions of the Original Agreement that are not expressly
revised by this Supplemental Agreement remain in full effect and are not modified or abrogated by
this Supplemental 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. The Term of Agreement section in the Original Agreement shall
remain unmodified.

     2. Position and Duties. The Position and Duties section in the Original Agreement
shall remain unmodified.

3. Compensation and BenefitsSection 3(b) of the Original Agreement is hereby
modified in its entirety as follows:

(b) Additional Performance Incentive. In addition to Base Salary,
the Employee will be eligible to receive an additional performance incentive
pursuant to a Management Incentive Plan expected to be adopted by the Board
of Directors seasonably after the commencement of Employee’s employment, as
such plan may be amended from time to time. 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;
however, Employee will be eligible to receive annually an additional
performance incentive target equal to 30% of Base Salary, based on the level
of attainment of corporate and individual performance goals established and
approved by the Board of Directors initially within 60 days from the date of
this Agreement and reestablished for each new calendar year thereafter. If paid, the value of
the additional performance incentive may be paid to Employee in some
combination of cash and stock option grants, as established by the Board

 

 

of Directors, with any such amounts received by the Employee subject to all
required withholdings, deductions, and tax reporting requirements.

     Compensation and Benefits section in the Original Agreement shall remain unmodified, except
that Employee and the Company agree that 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. Employee and the Company agree that such revision is in
their mutual best interest, and the benefits of such revision to each party constitute sufficient
consideration for such revision.

     4. Termination of Employment. The Termination of Employment section in the Original
Agreement shall remain unmodified.

     5. Definitions. The Definitions section in the Original Agreement is modified as
follows:

          (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 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.

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          (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;

     (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.

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          (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.

     6. Successors and Binding Agreement. The Successors and Binding Agreement section of
the Original Agreement shall remain unmodified.

     7. Limitation of Damages. The Limitation of Damages section in the Original Agreement
shall remain unmodified.

     8. Dispute Resolution. The Dispute Resolution section in the Original Agreement shall
remain unmodified.

     9. Modification; Waiver. The Modification; Waiver section of the Original Agreement
shall remain unmodified.

     10. Notice. The Notice section of the Original Agreement shall remain unmodified.

     11. Severability. The Severability section of the Original Agreement shall remain
unmodified.

     12. Governing Law. The Governing Law section of the Original Agreement shall remain unmodified.

     13. Effect of Agreement; Entire Agreement. The Effect of Agreement; Entire Agreement
section of the Original Agreement shall remain unmodified.

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

Restore Medical Inc.

	 	 	 	 	 	 	 
	By:

	 	/s/ Mark. B. Knudson
	 	 	 	/s/ J. Robert Paulson, Jr.
	 

	 	 
	 	 	 	 
	 

	 	Name: Mark B. Knudson, Ph.D.

Title: Chairman of the Board
	 	 	 	J. Robert Paulson, Jr.

4exv10w16

 

EXHIBIT 10.16

EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT

     This Employment and 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
Christopher Geyen, an individual resident of Minnesota (the “Employee”).

     WHEREAS, the Company desires to employ Employee as its Chief Financial Officer (“CFO”), 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 CFO, 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. However, in the event Employee needs to
complete certain open projects for Employee’s former employer, the
Company will accommodate reasonable requests to complete these open projects as an employee of
the Company, and during the Company’s normal business hours, through March 31, 2006 (“Transition
Period”). Notwithstanding the foregoing, the Company

 

 

time that Employee uses to complete these projects shall not exceed fifteen (15) hours per week (without prior approval) during the
Transition Period. 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 $15,416.67 monthly, which equates to an annualized Base Salary of $185,000.00,
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 will be reviewed by the Company in January 2007 and may be reviewed annually
thereafter for potential increases on the basis of the Employee’s performance and the
financial standing of the Company.

     (b) Signing Bonus. The Employee will be entitled to receive a signing bonus of
$5,000, less all applicable withholdings, within five (5) business days of the date the
Employee completes the Transition Period.

     (c) 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. 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; however, Employee
will be eligible to receive annually an additional performance incentive target equal to 22%
of Base Salary, based on the level of attainment of corporate and individual performance
goals as determined in the discretion of the Board of Directors. If paid, the value of the
additional performance incentive may be paid to Employee in some combination of cash and
stock option grants, as established by the Board of Directors, with any such amounts
received by the Employee subject to all required withholdings, deductions, and tax reporting
requirements.

     (d) Equity Participation.

     (i) The Board of Directors will approve a stock option grant to Employee to
purchase up to 200,000 shares of the Company’s common stock in accordance with the
Company’s 1999 Omnibus Stock Plan, as amended (the “Plan”) at an exercise price
reflecting the fair market value of the Company’s common stock on the date of the
grant as determined by the Board of Directors. Employee’s stock option grant will
vest 25% at the end of his first year of employment, and 1/36th of the remaining balance will vest each month
thereafter for 36 months.

     (ii) In the event of an IPO, Employee will be eligible to receive an additional
stock option grant of the Company’s common stock under the Plan as of the effective
date of the IPO. The number of shares to be included in this

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second grant will be
an amount, when added to the initial 200,000 shares grant (as adjusted for any stock
split) defined above, which represents 0.9% of the fully diluted issued and
outstanding capital stock of the Company (including all outstanding warrants to
purchase common or preferred stock, and all issued stock options) following the IPO.
The option price of this grant will reflect the fair market value of the Company’s
common stock on the date of grant, as determined by the Board of Directors. In the
event the IPO does not occur, the Employee will not be eligible to receive a second
stock option grant in the amount described in this paragraph.

     (iii) In the event of a “Change in Control” (as defined in Section 6(a) below)
occurring during the Term of this Agreement, 50% of the remaining unvested portion
of this stock option grant shall vest upon the closing of the last transaction
necessary to effect the Change in Control. In the further event that the Employee’s
employment is terminated at any time following a Change in Control, either by the
Company without “Cause” (as defined in Section 6(c) below) or as the result of a
“Constructive Termination” (as defined in Section 6(c) below), any remaining
unvested portion of this stock option grant shall thereupon vest.

     (iv) In the event of a voluntary termination by the Employee or a termination
by the Company with Cause at any time or without Cause prior to a Change in Control,
the Employee’s rights to any remaining unvested portion of this stock option grant
shall be extinguished.

     (v) This stock option grant is made under the Company’s 1999 Omnibus Stock
Plan, as amended from time to time (the “Plan”). In no event shall the Plan be
amended in a manner that prohibits the exercise of Employee’s stock options as set
forth in this Agreement.

     (e) 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.

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     (f) Special Transaction Bonus.

     (a) In the event a third party purchases all, or substantially all, of the
stock or assets of the Company (a “Change of Control Transaction”) prior to the
closing of the Company’s current IPO process or the Company’s next private equity
financing, upon the closing of such transaction, Employee will receive a transaction
bonus in the amount of $150,000. The right to receive this transaction bonus will
expire upon the closing of the IPO or the completion of the next private equity
financing.

     (b) In the event the current IPO process does not occur, the Company elects to
raise capital in a private equity financing, and a Change of Control Transaction
occurs subsequent thereto (but prior to any IPO of the Company), Employee will be
entitled to a special transaction bonus. Provided that there are shares of
preferred stock that remain outstanding and provided that the holders of the
Company’s outstanding shares of preferred stock receive, after payment of the
special transaction bonus provided herein, proceeds in the aggregate equal to their
original purchase price for their shares of preferred stock in the Change in Control
transaction, Employee shall be entitled to receive from the aggregate proceeds
payable to all stockholders of the Company in the Change in Control transaction a
special transaction cash bonus, which, when added to the amount to be received by
Employee in such transaction for all outstanding shares of capital stock of the
Company and any vested options and/or warrants (net of acquisition cost) to acquire
shares of capital stock of the Company (“Employee’s Equity”), will result in
Employee receiving total proceeds equal to nine-tenths of one percent (0.9%) of the
net proceeds payable to the Company’s stockholders and holders of outstanding
options and/or warrants in such Change in Control transaction. The right to
receive this special cash transaction bonus will expire upon any IPO of the Company.

     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 be
entitled to receive 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. §

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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 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 amounts already vested or earned by but unpaid to the Employee as of the date of
termination, the Employee shall be entitled to receive 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

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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.

     (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 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

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     (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;

     (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

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     (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 12 months following a Change in Control, without Cause.

     (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

 

     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).

     (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 Company’s
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.

9

 

     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
	 

	 	Christopher Geyen
	 

	 	2528 Wood Duck Trail
	 

	 	Shakopee, MN 55379

     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.

     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

10

 

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’ 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/ Christopher Geyen
	 

	 	 
	 	 
	 

	 	Name: J. Robert Paulson, Jr.
	 	Christopher Geyen
	 

	 	Title: President & CEO	 	 

11

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