SEPARATION AGREEMENT
Exhibit 10.5
This Separation Agreement and Mutual Release (“Agreement”) is made and entered into by and
between Restore Medical Inc. (“RMI”), a Delaware corporation located at 0000 Xxxxxx Xxxx, Xx. Xxxx,
Xxxxxxxxx 00000 and Xxxxx X. Xxxxxxx (“Xxxxxxx”) who resides at 9 Spyglass, Xxxxxxxx, Xxxxxxxxx
00000.
WITNESSETH:
WHEREAS, Xxxxxxx is the President and Chief Executive Officer of RMI;
WHEREAS, RMI and Xxxxxxx have mutually agreed to the terms related to the termination of
Xxxxxxx’x 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 Xxxxxxx;
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”), Xxxxxxx’x employment with RMI will terminate.
Following the Separation Date, all Xxxxxxx’x benefits and privileges of employment will end except
as provided in Paragraph 3 of this Agreement. Xxxxxxx and RMI further agree that the Change in
Control and Severance Agreement dated March 30, 2004, by and between RMI and Xxxxxxx is terminated
and superceded by this Agreement and is null and void.
2. Xxxxxxx’x Transition Assistance Duties Prior to the Separation Date. Prior to the
Separation Date, Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx
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 Xxxxxxx. Provided this Agreement is executed and Xxxxxxx
has not revoked and/or rescinded it in accordance with Xxxxxxxxx 0, XXX will provide the following
payments and benefits to Xxxxxxx:
| (a) | Following the Separation Date, RMI shall pay Xxxxxxx $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, Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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) Xxxxxxx or her husband becomes covered under another company’s like benefit plan; (ii) Xxxxxxx is eligible (whether or not covered) under Medicare; or (iii) Xxxxxxx dies. After expiration of the 12 month period in which RMI pays the above-described premiums, if necessary, Xxxxxxx 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 Xxxxxxx’x 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 Xxxxxxx’x 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, Xxxxxxx shall be permitted to exercise 100% of all stock options granted to Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx more than 90 days following the Separation Date shall be treated as non-qualified stock options, notwithstanding any provision in Xxxxxxx’x stock option agreements to the contrary. |
4. Continuing Obligations Under Nondisclosure and Noncompetition Agreement. Xxxxxxx
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. Xxxxxxx 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. Xxxxxxx 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 Xxxxxxx authored, created or assisted in
authoring or creating such property. Xxxxxxx 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, Xxxxxxx shall be permitted to
keep her cellular phone, phone number, and phone account. Such cell phone account shall be
transferred to Xxxxxxx personally on or about the Separation Date. Xxxxxxx agrees to accept such
transfer or RMI may cancel such cell phone account. Following such transfer, Xxxxxxx shall be
responsible for all cell phone charges.
6. Acceptance Period. The terms of this Agreement will be open for acceptance by
Xxxxxxx 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. Xxxxxxx agrees that any changes to this Agreement, material or immaterial during the
Acceptance Period, will not restart the Acceptance Period. Xxxxxxx 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. Xxxxxxx 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: Xxxx Xxxxxxx, Executive Chairman, Board of Directors, Restore Medical Inc., 0000
Xxxxxx Xxxx, Xx. Xxxx, Xxxxxxxxx, 00000.
In the event that Xxxxxxx revokes or rescinds (that is cancels) this Agreement, it shall be
null and void and neither Xxxxxxx nor RMI shall have any rights or obligations under this
Agreement.
8. Xxxxxxx’x Release of RMI. In exchange for the payments and benefits specified in
this Agreement, Xxxxxxx, 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 Xxxxxxx 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 Xxxxxxx could have asserted in any litigation against any of the
Released Parties; any cause of action or claim relating to Xxxxxxx’x 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 Xxxxxxx’x 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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Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx. 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 Xxxxxxx and her attorneys, agents,
personal representatives, heirs, and assigns (“the Released Xxxxxxx 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 Xxxxxxx Parties arising up through the date of her
signature on this Agreement.
10. Confidentiality. Xxxxxxx agrees to keep the terms of this Agreement confidential.
Xxxxxxx 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: Xxxxxxx 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 Xxxxxxx or anyone else, and shall not be interpreted as such.
12. No Assignment. This Agreement is personal to Xxxxxxx and may not be assigned by
her. The payments to be provided to Xxxxxxx as set forth in Paragraph 3 of this Agreement shall be
made to Xxxxxxx’x estate in the event of Xxxxxxx’x death prior to Xxxxxxx’x 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. Xxxxxxx 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
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March 30, 2004”), contains the entire agreement between Xxxxxxx and RMI with respect to
Xxxxxxx’x employment and separation from employment and that there are no promises or
understandings outside of this Agreement with respect to Xxxxxxx’x employment or Xxxxxxx’x
separation from employment with RMI. Any modification of or addition to this Agreement must be in
a writing signed by Xxxxxxx and XXX.
00. 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 Xxxxxxx waives any right she may have to transfer or change the venue of any
litigation brought against Xxxxxxx 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. XXXXXXX AFFIRMS THAT SHE HAS READ THIS AGREEMENT. XXXXXXX IS
HEREBY ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT. XXXXXXX 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/ Xxxxx X. Xxxxxxx | |||
| Xxxxx X. Xxxxxxx | ||||
| Dated: August 13, 2004 | RESTORE MEDICAL INC. |
|||
| By /s/ Xxxx X. Xxxxxxx | ||||
| Its Executive Chair | ||||
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