DISTRIBUTION AGREEMENT

Exhibit 10.13

DISTRIBUTION AGREEMENT

     THIS AGREEMENT is made as of 20 January 2005 (the “Effective Date”) by and between Restore Medical, Inc., a Minnesota corporation having its principal place of business at 2800 Patton Road, Roseville, Minnesota 55113 USA (“Restore”) and Sonomed Ltd., a company organized under the laws of Israel and having its principal place of business at 40/42 Hatizmoret Str., Rishon Le Zion, Zip 75562, Israel (“Distributor”).

RECITALS

1. APPOINTMENT

     1.1 Scope. Subject to the terms and conditions of this Agreement, Restore hereby appoints Distributor, and Distributor hereby accepts appointment, as Restore’s exclusive distributor of the Products listed in Exhibit A in the Territory. So long as Distributor is Restore’s exclusive distributor of the Products in the Territory under the terms of this Agreement, and subject to the laws and regulations applicable in the Territory, Restore agrees that it will not sell or distribute the Products in the Territory, directly or through third parties.

     1.2 Subdistributors. Distributor may appoint subdistributors that are duly licensed in the Territory to promote and/or distribute Products within the Territory, provided that Distributor obtains Restore’s prior written approval to such appointment, which approval Restore may grant or withhold in its sole discretion. In no event shall any such subdistributor be allowed to promote, market or distribute products which compete with the Products without Restore’s prior written consent. Distributor shall at all times remain fully liable for and shall indemnify and hold Restore harmless for the performance of its subdistributors.

     1.3 Sales Outside the Territory. Distributor shall not sell the Products to customers outside the Territory.

     1.4 Competitive Products. During the term of this Agreement, Distributor shall not, either directly or indirectly, through subdistributors or otherwise, develop, manufacture, promote, market or distribute products that are competitive with the Products.

2. OBLIGATIONS OF DISTRIBUTOR.

     2.1 Marketing Efforts. Distributor shall have the following obligations with respect to the marketing and distribution of the Products:

     2.2 Minimum Purchase Requirement. Distributor agrees to purchase and take delivery of a quantity of Products that, at a minimum, meets the Minimum Purchase Requirements specified in Exhibit A. No less than three (3) months before the end of each twelve (12) month period (the first of which shall commence on the Effective Date) during the initial term hereof, and any renewal term, new Minimum Purchase Requirements shall be agreed by the parties. Distributor understands and agrees that achievement of the Minimum Purchase Requirements is of the essence of this Agreement and if at the end of the initial term or any renewal term: (a) Distributor and Restore fail to agree upon Minimum Purchase Requirements for the Products for the following year, or (b) Distributor fails to meet the Minimum Purchase Requirements, Restore, at its sole option, shall have the right to (1) terminate this Agreement pursuant to Section 9.2(c)(i) hereof with no liability to Distributor, or (2) appoint other distributors of the Products in all or part of the Territory (i.e., so that Distributor is Restore’s nonexclusive distributor of the Products in the Territory) during the remaining term of this Agreement notwithstanding any contrary terms herein.

     2.3 Expired Products. Distributor shall not sell any Products beyond their stated expiration date.

     2.4 Returned Products Policy. All returns must be authorized in writing by Restore and an authorization number given to Distributor prior to the return of any Product, freight pre-paid. Product returned must be unopened and undamaged, and must be received within 30 days of the invoice date for full replacement or credit. Product returned after 30 days may be subject to a restocking fee. Returns after 90 days from the invoice date may not be accepted. For Product returns because of defective product or under warranty, see the warranty provision in Section 5.1.

     2.5 Reverse Engineering; Alteration of Products. Except as may be permitted by applicable law, Distributor shall not reverse engineer or disassemble the Products and shall not knowingly allow any other person to do so. Distributor shall not alter the Products or any Product packaging or labeling except with the prior written consent of Restore.

     2.6 Inventory. Distributor shall at all times maintain an inventory of the Products sufficient to meet anticipated demand but calculated to result in the minimum possible return of Products under Section 2.4.

     2.7 Governmental Requirements; Registrations. Except as otherwise agreed by Restore in writing, Distributor shall be responsible for compliance with all governmental requirements for importing the Products into the Territory, including but not limited to all customs requirements. Distributor shall obtain any necessary import licenses at its own expense. Restore shall be responsible for obtaining all governmental approvals for the Products, and Distributor shall provide Restore with assistance in obtaining all governmental approvals as Restore may reasonably request, unless the parties agree otherwise or unless otherwise required by law in the Territory. In the event that Distributor obtains the necessary registrations or approvals by agreement of the parties or because required by the law of the Territory, Distributor shall provide Restore with copies of filings and correspondence with regulatory authorities relating to the Products or such registrations or approvals and, upon termination or expiration of this Agreement, Distributor shall promptly execute and deliver all documents reasonably requested by Restore to Restore or any third party designated by Restore to transfer such registrations or approvals to Restore or its designee. If Distributor obtains such registrations or approvals in its own name without Restore’s prior written consent, Distributor agrees that such registrations and approvals shall be the property of Restore and Distributor shall cooperate as requested by Restore in connection therewith.

     2.8 Product Claims. Distributor shall make no representations, warranties or other claims concerning the Products except as authorized by Restore in writing or as are contained in any of Restore’s marketing materials that may be provided to Distributor. Without prior written consent of Restore, no studies concerning the Products conducted by or for Distributor shall be deemed clinical studies of the Products or shall be used to market or promote the Products. Restore shall be the sole owner of, and Distributor hereby assigns to Restore all right, title and interest in, the Products and any information or data concerning the Products that result from such studies or clinical trials. Distributor shall take any actions and execute any documents requested by Restore to perfect Restore’s ownership rights in such information or data.

     2.9 Notice of Intellectual Property Infringement. Distributor shall promptly notify Restore in writing of any patent, copyright infringement or unauthorized use of Restore’s trade secrets in the Territory. Restore reserves the right in its sole discretion to institute any proceedings against such third party infringers, and Distributor shall refrain from doing so. Distributor shall cooperate fully with Restore in any legal action taken by Restore against such third parties, provided that Restore shall pay all expenses of such action and all damages which may be awarded or agreed upon in settlement of such action shall accrue to Restore.

     2.10 Laws of the Territory. Distributor shall promptly inform Restore of any legal requirements in the Territory relating to the use or distribution of the Products, marketing materials or Product packaging and labeling.

     2.11 Insurance. Distributor shall maintain in force, during the term of this Agreement and for as long thereafter as a practical need exists, one or more policies of liability insurance with an insurer reasonably acceptable to Restore which shall cover all liabilities of Distributor, whenever arising, attributable to the Products and in an amount of at least One Million Dollars ($1,000,000). Restore shall be designated as an additional named insured under each such policy and shall be provided with a certificate of insurance within thirty (30) days after the issuance and each renewal thereof.

     2.12 Adverse Reactions. Distributor shall advise Restore within twenty four (24) hours of any adverse reaction, injury or death resulting from any use of the Products (“Adverse Reaction”) of which it becomes aware. Distributor shall also, within five (5) days thereafter, provide Restore with a written report stating the full facts known to it about the Adverse Reaction, including but not limited to customer name, address, telephone number and Product, lot or serial number. Restore shall from time to time provide Distributor with written procedures regarding the information required by Restore in the event of any Adverse Reaction. At all times during the term of this Agreement, Distributor shall have appropriate written procedures established for processing any Adverse Reaction, and shall provide the same to Restore upon request. As part of such procedures, Distributor shall establish a means for properly (a) tracking delivery of Products to customers (including all customers who receive Products from subdistributors), including, without limitation, tracking which customers have received Products from particular lot numbers, and (b) maintaining its distribution records for the Products for a reasonable time period. All information related to any Adverse Reaction shall be the Confidential Information of Restore, and shall not be disclosed by Distributor to any third party or used by Distributor except as required by applicable laws.

     2.13 Distributor Expenses. Distributor assumes full responsibility for all its own costs and expenses incurred in carrying out its obligations under this Agreement, including but not limited to all rents, salaries, commissions, and advertising, demonstration, travel and accommodation expenses.

     2.14 Product Recalls.

     2.15 Personnel.

3. OBLIGATIONS OF RESTORE

     3.1 Sales and Technical Literature. Restore shall provide to Distributor reasonable quantities of such sales and technical literature and materials as Restore may have prepared and shall make available copies of promotional artwork it may have prepared. At its option, Restore may provide the same to Distributor in electronic format. Distributor shall use such materials solely as provided under this Agreement. Distributor shall not alter such materials or use any other materials in connection with the marketing and distribution of Products hereunder without Restore’s prior written consent. Notwithstanding the above, Distributor shall translate all materials into the language or languages required by law or appropriate to the Territory, and shall provide Restore with copies of such translations for approval prior to their first use. Restore retains all right, title and interest in and to such materials and to all translated versions thereof.

     3.2 Marketing and Technical Support. Restore will provide Distributor with such other marketing support as the parties may mutually agree, including providing training with respect to the Products to Distributor’s employees at Distributor’s expense.

     3.3 Export of Products. Restore shall be responsible for obtaining U.S. export licenses for the Products. Distributor shall cooperate with Restore with respect to export licenses, including supplying Restore on a timely basis with such information and documentation as Restore shall request in connection therewith.

     3.4 Special Programs. Restore may, in its sole discretion from time to time during the term of this Agreement, offer to Distributor certain promotional items related to the Products and discounts from the then-current prices for the Products, in order to support certain time- and volume-limited promotional and sales programs instituted by Restore. Special programs offered by Restore as of the Effective Date are set forth in Exhibit C, which may be modified by Restore from time to time during the term of this Agreement upon notice to Distributor. In no event shall Restore be obligated to offer, or continue to offer, any special programs under this Agreement.

4. PURCHASES AND PAYMENT TERMS

     4.1 Orders. Distributor shall submit orders pursuant to Restore procedures as communicated to Distributor from time to time. Distributor shall confirm all oral orders in writing (preferably by e-mail or facsimile). All orders from Distributor are subject to acceptance in writing by Restore, which acceptance may be delivered by reply e-mail or facsimile. No accepted order may be modified or canceled except as agreed in writing by the parties. Distributor’s orders or mutually agreed change orders shall be subject to all provisions of this Agreement. Any terms or conditions of such order or change order which conflict with the terms or conditions of this Agreement shall be deemed excluded.

     4.2 Fulfillment of Orders. Distributor’s purchase orders shall include shipping instructions and shipping address and, if applicable, any relevant export control information or documentation to enable Restore to comply with applicable U.S. export control laws. Restore shall use its best efforts to fill orders that are within Distributor’s forecast within fourteen (14) business days. Restore shall use reasonable efforts to fill orders to the extent they exceed Distributor’s forecast.

     4.3 Delivery Terms. Distributor shall insure each shipment of the Products with a reputable insurer for the full invoice price of such shipment. Such insurance shall provide for coverage from delivery of the Products at the Free Carrier point, Restore’s facility in St. Paul, Minnesota, U.S.A.

     4.4 Acceptance of Products. In the event of any shortage, damage or discrepancy in or to a shipment of Products, Distributor shall promptly report the same to Restore and furnish such written evidence or other documentation as Restore may deem appropriate. Restore shall not be liable for any such shortage, damage or discrepancy unless Restore has received notice and evidence thereof from Distributor within ten (10) days after delivery of the Products. If such evidence demonstrates to Restore’s satisfaction that Restore is responsible for such shortage, damage or discrepancy, Restore shall promptly deliver additional or substitute Products to

Distributor, but in no event shall Restore be liable for any additional costs, expenses or damages incurred by Distributor directly or indirectly as a result of such shortage, damage or discrepancy in or to a shipment. Distributor shall return any excess or damaged Products as directed by Restore.

     4.5 Prices. Distributor shall pay Restore the prices for the Products as listed in Exhibit B hereto. Restore may increase its prices for the Products upon one hundred eighty (180) days written notice. Increased prices shall not apply to any purchase order accepted prior to the effective date of the price increase unless the order provides for delivery more than one hundred twenty (120) days after acceptance of the order. Prices are quoted in U.S. dollars, and include charges for freight and insurance. Taxes, duties and the like shall be the sole responsibility of Distributor. Any special packing or handling requested by Distributor shall be at the sole expense of Distributor.

     4.6 Payment Terms. Subject to credit review and credit limits which may be established by Restore in its sole discretion, payment for each shipment shall be paid within sixty (60) days of receipt of Restore’s invoice by wire transfer or check drawn on a U.S. bank designated by Restore. All payments shall be made in U.S. dollars. Any overdue payment from Distributor to Restore under this Agreement shall accrue interest at the lesser of one and one-half percent (1.5%) per month or the highest rate permitted under applicable law. Restore shall have the right to recover its collection costs and expenses (including attorneys’ fees) for late payments. Restore reserves the right to withhold or suspend shipment of Products if there is any overdue balance owed by Distributor to Restore and to modify the payment terms set forth in this Section 4.6.

     4.7 Resale Prices. Distributor may offer the Products in the Territory at such prices as Distributor, in its sole discretion, shall determine.

     4.8 Product Changes. Restore may do the following upon written notice and without liability to Distributor:

     4.9 Net Payments. All payments to be made by Distributor to Restore pursuant to this Agreement represent net amounts Restore is entitled to receive and shall not be subject to any deductions for any reason whatsoever, including duties, assessments, taxes and bank charges.

5. WARRANTY; LIMITATION OF DAMAGES

     5.1 Limited Warranty. Restore warrants that the Products will conform to the then-current specifications published by Restore for a period of ninety (90) days after delivery thereof to Distributor under this Agreement. The foregoing warranty, or such other warranty of which Restore may notify Distributor in writing from time to time, is the sole and exclusive warranty

made by Restore relating to the Products. Distributor agrees that it alone shall be liable, to the exclusion of Restore, for the breach of any other warranty given by Distributor to its customers or others regarding the Products. Restore’s obligation in the event of a breach of Restore’s warranty shall be limited replacement of the relevant Product. Distributor shall cooperate with Restore to provide such remedies to purchasers of the Products in the Territory. THE LIMITED WARRANTY SET FORTH IN THIS SECTION 5.1, OR ANY SUCCESSOR WARRANTY, IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.

     5.2 Limitation of Damages. RESTORE SHALL NOT BE LIABLE TO DISTRIBUTOR OR ANY THIRD PARTY FOR ANY LOSS OR DAMAGE CAUSED BY DELAY IN FURNISHING THE PRODUCTS UNDER THIS AGREEMENT OR ANY OTHER PERFORMANCE UNDER THIS AGREEMENT. NEITHER PARTY SHALL HAVE ANY LIABILITY OF ANY KIND TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE BY THE OTHER PARTY OR ANY THIRD PARTY. IN NO EVENT SHALL RESTORE BE LIABLE FOR ANY DAMAGES IN EXCESS OF THE AGGREGATE AMOUNTS ACTUALLY PAID BY DISTRIBUTOR TO RESTORE UNDER THIS AGREEMENT.

6. INDEMNIFICATION

     6.1 Indemnification by Restore. Restore hereby agrees to indemnify, defend and hold Distributor harmless from any damages awarded against Distributor (including, without limitation, reasonable costs and legal fees thereby incurred by Distributor) arising out of any suit, claim or other legal action (“Legal Action”) brought by a third party that alleges the Products, or any of them, infringe any United States patent, copyright, or trade secret. If a Product is found to infringe any such third party intellectual property right in such a Legal Action, at Restore’s sole discretion and expense, Restore may (a) obtain a license from such third party for the benefit of Distributor; (b) replace or modify the Product so that it is no longer infringing; or (c), if neither of the foregoing is commercially feasible, terminate this Agreement with no further liability to Distributor.

     6.2 Indemnification by Distributor. Distributor hereby agrees to indemnify, defend and hold Restore harmless from any damages, costs or liabilities (including, without limitation, any reasonable costs or legal fees thereby incurred by Restore) arising out of any Legal Action that arises from or results out of the marketing, distribution or sale of the Products by Distributor, including, without limitation, (a) any act or omission by Distributor or any of its subdistributors or agents; (b) any unfair business practice of Distributor or any of its subdistributors or agents; or (c) any violation by Distributor or any of its subdistributors or agents of any law, regulation or order of the Territory.

     6.3 Indemnification Procedure. A party seeking indemnification (an “indemnified party”) shall give the other party (an “indemnifying party”) written notice of any Legal Action within ten (10) days of first knowledge thereof. The indemnifying party shall have sole and

exclusive control of the defense of any Legal Action, including the choice and direction of legal counsel. The indemnified party shall have the right to engage its own counsel, at its own expense. The indemnified party may not settle or compromise any Legal Action without the written consent of the indemnifying party.

7. CONFIDENTIALITY

     7.1 Confidential Information; Term. All Confidential Information (as defined below) shall be deemed confidential and proprietary to the disclosing party. Each party may use the Confidential Information disclosed by the other party during the term of this Agreement only as permitted or required for its performance hereunder. Neither party shall disclose or provide any Confidential Information of the other party to any third party and shall take reasonable measures to prevent any unauthorized disclosure by its employees, agents, contractors, consultants or permitted subdistributors, including appropriate individual nondisclosure agreements. The foregoing duty shall survive for five (5) years after any termination or expiration of this Agreement.

     7.2 Definition. As used in this Agreement, the term “Confidential Information” shall mean all information disclosed by Restore to Distributor, or by Distributor to Restore, including without limitation customer lists, information that is embodied in the Products, or any information regardless of the form in which it is disclosed that relates to a party’s markets, customers, products, patents, inventions, procedures, methods, designs, strategies, plans, assets, liabilities, prices, costs, revenues, profits, organization, employees, agents, resellers or business in general. The following shall not be considered Confidential Information for purposes of this Article 7:

8. TRADEMARKS

     8.1 Use of Trademarks. Subject to the terms and conditions of this Agreement, Restore hereby grants to Distributor, and Distributor hereby accepts from Restore, a nonexclusive, nontransferable license to use the Restore trademarks specified in Exhibit A hereto, as the same may be revised by Restore from time to time, during the term of this Agreement, solely in connection with the distribution, promotion and advertising of the Products in the Territory, and solely in accordance with Restore’s standards and instructions. Distributor may use the Restore trademarks in promotional brochures and in connection with trade fairs only

with Restore’s prior written consent. Distributor shall not use any other marks or trade names in connection with the marketing and distribution of the Products. Restore may inspect and monitor Distributor’s use of the Restore trademarks. Distributor shall not remove or alter any Restore trade names, trademarks, copyright notices, catalogue and lot numbers, labels, tags or other identifying marks, symbols or legends affixed to any Products, documentation or containers or packages. Distributor shall not adopt, use or register any words, phrases or symbols which are identical to or confusingly similar to any of Restore’s trademarks.

     8.2 Ownership. Distributor acknowledges and agrees that Restore is the owner of all rights in the Restore trademarks, that all use of the Restore trademarks by Distributor shall inure to the benefit of Restore, that Distributor will not take any action which is inconsistent with Restore’s ownership of the Restore trademarks and that, upon termination of this Agreement, all rights in the Restore trademarks, including the goodwill connected therewith, shall remain the property of Restore.

     8.3 Registration and Enforcement. Restore shall be solely responsible for, and may exercise its sole discretion in, deciding whether to apply for and prosecute applications for registration of the Restore trademarks in any jurisdiction and whether to maintain any such registrations therefor. Distributor shall give Restore immediate notice in writing of any infringement or threatened infringement of the Restore trademarks of which Distributor becomes aware. In any such case, Restore shall have complete discretion whether to institute proceedings for infringement of the Restore trademarks and complete discretion and control over such proceedings, and Distributor shall cooperate fully with Restore in any such proceedings with such third parties, provided that Restore shall pay all expenses of such action and all damages which may be awarded or agreed upon in settlement of such proceedings shall accrue to Restore.

9. TERM AND TERMINATION

     9.1 Term. This Agreement shall take effect on the Effective Date and shall continue for an initial term of three (3) years, unless terminated earlier pursuant to the terms of this Article 9. This Agreement may be renewed for additional one (1) year extensions after the expiration of its initial term upon mutual written agreement of the parties. If such renewal has not been agreed to by the parties in writing at least three (3) months prior the end of the initial or any renewal term, then this Agreement shall terminate at the end such term and Restore shall immediately be free to make other arrangements regarding the future distribution and sale of the Products in the Territory.

     9.2 Termination. This Agreement may be terminated prior to expiration as follows: