Employment Agreement - Grossman

Employment Agreement - Burbach

Amendment to Employment Agreement - Burbach

 

EX-10.1 3 a14-21222_1ex10d1.htm EX-10.1

Exhibit 10.1

 

Employment Agreement

 

This Employment Agreement (the “Agreement”), dated as of September 21, 2014 (the “Effective Date”), is made by and between Thoratec Corporation, a California corporation (the “Company”), and Keith Grossman (the “Executive”) (collectively referred to herein as the “Parties”).

 

RECITALS

 

WHEREAS, the Company desires to assure itself of the services of Executive by engaging Executive to perform services under the terms hereof; and

 

WHEREAS, Executive desires to provide services to the Company on the terms herein provided.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

 

1.                                      Certain Definitions.

 

Capitalized terms not specifically defined in the text of this Agreement shall have the following meanings:

 

(a)                                 Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

 

(b)                                 Board” shall mean the Board of Directors of the Company.

 

(c)                                  The Company shall have “Cause” to terminate Executive’s employment hereunder upon:  (i) gross negligence or willful misconduct in the performance of Executive’s duties to the Company where such gross negligence or willful misconduct has resulted or is substantially likely to result in substantial and material damage to the Company or its subsidiaries; (ii) Executive’s repeated unexplained or unjustified absence from the Company; (iii) Executive’s material and willful violation of any material federal or state law; (iv) Executive’s commission of any material act of fraud with respect to the Company; (v) Executive’s conviction of a felony or crime involving moral turpitude which causes material harm to the standing and reputation of the Company; or (vi) Executive’s material breach of this Agreement, which breach, if reasonably capable of cure, is not cured within thirty (30) days after the Board gives Executive written notice specifically identifying the conduct requiring cure, or any breach of the Proprietary Information Agreement (as defined below). Whether or not an event giving rise to “Cause” occurs will be determined by the Board in its reasonable and good faith discretion.

 



 

(d)                                 Change in Control” shall mean the occurrence of any of the following events:

 

(i)                                     any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the total voting power represented by the Company’s then outstanding voting securities;

 

(ii)                                  a merger or consolidation of the Company whether or not approved by the Board, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company;

 

(iii)                               an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or

 

(iv)                              a change in the composition of the Board, as a result of which less than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of Executive’s hire or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).

 

Notwithstanding the foregoing, in no event shall a Change in Control be deemed to have occurred unless the transaction or event giving rise to the Change in Control also constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5).

 

(e)                                  Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(f)                                   Date of Termination” shall mean (i) if Executive’s employment is terminated due to Executive’s death, the date of Executive’s death; (ii) if Executive’s employment is terminated due to Executive’s Disability, the date determined pursuant to Section 4(a)(ii) hereof; or (iii) if Executive’s employment is terminated pursuant to Section 4(a)(iii)-(ix) hereof either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4(b) hereof, whichever is earlier.

 

(g)                                  Disability” shall mean Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of not less than twelve (12) months.

 

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(h)                                 Executive shall have “Good Reason” to terminate Executive’s employment hereunder within two (2) years after the occurrence of one or more of the following conditions without Executive’s consent:  (i) a material diminution in Executive’s authority, duties, or responsibilities, as described herein (which shall include the Executive not being the Chief Executive Officer of an independent, publicly owned successor entity following a Change in Control); (ii) a material diminution in Executive’s Annual Base Salary and/or Annual Target Bonus, as described herein, other than a diminution ratably applied to other senior executives of the Company of no more than ten percent (10%); (iii) a material change in the geographic location at which Executive must perform Executive’s services hereunder (which shall in no event include a relocation of Executive’s office which results in an increased commuting distance from Executive’s home to Pleasanton, California of less than twenty-five (25) miles; (iv) any other action or inaction that constitutes a material breach of this Agreement by the Company; or (v) a failure of a successor to assume this Agreement; and which, in the case of any of the foregoing, continues uncured by the Company beyond thirty (30) days after Executive has provided the Company written notice that Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days from Executive first obtaining actual knowledge of such condition.

 

(i)                                     Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

 

(j)                                    Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

 

2.                                      Employment.

 

(a)                                 General.  The Company shall employ Executive and Executive shall enter the employ of the Company, for the period and in the position set forth in this Section 2, and upon the other terms and conditions herein provided.

 

(b)                                 Employment Term.  The term of employment under this Agreement (the “Term”) shall be for the period beginning on September 22, 2014 (the actual date Executive commences employment hereunder, the “Commencement Date”), and ending on the third (3rd) anniversary thereof, subject to earlier termination as provided in Section 4 below.  The Term shall automatically renew for additional one (1) year periods unless either party gives ninety (90) days advance written notice of non-renewal (“Notice of Non-Renewal”) to the other party, in which case Executive’s employment will terminate at the end of the then-applicable Term or any other date set by the Company in accordance with Section 4 below and subject to earlier termination as provided in Section 4 below.

 

(c)                                  Position and Duties.  During the Term, Executive: (i) shall serve as the President and Chief Executive Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Board; (ii) shall report directly to the

 

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Board; (iii) shall devote substantially all Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries; (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time.  The Board has already consented to Executive’s continuing service on each board of directors of which Executive is now a member as set forth on Exhibit A attached hereto, which consent shall continue until such time as the Board provides notice to Executive that, in its reasonable judgment, such company competes with the Company, such service interferes with Executive’s duties as President and Chief Executive Officer of the Company or places him in a competing position, or otherwise conflicts with, the interests of the Company.  Notwithstanding the foregoing, Executive may devote reasonable time to unpaid activities such as supervision of personal investments and activities involving professional, charitable, educational, religious, civic and similar types of activities, speaking engagements and membership on committees, provided such activities do not individually or in the aggregate interfere with the performance of Executive’s duties under this Agreement, violate the Company’s standards of conduct then in effect, or raise a conflict under the Company’s conflict of interest policies.  Executive cannot serve on the board of directors of a private or publicly traded company (other than the Company’s Board) without the Board’s prior written consent.  In addition, as of the Effective Date, the Company shall use commercially reasonable efforts to cause Executive to elected to the Board.  During the Term, the Board shall propose Executive for re-election to the Board.

 

3.                                      Compensation and Related Matters.

 

(a)                                 Annual Base Salary.  During the Term, Executive shall receive a base salary at a rate of seven hundred thousand dollars ($700,000) per annum (the “Annual Base Salary”), which shall be paid in accordance with the customary payroll practices and procedures of the Company.  Such Annual Base Salary shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) not less often than annually, and may be increased from time to time.

 

(b)                                 Bonus.  With respect to each Company fiscal year that ends during the Term, Executive will be eligible to receive an annual performance bonus (the “Annual Bonus”), with a target achievement of one hundred percent (100%) of Annual Base Salary (the “Annual Target Bonus”).  For the fiscal year in which the Commencement Date occurs, the Annual Target Bonus will be determined by the Compensation Committee based on its review of individual performance to key early goals reasonably determined by the Compensation Committee in consultation with the Executive, and will be prorated for the period beginning on the Commencement Date and ending on the last day of such fiscal year.  For subsequent fiscal years, the Annual Target Bonus amount payable shall be based on the achievement of performance goals consistent with the Company’s current bonus plan with a maximum bonus opportunity of 200% of Annual Base Salary.  The amount of any Annual Target Bonus for which Executive is eligible shall be reviewed by the Compensation Committee from time to time.  The Annual Bonus shall be payable on such date as is determined by the Compensation Committee in its sole discretion as soon as reasonably practicable after the final audited financial performance information for the Company is available for the calendar year with respect to which such Annual Bonus relates.  Notwithstanding any other provision of this Section 3, no bonus shall be payable with respect to any fiscal year unless Executive remains continuously employed with the Company during the period beginning on the Commencement Date and ending on the last day of

 

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the fiscal year for which the bonus is to be paid.  Any Annual Bonus earned by Executive pursuant to this section shall be paid to Executive, less authorized deductions and required withholding obligations, within two and a half months following the end of the calendar year to which the bonus relates.

 

(c)                                  Benefits.  During the Term, Executive may participate in such employee and executive benefit plans and programs as the Company may from time to time offer to provide to its employees and executives, pursuant to the terms and eligibility requirements of those plans.

 

(d)                                 Vacation.  During the Term, Executive shall be entitled to paid vacation in accordance with the Company’s vacation policy, as it may be amended from time to time; provided that in no case shall such paid vacation be less than five (5) weeks per year.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.  Holidays shall be provided in accordance with Company policy, as in effect from time to time.

 

(e)                                  Business Expenses.  During the Term, the Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

 

4.                                      Termination.

 

(a)                                 The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law, and that Executive’s employment with the Company may be terminated by either party at any time for any or no reason. If Executive’s employment terminates for any reason, Executive shall not be entitled to any payments, benefits, damages, award or compensation other than as provided in this Agreement. Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:

 

(b)                                 Circumstances.

 

(i)                                     Death.  Executive’s employment hereunder shall terminate upon Executive’s death.

 

(ii)                                  Disability.  If Executive incurs a Disability, the Company may give Executive written notice of its intention to terminate Executive’s employment.  In that event, Executive’s employment with the Company shall terminate, effective on the later of the thirtieth (30th) day after receipt of such notice by Executive or the date specified in such notice; provided that within the thirty (30) day period following receipt of such notice, Executive shall not have returned to full-time performance of Executive’s duties hereunder.

 

(iii)                               Termination for Cause.  The Company may terminate Executive’s employment for Cause.

 

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(iv)                              Termination Without Cause in Connection with a Change in Control.  The Company may terminate Executive’s employment without Cause within three (3) months prior to and eighteen (18) months following a Change in Control.

 

(v)                                 Other Terminations Without Cause.  The Company may terminate Executive’s employment without Cause more than three (3) months prior to a Change in Control or more than eighteen (18) months following a Change in Control.

 

(vi)                              Resignation for Good Reason In Connection With a Change in Control.  Executive may resign from Executive’s employment for Good Reason within three (3) months prior to and eighteen (18) months following a Change in Control.

 

(vii)                           Resignation for Any Other Reason.  Executive may resign from Executive’s employment with or without Good Reason at any time.

 

(viii)                        Non-Renewal of Term by the Company.  The Company may give Notice of Non-Renewal to Executive pursuant to Section 2 hereof.  The Company’s decision to give a Notice of Non-Renewal to Executive shall constitute a Termination without Cause with the Date of Termination being the end of the then-applicable Term for purposes of determining Executive’s severance benefits hereunder.

 

(ix)                              Non-Renewal of Term by Executive.  Executive may give Notice of Non-Renewal to the Company pursuant to Section 2 hereof.

 

(c)                                  Notice of Termination.  Any termination of Executive’s employment by the Company or by Executive under this Section 4 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination which, if submitted by Executive, shall be at least thirty (30) days following the date such notice is received by the Company (a “Notice of Termination”); provided, however, that in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination and is prior to the date specified in such Notice of Termination.  A Notice of Termination submitted by the Company may provide for a Date of Termination on the date Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion.  The failure by the Company to set forth in the Notice of Termination all of the facts and circumstances which contribute to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder.

 

(d)                                 Deemed Resignation.  Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its Affiliates.

 

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5.                                      Change in Control. Upon a Change in Control, any outstanding performance stock units or other performance-vesting equity award held by Executive will convert to time-vesting restricted stock units or, in the event of a performance-vesting equity award not denominated in units, a time-vesting substitute equity award similar to the equity award for which it is substituted, in each case, covering such number of shares otherwise issuable in respect of the performance stock units or other performance-vesting equity award based on the achievement of the applicable performance target determined as of the date of consummation of the Change in Control.  Such restricted stock units or other substitute equity award shall vest in full at the end of the original performance period, subject to any additional acceleration provisions herein.

 

6.                                      Company Obligations upon Termination of Employment.

 

(a)                                 In General.  Upon a termination of Executive’s employment for any reason, Executive (or Executive’s estate) shall be entitled to receive: (i) any portion of Executive’s Annual Base Salary and Annual Bonus earned through the Date of Termination not theretofore paid, (ii) any expenses owed to Executive under Section 3(e) above, (iii) any accrued but unused vacation pay owed to Executive pursuant to Section 3(d) above, and (iv) any amount arising from Executive’s participation in, or benefits under, any employee benefit plans, programs or arrangements under Section 3(c) above, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements.  Except as otherwise set forth in Sections 6(b) and 6(c) below, the payments and benefits described in this Section 6(a) shall be the only payments and benefits payable in the event of Executive’s termination of employment for any reason.

 

(b)                                 Severance Payments Not In Connection With a Change in Control.  In the event of Executive’s termination of employment by the Company without Cause, as a result of Executive’s resignation for Good Reason, or due to death or Disability, in each case, more than three (3) months before a Change in Control or more than eighteen (18) months after a Change in Control, in addition to the payments and benefits described in Section 6(a) above, subject to Sections 13 and 6(d) hereof and subject to Executive’s delivery to the Company of a waiver and release of claims agreement in a form approved by the Company that becomes effective and irrevocable accordance with Section 14(d) hereof (a “Release”):

 

(i)                                     The Company shall pay to Executive in a lump sum cash payment an amount equal to two hundred percent (200%) of Executive’s Annual Base Salary as of the Date of Termination, such payment to be made on the first regular payroll date following the Release becoming irrevocable or as otherwise provided in Section 14(d) hereof;

 

(ii)                                  Each outstanding equity award subject to time-based vesting held by Executive shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, in each case, with respect to that number of shares that would have vested and, if applicable, become exercisable on the Date of Termination had such equity award been subject to a monthly vesting schedule;

 

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(iii)                               In the event that such termination or resignation occurs at least one year following the Commencement Date, the performance with respect to each outstanding performance-vesting equity award, including the Initial PSUs, shall be measured as of the Date of Termination and to the extent performance measured on the Date of Termination equals or exceeds the target level performance, which for the Initial PSUs shall be a Performance Factor of 1.0, the performance-vesting equity award shall become vested  with respect to that number of shares based on achievement determined as of the Date of Termination and multiplied by a fraction, the numerator of which is the number of days from the beginning of the applicable performance period through the Date of Termination and the denominator of which is the total number of days in the applicable performance period;

 

(iv)                              If Executive elects to receive continued healthcare coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall directly pay, or reimburse Executive for, the COBRA premiums for Executive and Executive’s covered dependents during the period commencing on Executive’s termination of employment and ending upon the earliest of (X) the second anniversary of the Date of Termination, (Y) the date that Executive and/or Executive’s covered dependents, as applicable, become no longer eligible for COBRA or (Z) the date Executive becomes eligible to receive healthcare coverage from a subsequent employer.

 

(c)                                  Severance Payments In Connection with a Change in Control.  In the event of Executive’s termination of employment  by the Company without Cause, by Executive for Good Reason, or due to death or Disability, in each case, that occurs within three (3) months before and eighteen (18) months after a Change in Control in addition to the payments and benefits described in Section 6(a) above, subject to Sections 13 and 6(d) hereof and subject to Executive’s delivery to the Company of a Release that becomes effective and irrevocable in accordance with Section 14(d) hereof:

 

(i)                                     The Company shall pay to Executive in a lump sum cash payment an amount equal to two hundred fifty percent (250%) of Executive’s Annual Base Salary, such payment to be made on the first regular payroll date following the Release becoming irrevocable or as otherwise provided in Section 14(d) hereof;

 

(ii)                                  The Company shall pay to Executive two hundred fifty percent (250%) of the greatest of: (A) Executive’s Annual Target Bonus for the fiscal year immediately preceding the year in which the Date of Termination occurs, (B) Executive’s actual Annual Bonus for the fiscal year immediately preceding the year in which the Date of Termination occurs, and (C) Executive’s Annual Target Bonus for the fiscal year in which the Date of Termination occurs, such payment to be made on the first regular payroll date following the Release becoming irrevocable or as otherwise provided in Section 14(d) hereof;

 

(iii)                               Each outstanding equity award held by Executive shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, in each case, with respect to 100% of the then unvested shares subject thereto as of the Date of Termination.  To the extent that any

 

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outstanding performance stock units or other performance-vesting equity awards have not converted to restricted stock units or time-vesting substitute equity awards pursuant to Section 6 hereof, such performance stock units or other performance-vesting equity awards shall vest based on applicable performance achievement measured as of the date of consummation of the Change in Control.

 

(iv)                              If Executive elects to receive continued healthcare coverage pursuant to the COBRA, the Company shall directly pay, or reimburse Executive for, the COBRA premiums for Executive and Executive’s covered dependents during the period commencing on Executive’s termination of employment and ending upon the earliest of (X) the 30-month anniversary of the Date of Termination, (Y) the date that Executive and/or Executive’s covered dependents, as applicable, become no longer eligible for COBRA or (Z) the date Executive becomes eligible to receive healthcare coverage from a subsequent employer.

 

(d)                                 No Other Severance.  The provisions of this Section 6 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

 

(e)                                  No Requirement to Mitigate; Survival.  Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner.  Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment and the expiration or termination of the Term shall not impair the rights or obligations of any party hereto.

 

7.                                      Equity Awards.

 

(a)                                 Restricted Stock Units.  Executive shall be granted an award of that number of restricted stock units calculated by dividing $3,200,000 by the average closing trading price of Company common stock for the 30 day period ending on the date of grant (the “Initial RSUs”) on or as soon as administratively practicable after the Commencement Date.  The Initial RSUs shall vest with respect to twenty five percent (25%) of the total number of the Initial RSUs on each yearly anniversary of the Commencement Date, such that the Initial RSUs shall be fully vested on the fourth (4th) anniversary of the Commencement Date, subject to Executive’s continuous service as an employee, director or consultant to the Company through the applicable vesting date.

 

(b)                                 Performance Stock Units.  Executive shall be granted an award of that number of performance stock units calculated by dividing $4,800,000 by the average closing trading price of Company common stock for the 30 day period ending on the date of grant (the “Initial PSUs”) on or as soon as administratively practicable after the Commencement Date.  The Initial PSUs shall vest with respect to one third (1/3) of the total number of Initial PSUs on the second anniversary of the Commencement Date (the “First Tranche”) and with respect to the remaining two-thirds (2/3) of the total number of Initial PSUs on the third anniversary of the Commencement Date (the “Second Tranche”) based on the total stockholder return (“TSR”) of the Company relative to the S&P Health Care Equipment Select Index (the “Index”) over the applicable performance period and subject to Executive’s continued service as an employee,

 

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director or consultant to the Company through the applicable vesting date.  The performance period for the First Tranche shall begin on  September 1, 2014 and end on August 31, 2016, and the performance period for the Second Tranche shall begin on September 1, 2014 and end on August 31, 2017.  Each Initial PSU represents the right to receive a number of shares of Company common stock equal to a performance factor (the “Performance Factor”), determined as follows:

 

(i)                                     If the percentile rank of the Company’s TSR during the applicable performance period relative to the Index is less than the 40th percentile, the Performance Factor shall equal 0.

 

(ii)                                  If the percentile rank of the Company’s TSR during the applicable performance period relative to the Index is at the 40th percentile, the Performance Factor shall equal 0.50.

 

(iii)                               If the percentile rank of the Company’s TSR during the applicable performance period relative to the Index is at the 60th percentile, the Performance Factor shall equal 1.00.

 

(iv)                              If the percentile rank of the Company’s TSR during the applicable performance period relative to the Index is at the 85th percentile or higher, the Performance Factor shall equal 2.00.

 

In the event the Company’s TSR for the applicable performance period is between the 40th and 60th percentiles or between the 60th and 85th percentiles, the Performance Factor will be determined using linear interpolation.  Shares issuable in respect of in respect of the Initial PSUs shall be issued upon vesting or at a future date to be elected by Executive.

 

(c)                                  Future Equity Grants.  Commencing in 2015, Executive shall be eligible to receive annual grants of equity awards (the “Annual Equity Awards”) in accordance with the Company’s policies as in effect from time to time.  The Annual Equity Awards shall be determined in the Board’s reasonable discretion based on overall performance, but it is expected that the Annual Equity awards will be split evenly between the RSUs and PSUs and shall have a value of not less than $3 million, including in 2015,  at target performance.  Annual performance stock unit grants shall have a performance period of not more than three years, and it is expected that the number of shares issuable in respect of such performance stock units shall be determined in the same manner as the Initial PSUs.  The annual restricted stock units granted in 2015 will vest over a four year period, subject to Executive’s continuous service as an employee, director or consultant through each applicable vesting date.

 

8.                                      Restrictive Covenants.

 

(a)                                 Affiliates.  As used in this Section 8, the term “Company” shall include the Company and any Affiliate of the Company.

 

(b)                                 Executive shall enter into and abide by the Company’s standard Employment, Proprietary Information and Inventions Assignment Agreement (the “Proprietary Information Agreement”).

 

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(c)                                  Non-Competition.  Without limiting the Proprietary Information Agreement, Executive hereby agrees that Executive shall not, at any time during the Term, directly or indirectly engage in, have any interest in (including, without limitation, through the investment of capital or lending of money or property), or manage, operate or otherwise render any services to, any Person (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity) that engages in (either directly or through any subsidiary or affiliate thereof) any business or activity in the United States (i) that is in direct or indirect competition with the business of the Company, or (ii) which the Company has taken active steps to engage in or acquire, but only if Executive directly or indirectly engages in, has any interest in (including, without limitation, through the investment of capital or lending of money or property), or manages, operates or otherwise renders any services in connection with, such business or activity (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity).  Notwithstanding the foregoing, Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than three percent (3%) of the outstanding interest in such business.

 

(d)                                 Non-Solicitation.  Without limiting the Proprietary Information Agreement, Executive hereby agrees that Executive shall not, at any time during the Term or, with respect to subsection (ii) below, within the one (1) year period immediately following the Term, directly or indirectly, either for himself or on behalf of any other Person, recruit or otherwise solicit or induce any employee or consultant of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company.

 

(e)                                  Non-Disclosure.  Without limiting the Proprietary Information Agreement, except as Executive reasonably and in good faith determines to be required in the faithful performance of Executive’s duties hereunder or in accordance with Section 8(g) below, Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for Executive’s benefit or the benefit of any other Person, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any Person, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information.  Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for Executive’s benefit or the benefit of any other Person, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company.  The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

 

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(f)                                   Return of Company Property.  Upon termination of Executive’s employment with the Company for any reason, Executive will promptly deliver to the Company (i) all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents that are Proprietary Information, including all physical and digital copies thereof, and (ii) all other Company property (including, without limitation, any personal computer or wireless device and related accessories, keys, credit cards and other similar items) which is in his possession, custody or control.

 

(g)                                  Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process.

 

(h)                                 Non-Disparagement.  Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, partners, members, equity holders or affiliates, either orally or in writing, at any time.  The Company (as an entity and through its officers and directors) agrees not to disparage Executive, either orally or in writing, at any time.  Nothing herein shall prevent the Company and Executive from engaging in full and frank confidential internal discussions regarding the Company, its products and services, and Executive’s performance or from conferring in confidence with their legal representatives and making truthful statements as required by law.

 

(i)                                     Prior to accepting other employment or any other service relationship during the Term or the one (1) year period immediately following the Term, Executive shall provide a copy of this Section 8 to any recruiter who assists Executive in obtaining other employment or any other service relationship and to any employer or other Person with which Executive discusses potential employment or any other service relationship.

 

(j)                                    In the event the terms of this Section 8 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.  Any breach or violation by Executive of the provisions of this Section 7 shall toll the running of any time periods set forth in this Section 8 for the duration of any such breach or violation.

 

9.                                      Injunctive Relief.

 

It is recognized and acknowledged by Executive that a breach of the covenants contained in Section 8 above will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, Executive agrees that in the event of a breach of any of the covenants contained in Section 8 above, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

 

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10.                               Assignment and Successors.

 

The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates.  This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.  None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or operation of law.

 

11.                               Miscellaneous Provisions.

 

(a)                                 Defense of Claims.  Executive agrees that, during the Term and for a period of twenty-four (24) months after the Date of Termination, upon request from the Company, Executive will cooperate with the Company and its affiliates in the defense of any claims or actions that may be made by or against the Company or any of its affiliates that affect Executive’s prior areas of responsibility, except if Executive’s reasonable interests are adverse to the Company or affiliates in such claim or action.  The Company agrees to promptly pay or reimburse Executive upon demand for all of Executive’s reasonable travel and other direct expenses incurred, or to be reasonably incurred, to comply with Executive’s obligations under this Section 11(a).

 

(b)                                 Governing Law.  This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of California, without giving effect to any principles of conflicts of law, whether of the State of California or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.

 

(c)                                  Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

(d)                                 Notices.  Any notice, request, claim, demand, document and other communication hereunder to any Party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile or certified or registered mail, postage prepaid, as follows:

 

(i)                                     If to the Company:

 

Thoratec Corporation

2035 Stoneridge Drive

Pleasanton, CA 94588

Attn: Board of Directors

Facsimile: (925) 847-8574

 

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and copies to:

 

Latham & Watkins LLP

650 Town Center Drive

20th Floor

Costa Mesa, CA 92626-1925

Attn: Charles K. Ruck, Esq.

Facsimile: (714) 755-8290

 

(ii)                                  If to Executive, at the address set forth on the signature page hereto.

 

or at any other address as any Party shall have specified by notice in writing to the other Party.

 

(e)                                  Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.  Signatures delivered by facsimile shall be deemed effective for all purposes.

 

(f)                                   Entire Agreement.  The terms of this Agreement are intended by the Parties to be the final expression of their agreement with respect to the employment of Executive by the Company and supersede all prior understandings and agreements, whether written or oral.  The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

 

(g)                                  Amendments; Waivers.  This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized officer of Company.  By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company, as applicable, may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

 

(h)                                 Arbitration.  Any dispute or controversy based on, arising under or relating to this Agreement (or Executive’s employment with the Company hereunder) shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator with JAMS pursuant to JAMS Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness.  The arbitration shall be conducted in Alameda County, California or such other location mutually agreed upon by the parties.  The parties acknowledge that they are each waiving any and all rights to a jury or court trial of all matters covered by this arbitration obligation.  The arbitrator shall (i) be authorized to determine if an issue is subject to this arbitration obligation, (ii) provide for adequate discovery, and (iii) be entitled to consider and determine dispositive pre-trial motions

 

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such as motions for summary judgment.  Judgment on the arbitration award may be entered in any court having jurisdiction.  Nothing herein shall prevent either party from pursuing injunctive relief in court (without having to post a bond) to avoid irreparable harm pending completion of any arbitration.  Within twenty (20) days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law.  Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the Company shall bear the cost of the arbitrator and the JAMS arbitrator and administrative fees; and provided further that Executive shall be entitled to recover reasonable attorney’s fees and costs incurred by him in any arbitration Executive initiates to enforce his rights under this Agreement and in which Executive is deemed to be the prevailing party.

 

(i)                                     Enforcement.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.  Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

(j)                                    Withholding.  The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

 

12.                               Legal Fees.  The Company shall promptly reimburse or pay directly on Executive’s behalf all attorney’s fees and costs incurred by Executive in connection with the negotiation, drafting and finalization of this Agreement, up to a maximum of thirty thousand dollars ($30,000).

 

13.                               Golden Parachute Excise Tax.

 

(a)                                 Best Pay.  Any provision of this Agreement to the contrary notwithstanding, if any payment or benefit Executive would receive from the Company pursuant to this Agreement or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount (as defined below).  The “Reduced Amount” will be either (l) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (2) the entire Payment, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in Executive’ s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (1) of the

 

15



 

preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive.  If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”). Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A of the Code as follows:  (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Executive as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A of the Code shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A of the Code.

 

(b)                                 Accounting Firm.  The accounting firm engaged by the Company for general tax purposes as of the day prior to the Change in Control will perform the calculations set forth in Section 13(a) above.  If the firm so engaged by the Company is serving as accountant or auditor for the acquiring company, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder.  The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company within fifteen (15) days before the consummation of a Change in Control (if requested at that time by the Company) or such other time as requested by the Company.  If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company with documentation reasonably acceptable to the Company that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Company and Executive.

 

14.                               Section 409A.

 

(a)                                 General.  The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company.  To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.

 

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(b)                                 Separation from Service.  Notwithstanding any provision to the contrary in this Agreement:  (i) no amount that constitutes “deferred compensation” under Section 409A shall be payable pursuant to Sections 6(b) and 6(c) above unless the termination of Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations (“Separation from Service”); (ii) for purposes of Section 409A, Executive’s right to receive installment payments pursuant to Sections 6(b) and 6(c) above shall be treated as a right to receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such reimbursement or benefit shall be provided no later than December 31st of the year following the year in which the expense was incurred.  The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year.  The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year.

 

(c)                                  Specified Employee.  Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (ii) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.

 

(d)                                 Release.  Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release (in substantially the same form attached hereto as Exhibit B) to Executive within ten (10) business days following the Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes his acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where the Date of Termination and the Release Expiration Date fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year.  For purposes of this Section 14(d), “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.  To

 

17



 

the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 14(d), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 14(d)(iii), on the first payroll period to occur in the subsequent taxable year, if later.

 

15.                               Employee Acknowledgement.

 

Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.

 

[Signature Page Follows]

 

18



 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date and year first above written.

 

 

THORATEC CORPORATION

 

 

 

 

 

 

By:

/s/ Neil F. Dimick

 

 

 

Name: Neil F. Dimick

 

 

 

Title: Chairman of the Board of Directors

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

By:

/s/ Keith Grossman

 

 

 

Keith Grossman

 

 

 

 

 

Address:

 

 

 



 

Exhibit A

 

Current Board of Director Service

 

ZELTIQ Aesthetics, Inc.

Medical Device Manufacturers Association

Home Dialysis Plus, Inc.

 



 

Exhibit B

 

Form of Release

 



 

GENERAL RELEASE

 

This General Release (the “Agreement”) is entered into by and between Keith Grossman (“Executive”) and Thoratec Corporation, a California corporation, (the “Company”), effective eight (8) days after Executive’s signature (the “Effective Date”), unless Executive revokes Executive’s acceptance as provided in Section 5(c) below, with reference to the following facts:

 

WHEREAS, Executive’s employment with the Company and status as an officer and employee of the Company will end effective upon the Termination Date (as defined below); and

 

WHEREAS, Executive and the Company want to end their relationship amicably and also to establish the obligations of the parties including, without limitation, all amounts due and owing to Executive.

 

NOW, THEREFORE, in exchange for the good and valuable consideration set forth herein, the adequacy of which is specifically acknowledged, Executive and the Company hereby agree as follows:

 

1.                                      Termination of Employment.  Executive and the Company hereby acknowledge and agree that Executive’s employment, including his service in all positions that Executive held as an officer of the Company and its subsidiaries and as a member of the Company’s board of directors (the “Board”) and the board of directors of the Company’s subsidiaries, ended effective as of [                ] (the “Termination Date”).

 

2.                                      Payment of Accrued Wages and Expenses.  Company and Executive acknowledge and agree that Executive is entitled to receive, and has received, payment of an amount equal to all accrued wages (including base salary and bonus compensation) earned through the Termination Date, including accrued vacation, less applicable withholding,as well as reimbursement for all expenses incurred by Executive on behalf of the Company, which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documenting such expenses.

 

3.                                      Separation Payments and Benefits.  Without admission of any liability, fact or claim, the Company hereby agrees, subject to the execution and non-revocation of this Agreement, Executive’s material compliance with any continuing obligations under that certain employment agreement by and between Executive and the Company dated as of [                ], 2014 (the “Employment Agreement”) and Executive’s material compliance with the Confidentiality Agreement (as defined below) to provide Executive the severance benefits set forth in Section 6[    ] of the Employment Agreement.

 

(a)                                 Taxes.  Executive understands and agrees that all payments under this Agreement will be subject to appropriate tax withholding and other deductions.  To the extent any taxes may be payable by Executive for the benefits provided to him by this Agreement beyond those withheld by the Company, Executive agrees to pay them himself and to indemnify and hold the Company and the other entities released herein harmless for any tax claims or penalties, and associated attorneys’ fees and costs, resulting from any failure by him to make required payments.

 



 

(b)                                 Sole Separation Benefit.  Executive agrees that the payments provided by this Section 3 are not required under the Company’s normal policies and procedures and are provided as a severance solely in connection with this Agreement.  Executive acknowledges and agrees that the payments referenced in this Section 3 constitute adequate and valuable consideration, in and of themselves, for the promises contained in this Agreement.

 

4.                                      Full Payment.  Executive acknowledges that the payment and arrangements herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and the termination thereof.

 

5.                                      General Release of Claims by Executive.  Executive understands that by agreeing to the release provided by this Section 5, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of its employees or other agents for any reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement.

 

(a)                                 Executive, on behalf of Executive’s self and Executive’s executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives, and employee benefit plans in which Executive is or has been a participant by virtue of Executive’s employment with the Company, from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which Executive has or may have had against such entities arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Executive’s employment by the Company or the separation thereof, including any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866; the Equal Pay Act; the Age Discrimination in Employment Act (“ADEA”); the Americans with Disabilities Act; the Fair Labor Standards Act; the Employee Retirement Income Security Act; the Family Medical Leave Act; the California Fair Employment and Housing Act; the California Family Rights Act; the California Labor Code; the California Occupational Safety and Health Act; and Section 17200 of the California Business and Professions Code; Claims under any other local, state or federal law governing employment; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or

 



 

other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

 

Notwithstanding the generality of the foregoing, Executive does not release the following:

 

(i)                               Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;

 

(ii)                            Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;

 

(iii)                         Claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA;

 

(iv)                        Claims to any benefit entitlements vested as the date of Executive’s employment termination, pursuant to written terms of any Company employee benefit plan;

 

(v)                           Claims for indemnification under the Company’s Bylaws, any written agreement for indemnification to which Executive is a party or intended third party beneficiary, California Labor Code Section 2802 or any other applicable law; and

 

(vi)                        Executive’s right to file a charge with the Equal Employment Opportunity Commission, the Department of Labor, the California Department of Fair Employment and Housing and any other analogous state or federal agency; provided, however, that Executive does release Executive’s right to recover any damages in connection with any claim released by Executive under this Agreement.

 

(b)                           EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

(c)                                  In accordance with the Older Workers Benefit Protection Act of 1990, Executive acknowledges that Executive is aware of the following:

 

(i)                                     This section and this Agreement are written in a manner calculated to be understood by Executive.

 



 

(ii)                                  The waiver and release of claims under the ADEA contained in this Agreement does not cover rights or claims that may arise after the date on which Executive signs this Agreement.

 

(iii)                               This Agreement provides for consideration in addition to anything of value to which Executive is already entitled.

 

(iv)                              Executive has been advised to consult an attorney before signing this Agreement.

 

(v)                                 Executive has been granted twenty-one (21) days after Executive is presented with this Agreement to decide whether or not to sign this Agreement.  If Executive executes this Agreement prior to the expiration of such period, Executive does so voluntarily and after having had the opportunity to consult with an attorney, and hereby waives the remainder of the twenty-one (21) day period.

 

(vi)                              Executive has the right to revoke this general release within seven (7) days of signing this Agreement.  In the event this general release is revoked, this Agreement will be null and void in its entirety, and Executive will not receive the benefits of this Agreement set forth in Section 3 above.

 

If Executive wishes to revoke this Agreement, Executive must deliver written notice stating that intent to revoke to [insert name/address/phone/fax number of person responsible for receipt of notice on behalf of the Company], on or before 5:00 p.m. Pacific Standard Time on or before the Effective Date.

 

6.                                      Cooperation.  After the Termination Date, Executive shall cooperate with the Company and its affiliates, upon the Company’s reasonable request, with respect to any internal investigation or administrative, regulatory or judicial proceeding involving matters within the scope of Executive’s duties and responsibilities to the Company during his employment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s reasonable request to give testimony without requiring service of a subpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come into Executive’s possession during his employment); provided, however, that any such request by the Company shall not be unduly burdensome or interfere with Executive’s personal schedule or ability to engage in gainful employment, and Executive shall be compensated by the Company for all costs and expenses incurred in complying with this Section, including compensation for lost wages (provided prior written notice of such lost wages is provided to the Company).

 

7.                                      Executive’s Representations and Warranties.  Executive represents and warrants that:

 



 

(a)                                 Executive has been paid all compensation owed to Executive by the Company, including any remaining earned but unpaid base salary and bonus compensation and all accrued but unused vacation, earned through the Termination Date;

 

(b)                                 During the course of Executive’s employment, Executive did not sustain any injuries for which Executive might be entitled to compensation pursuant to California’s Workers Compensation law and for which Executive has not already filed a claim;

 

(c)                                  Executive has not initiated any adversarial proceedings of any kind against the Company or against any other person or entity released herein for any claim released by Executive herein, nor will Executive do so in the future, except as specifically allowed by this Agreement;

 

(d)                                 The execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject; and

 

(e)                                  Upon the execution and delivery of this Agreement by the Company and the Executive, this Agreement will be a valid and binding obligation of the Executive, enforceable in accordance with its terms.

 

8.                                      Confidential Information; Return of Company Property.

 

(a)                                 Executive hereby expressly confirms Executive’s continuing obligations to the Company pursuant to the Proprietary Information and Inventions Agreement entered into between Executive and the Company (the “Confidentiality Agreement”).

 

(b)                                 Executive shall deliver to the Company within ten (10) business days of the Effective Date all originals and copies of correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products, processes or business of any kind and/or which contain proprietary information or trade secrets which are in the possession or control of Executive or Executive’s agents or representatives, but excluding documents which Executive is entitled to retain for his personal records (e.g., all documents that Executive executed in connection with his employment with the Company, all wage statements and other payroll records issued to Executive, all documents issued to Executive with regard to his employee benefits, and all Company documents and information issued to Executive in connection with his equity interests in the Company).

 

(c)                                  Executive shall return to the Company within ten (10) business days of the Effective Date all equipment of the Company in Executive’s possession or control.

 



 

9.                                      No Assignment.  Executive warrants and represents that no portion of any of the matters released herein, and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to any other person, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law or otherwise.  If any claim, action, demand or suit should be made or instituted against the Company or any affiliate of the Company because of any actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company or any affiliate of the Company against such claim, action, suit or demand, including necessary expenses of investigation, attorneys’ fees and costs.

 

10.                               In the Event of a Claimed Breach.  All controversies, claims and disputes arising out of or relating to this Agreement, including without limitation any alleged violation of its terms, shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator with JAMS pursuant to JAMS Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness.  The arbitration shall be conducted in Alameda County, California or such other location mutually agreed upon by the parties.  The parties acknowledge that they are each waiving any and all rights to a jury or court trial of all matters covered by this arbitration obligation.  The arbitrator shall (i) be authorized to determine if an issue is subject to this arbitration obligation, (ii) provide for adequate discovery, and (iii) be entitled to consider and determine dispositive pre-trial motions such as motions for summary judgment.  Judgment on the arbitration award may be entered in any court having jurisdiction.  Nothing herein shall prevent either party from pursuing injunctive relief in court (without having to post a bond) to avoid irreparable harm pending completion of any arbitration.  Within twenty (20) days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law.  Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the Company shall bear the cost of the arbitrator and the JAMS arbitrator and administrative fees; and provided further that Executive shall be entitled to recover reasonable attorney’s fees and costs incurred by him in any arbitration Executive initiates to enforce his rights under this Agreement and in which Executive is deemed to be the prevailing party.  Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations imposed on them under Section 8(a) hereof, and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Section 8(a) of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

 

11.                               Choice of Law.  This Agreement shall in all respects be governed and construed in accordance with the laws of the State of California, including all matters of construction, validity and performance, without regard to conflicts of law principles.

 

12.                               Notices.  All notices, demands or other communications regarding this Agreement shall be in writing and shall be sufficiently given if either personally delivered or sent by facsimile or overnight courier, addressed as follows:

 



 

(a)                                 If to the Company:

Thoratec Corporation

2035 Stoneridge Drive

Pleasanton, CA 94588

Attn:  [title of responsible officer or manager]

 

(b)                                 If to Executive:

 

The last address on file with the Company.

 

13.                               Severability.  Except as otherwise specified below, should any portion of this Agreement be found void or unenforceable for any reason by an arbitrator or court of competent jurisdiction, the parties intend that such provision be limited or modified so as to make it enforceable, and if such provision cannot be modified to be enforceable, the unenforceable portion shall be deemed severed from the remaining portions of this Agreement, which shall otherwise remain in full force and effect; provided, however, that the release of claims provided by Executive herein shall cease to have any force or effect in the event the Company’s obligations to provide all benefits due to Executive under Sections 2 and 3 of this Agreement are materially breached or are deemed unenforceable.  If any portion of Executive’s release of claims is found to be void or unenforceable for any reason in regard to any one or more persons, entities, or subject matters, such portion shall remain in full force and effect with respect to all other persons, entities, and subject matters.  This paragraph shall not operate, however, to sever Executive’s obligation to provide the binding release to all entities intended to be released hereunder.

 

14.                               Understanding and Authority.  The parties understand and agree that all terms of this Agreement are contractual and are not a mere recital, and represent and warrant that they are competent to covenant and agree as herein provided.

 

15.                               Integration Clause.  This Agreement, collectively with the Employment Agreement and Confidentiality Agreement, contains the entire agreement of the parties with regard to the separation of Executive’s employment, and supersedes any prior agreements as to that matter. The Company and Executive acknowledge that the termination of the Executive’s employment with the Company is intended to constitute an involuntary separation from service for the purposes of Section 409A of the Code, and the related Department of Treasury regulations.  Executive acknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations, discussions, representations or agreements.  This Agreement may not be changed or modified, in whole or in part, except by an instrument in writing signed by Executive and the Chief Executive Officer of the Company.

 

16.                               Execution in Counterparts.  This Agreement may be executed in counterparts with the same force and effectiveness as though executed in a single document.

 

The parties have carefully read this Agreement in its entirety; fully understand and agree to its terms and provisions; and intend and agree that it is final and binding on all parties.

 

(Signature Page Follows)

 



 

IN WITNESS WHEREOF, and intending to be legally bound, the undersigned parties have caused this General Release to be duly executed and delivered as of the date indicated next to their respective signatures below.

 

EXECUTIVE

 

 

COMPANY

 

 

 

 

 

 

 

 

 

 

 

 

By: Keith Grossman

 

By:

 

 

 

 

Title:

 

 

 

Date

 

 

 

Date

 

 


 

EX-10.2 3 f29554exv10w2.htm EXHIBIT 10.2  

EXHIBIT 10.2

Amended and Restated Employment Agreement

          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of April 23rd, 2007 (“Effective Date”), by and between THORATEC CORPORATION, a California corporation (the “Company”), and Gerhard F. Burbach (“Executive”) and amends and restates an employment agreement between the Company and Executive dated as of January 13, 2006, and amended as of May 12, 2006.

          THE PARTIES AGREE AS FOLLOWS:

     1. Position and Duties.

          1.1 Title. From January 17, 2006 (the “Hire Date”) until the termination of this Agreement, as provided herein, Executive shall serve as the President and Chief Executive Officer of the Company, subject to policies of the Company and the terms and conditions of this Agreement. If there is any conflict between this Agreement and any written Company policy, this Agreement shall control. During the period that Executive serves as President and Chief Executive Officer, the Company shall take all reasonable and lawful action necessary and appropriate to cause Executive to be nominated for and elected to the Board of Directors of the Company (the “Board”).

          1.2 Duties. Except as provided in Section 4.1, Executive agrees that he shall perform, to the best of his ability, the employment duties assigned to him by the Company, and shall devote his full time and attention, with undivided loyalty, to the business and affairs of the Company while employed pursuant to this Agreement. Executive shall report to the Board.

     2. Compensation.

          2.1 Base Salary. Effective as of the Effective Date, Executive shall receive for his services under this Agreement an annual base salary of four hundred thousand ($400,000) dollars. The base salary may be increased annually at the sole discretion of the Board.

          2.2 Annual Target Bonus. Effective as of the Effective Date, Executive will be eligible for an annual incentive bonus equal to a target amount of eighty percent (80%) of Executive’s base salary. Such annual incentive bonus shall be subject to the achievement of certain individual and corporate objectives, as shall be set by the Board, or a designated committee thereof, in consultation with Executive, as well as to the terms and conditions of the Company’s incentive compensation plan applicable to executive officers. The Board, or a designated committee thereof, shall meet on an annual basis to determine, in consultation with Executive, the goals and formula for bonus payment for each year of employment under this Agreement.

          2.3 Stock Options.

               (a) Initial Stock Options. Effective as of the Hire Date, Executive shall be granted stock options to purchase 375,000 shares of the common stock of the Company (the “Initial Stock Options”). The options shall be incentive stock options to the maximum extent permissible under applicable tax laws, and the balance of the options will be non-qualified stock

 


 

options. The exercise price of the Initial Stock Options shall equal the closing price of the Company’s common stock on the Hire Date, as determined by the Board, or a designated committee thereof. Twenty-five percent (25% ) of the Initial Stock Options shares shall vest and become exercisable after the first twelve (12) months of continuous service by Executive after the Hire Date, and the remaining Initial Stock Options shares shall vest and become exercisable in equal annual installments over the next three (3) years of continuous service by Executive. Notwithstanding the terms of any agreements related to the grant of such options to the contrary, upon the occurrence of a Change of Control, as defined below, Executive shall vest in all remaining unvested Initial Stock Options shares. The grant of each such option shall be subject to the other terms and conditions set forth in the Company’s 1997 Stock Option Plan and in the Company’s standard form of stock option agreement.

               (b) The Executive shall be eligible for periodic grants of stock options, as may be approved by the Board, or a designated committee thereof, in its sole discretion. Such stock options must be exercised within the time period specified in the applicable stock option agreement, the applicable Company equity compensation plan and this Agreement.

          2.4 Restricted Share Grant.

               (a) Initial Restricted Stock Grant. Executive shall be granted, as soon as administratively practicable, 50,000 shares of restricted common stock of the Company (“Initial Restricted Stock”). The restrictions shall lapse as to the first twenty percent (20%) increment (or 10,000 shares) on February 24, 2007, and thereafter in twenty percent (20%) increments (or 10,000 shares) upon the second, third, fourth and fifth anniversaries of the Hire Date. Notwithstanding the terms of any agreements related to the grant of the Initial Restricted Stock to the contrary, upon the occurrence of a Change of Control (as defined below), (a) the restrictions on the Initial Restricted Stock shall, upon such occurrence, immediately lapse as to fifty percent (50%) of the number of shares of Restricted Stock that at such date are still restricted and (b) upon the earlier of (i) the one (1) year anniversary of the effective date of such Change of Control, or (ii) such date after the date of such Change of Control when Executive voluntarily terminates his employment for Good Reason or his employment is involuntary terminated without Cause by the Company, the restrictions on the Restricted Stock shall immediately lapse as to the remainder, if any, of the shares of Restricted Stock that are then still otherwise restricted.

               (b) The Executive shall be eligible for periodic grants of restricted stock, as may be approved by the Board, or a designated committee thereof, in its sole discretion. Such restricted stock will vest within the time period specified in the applicable equity grant agreement, the applicable Company equity compensation plan and this Agreement.

          2.5 Acceleration of Stock Options and Stock Grants Upon A Change of Control.

               (a) In the event of a Change of Control of the Company, any options to purchase Company common stock, shares of restricted stock or restricted stock units (collectively, “Equity Units”) that have been granted to the Executive by the Company that are

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outstanding, but not yet exercisable or as to which restrictions have not yet lapsed, in whole or in part, as of the effective date of such Change of Control, shall

                    (i) with respect to all Equity Units granted to Executive prior to April 2007, become fully vested and exercisable and shall be otherwise exercisable in accordance with the terms of the stock option grant, restricted stock grant or restricted stock unit grant and applicable Company stock option or incentive stock plan; and

                    (ii) with respect to all Equity Units granted to Executive during or subsequent to April 2007, if the Company terminates the employment of the Executive without Cause on or within eighteen (18) months after a Change of Control, or if the Executive terminates employment with the Company for Good Reason during such period, all such Equity Units shall become fully vested and exercisable and shall be otherwise exercisable in accordance with the terms of the stock option grant, restricted stock grant or restricted stock unit grant and applicable Company stock option or incentive stock plan.

               (b) Notwithstanding anything in this section 2.5 to the contrary, sections 2.5 (a) (i) and (ii) hereinabove shall not apply to the Initial Stock Options and the Initial Restricted Stock, which shall be vest pursuant to section 2.4 above.

     3. Benefits.

          3.1 Benefits Generally. Executive shall be eligible to participate in such of the Company’s benefit plans as are generally available to senior officers of the Company, including, without limitation, medical, dental, life and disability insurance plans. Executive shall be entitled to paid vacation of four (4) weeks per annum in accordance with the standard policies and procedures of the Company.

     4. Outside Employment.

          4.1 Other Affiliations. Executive shall not perform consultation or other services for any other company, corporation, or other commercial enterprise (other than for subsidiaries or affiliates of the Company), during the term of Executive’s employment under this Agreement, unless Executive has received written approval to do so from the Board; provided, however, that it is hereby agreed and acknowledged that Executive may continue to serve as a director of Digirad Corporation. Executive shall at all times be subject to the obligations of Executive Confidential Information and Inventions Agreement to be executed by Executive pursuant to Section 5 of this Agreement, including when performing services for others permitted under this Section 4.1.

          4.2 Conflict of Interest. Executive warrants that (a) Executive is not obligated under any other employment, consulting, or other agreement which would affect the Company’s rights or Executive’s duties under this Agreement, and (b) this Agreement is not in conflict with Executive’s commitments to any party.

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     5. Confidentiality. On or prior to the Hire Date, Executive shall execute and deliver to the Company the Executive Confidential Information and Inventions Agreement in the form attached hereto as Exhibit A.

     6. Separation Benefits.

          6.1 Employment At Will. Executive understands and agrees that employment with the Company is “at will”, which means that either Executive or the Company may terminate the employment relationship at any time with or without cause. The Company may terminate Executive’s employment for Cause (as defined below) immediately or other than for Cause upon fifteen (15) days’ written notice to Executive. Executive may terminate his employment for any reason upon thirty (30) days’ written notice to the Company of such termination. If this Agreement is terminated by the Company for Cause or by Executive (except for Good Reason after a Change of Control, each such term as defined below), Executive shall not be entitled to any benefits under this Section 6 or to any other separation benefits or severance benefits of any kind.

          6.2 Termination of Executive Without Cause. If Executive’s employment is involuntarily terminated by the Company without Cause, Executive shall be paid a severance pay benefit equal to two (2) times Executive’s then-current annual base salary. Such amount shall be payable in compliance with Section 6.9, in a cash lump sum as soon as practicable (as provided by law) after he executes and delivers an effective release of claims, in a form acceptable to the Company and at the time specified by the Company, and remains in compliance with all applicable restrictive covenants, including those set forth in this Agreement.

          6.3 Termination of Executive After a Change of Control. Notwithstanding Section 6.2, if Executive would otherwise have been entitled to benefits pursuant to Section 6.2 but his involuntary termination of employment by the Company occurs on or within eighteen (18) months after a Change of Control, or if Executive terminates his employment with the Company for Good Reason during such period, Executive shall be paid in lieu of the severance pay benefit described in Section 6.2 a Change of Control severance pay benefit equal to two and one-half (2.5) times Executive’s then-current annual base salary plus two and one-half (2.5) times the greatest of (a) the target bonus for the year preceding the year in which Executive’s termination occurs, (b) the actual bonus for such prior year, or (c) the target bonus for the year in which the termination of employment occurs. Such amounts shall be payable in compliance with Section 6.9, in a cash lump sum after Executive’s termination of employment and after he executes and delivers an effective release of claims, in a form acceptable to the Company and at the time specified by the Company, and remains in compliance with all provisions of this Agreement.

          6.4 COBRA Benefit. If Executive is entitled to receive benefits pursuant to Section 6.2 or 6.3, and if Executive elects health care continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as provided by the Company’s group health plan, then in each of the first twelve (12) consecutive months following termination of employment that the Executive has not become employed by another company which offers health insurance generally comparable with that of the Company at the time of Executive’s termination, the Company shall pay in monthly payments at the beginning of each

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such month, an amount equal to the monthly amount paid by the Company immediately before termination of employment for the Executive’s health coverage.

          6.5 Definitions. For purposes hereof, the following terms have the following meanings:

               (a) “Cause” shall mean (A) Executive’s material misappropriation of property of the Company (including its subsidiaries) that is intended to result in a personal financial benefit to himself or to members of his family; (B) Executive’s conviction of, or plea of guilty or no contest to, a felony, which the Company reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; (C) Executive’s act of gross negligence or willful misconduct (including but not limited to any willfully dishonest or fraudulent act or omission) taken in connection with the performance or intentional nonperformance of any of his duties and responsibilities as an employee or continued neglect of his duties to the Company (including its subsidiaries); or (D) Executive’s continued willful or grossly negligent failure to comply with the lawful directions of the Board; provided, however, that the Board will deliver to Executive a written demand for performance that describes the basis for its belief that Executive has not substantially performed his duties and Executive fails to cure such act or omission to the Board’s reasonable satisfaction, if such act or omission is reasonably capable of being cured, no later than ten (10) business days following delivery of such written demand.

               (b) “Change of Control” shall mean the occurrence of any of the following events: (A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or (B) the consummation of a sale of substantially all of the Company’s assets; or (C) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining out-standing or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or (D) a change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (x) are directors of the Company as of January 1, 2006 or (y) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transaction described in subsections (A), (B), or (C) above, or in connection with an actual or threatened proxy contest relating to the election of directors to the Company.

               (c) “Good Reason” shall mean any material reduction in the duties or salary or bonus opportunity of Executive or a requirement that Executive work at a facility more than 25 miles from the Company’s headquarters in Pleasanton, California.

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          6.6 Gross-Up for Excise Tax. In the event that any payment and any separation benefit or other benefit (including without limitation, any acceleration of Initial Stock Options, Initial Restricted Stock or Equity Units (as defined herein)) payable or due to or for the benefit of, or received by or on behalf of, the Executive, whether under this Agreement or otherwise (determined without regard to any additional payment required under this paragraph) (a “Payment”) is subject to the excise tax (the “Excise Tax”) imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then Executive shall be paid an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes, including, without limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment, Executive shall retain the full amount of the Payment without being reduced by the Excise Tax imposed upon the Payment. For avoidance of doubt, Executive and Company agree that this Section 6.6 shall not be interpreted to compensate Executive for any other tax to which the Payment may be subject, including but not limited to income and employment taxes.

          6.7 Benefits Subject to Execution of Waiver of Claims. Executive shall not be entitled to receive any amount or benefit pursuant to this Section 6 unless Executive executes and delivers an effective release of claims, in a form acceptable to the Company and at the time specified by the Company, and remains in compliance with all provisions of this Agreement.

          6.8 Exclusivity of Agreement. The benefits provided hereunder are in lieu of any other severance-type benefits provided by the Company under any other plan, agreement, arrangement or policy, notwithstanding the terms of any such other plan, agreement, arrangement or policy.

          6.9 Section 409A Compliance. Notwithstanding anything to the contrary in this Agreement, if the Company determines that any payment or benefit to be provided to Executive by the Company pursuant to this Agreement is or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code (“409A Taxes”) if provided at the time otherwise required under this Agreement, then:

          Notwithstanding anything to the contrary in this Agreement,

               (a) such payments shall be delayed until the date that is six months after the date of Executive’s “separation from service” (as such term is defined under Section 409A) with the Company, or such shorter period that, as determined by the Company, is sufficient to avoid the imposition of 409A Taxes; and

               (b) with respect to the provision of such benefit, for a period of six (6) months following the date of Executive’s “separation from service” (as such term is defined under Section 409A) with the Company, or such shorter period, that, as determined by the Company, is sufficient to avoid the imposition of 409A Taxes, Executive shall be responsible for the full cost of providing such benefits.

     7. Non-disparagement. Except as required by law or legal process, Executive agrees that during and subsequent to the term of this Agreement, he will not disparage any aspect of the

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Company or its successors or assigns, including but not limited to its officers, management, employees and products.

     8. Nonsolicitation. Executive agrees that for a period of one (1) year after the termination of this Agreement, Executive will not, except with the advance written approval of the Company, for any reason whatsoever, directly or indirectly, individually or on behalf of persons not now parties to this Agreement, or as a partner, founder, stockholder, director, officer, principal, agent, employee or in any other capacity or relationship, for Executive’s own account or for the benefit of any other company, person or entity, encourage, induce, attempt to induce, solicit or attempt to solicit anyone who is employed at that time, or was employed during the previous six (6) months, by the Company or any affiliate to leave his or her employment with the Company or any of its affiliates, or to accept employment with or perform services for any other company, person or entity.

     9. Injunctive Relief. Executive acknowledges that damages will not be an adequate remedy in the event of a breach of any of Executive’s obligations under Sections 4, 5, 7 or 8 of this Agreement. Executive therefore agrees that the Company shall be entitled (without limitation of any other rights or remedies otherwise available to the Company and without the necessity of posting a bond) to obtain an injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any such breach of this Agreement. Executive hereby submits to the jurisdiction and venue of the courts of the State of California and the Federal Courts of the United States of America located within the County of Alameda for purposes of any such action. Executive further agrees that service upon him in any such action or proceeding may be made by first class mail, certified or registered, to his address as last appearing on the records of the Company.

     10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors, and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by the Company (except to an affiliate or successor of the Company) or by Executive without the prior written consent of the other party. Any attempted assignment in contravention of this Section 10 shall be void.

     11. Notice. Any notice or communication under this Agreement shall be in writing and shall be given by personal delivery, facsimile or United States mail, certified or registered with return receipt requested, postage prepaid, and shall be deemed to have been duly given three (3) business days after the mailing if mailed, or upon receipt if delivered personally, or the first business day after transmission if sent by facsimile, to the other party at the following addresses, or such other address as one party may from time to time give the other in writing:

 

 

 

 

 

 

 

If to the Company:

 

Thoratec Corporation
Attention: General Counsel
6035 Stoneridge Drive
Pleasanton, CA 94588
Tel: (925) 847-8600, Fax: (925) 847-8574

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If to Executive:

 

Gerhard F. Burbach
c/o Thoratec Corporation
6035 Stoneridge Drive
Pleasanton, CA 94588
Tel: (925) 847-8600, Fax: (925) 847-8574

     12. Termination of the Agreement; Survival of Certain Agreements. This Agreement shall terminate upon the termination of Executive’s service with the Company for any reason and the payment of any amounts owed under Section 6 hereof; provided, however, that the covenants and agreements contained in Sections 5 and 7 through 22 of this Agreement shall be continuous and survive the termination of this Agreement and shall remain in full force and effect regardless of the cause of such termination.

     13. Assumption by Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in the Agreement, the “Company” shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

     14. Captions. The captions to Sections of this Agreement have been inserted for identification and reference purposes and shall not by themselves determine the construction or interpretation of this Agreement.

     15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     16. Governing Law; Jurisdiction and Venue. This Agreement shall be construed in accordance with, and shall be governed by, the procedural and substantive laws of the State of California, without reference to principles of conflicts of law. Executive hereby submits to the jurisdiction and venue of the courts of the State of California and the Federal Courts of the United States of America located within the County of Alameda for purposes of any such action. Executive further agrees that service upon him in any such action or proceeding may be made by first class mail, certified or registered, to his address as last appearing on the records of the Company.

     17. Waiver. The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or any other provision hereof.

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     18. Withholding. The Company may withhold from any amounts payable to Executive hereunder all federal, state, local, and other withholdings and similar taxes and payments required by applicable law or regulation.

     19. Reasonableness of Restrictions. Executive acknowledges that compliance with this Agreement, including but not limited to Sections 4, 5, 7, 8, and 9 is reasonable and necessary to protect the Company’s legitimate business interests, including but not limited to the Company’s goodwill and maintaining the confidentiality of the Company’s confidential information.

     20. Extension of Covenants. In the event that Executive violates any covenant contained in Section 8 of this Agreement, Executive agrees that the term of each such covenant so violated shall be automatically extended for a period equal to the period during which Executive is in violation of such covenants.

     21. Enforceability. The Company and Executive expressly agree that the character, duration and scope of the covenants in this agreement, including but not limited to Sections 4, 5, 7, 8, and 9, are reasonable in light of the circumstances as they exist on the date upon which this Agreement has been executed. The Company has attempted to limit Executive’s rights only to the extent necessary to protect the Company’s goodwill, proprietary and/or confidential information, and other business interests. The Company and Executive recognize, however, that reasonable people may differ in making such a determination. Consequently, the parties hereby agree that a court having jurisdiction over the enforcement of this Agreement shall exercise its power and authority to reform Executive’s covenants under Sections 4, 5, 7 and 8 above to the extent necessary to cause the limitations contained therein as to time and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than necessary to protect the Company’s goodwill, confidential information and other business interests.

     22. Attorney’s Fees. In the event of any action in law or in equity for the purposes of enforcing any of the provisions of this Agreement, including arbitration, the prevailing party as determined by the trier of fact shall be entitled to recover its reasonable attorney fees, plus court costs and expenses, from the other party, to the extent permitted by applicable law.

     23. Entire Agreement and Modifications. This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between Executive and the Company with regard to its subject matter, and supersedes and replaces in its entirety any other agreements or understandings, whether written or oral, between the Company and Executive. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. This Agreement may not be modified or amended except in a writing signed by Executive and a duly authorized officer of the Company. Notwithstanding the foregoing, the Company may in its sole discretion, amend the Agreement at any time as may be necessary to avoid the imposition of the additional tax under Section 409(A)(a)(1)(B) of the Code; provided, however, that any such amendment shall be implemented in such a manner as to preserve, to the greatest extent possible, the terms and conditions of the Agreement as in existence immediately prior to any such amendment.

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     24. Advice of Counsel. Executive acknowledges and confirms that he has had the opportunity to seek such legal, financial and other advice and representation as Executive deems appropriate in connection with this Agreement.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the date set forth in the first paragraph above.

 

 

 

 

 

 

THORATEC CORPORATION
 

 

 

By:  

/s/ J. Donald Hill  

 

 

 

J. Donald Hill 

 

 

 

Chairman of the Board 

 

 

 

AGREED:
 

 

 

/s/ Gerhard F. Burbach  

 

 

Gerhard F. Burbach 

 

 

 

 

 

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Exhibit A

Employee Confidential Information and Inventions Agreement

 


 

(Thoratec Logo)

EMPLOYEE CONFIDENTIAL INFORMATION AND
INVENTIONS AGREEMENT

     In partial consideration and as a condition of my employment or continued employment with Thoratec Corporation, a California corporation (which together with any parent, subsidiary, affiliate, or successor is hereinafter referred to as the “Company” or “Thoratec”), and effective as of the date that my employment with the Company first commenced, I hereby agree as follows:

 

1.

 

NONCOMPETITION

                    During my employment with the Company, I will perform for the Company such duties as it may designate from time to time and will devote my full time and best efforts to the business of the Company and will not, without the prior written approval of (i) an officer of the Company if I am not an executive officer of the Company or (ii) the Board of Directors of the Company if I am an executive officer of the Company, (a) engage in any other professional employment or consulting, or (b) directly or indirectly participate in or assist any business which is a current or potential supplier, customer, or competitor of the Company.

 

2.

 

THORATEC’S BUSINESS

 

 

 

 

The general line of business of the Company includes but is not limited to:

 

 

(i)

 

development, manufacture and sale of (1) medical equipment, devices, apparatus and instrumentation; (2) specialty polymer and chemicals and configured polymer parts; and (3) high performance textiles and textile products;

 

 

(ii)

 

all equipment and items related to the above; and

 

 

(iii)

 

all matters which are recorded in the Company’s records and notebooks.

 

 

3.

 

CONFIDENTIALITY OBLIGATION

                    I will hold all Thoratec Confidential Information in confidence and will not disclose, use, copy, publish, summarize, or remove from Thoratec’s premises any Confidential Information, except (a) as necessary to carry out my assigned responsibilities as a Thoratec employee, and (b) after termination of my employment, only as specifically authorized in writing by an officer of Thoratec. “Confidential Information” is all information related to any aspect of Thoratec’s business which is either information not known by actual or potential competitors of the Company or is proprietary information of the Company, whether of a technical nature or otherwise. Confidential Information includes computer programs, computer source code, inventions, discoveries, ideas, designs, circuits, schematics, formulas, algorithms, trade secrets, secret procedures, works of authorship, developmental or experimental work, processes, techniques, methods, improvements, know-how, data, financial information and forecasts, product plans, marketing/ sales plans and strategies, and customer lists.

 


 

 

4.

 

INFORMATION OF OTHERS

                    I will safeguard and keep confidential the proprietary information of customers, vendors, consultants, and other parties with which Thoratec does business to the same extent as if it were Thoratec Confidential Information. I will not, during my employment with the Company or otherwise, use or disclose to the Company any confidential, trade secret, or other proprietary information or material of any previous employer or other person, and I will not bring onto the Company’s premises any unpublished document or any other property belonging to any former employer without the written consent of that former employer.

 

5.

 

THORATEC PROPERTY

                    All papers, records, data, notes, drawings, files, documents, samples, devices, products, equipment, and other materials, including copies, relating to Thoratec’s business that I possess or create as a result of my employment with Thoratec, whether or not confidential, are the sole and exclusive property of Thoratec. In the event of the termination of my employment, I will promptly deliver all such materials to Thoratec and will sign and deliver to the Company the “Termination Certificate” attached hereto as Exhibit A.

 

6.

 

OWNERSHIP OF INVENTIONS

                    All computer programs, computer source code, inventions, ideas, designs, circuits, schematics, formulas, algorithms, trade secrets, works of authorship, developments, processes, techniques, improvements, and related know-how which result from work performed by me, alone or with others, on behalf of Thoratec or from access to Thoratec Confidential Information or property, whether or not patentable or copyrightable, (collectively “Inventions”) shall be the property of Thoratec, and, to the extent permitted by law, shall be “works made for hire.” I hereby assign and agree to assign to Thoratec or its designee, without further consideration, my entire right, title, and interest in and to all Inventions, other than those described in Paragraph 7 of this Agreement, including all rights to obtain, register, perfect, and enforce patents, copyrights, and other intellectual property protection for Inventions. I will disclose promptly and in writing to the individual designated by Thoratec or to my immediate supervisor all Inventions which I have made or reduced to practice. During my employment and for four years after, I will assist Thoratec (at its expense) to obtain and enforce patents, copyrights, and other forms of intellectual property protection on Inventions.

 

7.

 

EXCLUDED INVENTIONS

                    Attached as Schedule 1 to this Agreement is a list of all inventions, improvements, and original works of authorship, which I desire to exclude from this Agreement, each of which has been made or reduced to practice by me prior to my employment by Thoratec. If no list is attached to this Agreement, there are no inventions to be excluded at the time of my signing of this Agreement. I understand that this Agreement requires disclosure, but not assignment, of any invention that qualifies under Section 2870 of the California Labor Code, which reads:

 

 

 

“Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 


 

 

 

 

(a)   relate at the time of conception or reduction to practice of the invention to the employer’s business or actual or demonstrably anticipated research or development of the employer; or

 

 

 

 

(b)   result from any work performed by the employee for the employer.”

 

 

8.

 

PRIOR CONTRACTS

                    I represent that there are no other contracts to assign inventions that are now in existence between any other person or entity and me. I further represent that I have no other employments, consultancies, or undertakings which would restrict or impair my performance of this Agreement.

 

9.

 

NON-SOLICITATION

                    During the term of my employment by the Company, and for twelve (12) months thereafter, I shall not, directly or indirectly, without the prior written consent of the Company: (i) solicit or induce any employee of the Company to leave the employ of the Company; (ii) hire for any purpose any employee of the Company or any former employee who has left the employment of the Company within six months of the date of termination of such employee’s employment with the Company.

 

10.

 

AGREEMENTS WITH THE UNITED STATES GOVERNMENT AND OTHER THIRD PARTIES

                    I acknowledge that the Company from time to time may have agreements with other persons or with the United States Government or agencies thereof which impose obligations or restrictions on the Company regarding Inventions made during the course of work under such agreements or regarding the confidential nature of such work. I agree to be bound by all such obligations or restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

 

11.

 

NO EMPLOYMENT AGREEMENT

                    I agree that unless specifically provided in another writing signed by me and an officer of the Company, my employment by the Company is not for a definite period of time. Rather, my employment relationship with the Company is one of employment at will and my continued employment is not obligatory by either myself or the Company.

 

12.

 

MISCELLANEOUS

 

 

12.1

 

Governing Law

                              This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, excluding those laws that direct the application of the laws of another jurisdiction.

 

12.2

 

Enforcement

                               If any provision of this Agreement shall be determined to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement, shall be deemed valid, and enforceable to the full extent possible.

 


 

 

12.3

 

Injunctive Relief; Consent to Jurisdiction

                               I acknowledge and agree that damages will not be an adequate remedy in the event of a breach of any of my obligations under this Agreement. I therefore agree that the Company shall be entitled (without limitation of any other rights or remedies otherwise available to the Company) to obtain, without posting bond, specific performance and preliminary and permanent injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any breach of this Agreement. I hereby submit myself to the jurisdiction and venue of the courts of the State of California for purposes of any such action. I further agree that service upon me in any such action or proceeding may be made by first class mail, certified or registered, to my address as last appearing on the records of the Company.

 

12.4

 

Arbitration

                              I further agree that the Company, at its option, may elect to submit any dispute or controversy arising out of this Agreement for final settlement by arbitration conducted in Alameda County or San Francisco County in accordance with the then existing rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators shall be specifically enforceable and may be entered in any court having jurisdiction thereof.

 

12.5

 

Attorneys’ Fees

                               If any party seeks to enforce its rights under this Agreement, by legal proceedings or otherwise, the non-prevailing party shall pay all costs and expenses of the prevailing party.

 

12.6

 

Binding Effect; Waiver

                              This Agreement shall be binding upon and shall inure to the benefit of the successors, executors, administrators, heirs, representatives, and assigns of the parties. The waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or any other provision hereof.

 

12.7

 

Headings

                              The Section headings herein are intended for reference and shall not by themselves determine the construction or interpretation of this Agreement.

 

12.8

 

Entire Agreement; Modifications

                              This Employee Confidential Information and Inventions Agreement contains the entire agreement between the Company and the undersigned employee concerning the subject matter hereof and supersedes any and all prior and contemporaneous negotiations, correspondence, understandings, and agreements, whether oral or written, respecting that subject matter. All modifications to this Agreement must be in writing and signed by the party against whom enforcement of such modification is sought.

 


 

     IN WITNESS WHEREOF, I have executed this document as of the 13th day of January, 2006.

 

 

 

 

 

 

 

 

 

/s/ Gerhard F. Burbach  

 

 

Employee Gary Burbach 

 

 

 

 

 

RECEIPT ACKNOWLEDGED:

THORATEC CORPORATION

By: /s/ David Lehman                         

 


 

SCHEDULE 1

(Excluded Inventions, Improvements, and
Original Works of Authorship)

 

 

 

 

 

 

 

 

 

Identifying Number

Title

 

Date

 

Or Brief Description

 

 

N/A

 

 

 


 

EXHIBIT A

Thoratec Corporation

TERMINATION CERTIFICATION

     This is to certify that I do not have in my possession, nor have I failed to return, any papers, records, data, notes, drawings, files, documents, samples, devices, products, equipment, and other materials, including reproductions of any of the aforementioned items, belonging to Thoratec Corporation, its subsidiaries, affiliates, successors, or assigns (together, the “Company”).

     I further certify that I have complied with all the terms of the Company’s Confidential Information and Inventions Agreement signed by me, including the reporting of any inventions and original works of authorship (as defined therein) conceived or made by me (solely or jointly with others) covered by that agreement.

     I further agree that, in compliance with the Confidential Information and Inventions Agreement, I will hold in confidence and will not disclose, use, copy, publish, or summarize any Confidential Information (as defined in the Company’s Confidential Information and Inventions Agreement) of the Company or of any of its customers, vendors, consultants, and other parties with which it does business.

Date:                     

 

 

 

 

 

 

 

 

 

 

 

 


Employee’s Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Type/Print Employee’s Name

 

 

 

 

 

California Labor Code § 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer.

(a)

 

Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 


 

 

(1)

 

Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

 

(2)

 

Result from any work performed by the employee for the employer.

 

(b)

 

To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

Added Stats 1979 ch 1001 § 1; Amended Stats 1986 ch 346 § 1.

 

 

 

EX-10.23 2 f54943exv10w23.htm EX-10.23

Exhibit 10.23

AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amendment to the Amended and Restated Employment Agreement (the “Amendment”) is entered into as of November 16, 2009 (the “Effective Date”), between Gerhard F. Burbach (“Executive”) and Thoratec Corporation, a California corporation (the “Company”).

RECITALS

     WHEREAS, on January 13, 2006, Executive and the Company entered into an Employment Agreement, as amended (the “Employment Agreement”) which sets forth the terms of Executive’s employment with the Company and provides for separation and change of control benefits upon the occurrence of certain terminations of Executive’s employment and/or a change of control of the Company;

     WHEREAS, on April 23, 2007, Executive and the Company entered into an Amended and Restated Employment Agreement (the “Agreement”) which superseded the Employment Agreement in its entirety as of such date;

     WHEREAS, pursuant to Section 23 of the Agreement, the Agreement may be amended by a written instrument signed by both Executive and a duly authorized officer of the Company; and

     WHEREAS, the parties wish to amend the Agreement in order to ensure that the benefits to be provided by the Agreement comply with, or are exempt from, the provisions of Section 409A of the United States Internal Revenue Code (“Section 409A”).

AGREEMENT

     NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereby agree as follows effective as of the Effective Date. Except as otherwise defined herein, capitalized terms shall have the meanings assigned to them in the Agreement.

     1. Amendment. The Agreement is hereby amended to the extent necessary to provide the following:

          1.1 Release; Payments upon Termination of Employment. To the extent the Agreement requires that a release of claims be provided to the Company following a termination of employment in order to receive a benefit under the Agreement, such release shall be delivered to the Company, and shall become non-revocable, no later than fifty-two (52) days following such termination of employment. Except as otherwise provided in this Amendment, any compensation provided under the Agreement that is payable upon a termination of Employee’s employment, shall be paid within sixty (60) days of such termination of employment.

          1.2 Definition of Good Reason. For purposes of the Agreement, “Good Reason” shall mean (A) any material reduction in Executive’s duties or salary or bonus opportunity or (B) a requirement that Executive works at a facility more than twenty-five (25) miles from the Company facility where Executive is then employed without Executive’s written consent; provided, that (A) and (B) shall not constitute grounds for Good Reason termination unless Executive gives the Company written notice describing such Good Reason event within thirty (30) days after the event first occurs, such event is not corrected by the Company within thirty (30) days after the Company’s receipt of such notice and Executive terminates employment no later than one hundred eighty (180) days after the expiration of such correction period.

 

<hr

 

          1.3 Section 6.9 of the Agreement. Section 6.9 of the Agreement is hereby amended and restated in its entirety to read as follows:

          “6.9 Section 409A.

               (A) Notwithstanding anything in the Agreement or this Amendment to the contrary, any compensation or benefits payable under the Agreement that constitutes “nonqualified deferred compensation” within the meaning of Section 409A and which are designated as payable upon Executive’s termination of employment (other than accrued obligations which must be paid upon such termination under applicable law) shall be payable upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “separation from service”), regardless of when the termination of employment occurs.

               (B) To the maximum extent permitted by applicable law, amounts payable in connection with a separation from service shall be paid in reliance upon Treasury Regulation 1.409A-1(b)(9) (Separation Pay Plans) or Treasury Regulation 1.409A-1(b)(4) (Short-Term Deferrals). However, notwithstanding anything to the contrary in the Agreement, if Executive is deemed by the Company at the time of Executive’s separation from service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under the Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s separation from service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.

               (C) To the extent that the Agreement provides for the payment of any tax gross-up and/or any related taxes, costs or expenses, all such payments shall be made by the Company promptly, but in no event later than the end of Executive’s taxable year next following the Executive’s taxable year in which Executive remits the related taxes.

               (D) To the extent applicable, the Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Amendment. Notwithstanding any provision of the Agreement or the Amendment to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to Executive under Section 409A and related Department of Treasury guidance, to the extent permitted under Section 409A, the Company may, to the extent permitted under Section 409A (i) cooperate in good faith to adopt such amendments to the Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that they determine necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Agreement, preserve the economic benefits of the Agreement and avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions as mutually determined necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under such section.”

          1.4 Termination of Executive After a Change of Control. The first sentence of Section 6.3 of the Agreement shall be amended and restated in its entirety to read as follows:

2

<hr

 

          “Notwithstanding Section 6.2, if Executive would otherwise have been entitled to benefits pursuant to Section 6.2 but his involuntary termination of employment without Cause by the Company occurs on or within eighteen (18) months after a Change of Control, or if Executive terminates his employment with the Company for Good Reason during such period, Executive shall be paid in lieu of the severance pay benefit described in Section 6.2 a Change of Control severance pay benefit equal to two and one-half (2.5) times Executive’s then-current annual base salary plus two and one-half (2.5) times the greatest of (a) the target bonus for the year preceding the year in which Executive’s termination occurs, (b) the actual bonus for such prior year, or (c) the target bonus for the year in which the termination of employment occurs.”

     2. Other Terms and Conditions. Except as set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the Effective Date.

 

 

 

 

 

 

EXECUTIVE 

 

THORATEC CORPORATION
 

 

/s/ Gerhard F. Burbach

 

By:  

/s/ Neil F. Dimick  

 

Gerhard F. Burbach

 

 

Name:  

Neil F. Dimick 

 

 

 

 

Title:  

Chairman of the Board 

 

 

3