Amended and Restated Employment
Agreement
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into effective as of
April 23, 2007 (“Effective Date”), by and between
THORATEC CORPORATION, a California corporation (the
“Company”), and Jeffrey Nelson (“Employee”)
and amends and restates an employment agreement between the parties
hereto dated August 15, 2005 (the “Original Employment
Agreement”).
WHEREAS , the Employee has tendered his resignation as a
full time employee and as President of the Company’s
Cardiovascular Division effective May 1, 2007; and
WHEREAS , the Company and Employee desire to amend the
Original Employment Agreement to provide that subsequent to
May 1, 2007, the Employee will continue to work for the
Company on a part time basis until September 30, 2007 unless
such employment is terminated earlier by either of the Employee or
the Company; and
WHEREAS , the Company and Employee each desire to make
certain amendments and changes to the Original Employment Agreement
to be reflected in this Agreement to reflect the aforementioned
intentions of the parties.
NOW THEREFORE , in consideration of the mutual covenants and
promises hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee hereby agree as
follows:
THE
PARTIES AGREE AS FOLLOWS:
1.
Part Time Employment; Position and Duties .
1.1
Title . The parties hereby acknowledge and agree that
Employee has resigned from his position as President,
Cardiovascular Division, as an officer of the Company and as a full
time employee of the Company effective as of May 1, 2007 (the
“Status Change Date”). For the period commencing on the
Status Change Date and continuing through September 30, 2007
or the earlier termination of Employee’s employment with the
Company pursuant to this Agreement (the “Part Time
Employment Period”), Employee shall be continue to be
employed by the Company on a part time basis, with the title of
Special Consultant on the terms and conditions described in this
Agreement. If there is any conflict between this Agreement and any
written Company policy, this Agreement shall control.
1.2
Duties . Employee agrees that he shall perform, to the best
of his ability, the employment duties assigned to him by the Chief
Executive Officer, and shall devote the appropriate time and
attention hereunder to the business and affairs of the Company
while employed pursuant to this Agreement. During the
Part Time Employment Period, Employee shall continue to report
to the Chief Executive Officer of the Company. During the
Part Time Employment Period, Employee’s primary duties
will be to assist the Chief Executive Officer, as
may be
requested by him, to transition Employee’s former duties as
President, Cardiovascular Division and to generally support the
business and regulatory activities of the Cardiovascular Division
of the Company. Employee shall be available to provide consultation
to the Chief Executive Officer, for up to twenty (20) hours
per week during the Part Time Employment Period. Employee
will, at the specific request of the Chief Executive Officer, be
available to perform such services at the Company’s
Pleasanton, California headquarters on an as needed basis. Such
travel to Pleasanton shall be at mutually agreed upon times. All
reasonable travel expenses incurred by Employee during the
Part Time Employment Period shall be reimbursed by the Company
in accordance with Company policy.
2.1
Base Salary . Effective as of the Status Change Date,
Employee’s salary shall be reduced to Five Thousand Eight
Hundred Sixty-Five Dollars and Thirty-Eight Cents ($5,865.38) paid
bi-weekly, which is the equivalent to $152,500 on an annualized
basis.
2.2
Annual Target Bonus . For the avoidance of doubt, Employee
shall immediately cease participation in the Company’s
Executive Incentive Plan for the Cardiovascular business.
Notwithstanding the foregoing, if Employee is still employed by the
Company pursuant to this Agreement on June 1, 2007, then
effective as of the termination of Employee’s employment by
the Company for whatever reason at any time thereafter, Employee
shall receive a 2007 bonus in the amount of Seventy One Thousand
One Hundred Sixty Seven Dollars ($71,167) less all applicable
withholdings. Such amount shall be payable in compliance with
Section 10 below in a cash lump sum as soon as reasonably
practicable (as provided by law) after the Employee’s
termination of employment and after the Employee 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 and the ECII
Agreement.
2.3
Stock Options . Stock options must be exercised within the
time period specified in the applicable stock option or restricted
stock agreements and the applicable Company stock option or
incentive stock plans, which is typically ninety (90) days
from termination of employment hereunder. All grants of stock
options and restricted stock will continue to vest in accordance
with their existing terms until the expiration of the
Part Time Employment Period.
3.1
Benefits Generally . During the Part Time Employment
Period, Employee shall be eligible to continue 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.
4.1
Other Affiliations . Employee 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) engaged in the manufacturing, selling or marketing of
(i) devices
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used for or in
connection with cardiovascular mechanical circulatory support and
(ii) point of care diagnostic products or tests, during the
term of Employee’s employment under this Agreement (including
during the Part Time Employment Period), unless Employee has
received prior written approval to do so from the Chief Executive
Officer.
4.2
Conflict of Interest . Employee warrants that
(a) Employee is not obligated under any other employment,
consulting, or other agreement which would affect the
Company’s rights or Employee’s duties under this
Agreement, and (b) this Agreement is not in conflict with
Employee’s commitments to any party. For the avoidance of
doubt, any agreement to work for a third party on a full time basis
shall be considered a conflict of interest under this Agreement and
shall be grounds for termination for Cause.
5.
Confidentiality . Employee warrants that he is obligated
under the Company Employee Confidential Information and Inventions
Agreement between the Company and Employee attached as
Exhibit A hereto (the “ECII Agreement”) and
he shall continue to be so obligated through the end of the
Part Time Employment Period.
6.
Term . This Agreement shall continue until the end of the
Part Time Employment Period, unless extended or terminated
sooner in accordance with the terms provided herein.
7.1
Employment At Will . For the avoidance of doubt,
Section 7 of the Original Employment Agreement, and the
separation benefits described therein, is hereby deleted in its
entirety and replaced by this Section 7. Employee understands
and agrees that employment with the Company is and continues to be
“at will”, which means that either Employee or the
Company may, subject to the terms of this Agreement, terminate the
employment relationship at any time with or without cause. In
consideration of the continuation of employment provided by this
Agreement, Employee hereby agrees to continue to conform to the
policies of the Company and acknowledges that employment can be
terminated for any reason, with or without cause, at any time with
or without notice at the option of the Company or the Employee.
Failure to comply with company policies will necessitate
disciplinary action, which may include termination of employment.
Employee may terminate his employment for any reason upon
30 days’ written notice to the Company of such
termination. If this Agreement is terminated by the Company for
Cause or by the Employee, Employee shall receive no separation
benefits or other severance benefits of any kind.
7.2
Termination of Employee Without Cause . If the
Employee’s employment is involuntarily terminated by the
Company (other than for Cause), the Employee shall be paid a
standard severance pay benefit equal to the weekly salary to be
paid to Employee pursuant to this Agreement in accordance with
section 2.1 hereinabove, multiplied by the number of weeks
remaining between the effective date of such termination of
employment without Cause and September 30, 2007 (the
“Severance Period”). Such amount shall be payable in
compliance with Section 10 below in a cash lump sum as soon as
reasonably practicable (as provided by law) after the
Employee’s termination of employment and after the Employee
executes and delivers an effective release of claims, in a form
acceptable to the Company and at the time specified by
the
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Company, and
remains in compliance with all applicable restrictive covenants,
including those set forth in this Agreement and the ECII
Agreement.
7.3
COBRA Benefit . If the Employee is entitled to receive
benefits pursuant to Section 7.2, and if the Employee 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, for a
period equal to the number of full months remaining in the
Severance Period, up to a maximum of five months, and to the extent
that in each such month following termination of employment that
the Employee has not become employed by another company which
offers health insurance generally comparable with that of the
Company at the time of Employee’s termination, the Company
shall pay in monthly payments at the beginning of each such month,
an amount equal to the monthly amount paid by the Company
immediately before termination of employment for the
Employee’s health coverage.
7.4
Definitions . For purposes hereof, “Cause” shall
mean (A) the Employee’s material misappropriation of
personal property of the Company (including its subsidiaries) that
is intended to result in a personal financial benefit to the
Employee or to members of the Employee’s family, (B) the
Employee’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) the Employee’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 the Employee’s duties and responsibilities as an
Employee or continued neglect of the Employee’s duties to the
Company (including its subsidiaries), or (D) the
Employee’s continued willful or grossly negligent failure to
comply with the lawful directions of the Company after there has
been delivered to the Employee a written demand for performance
from the Company that describes the basis for its belief that the
Employee has not substantially performed the Employee’s
duties and the Employee fails to cure such act or omission to the
Company’s reasonable satisfaction, if such act or omission is
reasonably capable of being cured, no later than five
(5) business days following delivery of such written demand
.
7.5
Benefits Subject to Execution of Waiver of Claims . Employee
shall not be entitled to receive any amount pursuant to this
Section 7 unless Employee executes a release of claims in a
form acceptable to the Company at the time specified by the Company
and remains in compliance with all provisions of this
Agreement.
8.
Execution of Release of Claims . Notwithstanding anything in
this Agreement to the contrary, this Agreement is being entered
into in consideration for, shall not be effective until, and
Employee shall not be entitled to receive any amount pursuant to
this Agreement until and unless, Employee executes a release of
claims in a form attached hereto as Exhibit B
with respect to the period of Employee’s full time employment
with the Company prior to the Part Time Employment
Period.
9.
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.
Employee agrees and acknowledges that he is and will not be
entitled to any compensation and/or benefits from the Company in
respect of his services as an full time or part
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time employee,
or the termination thereof, other than those items specifically
provided for under this Agreement.
10.
Section 409A Compliance . Notwithstanding anything to
the contrary in this Agreement, if the Company determines that any
payment or benefit to be provided to the Employee 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:
(a) such
payments shall be delayed until the date that is six months after
the date of the Employee’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 the Employee’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, Employee shall be responsible for the
full cost of providing such benefits.
11.
Non-disparagement . Except as required by law or legal
process, Employee agrees not to disparage any aspect of the Company
or its successors or assigns, including but not limited to its
officers, management, employees and products.
12.
Injunctive Relief . Employee acknowledges that damages will
not be an adequate remedy in the event of a breach of any of
Employee’s obligations under Sections 4, 5 or 12 of this
Agreement. Employee 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.
13.
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 the Employee without the prior
written consent of the other party. Any attempted assignment in
contravention of this Section 14 shall be void.
14.
Notice . Any notice or communication under this Agreement
shall be in writing and shall be given by personal delivery,
facsimile or Unites States mail, certified or registere
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