SEPARATION AGREEMENT

Exhibit 10.1

SEPARATION AGREEMENT

Separation Agreement, dated September 12, 2007, between Jane Reedy (“Employee”), HeartWare, Inc., a Delaware corporation (the “ Company ”), and, as to Sections 2, 6, 7, and 9 only, HeartWare Limited, an Australian corporation (the “ Parent ”).

RECITALS

A.       Employee is currently employed by the Company as the Vice President of Sales and Marketing, pursuant to an Employment Agreement, dated as of April 14, 2005, between Employee and the Company, as amended by letter agreement dated November 13, 2006 (as so amended, the “Employment Agreement”).

B.        The Company and Employee desire to enter into this Agreement to set forth the agreement of the parties regarding Employee’s resignation from the Company, effective December 31, 2007 (the “ Resignation Date ”).

C.        The Company has delivered an initial draft of this Agreement to Employee. Following the execution and delivery of this Agreement, Employee understands that she will have seven (7) days to rescind the Agreement, should she so choose.

Now, Therefore , in consideration of the promises, representations, warranties and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.  Resignation; Compensation and Expense Reimbursements .

1.1 Resignation . Employee shall resign from all positions with the Company, effective as of the Resignation Date. Until the Resignation Date, Employee shall continue to be employed by the Company with her current title of Vice President of Sales and Marketing and will continue to receive or accrue all her current compensation and benefits during that period.

1.2 Compensation . The Company irrevocably agrees to cause its payroll service to pay Employee the aggregate sum of $220,000.00, less applicable withholding, which shall not be at a higher percentage than currently being withheld for such payments, (the “ Severance Payment ”), representing twelve (12) months of Employee’s base salary, commencing in January 2008, provided that Employee has not revoked her acceptance of this Agreement pursuant to Section 10. The Severance Payment shall be made bi-weekly in accordance with the Company’s normal payroll policy, over the twelve (12) month period following the Resignation Date.

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2.  Stock Options . On or about the date of the Employment Agreement, Employee was granted options to purchase an aggregate of 1,146,306 ordinary shares of the Parent (the “Option Shares”) under the Parent’s Employee Stock Option Plan (the “ESOP”), at an exercise price of AU$0.50 per share, subject to certain vesting requirements. Of such grant, 50% of such Option Shares, equal to 573,153 Option Shares, are vested and exercisable (the “Vested Options”). Pursuant to the terms of the ESOP, the Vested Options shall remain exercisable until the close of business on January 31, 2008, a period of 30 days following the Resignation Date. Thereafter, the Vested Options shall expire according to their terms and be of no further force or effect. Employee shall receive separate documentation from the Company’s Human Resources Department regarding the procedure for exercising the Vested Options.

3.  Insurance . Employee’s coverage for insurance under the Company’s health insurance plan will remain in place to and including the Resignation Date. If Employee wishes to continue the coverage after the Resignation Date, she will be obligated to pay the full amount of the premiums for such insurance (including any incremental expenses in connection with pre-existing conditions and increases in premiums as permitted or required under COBRA). A separate notice under COBRA will be sent to Employee from the Company’s Human Resources Department regarding insurance.

4.  Return of Company Property . On the Resignation Date, Employee will return to the Company all credit cards issued to her, and any other property of the Company in her possession. Employee will remain responsible for any personal charges made to her Company credit card, and any other monies owed to the Company.

5.  Confidentiality .

5.1 Proprietary Information Agreement . Employee agrees that she will remain bound by her existing Proprietary Information, Confidentiality and Inventions Assignment with the Company (the “Proprietary Information Agreement”) in accordance with its terms; such Agreement shall survive the execution of this Agreement and the Resignation Date, in accordance with its terms, and the releases granted hereunder shall not release Employee from any obligations thereunder. A copy of the Proprietary Information Agreement is attached hereto as Exhibit A , and is incorporated herein by reference.

5.2 Return of Property . Employee irrevocably agrees that on the Resignation Date, she will return to the Company all documents, reports, written and electronic files, memoranda, records, manuals, data or other materials that Employee received, prepared or helped prepare in connection with her employment with the Company, and all other Company property.

6.  Non-Disparagement .

6.1 Reference Requests . In response to any inquiries or reference requests to the Company by any person in any capacity concerning matters relating to Employee’s employment with the Company, the parties agree to direct such requests to Douglas Godshall, the Company’s Chief Executive Officer. Mr. Godshall may disclose Employee’s job description, title, period of employment and compensation and nothing else, except that he shall state that Employee’s separation was voluntary and shall confirm her status as the Vice President of Sales and Marketing of the Company during the period prior to the Resignation Date.

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6.2 Non-Disparagement . Employee shall not take any action intended to damage or disparage the Company or the Parent, or their respective products and services, affiliates, officers, directors, stockholders, agents, employees or representatives. Neither the Company nor the Parent will take any action intended to damage or disparage Employee and each shall use its commercially reasonable efforts to prevent its affiliates, officers, directors, stockholders, agents, employees and representatives from damaging or disparaging Employee.

7.  Release of Claims .

7.1 Employee Release . Employee hereby releases (the “ Employee Release ”) each of the Company, its past and present officers, directors, stockholders, employees and agents, and the Parent, any subsidiary or other affiliated entity and their respective past and present officers, directors, trustees, stockholders, employees and agents, and each of their respective heirs, distributees and personal and legal representatives (all of the foregoing, including the Company, being referred to as the “ Company Released Parties ”) from all claims, demands or causes of action that Employee may now have, or has ever had, whether known or unknown, either at law, in equity, or mixed (“ Claims ”), against any of the Company Released Parties up to the date of execution of this agreement, except as provided in the last two sentences of this Section 7.1. Without limiting the generality of the foregoing, Employee also specifically releases each of the Company Released Parties from any and all claims, demands and causes of action that have been or could have been asserted as a result of Employee’s employment with the Company, separation from employment or other status with the Company, including but not limited to all wrongful discharge claims; all claims relating to any contracts of employment (other than this Agreement), express or implied; any covenant of good faith and fair dealing, express or implied; any tort of any nature; any claims relating to harassment or discrimination of any sort, any claims arising out of any federal, state or municipal statute or ordinance; any claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination In Employment Act of 1967, as amended, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, as amended, the Federal Rehabilitation Act of 1973, the Americans with Disabilities Act of 1992, any claim under the California Fair Employment and Housing Act, the California Labor Code, the California Family Rights Act or at common law, and similar provisions under the laws of any other State, and any other laws or regulations relating to employment, discrimination, retaliation or civil rights and any and all claims for attorneys’ fees and costs. In addition, and not in limitation of the foregoing, Employee hereby forever releases and discharges each of the Company Released Parties from any liability or obligation to reinstate or reemploy her in any capacity following the Resignation Date. Employee further agree that, on the Resignation Date, she will execute and deliver to the Company a second General Release in the form attached hereto as Exhibit B , releasing the Company from any claims arising between the date of execution of this agreement and the Resignation Date. Notwithstanding anything to the contrary contained in this Section 7.1, Employee does not intend to release, and this Agreement shall not be construed as releasing, (i) any unperformed obligations of the Company arising pursuant to this Agreement, (ii) any indemnification obligations that the Company may have with respect to claims, demands and causes of actions by third parties that may arise from Employee’s permitted actions as an officer of the Company while she was employed by the Company, (iii) any claims arising during the period between the date of execution of this agreement and the Resignation Date and (iv) any claims for workers compensation benefits arising under the applicable state or federal law. This General Release shall be construed as broadly as possible under applicable law but shall not include any claim for indemnification under California Labor Code Section 2802 or California Corporations Code Section 317 or any other claim the release of which would violate California or federal statutory law or the public policy of the State of California.

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7.2 Company Release . The Company releases Employee from all claims, demands and causes of action that it now has or has ever had against her, but expressly excluding from this release any obligations of Employee to the Company imposed by the express terms of this Agreement or the Proprietary Information Agreement. The Company further agrees that, on the Resignation Date, it will execute and deliver to Employee a second General Release in the form attached hereto as Exhibit C , releasing her from any claims arising between the date of execution of this agreement and the Resignation Date.

7.3 Waiver of Section 1542 . The parties also expressly waive any and all rights and benefits conferred under the terms 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 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.”

8.  Covenant Not to Sue . Employee represents and warrants that she has not filed any complaints, charges or claims for relief against any of the Company Released Parties with any local, state or federal court, administrative body or adjudicative body. Employee and the Company further agree and covenant not to sue, bring any claims or charges against or commence any legal action against each other, or, with regard to Employee, any of the Company Released Parties, with respect to any matters arising out of or relating to Employee’s employment with or separation from the Company, except as to claims arising out of the terms and conditions of this Agreement or as described in the last two sentences of Section 7.1, above. Nothing in this release of claims shall be construed as prohibiting Employee from making a future claim with the Equal Employment Opportunity Commission or any similar state agency including, but not limited, to the California Department of Fair Employment and Housing, provided, however , that should Employee pursue such an administrative action against the Company Released Parties, Employee agrees and acknowledges that she will not seek, nor shall she be entitled to recover, any monetary damages from any such proceeding.

9.  Confidentiality of this Agreement . The parties covenant and agree that they shall keep the terms of this Agreement completely confidential and that they shall not disclose the terms of this Agreement to anyone except:

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No disclosures will be made pursuant to subparagraph (a), (b) or (c) above unless the disclosing party takes reasonable precautions to ensure that the confidentiality of this Agreement and its terms are maintained by the individuals to whom it is disclosed.

10.  No Further Amounts Owed . Employee acknowledges and agrees that the Company’s promises, paym