Exhibit 10.1

FIRST AMENDMENT

TO

EXECUTIVE EMPLOYMENT AGREEMENT

This First Amendment to Executive Employment Agreement, dated effective as of
January __, 2009 (the “First Amendment”), amends that certain Executive
Employment Agreement dated effective as of January 1, 2009 (the “Original
Agreement”), by and between Northstar Neuroscience, Inc. (“Northstar”) and Brian
Dow (“Employee”), and is entered into by and between Northstar and Employee. All
capitalized terms used in this First Amendment, but not defined herein, shall
have the meanings given to them in the Original Agreement.

RECITALS

A. The Board of Directors of Northstar (the “Board”) has approved a Plan of
Complete Liquidation and Dissolution (the “Plan”) and in furtherance thereof
Northstar will terminate the employment of most of its employees on or about
January 31, 2009.

B. Northstar desires to retain the services of Employee to assist Northstar in
administering and implementing the Plan and all operational aspects related to
the Plan and the operation of Northstar pending and following shareholder
approval of the Plan, including but not limited to assisting Northstar in
preparing for the shareholder meeting to approve the Plan, continuing to assist
Northstar in complying with its public company reporting obligations, winding
down the operations of Northstar, assisting in the sale of Northstar’s assets
and distributions to shareholders following shareholder approval of the Plan.

C. If Employee were terminated without Cause on January 31, 2009, Employee would
be entitled under the Original Agreement to receive, among other things, full
acceleration of all stock options and other equity awards granted between
April 1, 2008 and January 15, 2009.

D. Northstar desires to incent Employee to remain employed by Northstar through
at least the end of the third quarter of 2009 to assist Northstar in the manner
described above.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

1. Amendment to Section 7. There is hereby added a new Section 7.6 to the
Original Agreement to read in its entirety as follows:

“7.6 Retention Bonus. If Employee (a) does not voluntarily terminate his
employment with Northstar prior to the earlier of (1) the date mutually agreed
by Northstar and Employee, and (2) September 30, 2009 (the “Termination Date”),
(b) is not terminated for Cause by Northstar prior to the Termination Date, and
(c) achieves the milestones described on the attached Exhibit A, for which
Employee is hereby directed and authorized to complete, pending shareholder
approval for those milestones dependent on obtaining shareholder approval, on or
prior to the Termination Date, then:

(i) Employee will receive a lump sum cash bonus payment equal to $75,000,
payable within five (5) days following the Termination Date; and

 

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(ii) on the Termination Date, or such other date as mutually agreed by Northstar
and Employee, Northstar will terminate Employee’s employment without Cause and
will treat such termination as (A) a termination without Cause prior to a Change
in Control under Section 7.3 of the Original Agreement, if Northstar has not
filed Articles of Dissolution under the Plan as of such date of termination, or
(B) a termination without Cause following a Change in Control under Section 7.4
of the Original Agreement, if Northstar has filed Articles of Dissolution under
the Plan as of such date of termination, and in each case will accord Employee
all rights to which he is entitled under Section 7.3 or 7.4 of the Original
Agreement, as applicable.”

2. Amendment to Section 13. Section 13 of the Original Agreement is hereby
amended and restated in its entirety to read as follows:

“13. Entire Agreement. This Agreement, together with the First Amendment to
Executive Employment Agreement dated January __, 2009, including the
Confidentiality Agreement incorporated herein by reference, the Restricted Stock
Grant Agreement, the 2006 Plan, the Northstar 1999 Stock Option Plan and related
option and other equity award documents in place at the time of this signing,
constitutes the entire agreement between the parties relating to this subject
matter and supersedes all prior or simultaneous representations, discussions,
negotiations, and agreements, whether written or oral, including the Severance
Program for Director Level Employees (July 2008) dated July 28, 2008 (except
that the 2008 revised bonus target total of $18,000 referenced therein shall
survive). This Agreement may be amended or modified only by a supplemental
written agreement signed by Employee and an authorized representative of
Northstar. No oral waiver, amendment or modification will be effective under any
circumstances whatsoever.”

3. Acceleration of Vesting. In consideration of Employee’s execution of this
First Amendment, effective as of January 31, 2009 Northstar hereby agrees to
accelerate (A) in full the vesting of all then-unvested shares subject to stock
options and other equity awards that were granted by Northstar to Employee
between April 1, 2008 and January 15, 2009 and (B) the vesting of all other
stock options held by Employee as of January 31, 2009 by an additional 12
months.

4. Effect of Amendment. Except as amended by this First Amendment, the terms of
the Original Agreement remain in full force and effect.

5. Counterparts. This First Amendment may be executed in two counterparts, each
of which shall be deemed an original but both of which together shall constitute
one and the same instrument.

The parties have executed this First Amendment effective as of the date and year
first written above.

 

NORTHSTAR NEUROSCIENCE, INC.     Brian Dow By:         By:     Name:          
Title:          

 

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