EX-10.3






Exhibit 10.3




RETENTION BONUS AGREEMENT




     This agreement is dated February 12, 2009, and is between HEARTWARE, INC., a Delaware
corporation (the “Company,” “us,” “we,” or “our”), and Jeffrey La Rose (“you” or “your”).



     The Board of Directors of the Company (the “Board”) considers it essential to foster the
continued employment of key executives. The Board believes it is in the best interests of the
Company, HeartWare International, Inc., a Delaware corporation that is the ultimate parent
corporation of the Company (the “Parent”), and the Parent’s stockholders to have your continued
dedication, notwithstanding the possibility, threat, or occurrence of a change in control of the
Parent and/or the Company.



     On the date hereof, the Parent has entered into an Agreement and Plan of Merger with Thoratec
Corporation, a California corporation (“Thoratec”), Thomas Merger Sub I, Inc., a Delaware
corporation and wholly owned subsidiary of Thoratec, and Thomas Merger Sub II, Inc., a Delaware
corporation and direct wholly owned subsidiary of Thoratec (the “Merger Agreement”).



     Consequently, in consideration of the mutual covenants contained in this agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:



     1. Separation Benefits Agreement. It is currently anticipated that you will be entering into
a separation benefits agreement (the “Separation Benefits Agreement”), to be effective upon the
Closing (as defined in the Merger Agreement).



     2. Retention Bonus.



          (a) Vesting and Payment. Subject to the provisions of this section 2, you shall be
paid by the Company a cash retention bonus in the aggregate amount of $1,700,000 (the “Retention
Bonus”). Such Retention Bonus shall vest in two equal installments of $850, 000 (each, a
“Retention Bonus Installment”) on (i) the Closing and (ii) the first anniversary of the Closing;
provided that in the case of each such Retention Bonus Installment (except as accelerated
vesting may occur pursuant to section 2(b) or 3 below) you remain continuously
employed through the relevant vesting date. Once vested, a Retention Bonus Installment shall be
paid to you within five (5) days following the relevant vesting date.




          (b) Effect of Termination or Resignation. In the event we terminate your employment for Cause
(as defined in the Separation Benefits Agreement) or you resign without Good Reason (as defined in
the Separation Benefits Agreement), any Retention Bonus Installment that has not vested as of the
date of such termination or resignation shall be forfeited, and any vested but unpaid Retention
Bonus Installment shall be paid promptly in accordance with section 2(a). In the event (i)
we terminate your employment without Cause or (ii) you resign for Good Reason, any then unvested
Retention Bonus Installment shall vest in full and be paid within sixty (60) days following such
termination or resignation, subject to you signing, returning to the Company within fifty (50)
days, and not revoking a general release of claims, in form and substance reasonably acceptable to
the Company, and any vested but unpaid Retention Bonus Installment shall be paid promptly in
accordance with section 2(a). You acknowledge and agree that any changes from your current
employment with the Company to your employment with the Company or Thoratec immediately after the
Closing shall not be deemed an occurrence of Good Reason.




     3. Death; Disability. If your employment terminates by reason of death or disability, any
then unvested Retention Bonus Installments shall vest and be paid within (5) days following such



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termination of employment by reason of death or disability, and any vested but unpaid
Retention Bonus Installment shall be paid promptly in accordance with section 2(a).



     4. Non-Exclusivity of Payments. Except as otherwise provided in this section 4,
nothing in this agreement prevents or limits your continuing or future participation in any Company
benefit plan, policy, or practice for which you may qualify; nor does anything in this agreement
limit or affect any right that you may have under that plan, policy, or practice, or under the
Separation Benefits Agreement.



     5 Limitation on Payments and Benefits.



          (a) Tax Liability. You shall bear all expense of, and be solely responsible for, all federal,
state, local, or non-U.S. taxes due with respect to any payment received under this agreement,
including, without limitation, any excise tax imposed by section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”).




          (b) Modified Cut-Back Rule. Notwithstanding anything to the contrary in this agreement, if
any payment to be made under this agreement, together with any other payment or benefit that you
have the right to receive from us or from any entity that is a member of an “affiliated group” (as
defined under Code section 1504(a) without regard to Code section 1504(b)) of which we are a member
(together with the Retention Bonus, the “Total Payments”), constitutes an “excess parachute
payment” (as defined under Code section 280G(b)), the Total Payments will be reduced to the extent
necessary to prevent any portion of the Total Payments from becoming nondeductible by the Company
under Code section 280G or subject to the excise tax imposed under Code section 4999 but only if,
by reason of such reduction, the net after-tax benefit received by you will exceed the net
after-tax benefit that you would receive if no such reduction was made. For this purpose, “net
after-tax benefit” means (i) the total of all payments and the value of all benefits which you
receive or are then entitled to receive from the Company that would constitute “excess parachute
payments” within the meaning of Code section 280G, less (ii) the amount of all federal, state, and
local income taxes payable with respect to the foregoing calculated at the maximum marginal income
tax rate for each year in which the foregoing shall be paid to you (based on the rate in effect for
such year as set forth in the Code as in effect at the time of the first payment of the foregoing),
less (iii) the amount of excise taxes imposed by Code section 4999 with respect to the payments and
benefits described in clause (i) above.




          (c) Determination Process. The determination of whether it is necessary to decrease a payment
or benefit to be paid under this agreement must be made in good faith by a nationally recognized
accounting firm (the “Accounting Firm”) selected by the Company. This determination will be
conclusive and binding upon you and the Company. In the event that the Accounting Firm is serving
as accountant or auditor for the individual, entity, or group effecting the transaction giving rise
to the characterization of any payments as “parachute payments,” we shall appoint another
nationally recognized accounting firm to make the determination required under this agreement (in
which case, that accounting firm will be referred to as the “Accounting Firm” under this
agreement). We shall bear all fees of the Accounting Firm. If a reduction is necessary, the
Company shall first reduce the Retention Bonus to the fullest extent necessary, and second reduce
any other payment or benefit in the Company’s discretion as may be necessary, so that after such
reductions no portion of any payment or benefit to be paid to you will be an excess parachute
payment subject to the deduction limits under Code section 280G and the excise tax under Code
section 4999. However, no payment of “deferred compensation” (as defined under Treasury regulation
section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury regulation sections
1.409A-1(b)(3) through (b)(12)) may be reduced to the extent that a reduction can be made to any
payment or benefit that is not “deferred compensation.”




     6. Section 409A Compliance.



          (a) This agreement is intended to comply with, or otherwise be exempt from, Code section 409A.




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          (b) We shall undertake to administer, interpret, and construe this agreement in a manner that
does not result in the imposition on you of any additional tax, penalty, or interest under Code
section 409A.




          (c) If the Company determines in good faith that any provision of this agreement would cause
you to incur an additional tax, penalty, or interest under Code section 409A, the Company and you
shall use reasonable efforts to reform such provision, if possible, in a mutually agreeable fashion
to maintain to the maximum extent practicable the original intent of the applicable provision
without violating the provisions of Code section 409A or causing the imposition of such additional
tax, penalty, or interest under Code section 409A.




          (d) The preceding provisions, however, will not be construed as a guarantee by the Company of
any particular tax effect to you under this agreement. We shall not be liable to you for any
payment or benefit paid under this agreement that is determined to result in an additional tax,
penalty, or interest under Code section 409A, nor for reporting in good faith any payment or
benefit made under this agreement as an amount includible in gross income under Code section 409A.




          (e) “Termination of employment,” or words of similar import, as used in this agreement means,
for purposes of any payments under this agreement that are payments of deferred compensation
subject to Code section 409A, your “separation from service” as defined in Code section 409A.




          (f) If a payment obligation under this agreement arises on account of your separation from
service while you are a “specified employee” (as defined under Code section 409A and determined in
good faith by the Board), any payment of “deferred compensation” (as defined under Treasury
regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury regulation
sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such
separation from service (the “Delayed Payment”) shall, in lieu thereof, be paid, as adjusted for
earnings or losses thereon, within 15 days after the end of the six-month period beginning on the
date of such separation from service or, if earlier, within 15 days after the appointment of the
personal representative or executor of your estate following your death. In the event that the
provisions of this section 6(f) shall apply to any payment obligation under this agreement,
the Company shall make an irrevocable contribution of an amount equal to the Delayed Payment to a
grantor trust established consistent with the terms of Revenue Procedure 92-64, 33 I.R.B. 11
(8/17/92) (the “Rabbi Trust”) with a financial institution approved by you, which approval will not
be withheld unreasonably, serving as the third-party trustee thereof, under the terms of which the
assets of the trust may be used, in the absence of the Company’s insolvency, solely for purposes of
fulfilling the Company’s obligation to pay the Delayed Payment to you in compliance with Section
409A(a)(2)(B)(i) of the Code, to the extent permitted under Code section 409A. The Company’s
obligation to make the contribution to the Rabbi Trust under the immediately preceding sentence
shall arise on the date of the relevant separation from service and such contribution shall be made
by no later than the tenth business day (excluding federal holidays) after such date. You shall be
permitted to direct the trustee how to invest the trust assets held on your behalf.




     7. Successors. This agreement is personal to you and may not be assigned other than by will
or the laws of descent and distribution without our prior written consent. This agreement inures
to the benefit of and is enforceable by your representatives. Likewise, this agreement inures to
the benefit of and is binding upon the Company and its successors and assigns. The Company shall
require any successor entity (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the Company expressly to
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
this agreement, the term “Company” shall mean both the Company as defined above and any such
successor entity.



     8. Notices. All notices and other communications hereunder must be in writing and must be
given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:



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     If to the employee:

     To the Company’s address of record for the employee.




     If to the Company:

     HEARTWARE, INC.

     Attention: Secretary

     205 Newbury Street

     Framingham, Massachusetts 01701



or to any other address as either party shall have furnished to the other in writing in accordance
with this section 8. Notice is effective when actually received by the addressee.




     9. Severability. The invalidity or unenforceability of any provision of this agreement will
not affect the validity or enforceability of any other provision of this agreement.



     10. Withholding. We may withhold from any amount payable under this agreement federal, state,
local, or non-U.S. taxes required to be withheld under applicable law.



     11. Amendment; Waiver. Except as provided in section 14 below, no provision of this
agreement may be modified, waived, or discharged except by a writing signed by both parties. The
failure of either party to insist upon strict compliance with any provision of this agreement or
assert any right either party may have hereunder does not constitute a waiver of the provision or
right under this agreement.



     12. Applicable Law. This agreement is governed in all respects, including as to validity,
interpretation, and effect, by the laws of the State of Florida, without regard to its conflict of
laws principles.



     13. Termination or Modification of Agreement. This agreement may not be modified on and after
the consummation of the transactions contemplated under the Merger Agreement without your written
consent.



     14. Counterparts. This agreement may be executed in two or more counterparts and via
facsimile, each being an original and all of which, when taken together, is deemed one instrument.



[Signature page follows]




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     The parties are signing this Retention Bonus Agreement on the date stated in the introductory
clause.



	 	 	 	 	 
	 	 	HEARTWARE, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Douglas E. Godshall
	 

	 	 	 	 
	 

	 	 	 	Name: Douglas E. Godshall

Title: President and Chief Executive Officer
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 

	 	 	 	/s/ Jeffrey A. LaRose
	 

	 	 	 	 
	 

	 	 	 	Name: Jeffrey A. LaRose







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