Document:

EX-10.5

Exhibit 10.5

INDEMNIFICATION AGREEMENT

          AGREEMENT, dated as of ___, 2009, by and between ABM Industries Incorporated, a
Delaware corporation (the “Company”), and [___] (the “Indemnitee”).

          WHEREAS, it is essential to the Company to retain and attract as directors and officers the
most capable persons available;

          WHEREAS, the Indemnitee is a director and/or officer of the Company;

          WHEREAS, the Company and the Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors and officers of companies in today’s environment;

          WHEREAS, basic protection against undue risk of personal liability of directors and officers
heretofore has been provided through insurance coverage providing reasonable protection at
reasonable cost, and the Indemnitee has relied on the availability of such coverage; but as a
result of substantial changes in the marketplace for such insurance it has become increasingly
difficult to obtain such insurance on terms providing reasonable protection at reasonable cost;

          WHEREAS, the Company’s By-Laws, as amended (the “By-Laws”), require the Company to
indemnify and advance expenses to its directors and officers to the extent provided therein, and
the Indemnitee serves as a director and/or officer of the Company, in part, in reliance on such
provisions in the By-Laws;

          WHEREAS, the current difficulty in obtaining adequate director and officer liability insurance
coverage at a reasonable cost, and uncertainties as to the availability of indemnification created
by recent court decisions, have increased the risk that the Company will be unable to retain and
attract as directors and officers the most capable persons available;

          WHEREAS, the Company has determined that its inability to retain and attract as directors and
officers the most capable persons would be detrimental to the interests of the Company, and that
Company therefore should seek to assure such persons that indemnification and insurance coverage
will be available in the future; and

          WHEREAS, in recognition of the Indemnitee’s need for substantial protection against personal
liability in order to enhance the Indemnitee’s continued service to the Company in an effective
manner, the increasing difficulty in obtaining satisfactory director and officer liability
insurance coverage, and the Indemnitee’s reliance on the By-Laws, and in part to provide the
Indemnitee with specific contractual assurance that the protection promised by the By-Laws will be
available to the Indemnitee (regardless of, among other things, any amendment to or revocation of
the applicable provisions of the By-Laws or any change in the composition of the Company’s Board of
Directors or acquisition transaction relating to the Company), the Company wishes to provide in
this Agreement for the indemnification of and the advancing of expenses to the Indemnitee to the
fullest extent (whether partial or complete) permitted by law and as set

 

 

forth in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of the Indemnitee under the directors’ and officers’ liability insurance policy of the
Company.

          NOW, THEREFORE, in consideration of the premises and of the Indemnitee continuing to serve the
Company directly or, at its request, as an officer, director, manager, member, partner, tax matters
partner, fiduciary or trustee of, or in any other capacity with, another Person (as defined below)
or any employee benefit plan, and intending to be legally bound hereby, the parties hereto agree as
follows:

     1. Certain Definitions. In addition to terms defined elsewhere herein, the following
terms have the following meanings when used in this Agreement:

	 	(a)	 	Agreement: shall mean this Indemnification Agreement,
as amended from time to time hereafter.
	 
	 	(b)	 	Board of Directors: shall mean the Board of Directors
of the Company.
	 
	 	(c)	 	Claim: means any threatened, asserted, pending or
completed civil, criminal, administrative, investigative or other action, suit
or proceeding of any kind whatsoever, or any appeal of any kind thereof, or any
inquiry or investigation, whether instituted by the Company, any governmental
agency or any other party, that the Indemnitee in good faith believes might
lead to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, including any arbitration or
other alternative dispute resolution mechanism.
	 
	 	(d)	 	Indemnifiable Expenses: means (i) all expenses and
liabilities, including judgments, fines, penalties, interest, amounts paid in
settlement with the approval of the Company, and counsel fees and disbursements
(including, without limitation, experts’ fees, court costs, retainers,
transcript fees, duplicating, printing and binding costs, as well as
telecommunications, postage and courier charges) paid or incurred in connection
with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to investigate, defend, be a witness in or
participate in, (including on appeal), any Claim relating to any Indemnifiable
Event, and (ii) any liabilities which an Indemnitee incurs as a result of
acting on behalf of the Company (whether as a fiduciary or otherwise) in
connection with the operation, administration or maintenance of an employee
benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the United States
Internal Revenue Service, penalties assessed by the Department of Labor,
restitutions to such a plan or trust or other funding mechanism or to a
participant or beneficiary of such plan, trust or other funding mechanism, or
otherwise).
	 
	 	(e)	 	Indemnifiable Event: means any act or omission,
whether occurring before, on or after the date of this Agreement, arising from
the

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	 	 	 	performance of the Indemnitee’s duties or obligations to the Company or any
of its subsidiaries, including in connection with any civil, criminal,
administrative, investigative or other action, suit or proceeding to which
the Indemnitee may hereafter be made a party by reason of being or having
been an officer, director, manager, member, partner, tax matters partner,
fiduciary or trustee of, or having served in any other capacity with,
another Person or any employee benefit plan at the request of the Company.

	 	(f)	 	Person: means any individual, corporation, firm,
partnership, joint venture, limited liability company, estate, trust, business
association, organization, governmental entity or other entity.

     2. Basic Indemnification Arrangement; Advancement of Expenses.

          (a) In the event that the Indemnitee was, is or becomes subject to, a party to or witness or
other participant in, or is threatened to be made subject to, a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify the Indemnitee, or cause such Indemnitee to be indemnified, to the fullest
extent permitted by Delaware law in effect on the date hereof and as amended from time to time;
provided, however, that no change in Delaware law shall have the effect of reducing
the benefits available to the Indemnitee hereunder based on Delaware law as in effect on the date
hereof or as such benefits may improve as a result of amendments after the date hereof. The rights
of the Indemnitee provided in this Section 2 shall include, without limitation, the rights set
forth in the other sections of this Agreement. Payments of Indemnifiable Expenses shall be made as
soon as practicable but in any event no later than thirty (30) days after written demand is
presented to the Company.

          (b) If so requested by the Indemnitee, the Company shall advance, or cause to be advanced
(within two business days of such request), any and all Indemnifiable Expenses incurred by the
Indemnitee (an “Expense Advance”). The Company shall, in accordance with such request (but
without duplication), either (i) pay, or cause to be paid, such Indemnifiable Expenses on behalf of
the Indemnitee, or (ii) reimburse, or cause the reimbursement of, the Indemnitee for such
Indemnifiable Expenses. The Indemnitee’s right to an Expense Advance is absolute and shall not be
subject to any condition that the Board of Directors shall not have determined that the Indemnitee
is not entitled to be indemnified under applicable law. However, the obligation of the Company to
make an Expense Advance pursuant to this Section 2(b) shall be subject to the condition that, if,
when and to the extent that a final judicial determination is made (as to which all rights of
appeal therefrom have been exhausted or lapsed) that the Indemnitee is not entitled to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed by the Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore paid (it being
understood and agreed that the foregoing agreement by the Indemnitee shall be deemed to satisfy any
requirement that the Indemnitee provide the Company with an undertaking to repay any Expense
Advance if it is ultimately determined that the Indemnitee is not entitled to indemnification under
applicable law). The Indemnitee’s undertaking to repay such Expense Advances shall be unsecured
and interest-free.

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          (c) Notwithstanding anything in this Agreement to the contrary, the Indemnitee shall not be
entitled to indemnification or advancement of Indemnifiable Expenses pursuant to this Agreement in
connection with any Claim initiated by the Indemnitee unless (i) the Company has joined in or the
Board of Directors of the Company has authorized or consented to the initiation of such Claim or
(ii) the Claim is one to enforce the Indemnitee’s rights under this Agreement (including an action
pursued by the Indemnitee to secure a determination that the Indemnitee should be indemnified under
applicable law).

          (d) The indemnification obligations of the Company under Section 2(a) shall be subject to the
condition that the Board of Directors shall not have determined (by majority vote of directors who
are not parties to the applicable Claim) that the indemnification of the Indemnitee is not proper
in the circumstances because the Indemnitee is not entitled to be indemnified under applicable law.
If the Board of Directors determines that the Indemnitee is not entitled to be indemnified in
whole or in part under applicable law, the Indemnitee shall have the right to commence litigation
in any court in the State of Delaware having subject matter jurisdiction thereof and in which
venue is proper, seeking an initial determination by the court or challenging any such
determination by the Board of Directors or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear in any such
proceeding. If the Indemnitee commences legal proceedings in a court of competent jurisdiction to
secure a determination that the Indemnitee should be indemnified under applicable law, any
determination made by the Board of Directors that the Indemnitee is not entitled to be indemnified
under applicable law shall not be binding, the Indemnitee shall continue to be entitled to receive
Expense Advances, and the Indemnitee shall not be required to reimburse the Company for any Expense
Advance, unless and until a final judicial determination is made (as to which all rights of appeal
therefrom have been exhausted or lapsed) that the Indemnitee is not entitled to be so indemnified
under applicable law. Any determination by the Board of Directors otherwise shall be conclusive
and binding on the Company and the Indemnitee.

          (e) To the extent that the Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice, the Indemnitee shall be
indemnified against all Indemnifiable Expenses actually and reasonably incurred in connection
therewith, notwithstanding an earlier determination by the Board of Directors that the Indemnitee
is not entitled to indemnification under applicable law.

     3. Indemnification for Additional Expenses. The Company shall indemnify, or cause the
indemnification of, the Indemnitee against any and all Indemnifiable Expenses and, if requested by
the Indemnitee, shall advance such Indemnifiable Expenses to the Indemnitee subject to and in
accordance with Sections 2(b) and (d), which are incurred by the Indemnitee in connection with any
action brought by the Indemnitee for (i) indemnification or an Expense Advance by the Company under
this Agreement and/or (ii) recovery under any directors’ and officers’ liability insurance policies
maintained by the Company, regardless of whether the Indemnitee ultimately is determined to be
entitled to such indemnification, Expense Advance or insurance recovery, as the case may be.

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     4. Partial Indemnity. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Indemnifiable Expenses in
respect of a Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

     5. Burden of Proof. In connection with any determination by the Board of Directors,
any court or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the
Board of Directors or court shall presume that the Indemnitee has satisfied the applicable standard
of conduct and is entitled to indemnification, and the burden of proof shall be on the Company or
its representative to establish, by clear and convincing evidence, that the Indemnitee is not so
entitled.

     6. Reliance as Safe Harbor. The Indemnitee shall be entitled to indemnification for
any action or omission to act undertaken (i) in good faith reliance upon the records of the
Company, including its financial statements, or upon information, opinions, reports or statements
furnished to the Indemnitee by the officers or employees of the Company or any of its subsidiaries
in the course of their duties, or by committees of the Board of Directors, or by any other Person
as to matters the Indemnitee reasonably believes are within such other Person’s professional or
expert competence, or (ii) on behalf of the Company in furtherance of the interests of the Company
in good faith in reliance upon, and in accordance with, the advice of legal counsel or accountants,
provided such legal counsel or accountants were selected with reasonable care by or on behalf of
the Company. In addition, the knowledge and/or actions, or failures to act, of any director,
officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of
determining the right to indemnity hereunder.

     7. No Other Presumptions. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a
presumption that the Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not permitted by
applicable law. In addition, neither the failure of the Board of Directors to have made a
determination as to whether the Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Board of Directors that the Indemnitee has
not met such standard of conduct or did not have such belief, prior to the commencement of legal
proceedings by the Indemnitee to secure a judicial determination that the Indemnitee should be
indemnified under applicable law shall be a defense to the Indemnitee’s claim or create a
presumption that the Indemnitee has not met any particular standard of conduct or did not have any
particular belief.

     8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition
to any other rights the Indemnitee may have under the By-Laws, the laws of the State of Delaware,
or otherwise. To the extent that a change in Delaware law or the interpretation thereof (whether
by statute or judicial decision) permits greater indemnification by agreement than would be
afforded currently under the By-Laws, it is the intent of the parties hereto that the Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by such change.

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     9. Liability Insurance. To the extent the Company maintains an insurance policy or
policies providing directors’ and officers’ liability insurance, the Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum extent of the
coverage available for the Company directors or officers.

     10. Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or in the right of the Company against the Indemnitee, the Indemnitee’s
spouse, heirs, executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of action of the Company
shall be extinguished and deemed released unless asserted by the timely filing of a legal action
within such two-year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall govern.

     11. Cooperation. During the Indemnitee’s service on the Board of Directors and
thereafter, the Indemnitee shall cooperate with the Company and any Company-affiliated entity in
its or their investigation, defense or prosecution of any potential, current or future legal matter
(including any Claim) in any forum, including, but not limited to, lawsuits, administrative
charges, audits, arbitrations, and internal and external investigations. The Indemnitee’s
cooperation shall include, but shall not be limited to, reviewing and preparing documents and
reports, meeting with attorneys representing the Company or any Company-affiliated entity,
providing truthful testimony, and communicating the Indmenitee’s knowledge of relevant facts to any
attorneys, experts, consultants, investigators, employees or other representatives working on
behalf of the Company or any Company-affiliated entity. Except as required by law, the Indemnitee
agrees to treat all information regarding any such actual or potential investigation or claim as
confidential. The Indemnitee also agrees not to discuss or assist in any litigation, potential
litigation, claim, or potential claim with any individual (or their attorney or investigator) who
is pursuing, or considering pursuing, any claims against the Company or any Company-affiliated
entity unless required by law. In performing the tasks outlined in this Section 11, the Indemnitee
shall be bound by the covenants of good faith and veracity set forth in the Company’s Code of
Business Conduct and Ethics, as amended from time to time, and by all legal obligations. Nothing
in this Section 11 is intended to prevent the Indemnitee from complying in good faith with any
subpoena or other affirmative legal obligation. The Indemnitee agrees to notify the Company as
promptly as practicable in the event that there is a request for information or inquiry pertaining
to the Company, any Company-affiliated entity, or the Indemnitee’s knowledge of or service with the
Company. In performing its responsibilities under this Section 11 at the request or for the
benefit of the Company, the Indemnitee shall be compensated for the Indemnitee’s time at an hourly
rate of $400 per hour; provided, however, that during any period in which the
Indemnitee is a director and/or officer of the Company or is receiving payments from the Company of
any kind, the Indemnitee shall not be so compensated.

     12. Amendments, Etc. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. In the event
the Company or any of its subsidiaries enters into an indemnification agreement with another
director, officer, agent, fiduciary or manager of the Company or any of its subsidiaries containing
a term or terms more favorable to the indemnitee than the terms

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contained herein (as determined by the Indemnitee), the Indemnitee shall be afforded the
benefit of such more favorable term or terms and such more favorable term or terms shall be deemed
incorporated by reference herein as if set forth in full herein.

     13. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who
shall execute all papers reasonably required and shall do everything that may be reasonably
necessary to secure such rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.

     14. No Duplication of Payments. The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against the Indemnitee to the extent the
Indemnitee has otherwise actually received payment (under any insurance policy, any provision of
the By-Laws, or otherwise) of the amounts otherwise indemnifiable hereunder.

     15. Defense of Claims. The Company shall be entitled to participate in the defense of
any Claim relating to an Indemnifiable Event or to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnitee; provided that if the Indemnitee believes, after
consultation with counsel selected by the Indemnitee, that (i) the use of counsel chosen by the
Company to represent the Indemnitee would present such counsel with an actual or potential conflict
of interest, (ii) the named parties in any such Claim (including any impleaded parties) include the
Company or any subsidiary of the Company and the Indemnitee, and the Indemnitee concludes that
there may be one or more legal defenses available to him or her that are different from or in
addition to those available to the Company or any subsidiary of the Company, or (iii) any such
representation by such counsel would be precluded under the applicable standards of professional
conduct then prevailing, then the Indemnitee shall be entitled to retain separate counsel (but not
more than one law firm plus, if applicable, local counsel in respect of any particular Claim) at
the Company’s expense. The Company shall not be liable to the Indemnitee under this Agreement for
any amounts paid in settlement of any Claim relating to an Indemnifiable Event effected without the
Company’s prior written consent. The Company shall not, without the prior written consent of the
Indemnitee, effect any settlement of any Claim relating to an Indemnifiable Event which the
Indemnitee is or could have been a party unless such settlement solely involves the payment of
money and includes a complete and unconditional release of the Indemnitee from all liability on all
claims that are the subject matter of such Claim. Neither the Company nor the Indemnitee shall
unreasonably withhold its or his or her consent to any proposed settlement; provided that
the Indemnitee may withhold consent to any settlement that does not provide a complete and
unconditional release of the Indemnitee.

     16. Binding Effect, Etc. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective successors, (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), assigns, spouses, heirs, executors
and personal and legal representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation, or otherwise) to all or a significant
portion of the business and/or assets of the Company and/or its subsidiaries, by written agreement
in form and substance satisfactory to the Indemnitee and his or her counsel, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent that the Company
would be

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required to perform if no such succession had taken place. This Agreement shall continue in
effect regardless of whether the Indemnitee continues to serve as an officer and/or director of the
Company of any other entity or enterprise at the request of the Company. Neither this Agreement
nor any duties or responsibilities pursuant hereto may be assigned by the Company to any other
person or entity without the prior written consent of the Indemnitee.

     17. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable
and to give effect to the terms of this Agreement.

     18. Specific Performance, Etc. The parties recognize that if any provision of this
Agreement is violated by the Company, the Indemnitee may be without an adequate remedy at law.
Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if the
Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to
enforce specific performance, to enjoin such violation, or to obtain any relief or any combination
of the foregoing as the Indemnitee may elect to pursue.

     19. Notices. All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written document delivered in person
or sent by telecopy, nationally recognized overnight courier or personal delivery, addressed to
such party at the address set forth below or such other address as may hereafter be designated on
the signature pages of this Agreement or in writing by such party to the other parties:

          (a) If to the Company, to:

ABM Industries Incorporated

551 Fifth Avenue, Suite 300

New York, NY 10176

Attn: General Counsel

          (b) If to the Indemnitee, to the address set forth on Annex
A hereto.

     20. Counterparts. This Agreement may be executed in counterparts, each of which shall
for all purposes be deemed to be an original but all of which together shall constitute one and the
same agreement. Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

     21. Headings. The headings of the sections and paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to
affect the construction or interpretation thereof.

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     22. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made and to be performed
in such state without giving effect to the principles of conflicts of laws.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	ABM INDUSTRIES INCORPORATED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[NAME]	 	 

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Annex A

	 	 	 	 	 
	Name and Business Address.	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Attn:
	 	 	 	 
	Tel:

	 	 

	 	 
	Fax:EX-10.1

Exhibit 10.1

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 Douglas Godshall (“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. Employment Agreement. You currently are party to an employment agreement with the Company
dated December 5, 2008 (the “Employment Agreement”), which remains in full force and effect and is
not amended hereby.

     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 $3,300,000 (the “Retention
Bonus”). Such Retention Bonus shall vest and be paid within thirty (30) days following the
consummation of the transactions contemplated by the Merger Agreement (the “Closing”), subject to
you signing, returning to the Company within twenty-one (21) days following the Closing, and not
revoking a general release of claims, in form and substance reasonably acceptable to the Company;
provided that (except as accelerated vesting may occur pursuant to section 2(b) or
3 below) you remain continuously employed through the Closing; and provided, further, that
you enter into a consulting agreement with Thoratec or the Company, prior to the Closing, for at
least a three-month consultancy relationship with Thoratec or the Company at $7,211.54 per week
(pro-rated for any partial weeks), to commence immediately after the Closing.

          (b) Effect of Termination or Resignation. In the event that, prior to the Closing, we
terminate your employment for Cause (as defined in the Employment Agreement) or you resign without
Good Reason (as defined in the Employment Agreement), the Retention Bonus shall be forfeited. In
the event that, prior to Closing, we terminate your employment without Cause or you resign for Good
Reason, the Retention Bonus shall vest in full and be paid on the later to occur of (i) the Closing
and (ii) within sixty (60) days following such termination or resignation, subject to you signing,
returning to the Company within fifty (50) days following such termination or resignation, and not
revoking a general release of claims, in form and substance reasonably acceptable to the Company.

     3. Death; Disability. If your employment terminates by reason of death or disability prior to
the Closing, the Retention Bonus shall vest and be paid within five (5) days following the Closing.

     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
Employment 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.

          (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

2

 

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:

     If to the employee:

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

     If to the Company:

     HEARTWARE, INC.

     Attention: Secretary

3

 

     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]

4

 

     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
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David McIntyre
	 

	 	 	 	 
	 

	 	 	 	Name: David McIntyre

Title: Chief Financial Officer and Chief Operating Officer
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 

	 	 	 	/s/ Douglas Godshall
	 

	 	 	 	 
	 

	 	 	 	Name: Douglas Godshall

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