Document:

exv10w1

 

Exhibit 10.1

Amended and Restated Employment Agreement

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
effective as of August 15, 2005, by and between THORATEC CORPORATION, a California corporation (the
“Company”), and D. Keith Grossman (“Employee” and, together with the Company, the “Parties”) and
amends and restates the Employment Agreement entered into by and between Employee and the Company
as of December 6, 2001 (the “Original Employment Agreement”).

RECITALS

A. WHEREAS, Employee is currently President and Chief Executive Officer of the Company;

B. WHEREAS, the Original Employment Agreement expires on December 6, 2006;

C. WHEREAS, Employee desires to transition out of his employment with the Company so that he
may pursue other interests and opportunities and additionally wishes to assist the Company in the
recruitment and transition of his replacement; and

D. WHEREAS, in recognition of Employee’s contributions to the Company, the Company desires to
facilitate Employee’s employment transition while continuing to obtain the benefit of his knowledge
and experience on the terms set forth below.

     NOW, THEREFORE, in consideration of the foregoing premises and for the purposes hereinafter
set forth and for other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Parties hereto agree as follows:

AGREEMENT

     1. Employment Transition. The Parties acknowledge and agree that, at Employee’s
request, the Board of Directors will shortly commence a search for a new Chief Executive Officer to
replace Employee. Employee agrees to continue serving in his current positions as Chief Executive
Officer during the course of this search (the “Search Period”). Following the hire date of a new
Chief Executive Officer, Employee shall remain employed by the Company in the capacity of a
transition facilitator to the new Chief Executive Officer for (i) ninety (90) days or (ii) such
shorter period as agreed to in writing by Employee and the new Chief Executive Officer (the
“Transition Period”; and the date on which such period expires and Employee’s employment with the
Company terminates is referred to as the “Separation Date”). As the transition facilitator to the
new Chief Executive Officer, Employee shall assist the new Chief Executive Officer as requested by
him/her to enable the new Chief Executive Officer to fully run the Company after the Separation
Date.

          1.1 Term. The term of the Original Employment Agreement was to expire on December 6, 2006
(the “Original Term Date”). If by February 1, 2006, no new Chief Executive Officer has been hired
by the Company, then the Parties will immediately engage in good faith discussions, using their
best efforts to determine whether to modify the timeline and structure of

 

 

this Agreement, and if so, how best to make any such modifications, including without
limitation whether to extend the duration or revise the incentive compensation provided
herein. If the Parties are unable to reach agreement regarding any such modification, then
the terms of this Agreement shall continue to apply through the Original Term Date, at which time
Employee’s employment with the Company shall terminate.

     2. Compensation and Benefits during Transition Period.

          2.1 Base Salary. Employee shall continue to receive his current base salary at the annual
rate of four hundred thirty six thousand eight hundred dollars ($436,800) during the Search Period
and the Transition Period. Upon the termination of his employment for any reason, Employee shall
immediately be paid any unpaid wages (including base salary and accrued vacation) earned by
Employee as of such termination date.

          2.2 Bonus. For fiscal 2005, Employee shall receive a bonus in an amount equal to one hundred
percent (100%) of Employee’s current base salary, plus any additional amount based on application
of the “accelerator” provision of the Company’s bonus plan (the “Accelerator”). For fiscal 2006,
Employee shall receive a bonus in an amount equal to eighty-five (85%) of his current base salary,
provided that if the Separation Date occurs prior to July 1, 2006, he shall not be eligible for
application of the Accelerator in determining the amount of his bonus, but if the Separation Date
occurs on or after July 1, 2006, Employee will be eligible for application of the Accelerator in
determining the amount of his bonus for fiscal 2006. Notwithstanding the foregoing, if Employee
terminates his employment with the Company prior to the end of the Transition Period, Employee
shall not be entitled to receive payment of a bonus in any amount for the year in which Employee’s
termination occurs or any future period. Upon the termination of his employment for any reason,
Employee shall immediately be paid any unpaid bonuses, if any, earned by him pursuant to this
Section (with respect to any Accelerator portion of such bonuses, that portion shall be paid as
soon as it can be determined whether the Accelerator applies).

          2.3 Benefits Generally. Employee shall continue to participate, during the Search Period and
the Transition Period, in the health insurance and other benefit programs, including any long-term
disability benefits, in which he is a participant at the time this Agreement is executed by the
Parties. Employee’s vacation accrual, stock option vesting, and restricted stock restriction
lapsing, shall also continue during those periods, and Employee shall be entitled to participate in
any other fringe benefit programs that are made available to Company executives during those
periods.

          2.4 Life Insurance. The insurance policy on the life of Employee purchased and maintained by
the Company as of the date of this Agreement shall continue to be maintained by the Company during
the Search Period and the Transition Period.

     3. Payments and Benefits Upon Termination of the Transition Period. Provided that
Employee (i) has executed and delivered to the Company this Agreement, (ii) has not terminated his
employment except for Good Reason after a Change of Control prior to the Separation Date, and (iii)
on or after the Separation Date executes and delivers the General Release in the form attached
hereto as Exhibit A and does not timely revoke such General

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Release, Employee will receive, promptly after the end of such revocation period, the
following additional payments and benefits on the terms and conditions set forth below:

          3.1 Severance Payments. Employee will receive a lump-sum severance payment in an amount equal
to the base salary, if any, he would have received during the period from the Separation Date
through the Original Term Date.

          3.2 Severance Benefits. Employee will receive a lump-sum payment in an amount equal to the
cost to continue Employee’s existing group health insurance coverage under COBRA as provided by the
Company’s group medical plan and dental plan for a period of eighteen (18) months following the
Separation Date. Following his termination, Employee will be allowed to retain possession of the
cell phone and laptop computer provided to him by the Company. In addition, the Company will pay
the premium necessary to maintain the insurance policy on the life of Employee referred to in
Section 2.4 hereof for a period of eighteen (18) months following the Original Term Date.
Executive shall retain at all times the sole right to designate the beneficiary(ies) of such
policy.

          3.3 Stock Options. To the extent not previously vested, all stock options granted to Employee
shall immediately vest and become one hundred percent (100%) exercisable. Options must be
exercised within the time period specified in the option agreement and option plan related to any
such option

          3.4 Restricted Stock. The restrictions on each share of restricted stock granted to Employee
pursuant to the Restricted Stock Grant Agreement between the Company and Employee, effective as of
December 6, 2001 (the “Restricted Stock Grant Agreement”), shall immediately lapse as to any shares
thereunder that are still restricted as of the Separation Date.

          3.5 Withholding and Section 409A Compliance. All of the above-described severance
arrangements will be subject to customary withholding and other taxes. The parties intend that the
payments and benefits or other compensation provided under this Agreement be paid in compliance
with Section 409A of the Internal Revenue Code of 1986, as amended, such that there are no adverse
tax consequences, interest, or penalties as a result of such payments, benefits or other
compensation. The parties agree to modify this Agreement, the timing (but not the amount(s)) of
the payments or benefits provided herein, or both, to the extent necessary to comply with such
Section 409A.

     4. Other Termination and Change of Control during Search Period and Transition
Period.

          4.1 Termination With Cause or Voluntary Termination. This Agreement may be terminated during
the Search Period or the Transition Period (i) by the Company for “Cause” (as defined in Section
4.5 hereof) immediately upon written notice by the Company to Employee, or (ii) by Employee for any
reason upon at least thirty (30) days prior written notice to the Company of such termination. If
this Agreement is terminated by the Company for Cause or by Employee, except for Good Reason
following a Change of Control, Employee shall receive no termination benefits pursuant to Section 3
hereof and if such termination occurs in 2005, no bonus for 2006. Notwithstanding the
foregoing, if Employee voluntarily terminates his

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employment for any reason prior to the Original Term Date, Employee shall be entitled to pro
rata vesting, based on Employee’s termination date, of the shares of restricted stock that would
otherwise have vested in 2006 pursuant to the terms of the Restricted Stock Grant Agreement. Such
vesting shall occur in increments of 1/12 for each full month of employment completed prior to the
effective date of such termination.

          4.2 Disability or Death. If Employee’s employment terminates as a result of his disability or
death (except as the result of his own intentional acts) during the Search Period or the Transition
Period, he (or his estate) shall be entitled to receive the termination benefits pursuant to
Section 3 hereof.

          4.3 Termination Without Cause. If this Agreement is terminated by the Company without Cause
during the Search Period or during the Transition Period, Employee shall receive a severance
payment of two (2) times his annual base salary and shall also receive the benefits set forth in
Sections 3.2, 3.3 and 3.4 hereof.

          4.4 Change of Control. If during the Search Period or the Transition Period this Agreement is
terminated by Employee for “Good Reason” after a Change of Control, or Employee is terminated by
the Company for any reason after a Change of Control, Employee shall receive a termination payment
of two and one-half times the sum of (i) his annual base salary, and (ii) the greatest of (a) the
prior year’s target bonus, (b) the current year’s actual bonus, and (c) the current year’s target
bonus.

          4.5 Cause. For purposes hereof, “Cause” shall mean (i) any act of personal dishonesty taken
by Employee in connection with his responsibilities as an employee that is intended to result in
substantial personal enrichment of Employee, (ii) Employee’s conviction of a felony which the
Company reasonably believes has had or will have a material detrimental effect on the Company’s
reputation or business, or (iii) any continued, willful, and material violation by Employee of
Employee’s obligations to the Company after there has been delivered to Employee a written demand
for performance from the Company that describes the basis for its belief that Employee is in
violation of his obligations to the Company, and after Employee has been given a reasonable
opportunity (of not less than 30 days, unless the circumstances merit a shorter period) to correct
such violation.

          4.6 Good Reason. For purposes hereof, “Good Reason” shall mean any material reduction in the
duties or salary or bonus opportunity of Employee or a requirement that Employee work at a facility
more than 25 miles from the Company’s current headquarters during the term of this Agreement.

          4.7 Change of Control. For purposes hereof, “Change of Control” shall mean the occurrence of
any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power represented by the
Company’s then outstanding voting securities; (ii) the consummation of a sale of substantially all
of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with
any other corporation or other entity, other than a

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merger or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its parent) at least fifty percent
(50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation; and (iv)
a change in the composition of the Company’s Board of Directors occurring with a two-year period,
as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either (A) are directors of the Company as of January 1, 2004
or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes
of at least a majority of those directors whose election or nomination was not in connection with
any transaction described in clauses (i), (ii), or (iii) above, or in connection with an actual or
threatened proxy contest relating to the election of directors to the Company.

          4.8 Good Faith and Fair Dealing. The Company acknowledges its obligation of good faith and
fair dealing under California law in the performance of this Agreement and further acknowledges
that any determination pursuant to Sections 4.5 and Section 4.6 hereof shall be made in good faith
by the Board of Directors and not with a view to unfairly deny Employee the benefits of this
Agreement.

          4.9 Gross-Up for Excise Tax. In the event the Company determines that any payment hereunder
to or for the benefit of Employee (determined without regard to any additional payment required
under this paragraph) (a “Payment”) is subject to the excise tax imposed by section 4999 (the
“Excise Tax”) of the Internal Revenue Code, as amended, then Employee shall be paid an additional
amount (a “Gross-Up Payment”) such that after payment by Employee of all taxes, including, without
limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment, Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

     5. Outside Employment During Search Period and Transition Period.

          5.1 Other Affiliations. Employee shall not perform consulting or other services for any other
company, corporation, or other commercial enterprise (other than for subsidiaries or affiliates of
the Company), during the Search Period or the Transition Period; provided, however, that with the
prior consent of the Company’s Board of Directors Employee may serve as a member of the board of
directors of one or more corporations or other entities that do not directly or indirectly compete
with the Company, as determined in the reasonable discretion of the Company’s Board of Directors.
Notwithstanding the foregoing, Employee shall be subject to Section 8 of this Agreement related to
confidential information of the Company at all times that Employee serves on any such other Board
of Directors. The Employee’s current positions as director of each of Acorn Cardiovascular and
Intuitive Surgical, Inc. are hereby consented to by the Company’s Board of Directors.

          5.2 Conflict of Interest. Employee hereby represents and warrants to the Company that (a) he
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 entity or person.

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     6. Board of Directors. The Company’s Board of Directors shall use its best efforts,
subject to the provisions of the Company’s by-laws, to nominate Employee as a director of the
Company during the Search Period and the Transition Period; provided, however, that if during the
Search Period or the Transition Period or thereafter, Employee takes a management or director
position with a “Company Competitor” (as defined below), Employee agrees to resign from the Board
immediately when requested to do so by the Board. Following the termination of his employment with
the Company for any reason other than for “Cause” (as defined in Section 4.5) or voluntarily
without “Good Reason” (as defined in section 4.6), Employee shall be compensated for his Company
Board of Director service in the same manner that other non-employee directors are compensated for
such service, with the exception that Employee will not be entitled to the grant for initial
election or appointment provided to new Company Directors under the 1996 Nonemployee Directors
Stock Option Plan of Thoratec Corporation. For the purposes of this Agreement, “Company
Competitor” shall be defined as any company or operating division of a company that is either
developing or marketing a device or devices for mechanical circulatory support in congestive heart
failure patients, designed to compete with any of Thoratec’s devices in the bridge-to-transplant,
destination therapy or postcardiotomy recovery markets.

     7. No Other Compensation or Benefits. Employee acknowledges and agrees that, except
as expressly provided in this Agreement, Employee will not receive any additional compensation,
severance, benefits or other payments of any kind in connection with Employee’s continued
employment or the termination of Employee’s employment with the Company.

     8. Confidentiality.

          8.1 Protection of Information. Employee shall not, without the prior written consent of the
Company, divulge to unauthorized persons, or use for any unauthorized purpose, either during or
after his employment, any Confidential Information (as defined in Section 8.3 hereof). Employee
shall use his best efforts and exercise due diligence to protect and guard Confidential Information
within his possession and/or under his direct or indirect control.

          8.2 Records. All notes, memoranda, reports, drawings, manuals, materials, data and any papers
or records of every kind, and any computers or wireless communications devices, which are now in
Employee’s possession owned by the Company or developed or generated by Employee in the course of
his employment under this Agreement that contain Confidential Information shall be the sole and
exclusive property of the Company. Except as set forth in Section 3.2 hereof, this property shall
be surrendered to the Company upon termination of this Agreement or upon request by the Company at
any time either during or after the termination of employment, and no copies, notes, or excerpts
thereof shall be retained by Employee.

          8.3 Confidential Information. For purposes of this Agreement, “Confidential Information”
shall mean information as set forth below disclosed to Employee or known to Employee as a
consequence of or through performance of services for the Company and its subsidiaries or
affiliates, whether or not related to his duties as an employee of the Company, whether or not in
his capacity as an employee or director. Such information shall include trade secrets or any other
like information of value relating to the business, including

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actual research and development, of the Company or of any corporation, limited liability
company, firm or partnership or other business enterprise directly or indirectly controlled by or
controlling the Company or in which the Company or any of its affiliates has more than a twenty
percent (20%) ownership interest for which Employee renders services. Information shall be
considered, for purposes of this Agreement, to be confidential if not known publicly, even though
such information has been disclosed to one or more third parties pursuant to distribution
agreements, or other agreements entered into by the Company or any of its affiliates. For purposes
of this Agreement, information shall not be considered confidential to the extent that such
information is or becomes, through no fault of Employee, part of the public domain, such
information is independently known to Employee, or such information is lawfully furnished to
Employee by a third party without restriction on disclosure.

          8.4 Continuing Obligations. Employee acknowledges that Employee’s obligations with respect to
Confidential Information as set forth in this Section 8, and any Confidential Information and
Inventions Agreement executed by Employee in connection with his employment by the Company, are
continuing and will survive the termination of this Agreement and the termination of Employee’s
employment with the Company.

     9. Nonsolicitation. Employee agrees that for a period of one (1) year after the
Separation Date (or such earlier termination date as may occur), Employee will not, except with the
advance written approval of the Company, for any reason whatsoever, directly or indirectly,
individually or on behalf of persons not now parties to this Agreement, or as a partner, founder,
stockholder, director, officer, principal, agent, employee or in any other capacity or
relationship, for Employee’s own account or for the benefit of any other person, encourage, induce,
attempt to induce, solicit or attempt to solicit anyone who is employed at that time, or was
employed during the previous one (1) year, by the Company or any affiliate to leave his or her
employment with the Company or any of its affiliates, or to accept employment with or perform
services for any other company, person or entity.

     10. Injunctive Relief. The parties hereto agree that damages would be an inadequate
remedy for the Company in the event of a breach or threatened breach of Section 8 or 9 of this
Agreement by Employee and, in the event of any such breach or threatened breach, the Company may,
either with or without pursuing any potential damage remedies, obtain and enforce an injunction
prohibiting Employee from violating this Agreement and requiring Employee to comply with the terms
of this Agreement. The parties hereby agree to submit to the jurisdiction of the courts of the
State of California and the Federal courts of the United States of America located within the
County of Alameda in the State of California for any action to seek equitable relief.

     11. Binding Effect. This Agreement shall constitute the respective legal, valid and
binding obligation of Employee and the Company in accordance with its terms, and shall inure to the
benefit of and be binding upon the Company and Employee and their respective successors and
assigns, and Employee’s heirs, executors and administrators.

     12. Notice. Any notice required or permitted hereunder shall be in writing and shall
be given by personal delivery, facsimile or Unites States mail, certified or registered with return
receipt requested, postage prepaid, and shall be deemed to have been duly given three (3) days

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after the mailing or on the date of service if delivered personally or the first day after
transmission if sent by facsimile to the other party at the following addresses, or such other
address as one party may from time to time give the other in writing:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Thoratec Corporation
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	6035 Stoneridge Drive
	 

	 	 	 	Pleasanton, CA 94588
	 

	 	 	 	Fax: (925) 847-8625
	 
	 	 	 	 
	 

	 	If to Employee:
	 	D. Keith Grossman
	 

	 	 	 	c/o Thoratec Corporation
	 

	 	 	 	6035 Stoneridge Drive
	 

	 	 	 	Pleasanton, CA 94588
	 

	 	 	 	Fax: (925) 847-8625

     13. Captions. The captions to Sections of this Agreement have been inserted for
identification and reference purposes and shall not by themselves determine the construction or
interpretation of this Agreement.

     14. Counterparts. This Agreement may be executed by facsimile and in counterparts,
each of which shall be deemed an original, but both of which together shall constitute one and the
same instrument.

     15. Governing Law. This Agreement shall be construed and enforced in accordance with
the laws of the State of California without regard to principles of conflict of laws.

     16. Entire Agreement, Modification, Costs. This Agreement, including Exhibit
A hereto, which is hereby incorporated by reference herein, constitutes the complete, final and
exclusive embodiment of the entire agreement between Employee and the Company with regard to its
subject matter, and supercedes and replaces in its entirety the Original Employment Agreement as
well as the Company’s Amended and Restated Executive Officer Severance Benefits Plan. Except to
the extent modified herein, the terms of the Restricted Stock Grant Agreement shall remain in full
force and effect. Nothing in this Agreement shall affect the Company’s obligation to indemnify
Employee to the fullest extent allowed by applicable law from and against any claims that are based
upon or arise out of Employee’s employment with or service for the Company, and the terms of the
Indemnity Agreement, dated as of January 31, 1996, between the Company and Employee, shall remain
in full force and effect. This Agreement is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein, and it supersedes any
other such promises, warranties or representations. This Agreement may not be modified or amended
except in a writing signed by Employee and a duly authorized officer of the Company. If any
provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement and the provision in question
will be modified by the court so as to be rendered enforceable. The Company shall reimburse
Employee for his costs, expenses, and reasonable attorneys’ fees incurred in negotiating and
finalizing this Agreement.

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     17. Dispute Resolution and Binding Arbitration. If there is any dispute arising out
of or related to interpretation or enforcement of this Agreement which cannot be settled by good
faith negotiation between the parties, such dispute will be submitted to JAMS for non-binding
mediation, and the Company shall be responsible for paying the mediator’s fees. If complete
agreement cannot be reached within forty-five (45) days of submission to mediation, any remaining
issues in dispute will be submitted to JAMS for final and binding arbitration pursuant to JAMS
Arbitration Rules and Procedures for Employment Disputes. Notwithstanding any provisions to the
contrary found in such procedures, in the event of final and binding arbitration pursuant to this
paragraph, except for the arbitrator’s fees which the Company shall be responsible for paying, each
party will be responsible for paying its own costs and attorneys’ fees in connection with the
arbitration. The arbitrator shall not be authorized to award the prevailing party costs and
attorneys’ fees, except as expressly provided by statute. The dispute resolution provision of this
Section 17 is without prejudice to the Company’s right to seek injunctive relief in a court of law
for a breach by Employee of Section 8 or 9 hereof as provided in Section 10 of this Agreement.

 

REMANDER OF PAGE INTENTIONALLY BLANK

 

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Signature Page to Amended and Restated Employment Agreement

dated as of August 15, 2005

	 	 	 	 	 
	 	THORATEC CORPORATION

 	 
	 	By:  	/s/ J. Donald Hill
 	 
	 	 	J. Donald Hill 	 
	 	 	Chairman of the Board 	 
	 

	 	 	 	 	 
	 	AGREED:

 	 
	 	By:  	/s/  D. Keith Grossman
 	 
	 	 	D. Keith Grossman 	 
	 	 	 	 

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EXHIBIT A

GENERAL RELEASE

     I, D. Keith Grossman (“Employee”), agree to the terms in the foregoing Amended and
Restated Employment Agreement and also agree as follows:

     Except as otherwise set forth in the foregoing Amended and Restated Employment Agreement,
Employee hereby releases, acquits and forever discharges Thoratec Corporation (the
“Company”) and each of its officers, directors, agents, servants, employees, attorneys,
shareholders, successors, assigns and affiliates (the “Releasees”) of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages,
indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related
to agreements, events, acts or conduct at any time prior to and including the execution date of
this Release, including but not limited to, all such claims and demands directly or indirectly
arising out of or in any way connected with Employee’s employment with the Company or the
termination of that employment; claims or demands related to salary, bonuses, commissions, stock,
stock options, or any other ownership interests in the Company, vacation pay, fringe benefits,
expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law, statute, or cause of action including, but not limited to, the federal
Civil Rights Act of 1964, as amended, the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”), the
antidiscrimination statutes of California or other applicable states; tort law; contract law;
wrongful discharge; discrimination; harassment; fraud; defamation; emotional distress; and breach
of the implied covenant of good faith and fair dealing. This release of claims does not affect in
any way Employee’s indemnification rights as described in Section 16 of the Agreement, nor does it
affect any rights that Employee has or may have to worker’s compensation benefits.

     Employee acknowledges that he is knowingly and voluntarily waiving and releasing any rights he
may have under the ADEA. Employee also acknowledges that the consideration given for the waiver
and release in the preceding paragraph hereof is in addition to anything of value to which he was
already entitled.

     Employee acknowledges his understanding that he may take twenty-one (21) days to consider this
Release, although Employee may sign this Release earlier if he chooses, and that he has been
advised that he should consult with an attorney, if he decides to do so, prior to executing this
Release. Employee further acknowledges that he has seven (7) days following the execution of this
Release to revoke the Release, and this Release will not be effective until the date upon which the
revocation period has expired, which will be the eighth day after this Release is executed by
Employee (“Effective Date”). To revoke acceptance, Employee must send a written notice to
Thoratec Corporation, 6035 Stoneridge Drive, Pleasanton, CA 94588, Attn: General Counsel, by 5:00
p.m. on or before the seventh (7th) day after Employee signs and delivers to the Company this
Release. All time limits set forth herein refer to calendar days unless otherwise specified. If
the expiration of any time limit set forth herein falls on a weekend

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or a holiday observed by Thoratec, the time limit will be deemed to end at the close of
business on the next workday.

     Employee understands and agrees that this Release includes claims which may be unknown to
Employee at present, and that Employee has read and understands Section 1542 of the California
Civil Code, which reads as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO 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.” Employee hereby expressly waives and relinquishes any and all rights under Section 1542
with respect to Employee’s release of any unknown or unsuspected claims Employee may have against
the Releasees.

     Employee agrees not to commence any proceeding in court against the Company in connection with
the matters released herein and that the only cause of action Employee could have against the
Company after the date hereof would be for a breach of the foregoing Agreement or this Release or
for matters arising after the date hereof.

     Employee represents and warrants that he has the sole right and authority to execute this
Release and that he has not assigned or transferred, or purported to have assigned or transferred,
to any corporation, entity or person, any dispute or claims released herein or any amount of money
related hereto.

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	D. Keith Grossman
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

12exv10w2

 

Exhibit 10.2

Consulting
Agreement

     THIS CONSULTING AGREEMENT (this “Agreement”) is made and entered into effective as of August
15, 2005, by and between THORATEC CORPORATION, a California corporation (the “Company”), and D.
Keith Grossman (“Executive” and, together with the Company, the “Parties”).

RECITALS

     A. WHEREAS, Executive is currently Chief Executive Officer of the Company;

     B. WHEREAS, Executive desires to transition out of his employment with the Company so that he
may pursue other interests and opportunities; and

     C. WHEREAS, the Company wishes to engage Executive as a consultant for a period following the
termination of his employment with the Company in order to enable the new Chief Executive Officer
to fully run the Company following the termination of Executive’s employment, and Executive desires
to enter into a consulting relationship with the Company.

     NOW, THEREFORE, in consideration of the foregoing premises and for the purposes hereinafter
set forth and for other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Parties hereto agree as follows:

AGREEMENT

     1. Consulting Relationship. Executive agrees that, for a period of nine (9) months
following the date on which his employment with the Company terminates (the “Separation Date”),
Executive will serve as a consultant to the Company so that the Company may continue to benefit
from Executive’s experience and knowledge of the Company’s operations (the “Consulting Period”).
The Company agrees to retain Executive as a consultant during the Consulting Period on the terms
set forth herein.

     2. Services, Term and Compensation. During the Consulting Period, Executive shall
assist the new Chief Executive Officer as requested by him or her to enable the new Chief Executive
Officer to fully run the Company after the Separation Date. Executive shall be available to
provide consultation to the Chief Executive Officer and the Company’s Board of Directors at
mutually-convenient times for no more than ten (10) hours per month. As consideration for such
consulting services, Executive shall receive payment for his services hereunder of Five Thousand
Dollars ($5,000) per month, payable at the end of each month, during the Consulting Period. With
respect to any stock options granted to Executive by the Company, the Parties agree that
Executive’s service as a consultant hereunder constitutes “employment” for purposes of Section
6.1.7 of the Company’s 1997 Stock Option Plan.

     3. Competitive Activities. Executive expressly acknowledges that, during the
Consulting Period, he will continue to have access to the Company’s trade secrets and other

1

 

confidential and sensitive information proprietary to the Company. Executive agrees that during
the Consulting Period, Executive shall not advise, consult, accept employment with, or render
services to, directly or indirectly, any “Company Competitor”, as defined below, whether as a
partner, employee, shareholder, consultant or otherwise, nor shall Executive promote, participate
or engage in any activity on behalf of a Company Competitor (“Competitive Activities”). For
purposes of this Agreement, “Company Competitor” shall be defined as any company or operating
division of a company that is either developing or marketing a device or devices for mechanical
circulatory support in congestive heart failure patients, designed to compete with any of
Thoratec’s devices in the bridge-to-transplant, destination therapy or postcardiotomy recovery
markets.

During the Consulting Period, Executive may accept employment or become otherwise involved with any
company other than a Company Competitor.

     In the event Executive fails to complete the consulting engagement by engaging in Competitive
Activities in violation of this Agreement, the Company will have the right to terminate the
consulting engagement and shall have no further obligation to pay Executive any amount pursuant to
Section 2, except as otherwise required by law.

     4. Termination of Consulting Relationship. By their mutual written agreement, or upon
notice of one party to the other of a breach of this Consulting Agreement, the Company and
Executive may end the consulting relationship described herein at any time prior to the end of the
Consulting Period.

     5. Conflict of Interest. Executive hereby represents and warrants to the Company that
(a) he is not obligated under any other employment, consulting, or other agreement which would
affect the Company’s rights, or Executive’s duties, under this Agreement and (b) this Agreement is
not in conflict with Executive’s commitments to any entity or person.

     6. Board of Directors. The Company’s Board of Directors shall use its best efforts,
subject to the provisions of the Company’s by-laws, to nominate Executive as a director of the
Company during the Consulting Period; provided, however, that if Executive engages in Competitive
Activities in violation of this Agreement, and in any event upon the termination of the consulting
relationship for any reason, Executive agrees to resign from the Board immediately when requested
to do so by the Company. During the Consulting Period and thereafter, Executive shall be
compensated for his Company Board of Director service in the same manner that other non-employee
directors are compensated for such service, with the exception that Employee will not be entitled
to the grant for initial election or appointment provided to new Company Directors under the 1996
Nonemployee Directors Stock Option Plan of Thoratec Corporation.

7. Confidentiality.

          7.1 Protection of Information. Executive shall not, without the prior written consent of the
Company, divulge to unauthorized persons, or use for any unauthorized purpose, either during or
after the Consulting Period, any Confidential Information (as defined in Section

2

 

7.3 hereof).
Executive shall use his best efforts and exercise due diligence to protect and guard Confidential
Information within his possession and/or under his direct or indirect control.

          7.2 Records. Except as set forth in the Parties’ Amended and Restated Employment Agreement
dated as of August 15, 2005 (the “Amended Agreement”), all notes, memoranda, reports, drawings,
manuals, materials, data and any papers or records of every kind, and any computers or wireless
communications devices, which are now in Executive’s possession owned by the Company or developed
or generated by Executive in the course of his providing consulting services under this Agreement
that contain Confidential Information shall be the sole and exclusive property of the Company.
Other than any property described in Section 3.2 of the Amended Agreement, this property shall be
surrendered to the Company upon termination of this Agreement or upon request by the Company at any
time either during or after the termination of the Consulting Period, and no copies, notes, or
excerpts thereof shall be retained by Executive.

          7.3 Confidential Information. For purposes of this Agreement, “Confidential Information”
shall mean information as set forth below disclosed to Executive or known to Executive as a
consequence of or through performance of services for the Company and its subsidiaries or
affiliates, whether or not related to his duties as a consultant to the Company, whether or not in
his capacity as a consultant or director. Such information shall include trade secrets or any
other like information of value relating to the business, including actual research and
development, of the Company or of any corporation, limited liability company, firm or partnership
or other business enterprise directly or indirectly controlled by or controlling the Company or in
which the Company or any of its affiliates has more than a twenty percent (20%) ownership interest
for which Executive renders services. Information shall be considered, for purposes of this
Agreement, to be confidential if not known publicly, even though such information has been
disclosed to one or more third parties pursuant to distribution agreements, or other agreements
entered into by the Company or any of its affiliates. For purposes of this Agreement, information
shall not be considered confidential to the extent that such information is or becomes, through no
fault of Executive, part of the public domain, such information is independently known to
Executive, or such information is lawfully furnished to Executive by a third party without
restriction on disclosure.

          7.4 Continuing Obligations. Executive acknowledges that Executive’s obligations with respect
to Confidential Information as set forth in this Section 7 are continuing and will survive the
termination of this Agreement and the termination of Executive’s consulting relationship with the
Company.

     8. Injunctive Relief. The parties hereto agree that damages would be an inadequate
remedy for the Company in the event of a breach or threatened breach of Section 7 of this Agreement
by Executive and, in the event of any such breach or threatened breach, the Company may, either
with or without pursuing any potential damage remedies, obtain and enforce an injunction
prohibiting Executive from violating this Agreement and requiring Executive to comply with the
terms of this Agreement. The parties hereby agree to submit to the jurisdiction of the courts of
the State of California and the Federal courts of the United States of America located within the
County of Alameda in the State of California for any action to seek equitable relief.

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     9. Binding Effect. This Agreement shall constitute the respective legal, valid and
binding obligation of Executive and the Company in accordance with its terms, and shall inure to
the benefit of and be binding upon the Company and Executive and their respective successors
and assigns, and Executive’s heirs, executors and administrators.

     10. Notice. Any notice required or permitted hereunder shall be in writing and shall
be given by personal delivery, facsimile or Unites States mail, certified or registered with return
receipt requested, postage prepaid, and shall be deemed to have been duly given three (3) days
after the mailing or on the date of service if delivered personally or the first day after
transmission if sent by facsimile to the other party at the following addresses, or such other
address as one party may from time to time give the other in writing:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Thoratec Corporation
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	6035 Stoneridge Drive
	 

	 	 	 	Pleasanton, CA 94588
	 

	 	 	 	Fax: (925) 847-8625
	 
	 	 	 	 
	 

	 	If to Executive:
	 	D. Keith Grossman
	 

	 	 	 	c/o 6035 Stoneridge Drive
	 

	 	 	 	Pleasanton, CA 94588
	 

	 	 	 	Fax: (925) 847-8625

     11. Captions. The captions to Sections of this Agreement have been inserted for
identification and reference purposes and shall not by themselves determine the construction or
interpretation of this Agreement.

     12. Counterparts. This Agreement may be executed by facsimile and in counterparts,
each of which shall be deemed an original, but both of which together shall constitute one and the
same instrument.

     13. Governing Law. This Agreement shall be construed and enforced in accordance with
the laws of the State of California without regard to principles of conflict of laws.

     14. Entire Agreement, Modification, Costs. This Agreement constitutes the complete,
final and exclusive embodiment of the entire agreement between Executive and the Company with
regard to the subject matter hereof. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein, and it supersedes any
other such promises, warranties or representations. This Agreement may not be modified or amended
except in a writing signed by Executive and a duly authorized officer of the Company. If any
provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement and the provision in question
will be modified by the court so as to be rendered enforceable. The Company shall reimburse
Executive for his costs, expenses, and reasonable attorneys’ fees incurred in negotiating and
finalizing this Agreement.

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     15. Dispute Resolution and Binding Arbitration. If there is any dispute arising out
of or related to interpretation or enforcement of this Agreement which cannot be settled by good
faith negotiation between the parties, such dispute will be submitted to JAMS for non-binding
mediation, and the Company shall be responsible for paying the mediator’s fees. If complete
agreement cannot be reached within forty-five (45) days of submission to mediation, any remaining
issues in dispute will be submitted to JAMS for final and binding arbitration pursuant to JAMS
Arbitration Rules and Procedures for Employment Disputes. Notwithstanding any provisions to the
contrary found in such procedures, in the event of final and binding arbitration pursuant to this
paragraph, except for the arbitrator’s fees which the Company shall be responsible for paying, each
party will be responsible for paying its own costs and attorneys’ fees in connection with the
arbitration. The arbitrator shall not be authorized to award the prevailing party costs and
attorneys’ fees, except as expressly provided by statute. The dispute resolution provision of this
Section 15 is without prejudice to the Company’s right to seek injunctive relief in a court of law
for a breach by Executive of Section 7 hereof as provided in Section 8 of this Agreement.

 

REMANDER OF PAGE INTENTIONALLY BLANK

 

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Signature Page to Consulting Agreement

dated as of August 15, 2005

	 	 	 	 	 
	 	THORATEC CORPORATION

 	 
	 	By:  	/s/  J. Donald Hill
 	 
	 	 	J. Donald Hill 	 
	 	 	Chairman of the Board 	 
	 

	 	 	 	 	 
	 	AGREED:

 	 
	 	By:  	/s/ D. Keith Grossman
 	 
	 	 	D. Keith Grossman 	 
	 	 	 	 

6

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