Document:

exv10w1

 

	 	 	 
	Stone Energy Corporation

	 	P.O. Box 52807
	 

	 	Lafayette, Louisiana 70505
	 

	 	625 East Kaliste Saloom Road
	 

	 	Lafayette, Louisiana 70508
	 

	 	Telephone: (337) 237-0410

January 12, 2006

Mr. David H. Welch

809 Richland Avenue

Lafayette, Louisiana 70508

Dear Dave:

     This letter serves to confirm certain aspects of Stone Energy Corporation’s (the “Company’s”)
offer of continued employment to you for the positions of President and Chief Executive Officer
(“CEO”) of the Company.

     The following represents the terms and conditions of this offer:

	1.	 	Your annual base salary shall remain at $400,000.00 in 2006. Your base salary shall be
reviewed by the Company’s Board of Directors (the “Board”) (or a committee thereof) on an
annual basis, and, in the sole discretion of the Board (or such committee), your annual base
salary may be increased, but not decreased, for each successive year. You will also be
eligible to participate in the Company’s annual incentive compensation plan, sometimes
referred to as the bonus plan, with the annual amount to be determined by performance and
market comparison. In addition, you will be eligible to receive all pension, welfare and
other similar employee benefits that are provided to similarly situated executives at the
Company.

	2.	 	It is contemplated that you shall be eligible to receive awards of restricted stock and stock
options annually during employment, subject to and based on performance and market comparison.

	3.	 	After you have completed five (5) consecutive years of employment with the Company as
President and CEO, the Board (or a committee thereof) will agree that you shall not be
required to forfeit upon your retirement any unvested stock options that were granted to you
or any restricted shares of the Company’s stock that were granted to you by virtue of your
ceasing to be an employee of the Company, that is, you will not forfeit the options and/or shares, and the options will continue to vest and the restrictions will continue to lapse
without your being an employee.

 

 

January 12, 2006

Page 2

	4.	 	If this Agreement is terminated (i) by the Board for other than Cause (as defined in the
Company’s Executive Change in Control Severance Policy) or (ii) by you for Good Reason (as
defined in the Company’s Executive Change in Control Severance Policy) in connection with or
within twenty-four (24) months after a Change in Control (as defined in the Company’s
Executive Change in Control Severance Policy), subject to executing a release satisfactory to
and in favor of the Company, you will receive a lump sum cash severance payment equal to 2.99
times the sum of (a) your annual base salary calculated using the annual salary rate in effect
at the time of termination (or, if higher, your annual base salary in effect on the date of a
Change in Control) and (b) any target bonus at the one hundred percent (100%) level for which
you are eligible for the fiscal year in which your termination occurs, with such lump sum cash
severance payment to be paid to you on the first date after your termination that the lump sum
cash payment is not subject to additional taxes and interest under section 409A of the
Internal Revenue Code (the “Code”). In addition, you will receive any earned but unpaid
salary through your date of termination and a pro rata share of your bonus opportunity up to
the date of your termination at the then projected year end rate of payout. Further, you will
receive outplacement services (up to 5% of your base salary). Any other termination benefits
will be managed consistent with current severance practices for non-executive employees.

	5.	 	If any of the payments or benefits received by you, whether or not pursuant to this
agreement, will be subject to any tax imposed under section 4999 of the Code (the “Excise
Tax”), then the Company shall pay to you an additional amount (“Gross-Up Payment”) such that
the net amount retained by you, after deduction of any Excise Tax on the total payments and
any federal, state and local income and employment
taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the amount you would have
otherwise received without such Excise Tax; provided, however, that if it shall be
determined that you are entitled to a Gross-Up Payment, but that the total to be paid to you
does not exceed one hundred ten percent (110%) of the greatest amount (the “Reduced Amount”)
that could be paid to you such that the receipt of the total would not give rise to any
Excise Tax, then no Gross-Up Payment shall be made to you and the total payments to you in
the aggregate shall be reduced to the Reduced Amount.

	6.	 	Unless sooner terminated for Cause, the Company agrees to employ you through December 31,
2008. Beginning on December 31, 2006 and on December 31 of each year thereafter, the term of
this agreement shall automatically be extended for one year (such that each December 31 shall
begin a new three-year term) unless the Board shall give written notice to you that the term
shall cease to be so extended in which event this agreement shall terminate on the first
anniversary of the date such notice is given.

 

 

January 12, 2006

Page 3

	7.	 	This agreement is entered into under, and shall be governed for all purposes by, the laws of
the State of Louisiana. With respect to any claim or dispute related to or arising under this
agreement, you hereby consent to the exclusive jurisdiction, forum and venue of the state and
federal courts located in Lafayette Parish, Louisiana.

     If the foregoing accurately reflects the basic terms and conditions upon which you would be
willing to continue employment, please sign one copy of this letter and return it to Stone, to the
attention of Kenneth H. Beer, Senior Vice President and Chief Financial Officer. Unless this
letter is signed by you and a copy (by fax or otherwise) is received by Stone by 5:00 p.m. (central
time) on January 16, 2006, this letter is withdrawn, void and without effect.

	 	 	 	 	 
	 	Very truly yours,

STONE ENERGY CORPORATION

 	 
	 	By:  	/s/ James H. Stone
 	 
	 	 	James H. Stone 	 
	 	 	Chairman of the Board of Directors 	 
	 

Agreed to and accepted this 12th day of January, 2006.

/s/ David H. Welch

DAVID H. WELCHexv10w1

 

Exhibit
10.1

Employment Agreement

          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of
January 13, 2006 (“Effective Date”), by and between THORATEC CORPORATION, a California corporation
(the “Company”), and Gerhard F. Burbach (“Employee”).

          THE PARTIES AGREE AS FOLLOWS:

     1. Position and Duties.

          1.1 Title. From January 17, 2006 (the “Hire Date”) until the termination of this
Agreement, as provided herein, Employee shall serve as the President and Chief Executive Officer of
the Company, subject to policies of the Company and the terms and conditions of this Agreement. If
there is any conflict between this Agreement and any written Company policy, this Agreement shall
control. During the period that Employee serves as President and Chief Executive Officer, the
Company shall take all reasonable and lawful action necessary and appropriate to cause Employee to
be nominated for and elected to the Board of Directors of the Company (the “Board”). 

          1.2 Duties. Except as provided in Section 4.1, Employee agrees that he shall perform,
to the best of his ability, the employment duties assigned to him by the Company, and shall devote
his full time and attention, with undivided loyalty, to the business and affairs of the Company
while employed pursuant to this Agreement. Employee shall report to the Board.

     2. Compensation.

          2.1 Base Salary. Effective as of the Hire Date, Employee shall receive for his
services under this Agreement an annual base salary of three hundred and seventy-five thousand
($375,000) dollars. The base salary may be increased annually at the sole discretion of the Board.

          2.2 Annual Target Bonus. Employee will be eligible for an annual incentive bonus
equal to a target amount of seventy-five percent (75%) of Employee’s base salary. Such annual
incentive bonus shall be subject to the achievement of certain individual and corporate objectives,
as shall be set by the Board, or a designated committee thereof, in consultation with Employee, as
well as to the terms and conditions of the Company’s incentive compensation plan applicable to
executive officers. The Board, or a designated committee thereof, shall meet on an annual basis to
determine, in consultation with Employee, the goals and formula for bonus payment for each year of
employment under this Agreement.

          2.3 Stock Options. Effective as of the Hire Date, Employee shall be granted stock
options to purchase 375,000 shares of the common stock of the Company. The options shall be
incentive stock options to the maximum extent permissible under applicable tax laws, and the
balance of the options will be non-qualified stock options. The exercise price of the options
shall equal the closing price of the Company’s common stock on the Hire Date, as determined by the
Board, or a designated committee thereof. Twenty-five percent (25% ) of the option shares shall

 

 

vest and become exercisable after the first twelve (12) months of continuous service by
Employee after the Hire Date, and the remaining option shares shall vest and become exercisable in
equal annual installments over the next three (3) years of continuous service by Employee.
Notwithstanding the terms of any agreements related to the grant of such options to the contrary,
upon the occurrence of a Change of Control, as defined below, Employee shall vest in all remaining
unvested option shares. The grant of each such option shall be subject to the other terms and
conditions set forth in the Company’s 1997 Stock Option Plan and in the Company’s standard form of
stock option agreement. The Employee shall be eligible for periodic grants of stock options, as
may be approved by the Board, or a designated committee thereof, in its sole discretion. Such
stock options must be exercised within the time period specified in the applicable stock option
agreement and the applicable Company stock option plan.

          2.4 Restricted Share Grant. Within an administratively reasonable period of time
after the Board, or a designated committee thereof, completes the vesting provisions by
establishing the applicable performance criteria, Employee shall be granted 50,000 shares of
restricted common stock of the Company (“Restricted Stock”). The restrictions shall lapse upon the
fifth anniversary of the Hire Date; provided, however, that restrictions shall lapse as to
thirty-three and one-third percent (33 1/3%) of the Restricted Stock upon each of the third and
fourth anniversaries of the Hire Date if Employee achieves certain individual and corporate
objectives for such anniversaries, as shall be agreed upon by Employee and the Board, or a
designated committee thereof, prior to the grant date. Notwithstanding the terms of any agreements
related to the grant of the Restricted Stock to the contrary, upon the occurrence of a Change of
Control, (a) the restrictions on the Restricted Stock shall, upon such occurrence, immediately
lapse as to fifty percent (50%) of the number of shares of Restricted Stock that at such date are
still restricted and (b) upon the earlier of (i) the one (1) year anniversary of the effective date
of such Change of Control, or (ii) such date after the date of such Change of Control when Employee
voluntarily terminates his employment for Good Reason or his employment is involuntary terminated
without Cause by the Company, the restrictions on the Restricted Stock shall immediately lapse as
to the remainder, if any, of the shares of Restricted Stock that are then still otherwise
restricted.

     3. Benefits.

          3.1 Benefits Generally. Employee shall be eligible to participate in such of the
Company’s benefit plans as are generally available to senior officers of the Company, including,
without limitation, medical, dental, life and disability insurance plans. Employee shall be
entitled to paid vacation of four (4) weeks per annum in accordance with the standard policies and
procedures of the Company.

     4. Outside Employment.

          4.1 Other Affiliations. Employee shall not perform consultation or other services for
any other company, corporation, or other commercial enterprise (other than for subsidiaries or
affiliates of the Company), during the term of Employee’s employment under this Agreement, unless
Employee has received written approval to do so from the Board; provided, however, that it is
hereby agreed and acknowledged that Employee may continue to serve as a director of Digirad
Corporation. Employee shall at all times be subject to the obligations of Employee

2

 

Confidential Information and Inventions Agreement to be executed by Employee pursuant to
Section 5 of this Agreement, including when performing services for others permitted under this
Section 4.1.

          4.2 Conflict of Interest. Employee warrants that (a) Employee 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 party.

     5. Confidentiality. On or prior to the Hire Date, Employee shall execute and deliver
to the Company the Employee Confidential Information and Inventions Agreement in the form attached
hereto as Exhibit A.

     6. Separation Benefits.

          6.1 Employment At Will. Employee understands and agrees that employment with the
Company is “at will”, which means that either Employee or the Company may terminate the employment
relationship at any time with or without cause. The Company may terminate Employee’s employment
for Cause (as defined below) immediately or other than for Cause upon fifteen (15) days’ written
notice to Employee. Employee may terminate his employment for any reason upon thirty (30) days’
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 after a Change of Control, each such term as
defined below), Employee shall not be entitled to any benefits under this Section 6 or to any other
separation benefits or severance benefits of any kind. 

          6.2 Termination of Employee Without Cause. If Employee’s employment is involuntarily
terminated by the Company without Cause, Employee shall be paid a severance pay benefit equal to
two (2) times Employee’s then-current annual base salary. Such amount shall be payable in
compliance with Section 6.9, in a cash lump sum as soon as practicable (as provided by law) after
he executes and delivers an effective release of claims, in a form acceptable to the Company and at
the time specified by the Company, and remains in compliance with all applicable restrictive
covenants, including those set forth in this Agreement.

          6.3 Termination of Employee After a Change of Control. Notwithstanding Section 6.2,
if Employee would otherwise have been entitled to benefits pursuant to Section 6.2 but his
involuntary termination of employment by the Company occurs on or within eighteen (18) months after
a Change of Control, or if Employee terminates his employment with the Company for Good Reason
during such period, Employee shall be paid in lieu of the severance pay benefit described in
Section 6.2 a Change of Control severance pay benefit equal to two and one-half (2.5) times
Employee’s then-current annual base salary plus two and one-half (2.5) times the greatest of (a)
the target bonus for the year preceding the year in which Employee’s termination occurs, (b) the
actual bonus for such prior year, or (c) the target bonus for the year in which the termination of
employment occurs. Such amounts shall be payable in compliance with Section 6.9, in a cash lump
sum after Employee’s termination of employment and after he executes and delivers an effective
release of claims, in a form acceptable to the Company and at

3

 

the time specified by the Company, and remains in compliance with all provisions of this
Agreement.

          6.4 COBRA Benefit. If Employee is entitled to receive benefits pursuant to Section
6.2 or 6.3, and if Employee elects health care continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), as provided by the Company’s group health plan, then
the Company shall pay in one lump sum payment at the time of any other payments pursuant to Section
6.2 or 6.3, an amount equal to the monthly amount paid by the Company immediately before
termination of employment for Employee’s health coverage multiplied by twelve (12).

          6.5 Definitions. For purposes hereof, the following terms have the following
meanings:

               (a) “Cause” shall mean (A) Employee ‘ s material misappropriation of property of the
Company (including its subsidiaries) that is intended to result in a personal financial benefit to
himself or to members of his family; (B) Employee’s conviction of, or plea of guilty or no contest
to, a felony, which the Company reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business; (C) Employee ‘ s act of gross negligence or
willful misconduct (including but not limited to any willfully dishonest or fraudulent act or
omission) taken in connection with the performance or intentional nonperformance of any of his
duties and responsibilities as an employee or continued neglect of his duties to the Company
(including its subsidiaries); or (D) Employee ‘ s continued willful or grossly negligent
failure to comply with the lawful directions of the Board; provided, however, that the Board will
deliver to Employee a written demand for performance that describes the basis for its belief that
Employee has not substantially performed his duties and Employee fails to cure such act or omission
to the Board’s reasonable satisfaction, if such act or omission is reasonably capable of being
cured, no later than ten (10) business days following delivery of such written demand.

               (b) “Change of Control” shall mean the occurrence of any of the following events: (A) 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; or (B) the consummation of a sale of substantially all of the Company’s assets; or (C)
the consummation of a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining out-standing 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; or (D) a
change in the composition of the Board occurring within 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 (x) are directors of the Company as of January 1, 2006 or (y) are elected, or
nominated for election, to the Board with the affirmative votes of at least a majority of those
directors whose election or nomination

4

 

was not in connection with any transaction described in subsections (A), (B), or (C) above, or
in connection with an actual or threatened proxy contest relating to the election of directors to
the Company.

               (c) “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 headquarters in Pleasanton, California.

          6.6 Gross-Up for Excise Tax. In the event 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 (the “Excise Tax”) imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), then Employee shall be paid an
additional payment (a “Gross-Up Payment”) in an amount 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 shall retain the full amount of the Payment without being reduced by the Excise
Tax imposed upon the Payment. For avoidance of doubt, Employee and Company agree that this Section
6.6 shall not be interpreted to compensate Employee for any other tax to which the Payment may be
subject, including but not limited to income and employment taxes.

          6.7 Benefits Subject to Execution of Waiver of Claims. Employee shall not be entitled
to receive any amount or benefit pursuant to this Section 6 unless Employee executes and delivers
an effective release of claims, in a form acceptable to the Company and at the time specified by
the Company, and remains in compliance with all provisions of this Agreement.

          6.8 Exclusivity of Agreement. The benefits provided hereunder are in lieu of any
other severance-type benefits provided by the Company under any other plan, agreement, arrangement
or policy, notwithstanding the terms of any such other plan, agreement, arrangement or policy.

          6.9 Section 409A Compliance. Notwithstanding anything to the contrary in this
Agreement, if the Company determines that any payment or benefit to be provided to Employee by the
Company pursuant to this Section 6 is or may become subject to the additional tax under Section
409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code
(“409A Taxes”) if provided at the time otherwise required under this Agreement, then:

          Notwithstanding anything to the contrary in this Agreement,

               (a) such payments shall be delayed until the date that is six months after the date of
Employee’s “separation from service” (as such term is defined under Section 409A) with the Company,
or such shorter period that, as determined by the Company, is sufficient to avoid the imposition of
409A Taxes; and

               (b) with respect to the provision of such benefit, for a period of six (6) months
following the date of Employee’s “separation from service” (as such term is defined under Section 409A) with the Company, or such shorter period, that, as determined by
the

5

 

Company, is sufficient to avoid the imposition of 409A Taxes, Employee shall be
responsible for the full cost of providing such benefits.

     7. Non-disparagement. Except as required by law or legal process, Employee agrees
that during and subsequent to the term of this Agreement, he will not disparage any aspect of the
Company or its successors or assigns, including but not limited to its officers, management,
employees and products.

     8. Nonsolicitation. Employee agrees that for a period of one (1) year after the
termination of this Agreement, 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 company, person or entity, encourage, induce, attempt to
induce, solicit or attempt to solicit anyone who is employed at that time, or was employed during
the previous six (6) months, 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.

     9. Injunctive Relief. Employee acknowledges that damages will not be an adequate
remedy in the event of a breach of any of Employee’s obligations under Sections 4, 5, 7 or 8 of
this Agreement. Employee therefore agrees that the Company shall be entitled (without limitation
of any other rights or remedies otherwise available to the Company and without the necessity of
posting a bond) to obtain an injunction from any court of competent jurisdiction prohibiting the
continuance or recurrence of any such breach of this Agreement. Employee hereby submits to the
jurisdiction and venue of the courts of the State of California and the Federal Courts of the
United States of America located within the County of Alameda for purposes of any such action.
Employee further agrees that service upon him in any such action or proceeding may be made by first
class mail, certified or registered, to his address as last appearing on the records of the
Company.

     10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the executors, administrators, heirs, successors, and assigns of the parties; provided, however,
that except as herein expressly provided, this Agreement shall not be assignable either by the
Company (except to an affiliate or successor of the Company) or by Employee without the prior
written consent of the other party. Any attempted assignment in contravention of this Section 10
shall be void.

     11. Notice. Any notice or communication under this Agreement shall be in writing and
shall be given by personal delivery, facsimile or United States mail, certified or registered with
return receipt requested, postage prepaid, and shall be deemed to have been duly given three (3)
business days after the mailing if mailed, or upon receipt if delivered personally, or the first
business 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:

6

 

	 	 	 
	If to the Company:

	 	Thoratec Corporation
	 

	 	Attention: General Counsel
	 

	 	6035 Stoneridge Drive
	 

	 	Pleasanton, CA 94588
	 

	 	Tel: (925) 847-8600, Fax: (925) 847-8574
	 
	 	 
	If to Employee:

	 	Gerhard F. Burbach
	 

	 	c/o Thoratec Corporation
	 

	 	6035 Stoneridge Drive
	 

	 	Pleasanton, CA 94588
	 

	 	Tel: (925) 847-8600, Fax: (925) 847-8574

     12. Termination of the Agreement; Survival of Certain Agreements. This Agreement shall
terminate upon the termination of Employee’s service with the Company for any reason and the
payment of any amounts owed under Section 6 hereof; provided, however, that the covenants and
agreements contained in Sections 5 and 7 through 22 of this Agreement shall be continuous and
survive the termination of this Agreement and shall remain in full force and effect regardless of
the cause of such termination.

     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 in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.

     15. Governing Law; Jurisdiction and Venue. This Agreement shall be construed in
accordance with, and shall be governed by, the procedural and substantive laws of the State of
California, without reference to principles of conflicts of law. Employee hereby submits to the
jurisdiction and venue of the courts of the State of California and the Federal Courts of the
United States of America located within the County of Alameda for purposes of any such action.
Employee further agrees that service upon him in any such action or proceeding may be made by first
class mail, certified or registered, to his address as last appearing on the records of the
Company.

     16. Waiver. The waiver of the breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach of the same or any other provision
hereof.

     17. Withholding. The Company may withhold from any amounts payable to Employee
hereunder all federal, state, local, and other withholdings and similar taxes and payments required
by applicable law or regulation.

     18. Reasonableness of Restrictions. Employee acknowledges that compliance with this
Agreement, including but not limited to Sections 4, 5, 7, 8, and 9 is reasonable and necessary to

7

 

protect the Company’s legitimate business interests, including but not limited to
the Company’s goodwill and maintaining the confidentiality of the Company’s
confidential information.

     19. Extension of Covenants . In the event that Employee violates any
covenant contained in Section 8 of this Agreement, Employee agrees that the term of each such
covenant so violated shall be automatically extended for a period equal to the period during which
Employee is in violation of such covenants.

     20. Enforceability. The Company and Employee expressly agree that the character,
duration and scope of the covenants in this agreement, including but not limited to Sections 4, 5,
7, 8, and 9, are reasonable in light of the circumstances as they exist on the date upon which this
Agreement has been executed. The Company has attempted to limit
Employee’s rights only
to the extent necessary to protect the Company’s goodwill, proprietary and/or
confidential information, and other business interests. The Company and Employee recognize,
however, that reasonable people may differ in making such a determination. Consequently, the
parties hereby agree that a court having jurisdiction over the enforcement of this Agreement shall
exercise its power and authority to reform Employee ‘ s covenants under Sections 4, 5, 7
and 8 above to the extent necessary to cause the limitations contained therein as to time and scope
of activity to be restrained to be reasonable and to impose a restraint that is not greater than
necessary to protect the Company’s goodwill, confidential information and other business
interests.

     21. Attorney’s Fees. In the event of any action in law or in equity for the
purposes of enforcing any of the provisions of this Agreement, including arbitration, the
prevailing party as determined by the trier of fact shall be entitled to recover its reasonable
attorney fees, plus court costs and expenses, from the other party, to the extent permitted by
applicable law.

     22. Entire Agreement and Modifications. This Agreement constitutes the complete,
final and exclusive embodiment of the entire agreement between Employee and the Company with regard
to its subject matter, and supersedes and replaces in its entirety any other agreements or
understandings, whether written or oral, between the Company and Employee. 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. Notwithstanding the foregoing, the Company
may in its sole discretion, amend the Agreement at any time as may be necessary to avoid the
imposition of the additional tax under Section 409(A)(a)(1)(B) of the Code; provided, however, that
any such amendment shall be implemented in such a manner as to preserve, to the greatest extent
possible, the terms and conditions of the Agreement as in existence immediately prior to any such
amendment.

     23. Advice of Counsel. Employee acknowledges and confirms that he has had the
opportunity to seek such legal, financial and other advice and representation as Employee deems
appropriate in connection with this Agreement.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the
date set forth in the first paragraph above.

	 	 	 	 	 
	 	 	THORATEC CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. Donald Hill
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	     J. Donald Hill
	 

	 	 	 	     Chairman of the Board
	 
	 	 	 	 
	 	 	AGREED:
	 
	 	 	 	 
	 	 	/s/ Gerhard F. Burbach
	 	 	 
	 	 	Gerhard F. Burbach

9

 

Exhibit A

EMPLOYEE CONFIDENTIAL INFORMATION AND

INVENTIONS AGREEMENT

     In partial consideration and as a condition of my employment or continued employment with
Thoratec Corporation, a California corporation (which together with any parent, subsidiary,
affiliate, or successor is hereinafter referred to as the “Company” or “Thoratec”), and effective
as of the date that my employment with the Company first commenced, I hereby agree as follows:

     1. NONCOMPETITION

          During my employment with the Company, I will perform for the Company such duties as it
may designate from time to time and will devote my full time and best efforts to the business of
the Company and will not, without the prior written approval of (i) an officer of the Company if I
am not an executive officer of the Company or (ii) the Board of Directors of the Company if I am an
executive officer of the Company, (a) engage in any other professional employment or consulting, or
(b) directly or indirectly participate in or assist any business which is a current or potential
supplier, customer, or competitor of the Company.

     2. THORATEC’S BUSINESS

The general line of business of the Company includes but is not limited to:

	 	(a)	 	development, manufacture and sale of (1) medical equipment,
devices, apparatus and instrumentation; (2) specialty polymer and chemicals and
configured polymer parts; and (3) high performance textiles and textile
products;
	 
	 	(b)	 	all equipment and items related to the above; and
	 
	 	(c)	 	all matters which are recorded in the Company’s records and
notebooks.

     3. CONFIDENTIALITY OBLIGATION

I will hold all Thoratec Confidential Information in confidence and will not disclose, use, copy,
publish, summarize, or remove from Thoratec’s premises any Confidential Information, except (a) as
necessary to carry out my assigned responsibilities as a Thoratec employee, and (b) after
termination of my employment, only as specifically authorized in writing by an officer of Thoratec.
“Confidential Information” is all information related to any aspect of Thoratec’s business which
is either information not known by actual or potential competitors of the Company or is proprietary
information of the Company, whether of a technical nature or otherwise. Confidential Information
includes computer programs, computer source code, inventions, discoveries, ideas, designs,
circuits, schematics, formulas, algorithms, trade secrets, secret procedures, works of authorship,
developmental or experimental work, processes, techniques, methods, improvements, know-how, data,
financial information and forecasts, product plans, marketing/ sales plans and strategies, and
customer lists.

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     4. INFORMATION OF OTHERS

          I will safeguard and keep confidential the proprietary information of customers, vendors,
consultants, and other parties with which Thoratec does business to the same extent as if it were
Thoratec Confidential Information. I will not, during my employment with the Company or otherwise,
use or disclose to the Company any confidential, trade secret, or other proprietary information or
material of any previous employer or other person, and I will not bring onto the Company’s premises
any unpublished document or any other property belonging to any former employer without the written
consent of that former employer.

     5. THORATEC PROPERTY

          All papers, records, data, notes, drawings, files, documents, samples, devices, products,
equipment, and other materials, including copies, relating to Thoratec’s business that I possess or
create as a result of my employment with Thoratec, whether or not confidential, are the sole and
exclusive property of Thoratec. In the event of the termination of my employment, I will promptly
deliver all such materials to Thoratec and will sign and deliver to the Company the “Termination
Certificate” attached hereto as Exhibit A.

     6. OWNERSHIP OF INVENTIONS

          All computer programs, computer source code, inventions, ideas, designs, circuits, schematics,
formulas, algorithms, trade secrets, works of authorship, developments, processes, techniques,
improvements, and related know-how which result from work performed by me, alone or with others, on
behalf of Thoratec or from access to Thoratec Confidential Information or property, whether or not
patentable or copyrightable, (collectively “Inventions”) shall be the property of Thoratec, and, to
the extent permitted by law, shall be “works made for hire.” I hereby assign and agree to assign
to Thoratec or its designee, without further consideration, my entire right, title, and interest in
and to all Inventions, other than those described in Paragraph 7 of this Agreement, including all
rights to obtain, register, perfect, and enforce patents, copyrights, and other intellectual
property protection for Inventions. I will disclose promptly and in writing to the individual
designated by Thoratec or to my immediate supervisor all Inventions which I have made or reduced to
practice. During my employment and for four years after, I will assist Thoratec (at its expense)
to obtain and enforce patents, copyrights, and other forms of intellectual property protection on
Inventions.

     7. EXCLUDED INVENTIONS

          Attached as Schedule 1 to this Agreement is a list of all inventions, improvements, and
original works of authorship, which I desire to exclude from this Agreement, each of which has been
made or reduced to practice by me prior to my employment by Thoratec. If no list is attached to
this Agreement, there are no inventions to be excluded at the time of my signing of this Agreement.
I understand that this Agreement requires disclosure, but not

11

 

assignment, of any invention that qualifies under Section 2870 of the California Labor Code, which
reads:

“Any provision in an employment agreement which provides that an employee shall
assign or offer to assign any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee developed entirely on his
or her own time without using the employer’s equipment, supplies, facilities, or
trade secret information except for those inventions that either:

(a) relate at the time of conception or reduction to practice of the invention to
the employer’s business or actual or demonstrably anticipated research or
development of the employer; or

(b) result from any work performed by the employee for the employer.”

     8. PRIOR CONTRACTS

          I represent that there are no other contracts to assign inventions that are now in
existence between any other person or entity and me. I further represent that I have no other
employments, consultancies, or undertakings which would restrict or impair my performance of this
Agreement.

     9. NON-SOLICITATION

          During the term of my employment by the Company, and for twelve (12) months thereafter, I
shall not, directly or indirectly, without the prior written consent of the Company: (i) solicit or
induce any employee of the Company to leave the employ of the Company; (ii) hire for any purpose
any employee of the Company or any former employee who has left the employment of the Company
within six months of the date of termination of such employee’s employment with the Company.

     10. AGREEMENTS WITH THE UNITED STATES GOVERNMENT AND OTHER THIRD PARTIES

          I acknowledge that the Company from time to time may have agreements with other persons or
with the United States Government or agencies thereof which impose obligations or restrictions on
the Company regarding Inventions made during the course of work under such agreements or regarding
the confidential nature of such work. I agree to be bound by all such obligations or restrictions
and to take all action necessary to discharge the obligations of the Company thereunder.

     11. NO EMPLOYMENT AGREEMENT

          I agree that unless specifically provided in another writing signed by me and an officer of
the Company, my employment by the Company is not for a definite period of time. Rather, my
employment relationship with the Company is one of employment at will and my continued employment
is not obligatory by either myself or the Company.

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     12. MISCELLANEOUS

          12.1 Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of the State of
California, excluding those laws that direct the application of the laws of another jurisdiction.

          12.2 Enforcement

If any provision of this Agreement shall be determined to be invalid or unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the
parties to the extent possible. In any event, all other provisions of this Agreement, shall be
deemed valid, and enforceable to the full extent possible.

          12.3 Injunctive Relief; Consent to Jurisdiction

I acknowledge and agree that damages will not be an adequate remedy in the event of a breach of any
of my obligations under this Agreement. I therefore agree that the Company shall be entitled
(without limitation of any other rights or remedies otherwise available to the Company) to obtain,
without posting bond, specific performance and preliminary and permanent injunction from any court
of competent jurisdiction prohibiting the continuance or recurrence of any breach of this
Agreement. I hereby submit myself to the jurisdiction and venue of the courts of the State of
California for purposes of any such action. I further agree that service upon me in any such
action or proceeding may be made by first class mail, certified or registered, to my address as
last appearing on the records of the Company.

          12.4 Arbitration

I further agree that the Company, at its option, may elect to submit any dispute or controversy
arising out of this Agreement for final settlement by arbitration conducted in Alameda County or
San Francisco County in accordance with the then existing rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators shall be specifically
enforceable and may be entered in any court having jurisdiction thereof.

          12.5 Attorneys’ Fees

If any party seeks to enforce its rights under this Agreement, by legal proceedings or otherwise,
the non-prevailing party shall pay all costs and expenses of the prevailing party.

          12.6 Binding Effect; Waiver

This Agreement shall be binding upon and shall inure to the benefit of the successors, executors,
administrators, heirs, representatives, and assigns of the parties. The waiver by the Company of a
breach of any provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision hereof.

          12.7 Headings

The Section headings herein are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement.

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          12.8 Entire Agreement; Modifications

          This Employee Confidential Information and Inventions Agreement contains the entire agreement
between the Company and the undersigned employee concerning the subject matter hereof and
supersedes any and all prior and contemporaneous negotiations, correspondence, understandings, and
agreements, whether oral or written, respecting that subject matter. All modifications to this
Agreement must be in writing and signed by the party against whom enforcement of such modification
is sought.

IN WITNESS WHEREOF, I have executed this document as of the                     day of                                        ,
200___.

	 	 	 
	 
	 
	 	 
	 
	 	Employee
	 	 	 
	RECEIPT ACKNOWLEDGED:	 	 
	 	 	 
	THORATEC CORPORATION	 	 
	 	 	 
	By:                                                            	 	 

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SCHEDULE 1

(Excluded Inventions, Improvements, and

Original Works of Authorship)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Identifying Number	 
	Title	 	Date	 	 	Or Brief Description	 
	 
	 	 	 	 	 	 	 	 

15

 

EXHIBIT A

Thoratec Corporation

TERMINATION CERTIFICATION

This is to certify that I do not have in my possession, nor have I failed to return, any papers,
records, data, notes, drawings, files, documents, samples, devices, products, equipment, and other
materials, including reproductions of any of the aforementioned items, belonging to Thoratec
Corporation, its subsidiaries, affiliates, successors, or assigns (together, the “Company”).

I further certify that I have complied with all the terms of the Company’s Confidential Information
and Inventions Agreement signed by me, including the reporting of any inventions and original works
of authorship (as defined therein) conceived or made by me (solely or jointly with others) covered
by that agreement.

I further agree that, in compliance with the Confidential Information and Inventions Agreement, I
will hold in confidence and will not disclose, use, copy, publish, or summarize any Confidential
Information (as defined in the Company’s Confidential Information and Inventions Agreement) of the
Company or of any of its customers, vendors, consultants, and other parties with which it does
business.

	 	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 

	 	 	 	Employee’s Signature
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 

	 	 	 	Type/Print Employee’s Name

California Labor Code § 2870. Application of provision providing that employee shall assign or
offer to assign rights in invention to employer.

	(a)	 	Any provision in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her employer shall not
apply to an invention that the employee developed entirely on his or her own time without
using the employer’s equipment, supplies, facilities, or trade secret information except for
those inventions that either:

16

 

	 	(1)	 	Relate at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or development of
the employer; or
	 
	 	(2)	 	Result from any work performed by the employee for the employer.

	(b)	 	To the extent a provision in an employment agreement purports to require an employee to
assign an invention otherwise excluded from being required to be assigned under subdivision
(a), the provision is against the public policy of this state and is unenforceable.

Added Stats 1979 ch 1001 § 1; Amended Stats 1986 ch 346 § 1.

17

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