AMENDMENT TO AMENDED AND RESTATED SEPARATION BENEFITS AGREEMENT
Exhibit 10.25
AMENDMENT TO
AMENDED AND RESTATED SEPARATION BENEFITS AGREEMENT
AMENDED AND RESTATED SEPARATION BENEFITS AGREEMENT
This Amendment to the Amended and Restated Separation Benefits Agreement (the
“Amendment”) is entered into as of November 16, 2009 (the “Effective Date”),
between Xxxxx X. Xxxxxx (“Executive”) and Thoratec Corporation, a California corporation
(the “Company”).
RECITALS
WHEREAS, on April 23, 2007, Executive and the Company entered into an Amended and Restated
Separation Benefits Agreement (the “Agreement”) which provides for separation and change of
control benefits upon the occurrence of certain terminations of Executive’s employment and/or a
change of control of the Company;
WHEREAS, pursuant to Section 9(c) of the Agreement, the Agreement may be amended by a written
instrument signed by both Executive and a duly authorized officer of the Company; and
WHEREAS, the parties wish to amend the Agreement in order to ensure that the benefits to be
provided by the Agreement comply with, or are exempt from, the provisions of Xxxxxxx 000X xx xxx
Xxxxxx Xxxxxx Internal Revenue Code (“Section 409A”).
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
the parties hereby agree as follows effective as of the Effective Date. Except as otherwise
defined herein, capitalized terms shall have the meanings assigned to them in the Agreement.
1. Amendment. The Agreement is hereby amended to the extent necessary to provide the
following:
1.1 Release; Payments upon Termination of Employment. To the extent the Agreement
requires that a release of claims be provided to the Company following a termination of employment
in order to receive a benefit under the Agreement, such release shall be delivered to the Company,
and shall become non-revocable, no later than fifty-two (52) days following such termination of
employment. Except as otherwise provided in this Amendment, any compensation provided under the
Agreement that is payable upon a termination of Employee’s employment, shall be paid within sixty
(60) days of such termination of employment.
1.2 Definition of Good Reason. For purposes of the Agreement, “Good Reason” shall
mean (A) any material reduction in Executive’s duties or salary or bonus opportunity or (B) a
requirement that Executive works at a facility more than twenty-five (25) miles from the Company
facility where Executive is then employed without Executive’s written consent; provided, that (A)
and (B) shall not constitute grounds for Good Reason termination unless Executive gives the Company
written notice describing such Good Reason event within thirty (30) days after the event first
occurs, such event is not corrected by the Company within thirty (30) days after the Company’s
receipt of such notice and Executive terminates employment no later than one hundred eighty (180)
days after the expiration of such correction period.
1.3 Section 7 of the Agreement. Section 7 of the Agreement is hereby amended and
restated in its entirety to read as follows:
“7. Section 409A.
(A) Notwithstanding anything in the Agreement or this Amendment to the contrary, any
compensation or benefits payable under the Agreement that constitutes “nonqualified deferred
compensation” within the meaning of Section 409A and which are designated as payable upon
Executive’s termination of employment (other than accrued obligations which must be paid upon such
termination under applicable law) shall be payable upon Executive’s “separation from service” with
the Company within the meaning of Section 409A (a “separation from service”), regardless of
when the termination of employment occurs.
(B) To the maximum extent permitted by applicable law, amounts payable in connection with a
separation from service shall be paid in reliance upon Treasury Regulation 1.409A-1(b)(9)
(Separation Pay Plans) or Treasury Regulation 1.409A-1(b)(4) (Short-Term Deferrals). However,
notwithstanding anything to the contrary in the Agreement, if Executive is deemed by the Company at
the time of Executive’s separation from service to be a “specified employee” for purposes of
Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive
is entitled under the Agreement is required in order to avoid a prohibited distribution under
Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the
earlier of (i) the expiration of the six-month period measured from the date of Executive’s
separation from service with the Company or (ii) the date of Executive’s death. Upon the first
business day following the expiration of the applicable period, all payments deferred pursuant to
the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or
beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as
otherwise provided herein.
(C) To the extent that the Agreement provides for the payment of any tax gross-up and/or any
related taxes, costs or expenses, all such payments shall be made by the Company promptly, but in
no event later than the end of Executive’s taxable year next following the Executive’s taxable year
in which Executive remits the related taxes.
(D) To the extent applicable, the Agreement shall be interpreted in accordance with, and
incorporate the terms and conditions required by, Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder, including without limitation any
such regulations or other guidance that may be issued after the effective date of this Amendment.
Notwithstanding any provision of the Agreement or the Amendment to the contrary, in the event that
the Company determines that any amounts payable hereunder will be immediately taxable to Executive
under Section 409A and related Department of Treasury guidance, to the extent permitted under
Section 409A, the Company may, to the extent permitted under Section 409A (i) cooperate in good
faith to adopt such amendments to the Agreement and appropriate policies and procedures, including
amendments and policies with retroactive effect, that they determine necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Agreement, preserve the
economic benefits of the Agreement and avoid less favorable accounting or tax consequences for the
Company and/or (ii) take such other actions as mutually determined necessary or appropriate to
exempt the amounts payable hereunder from Section 409A or to comply with the requirements of
Section 409A and thereby avoid the application of penalty taxes under such section.”
1.4 Termination of Executive After a Change of Control. The first sentence of Section
2(b) of the Agreement shall be amended and restated in its entirety to read as follows:
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“Notwithstanding Section 2(a), if Executive would otherwise have been entitled to benefits
pursuant to Section 2(a) but Executive’s involuntary termination of employment without Cause by the
Company occurs on or within eighteen (18) months after a Change
of Control, or if Executive terminates employment with the Company for Good Reason during such period, Executive shall be paid
in lieu of the severance pay benefit described in Section 2(a) a Change of Control severance pay
benefit equal to two (2) times Executive’s then-current annual base salary plus two (2) times the
greatest of (a) the target bonus for the year preceding the year in which Executive’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.”
1.5 Tax Withholding. New Section 9(l) is hereby added to the Agreement to read in its
entirety as follows:
“The Company may withhold from any amounts payable to Executive hereunder all federal, state,
city or other taxes that the Company may reasonably determine are required to be withheld pursuant
to any applicable law or regulation.”
2. Other Terms and Conditions. Except as set forth herein, all other terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the Effective Date.
| EXECUTIVE | THORATEC CORPORATION |
||||
| /s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxx X. Xxxxxx | Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | President & Chief Executive Officer | ||||
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