Exhibit 10.20
SEPARATION BENEFITS AGREEMENT
THIS AGREEMENT is made this day of ___________, 2005 (the
"Agreement"), by and between THORATEC CORPORATION, a California corporation (the
"Company"), and _____________ (the "Executive").
WITNESSETH
WHEREAS, the Company maintained the Thoratec Corporation Employee
Severance Benefits Plan (the "Severance Plan"), which was effective July 11,
1998 and was amended and restated by the Board of Directors of the Company on
February 26, 2004, and which was designed to provide severance benefits to
certain employees whose employment was terminated in the circumstances specified
in the Plan;
WHEREAS, the Company wishes to provide severance benefits to the
Executive as described herein rather than pursuant to the Severance Plan;
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:
1. Effectiveness. This Agreement is effective as of the date first
noted above.
2. Separation Benefits.
(a) If the Executive's employment is involuntarily terminated by the
Company (other than for Cause) and the Executive has not declined another
comparable position with the Company, an affiliate of the Company, or a
successor or assignee of the Company, the Executive shall be paid a standard
severance pay benefit equal to one times the Executive's then-current annual
base salary. Such amount shall be payable either (i) in a cash lump sum as soon
as reasonably practicable after the Executive's termination of employment, or
(ii) if elected by the Executive in accordance with applicable law, ratably
during the one year after termination of employment in accordance with Company's
regular pay periods.
(b) Notwithstanding Section 2(a), if the Executive would otherwise
have been entitled to benefits pursuant to Section 2(a) but his involuntary
termination of employment by the Company occurs within 18 months after a Change
In Control, or if the Executive terminates his employment with the Company for
Good Reason during such period, the Executive shall be paid in lieu of the
standard severance pay benefit described in Section 2(a) a Change in Control
severance pay benefit equal to two times the Executive's then-current annual
base salary plus two times the greatest of (a) the target bonus for the year
preceding the year in which the 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. Such amounts shall be payable either (i) in a
cash lump sum as soon as reasonably practicable after the Executive's
termination of employment, or (ii) if elected by the Executive in accordance
with applicable law, ratably during the one year after termination of employment
in accordance with Company's regular pay periods.
(c) If the Executive is entitled to receive benefits pursuant to
Section 2(a) or 2(b), the Company shall continue to pay, to the same extent as
paid by the Company immediately before termination of employment, for the
Executive's health coverage continuation if the Executive elects "COBRA" as
provided by the Company's group health plan through (i) the calendar month
following the calendar month of termination of employment, if benefits are paid
pursuant to Section 2(a), or (ii) one year following termination of employment,
if benefits are paid pursuant to Section 2(b). The period of such Company-paid
COBRA coverage shall be considered part of the Executive's COBRA coverage
entitlement period.
(d) For purposes hereof, the following terms have the following
meanings:
(i) "Cause" shall mean (A) any act of personal dishonesty
taken by the Executive in connection with his/her
responsibilities as an employee that is intended to
result in substantial personal enrichment of the
Executive, (B) the Executive'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
(C) continued willful violations by the Executive of the
Executive's obligations to the Company after there has
been delivered to the Executive a written demand for
performance from the Company that describes the basis
for its belief that the Executive has not substantially
performed his duties.
(ii) "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 (iv) a change in the composition of
the Company Board of Directors 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, 2004
or (y) 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 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.
(iii) "Good Reason" shall mean any material reduction in the
duties or salary or bonus opportunity of the Executive
or a requirement that the Executive work at a facility
more than 25 miles from the Company's current
headquarters.
3. Gross-Up for Excise Tax. In the event that any payment hereunder
to or for the benefit of the Executive (determined without regard to any
additional payment required under this paragraph) (a "Payment") is subject to
the excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as
amended (the "Excise Tax"), then the Executive shall be paid an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes, including, without limitation, any income taxes and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
4. Benefits Subject to Execution of Waiver of Claims. The Executive
shall not be entitled to receive any amount hereunder unless the Executive
executes a release of claims in a form acceptable to the Company at the time
specified by the Company.
5. 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; provided, however, that if the
Executive's employment agreement with the Company provides larger severance
benefits, such benefits shall be paid in lieu of any amounts hereunder.
6. Miscellaneous.
(a) Any notice or other communication required or permitted under
this Agreement shall be effective only if it is in writing and delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as follows (or if it is sent through any other method agreed upon by the
parties):
If to the Company:
Thoratec Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Vice President of Human Resources
If to the Executive:
____________________
____________________
____________________
or to such other address as any party hereto may designate by notice to
the other, and shall be deemed to have been given upon receipt.
(b) This Agreement by and between the Executive and the Company
constitutes the entire agreement between the parties hereto with respect to the
matters herein, and supersedes and is in full substitution for any and all prior
understandings or agreements, whether oral or written, with respect to the
matters herein, including without limitation the Severance Plan.
(c) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party against whom or which enforcement of
such waiver is sought. The failure of any party hereto at any time to require
the performance by any other party hereto of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter,
nor shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) (i) This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators and other legal representatives.
(ii) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been required to
perform it if no such succession had taken place. As used in the
Agreement, the "Company" shall mean both the Company as defined above and
any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
(e) The Company may withhold from any amounts payable to the
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.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the state of California, without reference to principles of
conflicts of law.
(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(h) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(i) All provisions of this Agreement are intended to be severable.
In the event any provision or restriction contained herein is held to be invalid
or unenforceable in any respect, in whole or in part, such finding will in no
way affect the validity or enforceability of any other provision of this
Agreement. The parties hereto further agree that any such invalid or
unenforceable provision will be deemed modified so that it will be enforced to
the greatest extent permissible under law, and to the extent that any court of
competent jurisdiction determines any restriction herein to be unreasonable in
any respect, such court may limit this Agreement to render it reasonable in
light of the circumstances in which it was entered into and specifically enforce
this Agreement as limited.
(j) The Executive acknowledges and confirms that he has had the
opportunity to seek such legal, financial and other advice and representation as
he has deemed appropriate in connection with this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
[Executive] THORATEC CORPORATION
_________________________________ _________________________
Name:
Title:
