-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TYBDCFEcxk/FYb/ktXadIei/nCpjS2SMCttEDCCv/S8S79Epjc0CJGG+iBQA3USr 9zmAr7Dyf5SrAEDRow/2Sw== 0000097745-01-000003.txt : 20010228 0000097745-01-000003.hdr.sgml : 20010228 ACCESSION NUMBER: 0000097745-01-000003 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010227 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: THORATEC CARDIOSYSTEMS INC CENTRAL INDEX KEY: 0000350907 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 942340464 STATE OF INCORPORATION: CA FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-32553 FILM NUMBER: 1554743 BUSINESS ADDRESS: STREET 1: 6035 STONERIDGE DR CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 9258478600 MAIL ADDRESS: STREET 1: 6035 STONERIDGE DR CITY: PLEASANTON STATE: CA ZIP: 94588 FORMER COMPANY: FORMER CONFORMED NAME: THORATEC LABORATORIES CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: THERMO ELECTRON CORP CENTRAL INDEX KEY: 0000097745 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 042209186 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 81 WYMAN ST STREET 2: P O BOX 9046 CITY: WALTHAM STATE: MA ZIP: 02454-9046 BUSINESS PHONE: 7816221000 SC 13D 1 0001.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-l(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Thoratec Corporation ---------------------- (Name of Issuer) Common Stock, no par value per share -------------------------------------- (Title of Class of Securities) 885175 30 7 ---------------------- (CUSIP Number) Seth H. Hoogasian, Esq. General Counsel (781) 622-1000 Thermo Electron Corporation 81 Wyman Street Waltham, Massachusetts 02454-9046 --------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 14, 2001 -------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) - --------------------------- -------------------------- CUSIP NO. 885175 30 7 13D Page 2 of 8 Pages - --------------------------- -------------------------- - ------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Thermo Electron Corporation 04-2209186 - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ] (b)[ ] - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* SC - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - ------------------------------------------------------------------------------- NUMBER OF SHARES 7. SOLE VOTING POWER BENEFICIALLY 16,686,555 OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------------------ 8. SHARED VOTING POWER 2,731,779 ------------------------------------------------------------ 9. SOLE DISPOSITIVE POWER 19,418,334 ------------------------------------------------------------ 10. SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 19,418,334 - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [] - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.5% - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! ITEM 1. Security of the Issuer. The securities to which this statement relates are the common stock, no par value per share (the "Common Stock"), of Thoratec Corporation (formerly known as Thoratec Laboratories Corporation), a California corporation (the "Company"). The principal executive offices of the Company are located at 6035 Stoneridge Drive, Pleasanton, California 94588. ITEM 2. Identity and Background. This statement is being filed by Thermo Electron Corporation, a Delaware corporation ("Thermo Electron"). Thermo Electron is sometimes referred to herein as the "Reporting Person." The principal business address and principal office address of the Reporting Person is 81 Wyman Street, Waltham, Massachusetts 02454-9046. The Reporting Person is a leading provider of analytical and monitoring instruments used in a broad range of applications, from life sciences research to telecommunications to food, drug, and beverage production. Appendix A attached to hereto sets forth with respect to each executive officer and director of the reporting Person the following information: (a) name; (b) business address; (c) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and (d) citizenship. To the knowledge of the Reporting Person, there is no person who may be deemed to be a controlling person of the Reporting Person. During the last five years, neither the Reporting Person nor, to the knowledge of the Reporting Person, any executive officer or director of the Reporting Person has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five years, neither the Reporting Person nor, to the knowledge of the Reporting Person, any executive officer of director of the Reporting Person has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. ITEM 3. Source and Amount of Funds or Other Consideration. The Common Stock acquired by the Reporting Person was acquired on February 14, 2001, in connection with the merger (the "Merger") of Lightning Acquisition Corp., a Massachusetts corporation and wholly owned subsidiary of the Company ("Merger Sub"), with and into Thermo Cardiosystems Inc., a Massachusetts corporation ("Cardiosystems"), pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement"), dated as of October 3, 2000, by and among the Company, Merger Sub, Cardiosystems and the Reporting Person. The Merger Agreement is filed as Exhibit 99.1 hereto. Prior to the Merger, the Reporting Person was the majority stockholder of Cardiosystems. Pursuant to the terms of the Merger Agreement, each outstanding share of Cardiosystems common stock was converted into the right to receive 0.835 shares of Common Stock of the Company. Accordingly, the outstanding shares of Cardiosystems common stock owned by the Reporting Person were converted into the number of shares of Common Stock of the Company acquired by the Reporting Person on February 14, 2001. ITEM 4. Purpose of Transactions. The following is a summary of the principal terms of the transaction. This summary is qualified in its entirety by reference to the definitive agreements referred to herein and filed as exhibits hereto. The Merger Agreement was entered into by the Company, Merger Sub, Cardiosystems and the Reporting Person as of October 3, 2000. The closing of the Merger occurred on February 14, 2001. In connection with the Merger, the former stockholders of Cardiosystems received, in the aggregate, 32,213,812 shares of Common Stock of the Company. In connection with the Merger Agreement, and as a condition to the consummation of the Merger, the Company and the Reporting Person entered into (i) a Shareholder Agreement, dated October 3, 2000 (the "Shareholder Agreement"), which is attached hereto as Exhibit 99.2 and (ii) a Registration Rights Agreement, dated October 3, 2000 (the "Registration Rights Agreement"), which is attached hereto as Exhibit 99.3. Pursuant to the Shareholder Agreement, the Company agreed that, following the Merger, as long as the Reporting Person beneficially owns voting securities of the Company representing at least 10% of the voting power of all of the Company's voting securities outstanding, the Company will take all necessary action to cause a nominee of the Reporting Person to be elected to the Company's board of directors. The Reporting Person has designated its Chief Financial Officer, Theo Melas-Kyriazi, to serve as its initial representative on the Company's board of directors. Additionally, the Reporting Person agreed that, so long as it beneficially owns voting securities of the Company representing at least 5% of the voting power of all of the Company's voting securities outstanding, the Reporting Person will not (i) acquire any voting securities of the Company without prior consent of the board of directors of the Company, (ii) sell or otherwise transfer any shares of Common Stock of the Company received in the Merger prior to the date four months following the consummation of the Merger, (iii) sell or otherwise transfer more than 25% of the shares of Common Stock of the Company received in the Merger prior to the first anniversary of the consummation of the Merger, (iv) sell or otherwise transfer more than 50% of the shares of Common Stock of the Company received in the Merger prior to the date eighteen months following the consummation of the Merger, or (v) sell or transfer any shares of Common Stock of the Company in privately negotiated transactions if, after giving effect to such transactions, the transferee would own securities of the Company representing more than 10% of the voting power of all of the Company's voting securities outstanding. The Reporting Person also agreed that, with respect to the Common Stock of the Company it received in the Merger, it will (i) cause such shares of Common Stock to appear or otherwise be counted as present for purposes of establishing a quorum at any shareholder meeting of the Company and (ii) provide the Company's management with a proxy or consent to vote such shares of Common Stock owned by the Reporting Person, but not more than a number of shares representing 5% of the voting power of securities of the Company outstanding at the closing of the Merger. Pursuant to the terms of the Registration Rights Agreement, the Company agreed to (i) file with the Securities and Exchange Commission (the "SEC") and use its reasonable best efforts to cause to become effective an `evergreen' or `shelf' registration statement registering for resale by the Reporting Person the Common Stock of the Company received by the Reporting Person in the Merger, (ii) file a registration statement, or a post-effective amendment to the shelf registration statement, for an underwritten offering of the shares of Common Stock of the Company received by the Reporting Person in the Merger at various times, and (iii) provide the Reporting Person the right to include the shares of Common Stock of the Company received by the Reporting Person in the Merger in any registration statement filed by the Company with the SEC, other than registration statements relating to employee plans and acquisitions. The timing of the effectiveness of the `shelf' registrations corresponds to the timing of the lapse of the transfer restrictions under the Shareholder Agreement applicable to the shares of Common Stock of the Company received by the Reporting Person in the Merger. Additionally, the Reporting Person has granted certain officers, directors and employees of the Reporting Person options to purchase a total of 68,000 shares of Cardiosystems common stock owned by Thermo Electron before the Merger. Those officers, directors and employees are entitled to have the Company register the shares of Common Stock of the Company into which those Cardiosystems shares were converted in the Merger. Immediately prior to the consummation of the Merger, Cardiosystems had $54.9 million of 4 3/4% Subordinated Convertible Debentures due 2004 (the "4 3/4% Debentures") outstanding. The 4 3/4% Debentures were convertible into shares of Cardiosystems common stock at a price of $31.415 per share of Cardiosystems common stock. Following the consummation of the Merger, the 4 3/4% Debentures remain obligations of Cardiosystems, but are convertible into shares of Common Stock of the Company, at a conversion price of $37.623 per share, which is $31.415 divided by the 0.835 merger exchange ratio. Additionally, the 4 3/4% Debentures are guaranteed by the Reporting Person, which guarantee remains in effect after the Merger. Cardiosystems has agreed to reimburse the Reporting Person for any payments made by the Reporting Person under such guarantee. Pursuant to the terms of the Merger Agreement, the Company has obtained a standby letter of credit in the amount of $45 million to support the repayment of the 4 3/4% Debentures and to reduce the prospect that the Reporting Person will be required to pay any amount under its guarantee of the 4 3/4% Debentures. As previously announced in January 2000, the Reporting Person has initiated a restructuring, of which the Merger is a component, to focus on its core instruments business. Accordingly, the Reporting Person may consummate the sale of shares of Common Stock from time to time in accordance with the Shareholder and Registration Rights Agreements. Any such sales will be dependent upon then current market conditions and other relevant considerations, and may be made on the open market, in privately negotiated transactions or in one or more underwritten offerings. Except as described in this Item 4, the Reporting Person does not have any current plans or proposals that relate to or would result in any of the events described in paragraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. Interest in Securities of the Issuer. (a) As a result of the Merger, the Reporting Person is the beneficial owner of 19,418,334 shares of Common Stock of the Company, representing approximately 35.5% of the outstanding Common Stock of the Company. This percentage amount reflects the 32,213,812 shares of Common Stock of the Company issued in connection with the Merger, as disclosed by the Company in its registration statement on Form S-4 (Commission File No. 333-49120). Of the 19,418,334 shares of Common Stock owned by the Reporting Person, (i) to the knowledge of the Reporting Person, 65,506 shares of Common Stock are beneficially owned by the other persons named in Item 2, (ii) 56,780 shares of Common Stock are subject to options to acquire such shares granted by the Reporting Person pursuant to its director and employee stock option plans, (iii) 39,869 shares of Common Stock are issuable upon the conversion by the Reporting Person of $1,500,000 principal amount of the 4 3/4% Debentures held by it, and (iv) Reporting Person has agreed to grant 16,700 shares of Common Stock to a former officer of Cardiosystems pursuant to a transition agreement executed with such former officer. Information with respect to the beneficial ownership of the shares of Common Stock of the other persons named in Item 2 is set forth in Appendix A. Except as set forth in this Item 5, to the best knowledge of the Reporting Person, none of the parties named in Item 2 owns any of the Company's Common Stock. (b) With respect to 2,731,779 shares of Common Stock of the Company beneficially owned by the Reporting Person, the Reporting Person shares the power to vote all of such shares with the Company pursuant to the Shareholder Agreement, as more fully described in Item 4 above. With respect to the remainder of the shares of Common Stock of the Company beneficially owned by the Reporting Person, the Reporting Person has the sole power to vote all such shares. Subject to the terms of the Shareholder Agreement, as more fully described in Item 4 above, the Reporting Person has the sole power to dispose of the shares of Common Stock beneficially owned by it. With respect to the shares of Common Stock of the Company beneficially owned by the other persons named in Item 2, except as set forth in Appendix A, each such person has the sole power to vote all of such shares and the sole power to dispose of all of such shares. Item 1 sets forth the Company's name and state of incorporation along with the address of its principal business and principal office. The Company's principal business is the research, development, manufacturing and marketing of medical devices for circulatory support and vascular graft applications. To the best knowledge of the Reporting Person, during the last five years, the Company (i) has not been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) and (ii) was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as result of which it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. (c) Except as described above in this Item 5 and in Item 4, which item is incorporated herein by reference, neither the Reporting Person nor, to the knowledge of the Reporting Person, any person named in Appendix A beneficially has effected any transactions in Common Stock during the past 60 days. (d) None. (e) Not applicable. ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The responses to Item 3, Item 4, Item 5, the Merger Agreement, the Shareholder Agreement and the Registration Rights Agreement are incorporated herein by reference. ITEM 7. Material to be Filed as Exhibits. The following documents are filed as a Exhibits to this Schedule 13D. Exhibit No. Description 99.1 Agreement and Plan of Merger, dated as of October 3, 2000, by and among Thoratec Laboratories Corporation, Lightning Acquisition Corp., Thermo Cardiosystems Inc. and Thermo Electron Corporation (1) 99.2 ShareholderAgreement, dated as of October 3, 2000, by and between Thoratec Laboratories Corporation and Thermo Electron Corporation. 99.3 Registration Rights Agreement, dated as of October 3, 2000, by and between Thoratec Laboratories Corporation and Thermo Electron Corporation. - ---------------------- (1) Incorporated by reference from the Registration Statement on form S-4 (File No. 333-49120) of Thoratec Corporation. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 23, 2001 THERMO ELECTRON CORPORATION By: /s/ Theo Melas-Kyriazi ------------------------------------ Name: Theo Melas-Kyriazi Title: Vice President and Chief Financial Officer APPENDIX A Thermo Electron Corporation The name, present principal occupation or employment and beneficial ownership of shares of common stock of Thoratec Corporation (the "Company") of each director and executive officer of Thermo Electron Corporation ("Thermo Electron") is set forth below. Unless otherwise noted, all such individuals are citizens of the United States. Unless otherwise noted, the business address of each executive officer and director of Thermo Electron is 81 Wyman Street, Waltham, Massachusetts 02454-9046. Directors
- ------------------------------------------------------------------------------------------------------------------------- Beneficial Ownership of Shares of the Company Common Stock -------------------------------------------------------------------- Name/Present Principal Business Address Shares Shares Underlying Total Occupation or Employment Held Outright Options Beneficial Exercisable Prior Ownership to April 15, 2001 - -------------------------------------------------------------------------------------------------------------------------- Samuel W. Bodman Cabot Corporation 0 0 0 Chairman and Chief 75 State Street Executive Officer of Boston, Massachusetts Cabot Corporation. 02109 - ------------------------------------------------------------------------------------------------------------------------- Peter O. Crisp 0 0 0 Vice Chairman of Rockefeller Financial Services, Inc. - ------------------------------------------------------------------------------------------------------------------------- Elias P. Gyftopoulos Massachusetts Institute 11,192 3,131 14,324 Professor Emeritus of of Technology the Massachusetts Room 24-109 Institute of 77 Massachusetts Avenue Technology. Cambridge, Massachusetts 02139 - ------------------------------------------------------------------------------------------------------------------------- Frank Jungers 822 NW Murrray 10,229 835 11,064 Private consultant on Suite 242 business and energy Portland, Oregon 97229 matters. - ------------------------------------------------------------------------------------------------------------------------- Jim P. Manzi 0 0 0 Currently involved in number of technology startup ventures, primarily relating to the Internet. - ------------------------------------------------------------------------------------------------------------------------- Robert A. McCabe Pilot Capital Corporation 9,394 835 10,229 Chairman of Pilot 444 Madison Avenue Capital Corporation. Suite 2103 New York, New York 10022 - ------------------------------------------------------------------------------------------------------------------------- Robert W. O'Leary PacifiCare Health Systems, Inc. 0 0 0 President and Chief 3120 Lake Center Drive Executive Officer of Santa Ana, California 92704 PacifiCare Health Systems Inc. - ------------------------------------------------------------------------------------------------------------------------- Hutham S. Olayan Suite 1100 9,394 835 10,229 President and director 505 Park Avenue of Olayan America New York, New York 10022 Corporation. - ------------------------------------------------------------------------------------------------------------------------- Richard F. Syron 0 0 0 Chief Executive Officer and Chairman of the Board of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Marijn E. Dekkers(1) 0 0 0 President, Chief Operating Officer and Director of Thermo Electron - -------------------------------------------------------------------------------------------------------------------------
(1) Mr. Dekkers is a citizen of The Netherlands Executive Officers Who are Not Directors No person is a controlling stockholder of Thermo Electron.
Beneficial Ownership of Shares of the Company Common Stock -------------------------------------------------------------------- Name/Present Principal Business Address Shares Shares Underlying Total Occupation or Employment Held Outright Options Beneficial Exercisable Prior Ownership to April 15, 2001 - ------------------------------------------------------------------------------------------------------------------------- Theo Melas-Kyriazi(2) 2,961 16,700 19,661 Vice President and Chief Financial Officer of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Guy Broadbent 0 0 0 Vice President, Optical Technologies of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Barry S. Howe 0 0 0 Vice President, Measurement and Control of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Colin Maddix 0 0 0 Vice President, Life Sciences of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Seth H. Hoogasian 0 0 0 Vice President and General Counsel of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- Peter E. Hornstra 0 0 0 Corporate Controller and Chief Accounting Officer of Thermo Electron - ------------------------------------------------------------------------------------------------------------------------- All directors and current executive officers as a 43,170 22,336 65,506 group - -------------------------------------------------------------------------------------------------------------------------
(2) Mr. Melas-Kyriazi is a citizen of Greece. EX-99 2 0002.txt SHAREHOLDER AGREEMENT EXHIBIT 99.2 SHAREHOLDER AGREEMENT THIS SHAREHOLDER AGREEMENT (the "Agreement") is made and entered into as of October 3, 2000 by and between Thoratec Laboratories Corporation, a California corporation ("Thoratec"), and Thermo Electron Corporation, a Delaware corporation ("TEC"). TEC is a stockholder of Thermo Cardiosystems Inc., a Massachusetts corporation ("TCA"). A. Concurrently with the execution of this Agreement, Thoratec, Lightning Acquisition Corp., a Massachusetts corporation and wholly-owned subsidiary of Thoratec ("Merger Sub"), TEC and TCA are entering into an Agreement and Plan of Merger (the "Merger Agreement") under which those parties are agreeing, upon the terms and subject to the conditions set forth in the Merger Agreement, to merge Merger Sub into TCA (the "Merger"). B. As of the date of this Agreement, TEC is the beneficial owner of 23,129,293 shares of the common stock, par value $0.10 per share, of TCA. C. As an inducement and condition to entering into the Merger Agreement, Thoratec and TEC have agreed that TEC will have the right to be represented on the board of directors of Thoratec and that TEC will agree to certain restrictions respecting the stock of Thoratec, all as set forth in this Agreement. ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS: 1. Certain Definitions. For purposes of this Agreement, these terms have these meanings: (a) "Affiliate" has the meaning specified in Rule 1-02(b) of Regulation S-X under the Securities Act but excluding any person or entity that would in the absence of this exclusion, be deemed an Affiliate of TEC solely as a result of a non-employee director serving as a member of the TEC Board of Directors. (b) "Beneficially Own" or "Beneficial Ownership" with respect to any securities means having "beneficial ownership" of such securities as determined under Rule 13d-3 under the Exchange Act. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person include all securities Beneficially Owned by all Affiliates of that Person and all other Persons with whom that Person would constitute a Group. (c) "Group" has the meaning set forth in Section 13(d) of the Exchange Act with respect to the securities of Thoratec. (d) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (e) "Existing Shares" means all issued and outstanding shares of TCA common stock owned of record or Beneficially Owned by TEC as of the record date for determining the Persons entitled to receive notice of, and to vote at, a meeting of the shareholders of TCA called for purpose of voting on the Merger Agreement and the Merger. (f) "Person" means any individual or entity. (g) "Securities Act" means the Securities Act of 1933, as amended. (h) "Voting Power" means the number of votes that the Voting Securities are entitled to cast in an election of directors of Thoratec. (i) "Voting Securities" means the capital stock and any other securities issued by Thoratec having the power to vote in the election of directors of Thoratec, other than securities having such power only upon the happening of a contingency. 2. Representations and Warranties of TEC. TEC represents and warrants to Thoratec that, as of the date of this Agreement: (a) TEC Beneficially Owns 23,129,293 Existing Shares. The Existing Shares constitute all the shares of TCA common stock Beneficially Owned by TEC. TEC does not Beneficially Own any options or other rights to purchase any other shares of TCA common stock, nor does TEC have any put or similar right or any obligation to sell or transfer any securities of TCA to any other Person. (b) TEC has the corporate power and authority to enter into and perform all of TEC's obligations under this Agreement. This Agreement has been duly and validly executed and delivered by TEC and constitutes a valid and binding agreement of TEC, enforceable against TEC in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable principles. (c) Except for any applicable filings under federal and state securities laws, no filing with, and no permit, authorization, consent or approval of, any governmental entity is required to be made or obtained by TEC for the execution of this Agreement by TEC or the compliance by TEC with its provisions. Neither the execution and delivery of this Agreement by TEC nor the compliance by TEC with its provisions will: (i) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, acceleration, redemption or purchase) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, or material license, lease, agreement or other instrument or obligation to which TEC is a party or by which TEC or any of TEC's properties or assets is bound or (ii) violate any order, writ, injunction, decree, judgment, statute, rule or regulation applicable to TEC or any of TEC's properties or assets. (d) All the Existing Shares are held by TEC or an Affiliate of TEC, or by a nominee or custodian for the benefit of TEC, free and clear of all mortgages, claims, charges, liens, security interests, pledges, options, proxies, voting trusts or agreements, except for those imposed by this Agreement and the Merger Agreement. (e) TEC understands and acknowledges that Thoratec is entering into, and causing Merger Sub to enter into, the Merger Agreement in reliance upon TEC's concurrent execution and delivery of this Agreement. (f) The representations and warranties set forth in this Section 2 shall survive the completion of the Merger. 3. Representations and Warranties of Thoratec. Thoratec hereby represents and warrants to TEC that, as of the date of this Agreement: (a) Thoratec has the corporate power and authority to enter into and perform all of its obligations under this Agreement. This Agreement has been duly and validly executed and delivered by Thoratec and constitutes a valid and binding agreement of Thoratec, enforceable against Thoratec in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable principles. (b) Except for any applicable filings under federal and state securities laws, no filing with, and no permit, authorization, consent or approval of, any governmental entity is necessary for the execution of this Agreement by Thoratec or the compliance by Thoratec with its provisions. Neither the execution and delivery of this Agreement by Thoratec nor the compliance by Thoratec with any of its provisions will: (i) conflict with or result in any breach of any organizational documents of Thoratec, (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, acceleration, redemption or purchase) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, or material license, lease, agreement or other instrument or obligation of any kind to which Thoratec is a party or by which Thoratec or any of its properties or assets is bound or (iii) violate any order, writ, injunction, decree, judgment, statute, rule or regulation applicable to Thoratec or any of its properties or assets. (c) The representations and warranties set forth in this Section 3 shall survive the completion of the Merger. 4. Thoratec Board Matters. (a) Effective if and when the Merger closes, Thoratec shall cause Thoratec's board of directors to take all necessary action to elect a nominee of TEC to fill one of the vacancies on Thoratec's board of directors. (b) For meetings of Thoratec's shareholders occurring if and after the Merger closes at which Thoratec's shareholders are asked to elect the members of Thoratec's board of directors, if requested by TEC, Thoratec shall nominate, as a member of the slate of directors to be elected at that meeting, one person designated by TEC (the "TEC Nominee"). Thoratec shall take any and all actions reasonably necessary to attempt to cause Thoratec's shareholders to vote for the TEC Nominee. (c) Subject to Section 4(e) and for so long as the TEC Nominee is a member of Thoratec's board of directors, TEC may appoint one observer (who can change from meeting to meeting) to participate in any and all meetings of Thoratec's board of directors in which the TEC Nominee does not participate. TEC shall notify Thoratec of the identity of any observer at least 24 hours in advance of any meeting that will be attended by that observer. At Thoratec's request, TEC and any observer shall enter into a confidentiality agreement in form and substance reasonably acceptable to Thoratec protecting the information provided to the observer. (d) The person whom TEC nominates to serve on Thoratec's board of directors under Section 4(b) (at the record date for the shareholder meeting or vote at which that nominee will be considered for election) and the person or persons who serve as observers under Section 4(c) (when they participate in meetings of Thoratec's board of directors) shall be management employees of TEC. If requested, those persons shall excuse themselves from those portions of Thoratec board meetings at which agreements, arrangements or other issues on which Thoratec or Affiliates of Thoratec, on one hand, and TEC or Affiliates of TEC, on the other hand, are materially adverse or in conflict. (e) This Section 4 shall terminate in all respects if and when TEC ceases to Beneficially Own at least 10% of the Voting Power. 5. Acquisitions of Voting Securities. TEC shall not, directly or indirectly, without the prior consent of the board of directors of Thoratec specifically expressed in a resolution, Beneficially Own any Voting Securities except for: (i) the shares of Thoratec common stock issued to TEC in the Merger, (ii) any shares of Thoratec common stock issued as a dividend on the shares of such stock and (iii) any shares of Thoratec common stock issued pursuant to a stock split or recapitalization (together with the shares referred to in clauses (i) and (ii), the "Thoratec Shares"). Except as authorized by this Section 5, TEC shall assure that neither TEC nor any Affiliate of TEC or member of any Group of which TEC is a member shall acquire Beneficial Ownership of any Voting Securities. 6. Restrictions on Transfer. (a) TEC shall not, directly or indirectly, without the prior consent of the board of directors of Thoratec specifically expressed in a resolution, sell, transfer, pledge, encumber or otherwise dispose of (collectively "Transfer" and, as appropriate, "Transferred") any Thoratec Shares except in compliance with this Section 6. (b) TEC acknowledges that the Thoratec Shares may be Transferred in the absence of registration under the Securities Act only pursuant to an exemption from such registration and in accordance with this Agreement. The Thoratec Shares will be subject to stop transfer orders. The certificates representing the Thoratec Shares will bear the following legends: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND THE OTHER PROVISIONS OF A SHAREHOLDER AGREEMENT DATED AS OF OCTOBER 2, 2000, AS IT MAY BE AMENDED FROM TIME TO TIME, BETWEEN THORATEC AND TEC, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THORATEC." (c) Except as set forth in Section 6(d), TEC agrees that it will not Transfer any Thoratec Shares prior to four months after the date the Merger becomes effective; that it will not Transfer more than 25% of the Thoratec Shares prior to the first anniversary of the date the Merger becomes effective; and that it will not Transfer more than 50% of the Thoratec Shares prior to 18 months after the date the Merger becomes effective. Thoratec agrees to remove the legend in Section 6(b) above relating to the restrictions on transfer and other provisions of this Agreement with respect to certificates representing that number of Thoratec Shares no longer subject to the restrictions on transfer pursuant to this Section 6(c). (d) Notwithstanding the restrictions on Transfers imposed by Sections 6(b) and 6(c), TEC may Transfer Thoratec Shares in whole or in part if such Transfer is: (i) in connection with, or at any time following the consummation of, a transaction approved by the board of directors of Thoratec resulting in the sale of substantially all of the consolidated assets of Thoratec or the merger (other than the Merger) of Thoratec with another entity pursuant to which the shareholders of Thoratec immediately before that merger will not possess more than 50% of the Voting Power of Thoratec or the surviving entity immediately after that merger; (ii) to a Person in connection with a tender or exchange offer by such Person which is approved by a majority of Thoratec's board of directors and reflected in a Schedule 14D-9 filed with the Securities and Exchange Commission; (iii) to Thoratec or any Person designated by Thoratec's board of directors as specifically expressed in a resolution, in exchange for cash, securities or other consideration specified by Thoratec's board of directors and subject to whatever other conditions may be specified in that resolution or (iv) to any Affiliate of TEC, but only if the transferee, its Affiliates and the members of any Group of which the transferee is a member agree in writing to be bound by this Agreement as if they were TEC, with such modifications thereto as Thoratec deems reasonably necessary to carry out the purposes of this Agreement (by way of example, if TEC's obligations under this Agreement shall have terminated because TEC no longer holds the requisite number of shares under Section 11 of this Agreement, the agreement with the transferee and its Affiliates and members of that Group shall make clear that their obligations shall nevertheless continue if, together, they hold that requisite amount). (e) No Thoratec Shares shall be Transferred pursuant to any privately negotiated transaction (except as permitted by Section 6(d) above) if, after giving effect to that Transfer, the transferee, its Affiliates and members of any Group of which the transferee is a member would together Beneficially Own Voting Securities representing more than 10% of the Voting Power. 7. Disclosure. TEC hereby agrees to permit Thoratec to publish and disclose in the registration statement and joint proxy statement/prospectus (including all documents and schedules filed with the Securities and Exchange Commission) contemplated by the Merger Agreement, and in any press release or other disclosure document that Thoratec reasonably determines to be necessary or desirable in connection with the Merger and any transactions related thereto, TEC's identity and ownership of TCA common stock and the nature of TEC's commitments, arrangements and understandings under this Agreement, provided, that any such disclosure document filed with the Securities and Exchange Commission, and to the extent practicable any press releases and similar disclosures, will be submitted to TEC for comment prior to filing or dissemination. 8. Voting of Thoratec Common Stock. TEC hereby irrevocably and unconditionally agrees that, during the period commencing with the closing of the Merger and continuing until the termination of this Agreement: (a) TEC shall, and shall cause its Affiliates and members of any Group of which TEC is a member to, appear (in person or by proxy) at any meeting (whether annual or special and whether or not an adjourned or postponed meeting) of the holders of Thoratec common stock, however called, or otherwise cause the Voting Securities Beneficially Owned by them to be counted as present thereat for purposes of establishing and maintaining a quorum. (b) TEC shall, and shall cause its Affiliates and members of any Group of which TEC is a member to, vote or provide a written consent with respect to the Voting Securities Beneficially Owned by them, but not more than a number of shares representing 5% of Voting Power of Voting Securities outstanding upon the Closing of the Merger in the manner directed by Thoratec management at any such meeting or pursuant to such written consent, provided, that if and to the extent necessary to assure the election of the TEC Nominee, TEC may deviate from this principle. (c) TEC shall not, and shall cause its Affiliates and members of any Group of which TEC is a member, not to deposit any Voting Securities Beneficially Owned by them in a voting trust or subject any Voting Securities Beneficially Owned by them to any arrangements or agreements with respect to the voting of such Voting Securities; provided that this restriction shall not apply to any Voting Securities Beneficially Owned by TEC in excess of a number of shares representing 5% of the Voting Power of Voting Securities outstanding upon the Closing of the Merger. (d) Thoratec shall indemnify and hold harmless TEC and each officer, director, employee, agent, representative or person who controls TEC (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses) resulting from (x) the agreement by TEC, pursuant to Section 8(b) above, to vote shares of Thoratec as directed by Thoratec management or (y) the voting of any such shares as so directed by Thoratec management, TEC shall (i) give prompt notice to Thoratec of any claim with respect to which it seeks indemnification hereunder and (ii) permit Thoratec to assume the defense of such claims with counsel of Thoratec's choice, provided that TEC shall have the right to employ separate counsel and to participate in (but not control) the defense of such claim, but the fees and expenses of such counsel shall be at the expense of TEC unless: (A) Thoratec shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to TEC in a timely manner or (B) in the reasonable judgment of TEC, based upon the advice of outside counsel, a material potential conflict of interest exists between TEC and Thoratec with respect to such claim (in which case, if TEC notifies Thoratec in writing that TEC elects to employ separate counsel at the expense of Thoratec, Thoratec shall not have the right to assume the defense of such claim on behalf of TEC). TEC will not be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term given by the claimant or plaintiff to TEC of a release from all liability in respect of such claim. Thoratec will not be obligated to pay the fees and expenses of more than one counsel for TEC with respect to any such claim. If for any reason the foregoing indemnification is unavailable to TEC or insufficient to hold it harmless, then Thoratec shall contribute to the amount paid or payable by TEC as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by Thoratec and TEC, but also the relative fault of Thoratec and TEC, as well as any other relevant equitable considerations. Thoratec shall have no obligation of indemnity with respect to voting on any specific matter pursuant to (y) above, if Thoratec notifies TEC that it releases TEC's obligations with respect to voting the shares on such particular matter at least three business days prior to any vote and Thoratec does not vote the shares on such particular matter. (e) At the closing of the Merger the parties shall execute a certificate setting forth the calculation of the number of shares referenced in (b) and (c) above. 9. Limitations on Ownership. Except as otherwise set forth in this Agreement, Thoratec shall not impair or otherwise adversely restrict or limit the exercise of any voting or other rights of the Voting Securities held by TEC, whether through an amendment to its Articles of Incorporation or its Bylaws, through any agreement or otherwise. Without limiting the foregoing, Thoratec shall exempt TEC from the provisions of any shareholder rights plan and shall not adopt any other "anti-takeover" measure (including but not limited to any supermajority voting requirement, control share provision or acceleration provision) that treats TEC in any manner different from that treatment accorded each other holder of Voting Securities. 10. Equitable Remedies. Thoratec and TEC acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their terms or were otherwise breached. Accordingly, they agree that the non-breaching or potentially breaching party shall be entitled to an injunction, specific performance or other equitable relief, without the need to post bond, to prevent or cure any breaches of this Agreement (including, without limitation, its Section 5) and to enforce specifically the provisions hereof in any court having jurisdiction, this being in addition to any other remedy to which that party may be entitled at law or in equity. 11. Options. The parties acknowledge that TEC has issued options to purchase 66,700 shares of issued and outstanding TCA Common Stock owned by TEC. Upon consummation of the Merger, these options will become exercisable for shares of Thoratec Common Stock. TEC agrees not to issue any additional securities exercisable for or convertible into shares of TCA Common Stock. Thoratec acknowledges that if the options are exercised, the shares of Thoratec Common Stock issuable upon exercise of the options will not be subject to this Agreement. 12. Termination. This Agreement shall terminate on the earlier to occur of: (a) the termination of the Merger Agreement in accordance with its Article VIII and (b) such time as TEC Beneficially Owns less than 5% of the Voting Power. 13. Miscellaneous. (a) This Agreement may be amended, modified or supplemented only by written agreement of Thoratec and TEC. (b) Any failure of TEC, on one hand, or Thoratec, on the other hand, to comply with any provision of this Agreement may be waived by Thoratec or TEC, respectively, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with that provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. (c) All notices and other communications hereunder shall be in writing and shall be delivered personally, by overnight courier or similar means or sent by facsimile with written confirmation of receipt, to the parties at the addresses specified below or at such other address for a party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof. Any such notice shall be effective upon receipt, if personally delivered, or on the next business day following transmittal, if sent by confirmed facsimile. Notices shall be delivered as follows: (1) if to Thoratec, to: Thoratec Laboratories Corporation 6035 Stoneridge Drive Pleasanton, California 94588 Telephone: (925) 847-8600 Facsimile: (925) 847-8625 Attention: D. Keith Grossman with a copy to: Heller Ehrman White & McAuliffe LLP 2500 Sand Hill Road Suite 100 Menlo Park, California 94025 Telephone: (650) 234-4200 Facsimile: (650) 234-4299 Attention: August J. Moretti, Esq. 6 (2) If to TEC, to: Thermo Electron Corporation 81 Wyman Street Waltham, Massachusetts 02454 Telephone: (781) 622-1198 Facsimile: (781) 622-1283 Attention: Seth Hoogasian with a copy to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 Attention: Jay E. Bothwick, Esq (d) Except as provided in the next sentence, neither this Agreement nor any right, interest or obligation hereunder shall be assigned by either of the parties hereto without the prior written consent of the other party. Thoratec's rights set forth in this Agreement shall redound to the benefit of any successor to Thoratec or any successor to Thoratec's business, including with respect to any equity securities that replace or are issued in exchange for Thoratec common stock. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or remedies hereunder upon any other Person except the parties hereto. (e) This Agreement shall be governed by the laws of the State of California without reference to its principles of conflicts of law. (f) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (g) In case any provision of this Agreement should be finally determined to be invalid, illegal or unenforceable in any respect against a party hereto, it shall be adjusted if possible to effect the intent of the parties. In any event, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability shall only apply as to such party in the specific jurisdiction where such final determination shall have been made. (h) The section headings contained in this Agreement are solely for the purpose of reference and shall not in any way affect the meaning or interpretation of this Agreement. The word "including" shall mean "including without limitation." (i) This Agreement, the Merger Agreement and the other "TCA Agreements" and "TEC Agreements" referenced in the Merger Agreement embody the entire agreement and understanding of the parties hereto with respect to the subject matter of this Agreement. (j) If either party hereto seeks to enforce any of its rights under this Agreement or obtain any remedy in connection with this Agreement, whether by formal legal proceedings or otherwise, the party that substantially prevails shall be entitled to recover all of its costs and expenses incurred in connection with that effort, including its attorneys' fees and costs. (k) From time to time, at either party's request and without further consideration, the other party hereto shall execute and deliver such additional documents and take such other actions as may be necessary or desirable to effectuate the provisions of this Agreement. (l) Each party to this Agreement has been represented by counsel during the preparation and negotiation of this Agreement, and therefore waives any rule of construction that would construe ambiguities against the party drafting this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first written above. THORATEC LABORATORIES CORPORATION By: /s/ D. KEITH GROSSMAN ------------------------------------ Name: D. Keith Grossman Title: President and Chief Executive Officer THERMO ELECTRON CORPORATION By: /s/ Theo Melas-Kyriazi ------------------------------------ Name: Theo Melas-Kyriazi Title: Vice President and Chief Financial Officer EX-99 3 0003.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 99.3 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of October 3, 2000 by and between Thoratec Laboratories Corporation, a California corporation ("Thoratec"), and Thermo Electron Corporation, a Delaware corporation ("TEC"). A. Thoratec, Lightning Acquisition Corp., a Massachusetts corporation and wholly-owned subsidiary of Thoratec ("Merger Sub"), TEC and Thermo Cardiosystems Inc., a Massachusetts corporation ("TCA"), entered into an Agreement and Plan of Merger (the "Merger Agreement") under which those parties agreed, upon the terms and subject to the conditions set forth in the Merger Agreement, to merge Merger Sub into TCA (the "Merger"). B. By virtue of the Merger, TEC will become the beneficial owner of Registrable Securities (defined below). Thoratec and TEC desire that Thoratec grant TEC certain registration rights regarding the Registrable Securities in order to facilitate TEC's ability to liquidate those securities. The purpose of this Agreement is to grant those rights. C. As an inducement and condition to entering into the Merger Agreement, Thoratec has agreed that TEC will be entitled to the registration rights as set forth in this Agreement. ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS: 1. Definitions. For purposes of this Agreement, these terms have these meanings: "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in the City of New York are authorized by law, regulation or executive order to close. "Common Stock" means the common stock, no par value, of Thoratec. "Compulsory Participation Notice" has the meaning set forth in Section 4(b). "Compulsory Registration" has the meaning set forth in Section 4(a). "Compulsory Registration Statement" has the meaning set forth in Section 4(a). "Delay Notice" has the meaning set forth in Section 7(b). "Effective Date" means the date of the closing of the Merger. "Holder" means TEC and any permitted assignee of all or any of TEC's registration rights under this Agreement. "Material Development Condition" has the meaning set forth in Section 7(b). "Merger Agreement" has the meaning set forth in the recitals. "Other Holders" has the meaning set forth in Section 5. "Persons" means an individual or entity. "Prospectus" means the prospectus included in any Registration Statement, as amended or supplemented. "Registrable Securities" means the Common Stock issued to TEC in the Merger and any other securities later issued, as a result of or in connection with any stock, dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger, consolidation, exchange or distribution in respect of the Common Stock issued to TEC in the Merger, but only so long as such Common Stock or other securities are held by TEC or another Holder. 1 "Registration Expenses" has the meaning set forth in Section 8. "Registration Period" has the meaning set forth in Section 4(c). "Registration Statement" means any registration statement within the scope of Sections 3,4 or 5 of this Agreement that covers any of the Registrable Securities, including the Prospectus included therein, all amendments and supplements to that Registration Statement, including post-effective amendments, and all exhibits and all materials incorporated by reference in that Registration Statement. "Requesting Securityholder" has the meaning set forth in Section 5. "Restricted Securities" has the meaning set forth in Section 2. "Rule 144" means Rule 144 adopted under the Securities Act, as amended from time to time, or any successor rule that may be adopted by the SEC. "Rule 145" means Rule 145 adopted under the Securities Act, as amended from time to time, or any successor rule that may be adopted by the SEC. "Rule 415" means Rule 415 adopted under the Securities Act, as amended from time to time, or any successor rule that may be adopted by the SEC. "SEC" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Securities Act" means the Securities Act of 1933, as amended or any successor federal statute, and the rules and regulations thereunder, as the same are in effect from time to time. "Shareholder Agreement" means the Shareholder Agreement between Thoratec and TEC dated the same date as the Merger Agreement. "Shelf Registration Period" has the meaning set forth in Section 3(b). "Shelf Registration Statements" has the meaning set forth in Section 3(a). "Underwritten Offering" means a registered offering in which securities of Thoratec are sold to an underwriter for reoffering to the public. Except where expressly indicated otherwise, all references to sections in this Agreement are to sections of this Agreement. 2. Securities Subject to this Agreement. The securities entitled to the benefits of this Agreement are the Registrable Securities but, with respect to any particular Registrable Security, only so long as such securities continue to be Restricted Securities and only so long as such securities are held by a Holder. A Registrable Security that has ceased to be a Registrable Security cannot thereafter become a Registrable Security. A "Restricted Security" is a Registrable Security (i) which has not been sold pursuant to an effective Registration Statement in accordance with the intended plan and method of distribution therefor set forth in the final Prospectus forming part of such Registration Statement, and (ii) which cannot, at that time, be freely sold by its Holder publicly without any registration under the Securities Act and without any restrictions (including, without limitation, restrictions as to volume or manner of sale) under Rule 144 or Rule 145. 3. Shelf Registrations. (a) General. Thoratec shall use its reasonable best efforts to cause to become effective under the Securities Act Registration Statements relating to the resale, from time to time, of the Registrable Securities in accordance with the plan and method of distribution set forth in the respective Prospectuses included in such Registration Statements (the "Shelf Registration Statements") as follows: (i) on or before four months after the Effective Date a Shelf Registration Statement relating to the resale of 25% of the Registrable Securities; (ii) on or before 12 months after the Effective Date a Shelf Registration Statement relating to an additional 25% of the Registrable Securities and (iii) on or before 18 months after the Effective Date a Shelf Registration Statement relating to all previously unregistered Registrable Securities. The plan and method of 2 distribution may include an Underwritten Offering of such Registrable Securities. Thoratec shall make the initial filing of each Shelf Registration at least 60 days prior to the date Thoratec is obligated to have such Shelf Registration effective. Thoratec shall promptly respond to any SEC comments to such Shelf Registration Statement. Thoratec shall file amendments to the Shelf Registration Statements to reflect transfers of Registrable Securities to any Holder. (b) Effective Period. Thoratec will use its reasonable best efforts to cause the Shelf Registration Statements to become effective on or before the dates set forth above and keep the Shelf Registration Statements continuously effective until the earlier of (i) the fifth anniversary of the Effective Date (subject to extension as provided in Section 7(b)) and (ii) the date on which all Registrable Securities covered by the Shelf Registration Statements have been sold thereunder in accordance with the plan and method of distribution intended by Holders and disclosed in the respective Prospectuses included in the Shelf Registration Statements (the "Shelf Registration Period"). (c) Restriction on Transfer. Notwithstanding the effectiveness of the Shelf Registration Statements, TEC will only distribute Registrable Securities in compliance with Section 6(c) of the Shareholder Agreement. 4. Compulsory Registration. (a) Compulsory. Subject to Section 7(b), Thoratec shall file a Registration Statement on Form S-3 (or any successor form) or any other appropriate form under the Securities Act for an Underwritten Offering (the "Compulsory Registration Statement") covering the Registrable Securities that Thoratec has been requested to register in accordance with Section 4(b) (a "Compulsory Registration"), provided that no one Compulsory Registration shall include Registrable Securities constituting more than 10 percent of the total number of outstanding securities of the class that includes the Registrable Securities and provided further that (i) no more than one Compulsory Registration Statement shall be filed during the period commencing four months after the Effective Date and ending on the first anniversary of the Effective Date; (ii) no more than one Compulsory Registration shall be filed during the period commencing on the first anniversary of the Effective Date and ending 18 months after the Effective Date; (iii) no more than one Compulsory Registration shall be filed during the period commencing 18 months after the Effective Date and ending on the second anniversary of the Effective Date; and (iv) commencing 18 months after the Effective Date no more than one Compulsory Registration Statement filed on or after 18 months after the Effective Date shall be filed in any twelve month period. If, at the time of any such registration, there are two or more Holders and at least two of them wish to register a total of more than that number of Registrable Securities, they shall allocate the number of Registrable Securities registered for each of them based on the relative number of Registrable Securities that each desires to have registered. (b) Participation Notice. The Holders shall have the right, by giving written notice (the "Compulsory Participation Notice") to Thoratec not later than the fifth anniversary of the Effective Date, to elect to have included in the Compulsory Registration Statement such portion of their Registrable Securities as is indicated in their Compulsory Participation Notice. A Holder may, at any time up to five Business Days before the anticipated effective date of the Compulsory Registration Statement, request that its Registrable Securities not be included therein by providing a written notice to that effect to Thoratec. Any such request shall be binding and irrevocable. (c) Effectiveness of Compulsory Registration Statement. Subject to Section 6(b), Thoratec shall file a Registration Statement relating to any Compulsory Registration as soon as practicable but no later than 45 calendar days after receiving the Compulsory Notice and shall use its commercially reasonable efforts to: (i) cause the Compulsory Registration Statement to become effective as promptly as practicable and (ii) thereafter keep the Compulsory Registration Statement effective continuously for the period ending, subject to the second sentence of Section 6(b) and the second sentence of Section 7(b), on the earlier of (A) the expiration of six months after the date the Compulsory Registration Statement is declared effective by the SEC and (B) the date on which all Registrable Securities covered by such Compulsory Registration Statement have been sold and the distribution contemplated hereby has been completed (the "Registration Period"). 3 (d) Inclusion of Other Securities. Thoratec and any other holder of Thoratec's securities who has contractual registration rights may include its securities in the Compulsory Registration effected pursuant to this Section 4, subject to Section 4(g). (e) Withdrawal. Subject to Section 7(b), Thoratec will withdraw the Compulsory Registration Statement upon: (i) the receipt from the SEC of a written request for withdrawal or (ii) having obtained the written request of the Holders of a majority of the Registrable Securities covered by that Registration Statement. (f) Maximum Number of Compulsory Registrations. Thoratec shall not be obligated to file and seek effectiveness of more than six Compulsory Registration Statements. A Compulsory Registration Statement withdrawn at the request of Thoratec pursuant to Section 4(e) or Section 7(b)(ii), or withdrawn at the request of Holders if such Holders agree to pay the Registration Expenses in connection therewith, shall not be counted towards that maximum number of Compulsory Registration Statements. (g) Priority on Compulsory Registration. With respect to any Compulsory Registration, if the managing underwriter or underwriters to which such Compulsory Registration relates, advise the selling Holders in writing that the total amount of Registrable Securities and equity securities requested to be included pursuant to Section 4(d) will in the aggregate materially and adversely affect the success of such Underwritten Offering, then: (i) first, the amount of equity securities requested to be included pursuant to Section 4(d) will be reduced to zero if necessary (pro rata among Thoratec and such other holders on the basis of the amount of such equity securities to be included therein by Thoratec and each such holder) and (ii) second, the amount of Registrable Securities of all Holders who have requested to have Registrable Securities included in the Compulsory Registration will be reduced, pro rata among such Holders on the basis of the amount of such Registrable Securities requested to be included therein by each such Holder, so that, after such reduction, there will be included in such Underwritten Offering the amount of Registrable Securities that, in the written opinion of such managing underwriter or underwriters, can be sold without materially and adversely affecting the success of the Underwritten Offering. 5. Piggyback Registration. If, on or before the fifth anniversary of the Effective Date, Thoratec at any time proposes to file a registration statement with respect to any class of its equity securities, whether for its own account (other than in connection with the Compulsory Registration Statement contemplated by Section 4 or a registration statement on Form S-4 or S-8 (or any successor or substantially similar form), or for the account of a holder of securities of Thoratec pursuant to demand registration rights granted by Thoratec to such holder (a "Requesting Securityholder"), or for the registration of securities for sale by Thoratec on a continuous or delayed basis pursuant to Rule 415, then Thoratec shall give written notice of such proposed filing to all Holders at least 20 days before the anticipated filing date of such registration statement. That notice shall offer to all Holders the opportunity to have any or all of the Registrable Securities held by the Holders included in that registration statement. Each Holder desiring to have its Registrable Securities registered under this Section 4 shall so advise Thoratec in writing within 15 days after the date of receipt of such notice (which request shall set forth the amount of Registrable Securities for which registration is requested). Thoratec shall use its commercially reasonable efforts to include in that registration statement all the Registrable Securities so requested to be included therein. Notwithstanding the foregoing, if the managing underwriter or underwriters of any such proposed public offering advises Thoratec in writing that the total amount or kind of securities which the Holders, Thoratec and any other Persons (the "Other Holders") intend to be included in such proposed public offering is sufficiently large to materially and adversely affect the success of such proposed public offering, then the amount or kind of securities to be offered for the accounts of Holders and Other Holders shall be reduced as follows: (i) if such Registration Statement is a primary registration on behalf of Thoratec, Thoratec will include in such registration (A) first, all securities to be offered by Thoratec and (B) second, up to the full amount of securities requested to be included in such registration by the Holders and the Requesting Securityholders having contractual rights to include securities in such underwritten offering (allocated pro rata among the Holders and Requesting Securityholders having contractual rights to include securities in such underwritten offering on the basis of the amount of securities requested to be included therein by each such Holder or Requesting Securityholder), so that the total amount of securities to be included in such offering is the full amount that, in the written opinion 4 of such managing underwriter or underwriters, can be sold without materially and adversely affecting the success of such offering; and (ii) if such Registration Statement is an underwritten secondary registration on behalf of such Requesting Securityholders, Thoratec will include in such registration: (A) first, all securities of such Requesting Securityholders requested to be included therein and (B) second, up to the full amount of securities requested to be included in such registration by the Holders and other persons (allocated pro rata among such Holders and such other persons on the basis of the amount of securities requested to be included therein by each such Holder or other person), so that the total amount of securities to be included in such offering is the full amount, that in the written opinion of such managing underwriter or underwriters, can be sold without materially and adversely affecting the success of the offering. Anything to the contrary in this Agreement notwithstanding, Thoratec may withdraw or postpone a registration statement referred to in this Section 5 at any time before it becomes effective or withdraw, postpone or terminate the offering after it becomes effective without obligation to any Holder. In addition, this Section 5 is subject to Section 6(c). If an offering in connection with which a Requesting Securityholder is entitled to registration under this Section 5 is an underwritten offering, any Requesting Securityholder whose Registrable Securities are included in the Registration Statement shall, unless otherwise agreed by Thoratec, offer and sell the Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to this Agreement, on the same terms and conditions as other shares of Common Stock included in the underwritten offering. 6. Registration Procedures. (a) General. Subject to Sections 7(b) and (c), in connection with Thoratec's registration obligations pursuant to Sections 3 and 4 and, to the extent applicable, Section 5, Thoratec shall: (i) prepare and file with the SEC: (A) a new Registration Statement or such amendments and post-effective amendments to an existing Registration Statement as may be necessary to keep the Registration Statement effective for the time period set forth herein, and (B) any amendments and post-effective amendments to any Shelf Registration Statement, any Prospectus and any supplements to any Prospectus included in any Shelf Registration Statement, as may be requested by any Holder of Registrable Securities to reflect (1) any changes to the plan of distribution contained in the Prospectus included in such Shelf Registration Statement or (2) the identity of any transferee of Registrable Securities, provided that, as soon as practicable, but in no event later than three Business Days before filing any Registration Statement, any related Prospectus or any amendment or supplement thereto, other than any amendment or supplement made solely as a result of incorporation by reference of documents filed with the SEC subsequent to the filing of such Registration Statement, Thoratec shall furnish to the Holders of the Registrable Securities covered by the Registration Statement and the underwriters, if any, copies of all such documents proposed to be filed; (ii) notify the selling Holders of Registrable Securities and the managing underwriters, if any, promptly: (A) when a new Registration Statement, Prospectus or any Prospectus supplement or post-effective amendment has been filed and, with respect to any new Registration Statement or post-effective amendment, when it has become effective, (B) of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose, (C) of any suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (D) if there is a misstatement or omission of a material fact in any Registration Statement, Prospectus or any document incorporated therein by reference or if any event occurs that requires the making of any changes in any Registration Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; providedthat upon any occurrence specified in clauses (B), (C) or (D) Thoratec shall use its reasonable best efforts to, at the earliest practicable date, obtain a withdrawal of any stop order, the lifting of any suspension of the qualification or exemption from qualification or amend the Registration Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; 5 (iii) if reasonably requested by the managing underwriter or underwriters or a Holder of Registrable Securities being sold in connection with an Underwritten Offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the Holders of a majority of the Registrable Securities being sold in such Underwritten Offering agree should be included therein relating to the sale of the Registrable Securities including, without limitation, information with respect to the total number of shares of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such Prospectus supplement or post-effective amendment; (iv) furnish to each selling Holder of Registrable Securities and each managing underwriter, if any, without charge, as many conformed copies as may reasonably be requested of the then effective Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (v) deliver to each selling Holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the then effective Prospectus (including each Prospectus subject to completion) and any amendments or supplements thereto as such Persons may reasonably request; (vi) use commercially reasonable efforts to register or qualify or cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any selling Holder of Registrable Securities or underwriter reasonably requests in writing, provided that Thoratec will not be required to: (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, but for this paragraph (vi), (B) subject itself to general taxation in any such jurisdiction or (C) file a general consent to service of process in any such jurisdiction; (vii) otherwise use commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC relating to such registration and the distribution of the securities being offered and make generally available to its securities holders earnings statements satisfying Section 11(a) of the Securities Act; (viii) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.; (ix) subject to the proviso in paragraph (vi) above, cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the selling Holders or the underwriters, if any, to complete the disposition of such Registrable Securities (other than as may be required by the governmental agencies or authorities of any foreign jurisdiction and other than as may be required by a law applicable to a selling Holder by reason of its own activities or business other than the sale of Registrable Securities); (x) cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates will not bear any restrictive legends; and cause such certificates to be in such denominations and registered in such names as the selling Holders or managing underwriters, if any, shall request; and (xi) to the extent requested by the Holders of Registrable Securities in connection with a proposed Underwritten Offering, but in no event more than once in any twelve month period commencing on the date of the immediately preceding request. (A) execute and deliver an underwriting agreement containing customary terms, including without limitation, appropriate restrictions on Thoratec's ability to issue or sell any shares of its Common Stock or securities convertible or exercisable or exchangeable therefor and any requirement, to the extent permitted by the applicable Thoratec stock option plans or other agreements, to enforce available restrictions on the ability of any option holder to exercise options 6 or on any stockholder to sell any shares of Thoratec Common Stock, (B) to the extent reasonably necessary to facilitate the success of any such Underwritten Offering, make available the appropriate executive officers of Thoratec for due diligence and drafting sessions and road show presentations in connection with such Underwritten Offering and (C) prepare and file with the SEC a Current Report on Form 8-K with such underwriting agreement attached as an exhibit thereto. Within 120 days of the execution of this Agreement, Thoratec will obtain agreements from each of its executive officers and directors to execute and deliver an agreement imposing customary restrictions (not exceeding 90 days from the commencement of the Underwritten Offering) on such executive officer's or director's ability to sell any shares of Thoratec Common Stock beneficially owned, if requested by the managing underwriter of any such Underwritten Offering. Thoratec will require any newly hired or appointed executive officer or director to enter into a similar agreement upon the commencement of employment or term as a director. If, in connection with such Underwritten Offering, Thoratec is not selling any securities, TCA will pay all out-of-pocket expenses of Thoratec related to any road show presentation. As a condition precedent to the participation in any registration hereunder, Thoratec may require each selling Holder of Registrable Securities as to which such registration is being effected to furnish to Thoratec such reasonable information regarding such Person and the distribution of such securities as Thoratec may from time to time request. (b) Discontinuance. Each Holder of Registrable Securities shall, upon receipt of any notice from Thoratec of the happening of any event of the kind described in Section 6(a)(ii), forthwith discontinue disposition of Registrable Securities pursuant to the then current Registration Statement until: (A) such Holder is advised in writing by Thoratec that a new Registration Statement covering the offer of Registrable Securities has become effective under the Securities Act or (B) such Holder receives copies of any required supplemented or amended Prospectus, or until such Holder is advised in writing by Thoratec that the use of the Registration Statement may be resumed. If Thoratec shall have given any such notice during a period when a Compulsory Registration is in effect, Thoratec shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during which any such disposition of Registrable Securities is discontinued pursuant to this Section 6(b). If so directed by Thoratec, on the happening of such event, each Holder will deliver to Thoratec (at Thoratec's expense) all copies, other than permanent file copies then in such Holder's possession, of the Registration Statement covering such Registrable Securities at the time of receipt of such notice. (c) Selection of Underwriter. The investment banker or investment bankers and manager or managers that will manage any Compulsory Registration will be selected by Thoratec, subject to approval of the selling Holders holding a majority of the Registrable Securities covered by the Compulsory Registration Statement that gave the original Compulsory Notice in connection with such Compulsory Registration, which approval shall not be unreasonably withheld. 7. Certain Limitations on Registration Rights. (a) Hold-Back Election. In the case of the registration of any underwritten primary offering initiated by Thoratec (other than any registration by Thoratec on Form S-4 or Form S-8 (or any successor or substantially similar form, and other than in connection with (i) an employee stock option, stock purchase or compensation plan or of securities issued or issuable pursuant to any such plan or an acquisition of any securities or assets of another entity, or (ii) a dividend reinvestment plan) or any underwritten secondary offering initiated at the request of a Requesting Securityholder, each Holder that includes Registrable Securities therein agrees not to effect any public sale or distribution of securities of Thoratec, except as part of such underwritten registration, during the period beginning 15 days prior to the expected date of execution of an underwriting agreement relating to such underwritten offering and ending 90 days after such closing date (or such shorter period as may be agreed to between the underwriters thereof and Thoratec or any other security holder of Thoratec selling securities in such offering). The parties acknowledge that the expected date of execution of an underwriting agreement shall be made in the good faith determination of the managing underwriter of such offering and communicated in writing to such Holders. 7 (b) Material Development Condition. With respect to any Registration Statement filed or to be filed pursuant to Section 3, if Thoratec determines that, in its good faith judgment, it would (because of the existence of, or in anticipation of, any acquisition or corporate reorganization or other transaction, financing activity, stock repurchase or other development involving Thoratec or any subsidiary, or the unavailability for reasons substantially beyond Thoratec's control of any required financial statements) require public disclosure by Thoratec of material non-public information that is not included in such Registration Statement and that immediate disclosure of such information would be seriously detrimental to Thoratec (a "Material Development Condition"), Thoratec shall, notwithstanding any other provisions of this Agreement, be entitled, upon the giving of a written notice that a Material Development Condition has occurred (a "Delay Notice") from Thoratec to any Holder of Registrable Securities included or to be included in such Registration Statement: (i) to cause sales of Registrable Securities by such Holder pursuant to such Registration Statement to cease, or (ii) if no such Registration Statement has yet been filed or declared effective, to delay the filing or effectiveness of any such Registration Statement until, in the good faith judgment of Thoratec, such Material Development Condition no longer exists (notice of which Thoratec shall promptly deliver to any Holder of Registrable Securities with respect to which any such Registration Statement has been filed). Notwithstanding the foregoing: (A) in no event may such cessation or delay (I) be for a period of more than 60 consecutive days from the giving of the Delay Notice to a Holder with respect to the Material Development Condition, as above provided, and (II) exceed 90 days in the aggregate in any 12 month period and the Shelf Registration Period with respect to such Holder and Registrable Securities shall be extended by the number of days during the Shelf Registration Period that such Holder is required to refrain from selling Registrable Securities. (c) Limitation on Piggyback Registration Rights. Anything to the contrary contained in this Agreement notwithstanding, when, in the opinion of reputable outside securities counsel for Thoratec, the registration of the Registrable Securities is not required by the Securities Act in connection with a proposed sale of such Registrable Securities, the Holders shall have no rights pursuant to Section 5 to request a piggyback registration in connection with such proposed sale and Thoratec shall promptly provide to the transfer agent and the Holder's or Holders' broker or brokers in connection with any sale transaction an opinion to that effect. 8. Registration Expenses. All expenses incident to Thoratec's performance of or compliance with this Agreement including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications or registrations, or the obtaining of exemptions therefrom, of the Registrable Securities), printing expenses (including expenses of printing Prospectuses), messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), fees and disbursements of its counsel and its independent certified public accountants, securities acts liability insurance (if Thoratec elects to obtain such insurance), fees and expenses of any special experts retained by Thoratec in connection with any registration fees and expenses of other Persons retained by Thoratec and reasonable fees and expenses of one counsel for all selling Holders (all such expenses being referred to as "Registration Expenses") shall be borne by Thoratec, provided that Registration Expenses shall not include any fees and expenses of more than one counsel for the Holders, the expenses of any special audit or accounting review (other than a review or audit of Thoratec's year-end financial statements), out-of-pocket expenses incurred by the Holders and underwriting discounts, commissions or fees attributable to the sale of the Registrable Securities. 9. Indemnification. (a) Indemnification by Thoratec. Thoratec shall indemnify and hold harmless, to the full extent permitted by law, but without duplication, each Holder of Registrable Securities, and each Person who controls such Holder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses) resulting from any untrue statement of a material fact in, or any omission of a material fact required to be stated in, any Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to Thoratec or to any underwriters by any 8 Holder expressly for use therein. Thoratec shall also indemnify underwriters participating in the distribution, their officers, directors, employees, partners and agents, and each Person who controls such underwriters (within the meaning of the Securities Act), to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities, if so requested. (b) Indemnification by Holders of Registrable Securities. In connection with any Registration Statement in which a Holder of Registrable Securities is participating, each such Holder will furnish to Thoratec in writing such information and affidavits as Thoratec reasonably requests for use in connection with any such Registration Statement or Prospectus and shall indemnify and hold harmless, to the full extent permitted by law, but without duplication, Thoratec, its officers, directors, stockholders, employees, advisors and agents, and each Person who controls Thoratec (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and reasonable legal fees and expenses) resulting from any untrue statement of material fact in, or any omission of a material fact required to be stated in, any Registration Statement or Prospectus or necessary to make the statements therein (in the case of a Prospectus in light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder to Thoratec specifically for inclusion therein. In no event will the liability of any Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel of such indemnifying party's choice, provided that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in (but not control) the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified Person unless: (A) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified Person in a timely manner or (B) in the reasonable judgment of any such indemnified Person, based upon the advice of outside securities counsel, a potential conflict of interest exists between such indemnified Person and the indemnifying party with respect to such claim (in which case, if the indemnified Person notifies the indemnifying party in writing that such indemnified Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such indemnified Person). The indemnifying party will not be subject to any liability for any settlement made without its written consent. No indemnified Person will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term given by the claimant or plaintiff to such indemnified Person of a release from all liability in respect of such claim. An indemnifying party who is not entitled to, or elects not to, assume the defense of the claim will not be obligated to pay the fees and expenses of more than one counsel for all Persons indemnified by such indemnifying party with respect to such claim. (d) Contribution. If for any reason the indemnification provided for in Section 8(a) or Section 8(b) is unavailable to an indemnified Person or insufficient to hold it harmless as contemplated by Section 8(a) and 8(b), then the indemnifying party shall contribute to the amount paid or payable by the indemnified Person as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party and the indemnified Person, but also the relative fault of the indemnifying party and the indemnified Person, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the indemnifying party or parties on the one hand, or the indemnified Person or Persons on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentations. 9 10. Participation in Underwritten Registrations. No Person may participate in any Underwritten Offering hereunder unless such Person: (i) agrees to sell such Person's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and signs all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements and in form and substance approved by Thoratec. Nothing in this Section 10 shall be construed to create any additional rights regarding the registration of Registrable Securities in any Person otherwise than as set forth herein. 11. Options. The parties acknowledge that TEC has issued options to purchase 66,700 shares of issued and outstanding Common Stock of TCA owned by TEC. Upon consummation of the Merger, these options will become exercisable for shares of Thoratec Common Stock. TEC agrees not to issue any additional securities exercisable for or convertible into shares of TCA Common Stock. Thoratec acknowledges that if the options are exercised, the shares of Thoratec Common Stock issuable upon exercise of the options will not be subject to this Agreement. 12. Amendments. This Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions may not be given, unless Thoratec has obtained the written consent of the Holders of a majority of the Registrable Securities then outstanding. 13. Waivers. Any failure of TEC or another Holder, on one hand, or Thoratec, on the other hand, to comply with any provision of this Agreement may be waived by Thoratec or TEC or that Holder, respectively, only by a written instrument signed by the party granting the waiver, but that waiver or the failure to insist upon strict compliance with that provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 14. Notices. All notices and other communications hereunder shall be in writing and shall be delivered personally, by overnight courier or similar means or sent by facsimile with written confirmation of receipt, to the parties at the addresses specified below or at such other address for a party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt. Any such notice shall be effective upon receipt, if personally delivered, or on the next business day following transmittal, if sent by confirmed facsimile. Notices shall be delivered as follows: (a) If to a Holder other than TEC, at the most current address given by that Holder to Thoratec, in accordance with this Section 14. (b) if to Thoratec, to: Thoratec Laboratories Corporation 6035 Stoneridge Drive Pleasanton, California 94588 Telephone: (925) 847-8600 Facsimile: (925) 847-8625 Attention: D. Keith Grossman with a copy to: Heller Ehrman White & McAuliffe LLP 2500 Sand Hill Road, Suite 100 Menlo Park, California 94025 Telephone: (650) 234-4200 Facsimile: (650) 234-4299 Attention: August J. Moretti, Esq. 10 (c) If to TEC, to: Thermo Electron Corporation 81 Wyman Street Waltham, Massachusetts 02454 Telephone: (781) 622-1198 Facsimile: (781) 622-1283 Attention: Seth Hoogasian with copies to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 Attention: Jay E. Bothwick, Esq. 15. Successors and Assigns. This Agreement may not be assigned by TEC to any Person, provided that TEC may assign rights under this Agreement to any Person to whom it simultaneously sells or otherwise transfers Registrable Securities then representing more than 5% of the Voting Power of Thoratec. "Voting Power" for this purpose has the same meaning that it has in the Shareholder Agreement that was signed with the Merger Agreement. Any such assignment shall not be effected unless and until the assignee assumes in writing all the obligations under this Agreement that correspond to the rights being assigned to that assignee, as determined in good faith by Thoratec. This Agreement shall be binding upon any successor to Thoratec (including any entity issuing securities in exchange for the Registrable Securities). 16. Governing Law. This Agreement shall be governed by the laws of the State of California without reference to its principles of conflicts of law. 17. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 18. Severability. If any provision of this Agreement should be finally determined to be invalid, illegal or unenforceable in any respect against a party hereto, it shall be adjusted if possible to effect the intention of the parties. In any event, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability shall only apply as to such party in the specific jurisdiction where such final determination shall have been made. 19. Headings. The section headings in this Agreement are solely for the purpose of reference and shall not in any way affect the meaning or interpretation of this Agreement. The word "including" shall mean "including without limitation." 20. Entire Agreement. This Agreement, the Merger Agreement and the Shareholder Agreement referenced previously embody the entire agreement and understanding of the parties hereto with respect to the subject matter of this Agreement. 21. Additional Actions. From time to time, at either party's request and without further consideration, the other party hereto (and any Holder in addition to TEC) shall execute and deliver such additional documents and take such other actions as may be necessary or desirable to effectuate this Agreement. 11 22. Representation of Counsel. Each party to this Agreement has been represented by counsel during the preparation and negotiation of this Agreement, and therefore waives any rule of construction that would construe ambiguities against the party drafting this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. THORATEC LABORATORIES CORPORATION By: /s/ D. KEITH GROSSMAN ------------------------------------ Name: D. Keith Grossman Title: President and Chief Executive Officer THERMO ELECTRON CORPORATION By: /s/ THEO MELAS-KYRIAZI -------------------------------------- Name: Theo Melas-Kyriazi Title: Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----