EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement ("the Agreement") dated as of the 3rd day of September, 2002
(the "Effective Date"), is by and between CryoLife, Inc., a Florida corporation
("CryoLife") and Xxxxxx X. Xxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Board of Directors of CryoLife (the "Board"), has determined
that it is in the best interests of CryoLife and its shareholders to enter into
this Employment Agreement in order to assure the Employee of CryoLife's
commitment and, in so doing, to motivate the Employee to continue in Employee's
dedicated service to CryoLife even in circumstances such as a possible future
threat or occurrence of a Change of Control (defined below) of CryoLife; and,
WHEREAS, in order to accomplish these objectives, the Board has caused
CryoLife to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, the promises hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledges, it is hereby agreed as follows:
1. Employment.
(a) CryoLife hereby employs Employee in the capacity of Vice President,
Marketing and Employee hereby accepts such duties as are customarily performed
and exercised by such officer subject to the supervision of the President of
CryoLife. The duties of Employee shall include those duties more specifically
described on Exhibit A attached hereto together with such additional duties as
are assigned by the President of CryoLife.
(b) CryoLife agrees to continue the Employee in its employ, and the
Employee hereby agrees to remain in the employ of CryoLife subject to the terms
and conditions of this Agreement, for the period commencing on the Effective
Date and ending on the first anniversary of such date (the "Employment Period").
Unless either party elects not to extend the term of this Agreement by so
notifying the other in writing at least 30 days prior to the first anniversary
of the Effective Date, the Employment Period shall automatically extend for an
additional one year.
2. Employment Duties.
(a) During the Employment Period, (A) the Employee's position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Employee's services shall be performed at the location where the Employee was
employed immediately preceding the Effective Date.
(b) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Employee is entitled, the Employee agrees to devote
reasonable attention and time to the business and affairs of CryoLife and, to
the extent necessary to discharge the responsibilities assigned to the Employee
hereunder, to use the Employee's reasonable best efforts to perform faithfully
and efficiently such responsibilities.
(c) During the Employment Period, the Employee will not, without the prior
written consent of CryoLife, directly or indirectly other than in the
performance of the duties hereunder, render services of a business, professional
or commercial nature to any other person or firm, whether for compensation or
otherwise, except with respect to any noncompetitive family businesses of the
Employee for which the rendering of such services will not have an adverse
effect upon Employee's performance of his duties and obligations hereunder.
3. Compensation, Benefits and Business Expenses.
(a) For all services which Employee renders to CryoLife or any of its
subsidiaries or affiliates during the term hereof, CryoLife agrees to pay the
Employee the salary and bonus compensation as set by the Compensation Advisory
Committee of the Board of Directors. Employee's salary at the Effective Date is
set forth on Exhibit A.
(b) CryoLife shall pay all reasonable expenses incurred by the Employee
directly related to performance of his responsibilities and duties for CryoLife
hereunder. Employee shall submit to CryoLife statements that justify in
reasonable detail all reasonable expenses so incurred. Subject to such audits as
CryoLife may deem necessary, CryoLife shall reimburse Employee the full amount
of any such expenses advanced by Employee.
(c) Employee shall be entitled to a vacation each year of his employment
with CryoLife, according to the standard vacation policy, as well as insurance
and other employment benefits, as more particularly described on Exhibit A.
Vacations not taken shall be cumulative and carried over to a subsequent year.
4. Change of Control. For the purposes of this Agreement, the term "Change
of Control" shall mean a change in the beneficial ownership of CryoLife's voting
stock or a change in the composition of the Board that occurs as follows:
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(a) Any "person," including a "syndication" or "group" as those terms are
used in Section 13(d)(3) of the Securities Exchange Act of 1934, is or becomes
the beneficial owner, directly or indirectly, of securities of CryoLife
representing 20% or more of the combined voting power of CryoLife's then
outstanding "Voting Securities," which is any security which ordinarily
possesses the power to vote in the election of the Board of Directors of a
corporation without the happening of any precondition or contingency;
(b) CryoLife is merged or consolidated with another corporation and
immediately after giving effect to the merger or consolidation less than 80% of
the outstanding Voting Securities of the surviving or resulting entity are then
beneficially owned in the aggregate by (x) the shareholders of CryoLife
immediately prior to such merger or consolidation, or (y) if a record date has
been set to determine the shareholders of CryoLife entitled to vote on such
merger or consolidation, the shareholders of CryoLife as of such record date;
(c) If at any time the following do not constitute a majority of the Board
of Directors of CryoLife (or any successor entity referred to in clause (ii)
above): individuals who, prior to their election as a director of CryoLife (or
successor entity if applicable) were nominated, recommended or endorsed by a
formal resolution of the Board; or
(d) CryoLife transfers substantially all of its assets to another
corporation which is a less than 80% owned subsidiary of CryoLife.
5. Termination of Employment.
(a) Disability or Death. If CryoLife determines in good faith that the
Disability of the Employee has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Employee
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Employee's employment. In such event, the Employee's
employment with CryoLife shall terminate effective on the 30th day after receipt
of such notice by the Employee (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Employee shall not have returned to
full-time performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Employee from the Employee's duties
with CryoLife on a full-time basis for 180 consecutive business days as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by CryoLife or its insurers and acceptable
to the Employee or the Employee's legal representative. The Employee's
employment shall terminate automatically upon the Employee's death during the
Employment Period.
(b) Cause. CryoLife may terminate the Employee's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Employee to perform
substantially the Employee's duties with CryoLife (other than any such failure
resulting from incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to Employee by the Board or the
Chief Executive Officer of CryoLife which specifically identifies the manner in
which CryoLife believes that the Employee has not substantially performed the
Employee's duties, or
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(ii) the willful engaging by the Employee in illegal conduct or gross
misconduct which is materially and demonstrably injurious to CryoLife.
For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that the
Employee's action or omission was in the best interests of CryoLife. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the instructions of the Chief Employee Officer or a senior
officer of CryoLife or based upon the advice of counsel for CryoLife shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of CryoLife.
(c) Good Reason. The Employee's employment may be terminated by the
Employee for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Employee of any duties inconsistent in any
respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1(a) of this Agreement, or any other action by CryoLife which results
in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by CryoLife promptly after receipt of
notice thereof given by the Employee;
(ii) any failure by CryoLife to comply with any of the provisions of
Section 3(a) or 3(b) of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by
CryoLife promptly after receipt of notice thereof given by the Employee;
(iii) any purported or threatened termination by CryoLife of the Employee's
employment otherwise than for Cause, Death or Disability; or
(iv) any failure by CryoLife to comply with and satisfy Section 11(c) of
this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Employee shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Employee for any reason at least
90 but not more than 120 days following consummation of a Change of Control or
during the 30 day period immediately following the first anniversary of a Change
of Control shall be deemed to be a termination for Good Reason for all purposes
of this Agreement.
(d) Notice of Termination. Any termination by CryoLife for Cause, or by the
Employee for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
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and circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving
of such notice). The failure by the Employee or CryoLife to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Employee or CryoLife,
respectively, hereunder or preclude the Employee or CryoLife, respectively, from
asserting such fact or circumstance in enforcing the Employee's or CryoLife's
rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the Employee's
employment is terminated by CryoLife for Cause, or by the Employee for Good
Reason, the date of receipt of the Notice of Termination, or any later date
specified therein, as the case may be, (ii) if the Employee's employment is
terminated by CryoLife other than for Cause or Disability, the Date of
Termination shall be the date on which CryoLife notifies the Employee of such
termination and (iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. Obligations of CryoLife upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If, during the
Employment Period, (i) CryoLife shall terminate the Employee's employment other
than for Cause, Death or Disability or (ii) the Employee shall terminate
employment for Good Reason, then CryoLife shall pay to Employee as severance
compensation an amount equal to $255,000.00. Such payment shall be in addition
to sums due to Employee through the Date of Termination and shall be subject to
normal withholding requirements of CryoLife. Payment of the amount shall be made
in one lump sum payment or in six equal monthly installments as directed by the
Employee.
(b) Death. If the Employee's employment is terminated by reason of the
Employee's death during the Employment Period, this Agreement shall terminate
without further obligations to the Employee's legal representatives under this
Agreement, other than for payment of obligations accruing through the Date of
Termination.
(c) Disability. If the Employee's employment is terminated by reason of the
Employee's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Employee, other than for payment
obligations accruing through the Date of Termination.
(d) Cause; Other than for Good Reason. If the Employee's employment shall
be terminated by CryoLife for Cause or by the Employee without Good Reason
during the Employment Period, this Agreement shall terminate without further
obligations to the Employee other than the obligation to pay to the Employee his
or her salary through the Date of Termination.
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7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by CryoLife or any of its affiliated companies and
for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
CryoLife or any of its affiliated companies. Amounts which are vested benefits
or which the Employee is otherwise entitled to receive under any plan, practice
or program of or any contract or agreement with CryoLife or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. Full Settlement. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Employee obtains other
employment. CryoLife agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which the Employee may reasonably incur as a
result of any contest (regardless of the outcome thereof) by CryoLife, the
Employee or others of the validity or enforceability of, or liability under, any
provision of this Agreement.
9. Limitation or Expansion of Benefits.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any benefit, payment or distribution by the
Company to or for the benefit of the Employee (whether payable or distributable
pursuant to the terms of this Agreement or otherwise) (a "Payment") would, if
paid, be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"; such excise tax, the "Excise
Tax"), then the Payment shall be reduced to the extent necessary of avoid the
imposition of the Excise Tax. The Employee may select the Payment to be limited
or reduced.
(b) All determinations required to be made under this Section 9, including
whether an Excise Tax would otherwise be imposed and the assumptions to be
utilized in arriving at such determination and the value of the maximum amount
payable without imposition of the Excise Tax, shall be made by the certified
public accounting firm regularly engaged by the Company (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Employee within 30 business days of the receipt of notice from the Employee that
a Payment is due to be made, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Employee may appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any determination by the Accounting
Firm shall be binding upon the Company and the Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Payments hereunder will have been unnecessarily limited by this Section 9
("Underpayment"), consistent with the calculations required to be made
hereunder. The Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be paid by the Company to or
for the benefit of the Employee.
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(c) The provisions of this Section 9 shall not apply unless and until
amounts become payable to Employee pursuant to Section 6(a) hereof.
10. Confidential Information. The Employee and CryoLife are parties to one
or more separate agreements respecting confidential information, trade secrets,
inventions and non-competition (collectively, the "IP Agreements"). The parties
agree that the IP Agreements shall not be superceded or terminated by this
Agreement and shall survive any termination of this Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and without the prior
written consent of CryoLife shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
CryoLife and its successors and assigns.
(c) CryoLife will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of CryoLife to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that CryoLife would be
required to perform it if no such succession had taken place. As used in this
Agreement, "CryoLife" shall mean CryoLife as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force and effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee:
Xxxxxx X. Xxxxxxx
_________________________
_________________________
If to CryoLife:
CryoLife, Inc.
0000 Xxxxxxx Xxxxxxxxx, X.X,
Xxxxxxxx, Xxxxxxx 00000
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability or any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) CryoLife may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) From and after the Effective Date this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Employee has hereunder set the Employee's hand and,
pursuant to the authorization from its Board, CryoLife has caused these presents
to be executed in its name on its behalf, all as of the day and year first above
written.
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx
CRYOLIFE, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
Chairman, President and CEO
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Exhibit A
Duties and Responsibilities of XXXXXX X. XXXXXXX:
------------------------------------------------
All duties of Vice President, Marketing and duties not inconsistent with
such duties that are assigned by the President.
Compensation:
------------
Salary of $170,000 and bonus set by the Compensation Advisory Committee.
Salary & Bonus subject to yearly review by the Compensation Advisory
Committee of the Board of Directors:
Vacation and Employee Benefits:
------------------------------
See attached Company vacation plan, standard Company medical plan and
contributory 401K plan.
Company Business:
----------------
The development, marketing, sale and distribution of tissue preservation
services and biomedical and medical products.
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