AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.1
AMENDED
AND RESTATED
This
Amended and Restated Employment
Agreement ("the Agreement") dated as of the 30th day of July, 2007 (the
"Effective Date"), is by and between CRYOLIFE, INC., a Florida corporation
("CryoLife") and XXXXXX X. XXXXXXXX (the "Employee").
W
I T N E S S E T H:
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 Amended and Restated 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;
WHEREAS,
in order to accomplish these
objectives, the Board has caused CryoLife to enter into this Agreement;
and
WHEREAS,
Employee has determined that
it is in the best interests of Employee 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 acknowledged
by
both parties, it is hereby agreed as follows:
1. EMPLOYMENT.
(a) CryoLife
hereby employs Employee in the capacity of President, Chief Executive Officer
and Chairman of the Board and Employee hereby accepts such
employment.
(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
December 31, 2010 (the "EmploymentPeriod").
2. EMPLOYMENT
DUTIES.
(a) Employee
shall have such duties as are customarily performed and exercised by the
President, Chief Executive Officer and Chairman of the Board of a public
company, subject to the supervision of the Board, together with such additional
duties as are reasonably assigned by the Board. 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 Committee of the Board
of Directors, subject to the following:
(i) Base
Salary. Employee’s annual base salary for the year ending December
31, 2007 shall be $600,000. The Employee's base salary shall be
reviewed annually by the Compensation Committee during the first quarter of
each
calendar year, beginning with the year ending December 31, 2008, and the base
salary for each such year shall be determined by the Compensation Committee,
which may authorize an increase in the Employee's base salary for such year;
provided, however, that Employee’s base salary shall be increased, at a minimum,
by an amount equal to the cumulative cost-of-living percentage increment during
the prior calendar year, if any, applied to the Employee’s base salary, as such
increment is reported in the "Consumer Price Index, Atlanta, Georgia, All
Items," published by the U.S. Department of Labor. In no event may
Employee’s base salary be reduced below its then current level at any time
during the Employment Period other than pursuant to a general wage reduction,
in
which event Employee’s base salary may only be reduced to the same extent and up
to the same percentage amount as the base salaries of all executive officers
are
reduced.
(ii) Bonus. Employee
shall be entitled to participate in an annual bonus program which shall provide
for the payment of an annual bonus to Employee on terms and in amounts no less
favorable to Employee than those currently contained in the Company’s Executive
Incentive Plan and the 2007 bonus program for Employee approved thereunder,
as
amended below, with such modifications thereto as shall be reasonably imposed
for all executive officers with the approval of at least 2/3’s of the Company’s
independent directors; provided, however, that, upon the certification of the
Company’s Chief Financial Officer (the “CFO”) that payment of cash bonuses would
materially negatively impact the Company’s cash position, liquidity or
operations, Employee’s bonus may be paid all or a portion in Company stock, but
only to the extent that all bonuses to executive officers are similarly
paid. Employee’s 2007 bonus program under the Executive Incentive
Plan is hereby amended to remove any discretion of the Compensation Committee
to
materially change the terms of the bonus program or to reduce or otherwise
refuse to pay any portion of the bonus earned thereunder, subject to the ability
of the Compensation Committee, upon the certification of the CFO that payment
of
cash bonuses would materially negatively impact the Company’s cash position,
liquidity or operations, to pay all or a portion of the 2007 bonus in Company
stock, but only to the extent that all bonuses to executive officers are
similarly paid.
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(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. Reimbursable expenses shall also
include, with a value of up to 10% of Employee's base salary, monthly car
payments and auto expenses and dues and business related expenses at the
Georgian Club, Buckhead Club, Marietta Country Club and Delta Crown
Room. The Employee shall also be promptly reimbursed up to a maximum
of $10,000 for any and all expenses (including, without limitation, legal fees)
incurred by him in connection with the negotiation, documentation and
implementation of this Agreement.
(c) Employee
shall participate in the standard Company vacation plan, Company medical plan,
Company life insurance program, and contributory 401K plan, as well as in all
other standard employee benefit plans; provided, however, that vacations not
taken shall be cumulative and carried over to a subsequent year. Upon
employment termination, Employee shall be paid at a rate per day equal to
Employee’s base salary then in effect divided by 260 for all accumulated
vacation days not taken. Such amount shall be deemed a payment
obligation accruing through the Date of Termination for purposes of Section
6 of
this Agreement.
4. CHANGE
OF CONTROL.
(a) In
consideration and recognition of the Employee's continued employment and his
contribution to protecting and enhancing shareholder value in any future sale
of
CryoLife that may occur and to provide incentive to Employee as a senior
executive to remain with the Company through any future sale or merger of the
Company, CryoLife agrees to pay to Employee a retention payment in addition
to
other compensation due pursuant to this Agreement equal to one times the
aggregate of Employee's annual salary and bonus compensation for the year in
which a Change of Control occurs (the "Retention Payment"). The
Retention Payment shall be in addition to sums otherwise payable pursuant to
Section 3 and shall be earned and become due upon the happening of a Change
of
Control (as defined below) provided Employee remains employed by the Company
at
such time or, if no longer then employed by the Company, Employee's employment
was terminated by the Company without Cause within 12 months prior to the Change
of Control. If the Change of Control occurs before the awarding of bonuses
in
the year in which the Change of Control occurs, or if it occurs during a year
in
which Employee is not employed by the Company, the bonus compensation component
of the Retention Payment shall be computed based on the prior year's bonus.
If
the Change of Control occurs during a year in which Employee is not employed
by
the Company, the salary compensation component of the Retention Payment shall
be
computed based on the prior year’s salary. Bonus compensation shall
include cash bonus payments and the value of any non-cash bonuses, such as
options or restricted stock. Any such options will be valued pursuant to the
Black Scholes valuation method as of the grant date, using the same assumptions
used by CryoLife in computing the FAS 123R charge for the options, and any
shares of restricted stock will be valued at the closing price of the CryoLife
Common Stock on The New York Stock Exchange on the date of
issuance. The Company’s annual option and restricted stock grants
shall not be deemed to be bonus compensation unless they are specifically
designated as such by the CryoLife Compensation Committee. For the
sake of clarification, all cash paid and any shares issued in payment of all
or
a portion of the bonus pursuant to the Company’s Executive Incentive Plan shall
be bonus compensation for purposes of this Agreement for the year in which
paid
or issued. The Retention Payment shall be paid within three months after the
occurrence of a Change of Control.
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For
the
purposes of this Agreement, the term “Change of Control” shall mean a change in
the ownership or effective control of, or in the ownership of a substantial
portion of the assets of, Cryolife, to the extent consistent with Section 409A
of the Code and any regulatory or other interpretive authority promulgated
thereunder, as described in paragraphs (i) through (iii) below.
(i) Change
in Ownership of Cryolife. A change in the ownership of Cryolife shall
occur on the date that any one person, or more than one person acting as a
group
(within the meaning of paragraph (i)(D)), other than a group of which Employee
is a member, acquires ownership of Cryolife stock that, together with Cryolife
stock held by such person or group, constitutes more than 50% of the total
voting power of the stock of Cryolife.
(A) If
any one person or more than one person acting as a group (within the meaning
of
paragraph (i)(D)), other than a group of which Employee is a
member, is considered to own more than 50% of the total voting power
of the stock of Cryolife, the acquisition of additional Cryolife stock by such
person or persons shall not be considered to cause a change in the ownership
of
Cryolife or to cause a change in the effective control of the Cryolife (within
the meaning of paragraph (ii) below).
(B) An
increase in the percentage of Cryolife stock owned by any one person, or persons
acting as a group (within the meaning of paragraph (i)(D)), as a result of
a
transaction in which Cryolife acquires its stock in exchange for property,
shall
be treated as an acquisition of stock for purposes of this paragraph
(i).
(C) The
provisions of this paragraph (i) shall apply only to the transfer or issuance
of
Cryolife stock if such stock remains outstanding after such transfer or
issuance.
(D) For
purposes of this paragraph (i), persons shall be considered to be acting as
a
group if they are owners of an entity that enters into a merger, consolidation,
purchase, or acquisition of stock, or similar business transaction with
Cryolife. If a person, including an entity, owns stock in Cryolife
and another entity with which Cryolife enters into a merger, consolidation,
purchase, or acquisition of stock, or similar business transaction, such
shareholder shall be considered to be acting as a group with the other
shareholders in a corporation only to the extent of the ownership in that
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other entity. Persons shall
not be considered to be acting as a group solely because they purchase or own
stock of Cryolife at the same time or as a result of the same public offering
of
Cryolife’s stock.
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(ii) Change
in Effective Control of Cryolife.
(A) A
change in the effective control of Cryolife shall occur on the date that either
of (1) or (2) below occurs:
(1) Any
one person, or more than one person acting as a group (within the meaning of
paragraph (ii)(D)), acquires (or has acquired during the 12 month period ending
on the date of the most recent acquisition by such person or persons) ownership
of stock of Cryolife possessing 35% or more of the total voting power of the
stock of Cryolife; or
(2) A
majority of members of the Cryolife Board of Directors are replaced during
any
12 month period by Directors whose appointment or election is not endorsed
by a
majority of the Board of Directors prior to the date of the appointment or
election.
(B) A
change in effective control of Cryolife also may occur with respect to any
transaction in which either of Cryolife or the other entity involved in a
transaction experiences a Change of Control event described in paragraphs (i)
or
(iii).
(C) If
any one person, or more than one person acting as a group (within the meaning
of
paragraph (ii)(D)), is considered to effectively control Cryolife (within the
meaning of this paragraph (ii)), the acquisition of additional control of
Cryolife by the same person or persons shall not be considered to cause a change
in the effective control of Cryolife (or to cause a change in the ownership
of
Cryolife within the meaning of paragraph (i)).
(D) For
purposes of this paragraph (ii), persons shall be considered to be acting as
a
group if they are owners of an entity that enters into a merger, consolidation,
purchase, or acquisition of stock, or similar business transaction with
Cryolife. If a person, including an entity, owns stock in Cryolife
and another entity with which Cryolife enters into a merger, consolidation,
purchase, or acquisition of stock, or similar business transaction, such
shareholder shall be considered to be acting as a group with the other
shareholders in a corporation only with respect to the ownership in that
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other entity. Persons shall
not be considered to be acting as a group solely because they purchase or own
stock of Cryolife at the same time, or as a result of the same public offering
of Cryolife’s stock.
(iii) Change
in Ownership of a Substantial Portion of Cryolife’s Assets. A change
in the ownership of a substantial portion of Cryolife’s assets shall occur on
the date that any one person, or more than one person acting as a group (within
the meaning of paragraph (iii)(C)), other than a group of which Employee is
a
member, acquires (or has acquired during the 12 month period ending on the
date
of the most recent acquisition by such person or persons) assets from Cryolife
that have a total gross fair market value (within the meaning of paragraph
(iii)(B)) equal to or more than 40% of the total gross fair market value of
all
of the assets of Cryolife immediately prior to such acquisition or
acquisitions.
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(A) A
transfer of Cryolife’s assets shall not be treated as a change in the ownership
of such assets if the assets are transferred to one or more of the
following:
(1) A
shareholder of Cryolife (immediately before the asset transfer) in exchange
for
or with respect to Cryolife stock;
(2) An
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Cryolife;
(3) A
person, or more than one person acting as a group (within the meaning of
paragraph (iii)(C)) that owns, directly or indirectly, 50% or more of the total
value or voting power of all of the outstanding stock of Cryolife;
or
(4) An
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph (iii)(A)(3).
For
purposes of this paragraph (iii)(A), and except as otherwise provided, a
person’s status is determined immediately after the transfer of assets.
(B) For
purposes of this paragraph (iii), gross fair market value means the value of
all
Cryolife assets, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.
(C) For
purposes of this paragraph (iii), persons shall be considered to be acting
as a
group if they are owners of an entity that enters into a merger, consolidation,
purchase, or acquisition of assets, or similar business transaction with
Cryolife. If a person, including an entity shareholder, owns stock in
Cryolife and another entity with which Cryolife enters into a merger,
consolidation, purchase, or acquisition of stock, or similar business
transaction, such shareholder shall be considered to be acting as a group with
the other shareholders in a corporation only to the extent of the ownership
in
that corporation prior to the transaction giving rise to the change and not
with
respect to the ownership interest in the other corporation. Persons
shall not be considered to be acting as a group solely because they purchase
or
own stock of Cryolife at the same time, or as a result of the same public
offering of Cryolife’s stock.
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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 days as a result of
incapacity due to mental or physical illness or determination by a physician
selected by CryoLife or its insurers and acceptable to the Employee or the
Employee's legal representative that the Employee is unable to perform the
essential functions of his position as a result of incapacity due to mental
or
physical illness. 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 of CryoLife which specifically identifies
the manner in which CryoLife believes that the Employee has not substantially
performed the Employee's duties, or
(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 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 2(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;
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(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 or 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 threatened termination by
CryoLife of the Employee's employment other 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) Retirement. The
Employee may voluntarily terminate his employment at any time by reason of
Retirement. For purposes of this Agreement, "Retirement" shall mean
the cessation by Employee of all full-time employment of any kind.
(e) Notice
of Termination. Any termination by CryoLife, or by the Employee
for Good Reason or Retirement, 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
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 to be later than the date of receipt of such notice,
specifies the termination date (which date shall not, except in the case of
Retirement, be 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.
(f) 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 or Retirement, 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 on which the Employee receives Notice of Termination, and (iii) if the
Employee's employment is terminated by reason of death or by CryoLife for
Disability, the date of death of the Employee or the Disability Effective Date,
as the case may be. Notwithstanding the foregoing, the Date of Termination
may,
except in the case of Retirement, be accelerated by the party who receives
Notice of Termination by providing to the other party written notice of
acceleration, including the accelerated Date of Termination, within 30 days
of
receipt of the Notice of Termination.
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(g) Non-Compete
Commitment. During the term of this Agreement and for a period of
two years after any termination of this Agreement, the Employee agrees not
to
accept any position as chief executive officer, president or chief operating
officer with, or provide comparable level executive consultation to, any
competitors of CryoLife in the cardiac or vascular tissue processing business
or
biological glue or protein hydrogel product business within the United States
or
the European Union. Payments of amounts owing under any Severance Payment
(defined in Section 6(d)) obligation, shall be conditioned upon Employee's
continued compliance with this non-compete commitment.
(h) Agreement
Not to Solicit. During the term of this Agreement and for a
period of two years after any termination of this Agreement, the Employee agrees
he will not, without the prior written consent of the Company, either directly
or indirectly, on his own behalf or in the service or on behalf of others,
solicit or attempt to solicit, divert or hire away any person employed by the
Company or any customer of the Company.
6. OBLIGATIONS
OF CRYOLIFE UPON TERMINATION.
(a) Expiration
of Term; Good Reason; Other Than for Cause, Death or
Disability. If the Employee’s employment is terminated by reason
of expiration of the Employment Period or if during the Employment Period,
(i)
CryoLife shall terminate the Employee's employment other than for Cause or
Death, or (ii) the Employee shall terminate employment for Good Reason or
Retirement, then CryoLife shall pay to Employee the Severance Payment (defined
below) and shall, subject to the limitations set forth in (e) below, continue
to
provide major medical insurance benefits comparable to those described in the
schedules attached to this Agreement (collectively, " Major Medical Benefits")
for Employee and Employee's wife, Xxx X. Xxxxxxxx, for the duration of their
lives. 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.
(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 obligation
to the Employee's legal representatives under this Agreement, other than for
(i)
payment of obligations occurring through the Date of Termination and (ii) for
CryoLife's agreement to continue the Major Medical Benefits for Employee's
wife,
Xxx X. Xxxxxxxx, for the duration of her life.
(c) Cause.
If the Employee's employment shall be terminated by CryoLife for Cause, this
Agreement shall terminate without further obligations to the Employee other
than
for payment obligations accruing through the Date of Termination.
(d) Severance
Payment. The "Severance Payment" shall be $1,985,000. The
Severance Payment shall be payable in cash by the Company in 24 equal monthly
installments over the two year period following the Date of Termination (the
"Severance Period"), with the first payment commencing on the date thirty (30)
days after Employee's Date of Termination; provided, however, that, to the
extent required under Section 409A of the Code to avoid the imposition of
additional tax to Employee under that Section, any payment of the Severance
Payment shall commence on the six-month anniversary of Employee's separation
from service with the Company, or on the date of Employee's death if Employee
should die prior to such six-month anniversary (such payment date being referred
to herein as the “Initial Payment Date”), with the first payment to be equal to
the sum of those payments that would have been made prior to the Initial Payment
Date but for the delay, and the remainder to be paid in equal monthly
installments over the remainder of the Severance Period; provided further,
that
to the extent permitted under Section 409A of the Code without the imposition
of
additional tax to Employee under that Section, the Severance Payment shall
be
paid (i) in an immediate lump-sum in the event the Employee's separation from
service occurs on or after a Change of Control or (ii) in an immediate lump
sum
at the time of a Change of Control (less amounts previously paid to Employee)
in
the event the separation from service occurs within six months prior to a Change
of Control. Payment of any Severance Payment will be subject to
normal withholding.
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(e) Limitations
on Major Medical Benefits. The Company's obligation to provide
Major Medical Benefits to Employee and Xxx X. Xxxxxxxx, or either of them,
after
employment termination shall not oblige the Company to expend more than the
Maximum Annual Premium Amount in any calendar year as determined by
CryoLife. For purposes of this Agreement, Maximum Annual Premium
Amount shall mean the sum of $25,000 increased by the Consumer Price Index
using
September 1, 2005 as the base date. If all of the Major Medical Benefits cannot
be provided for the Maximum Annual Premium Amount, the Company shall utilize
the
Maximum Annual Premium Amount to obtain such major medical insurance coverage
as
can reasonably be obtained. When Employee or Employee's wife, Xxx X.
Xxxxxxxx, qualifies for Medicare, Medicaid or other governmentally provided
major medical benefit (collectively, "Government Benefits") of the sorts
otherwise included within Major Medical Benefits, the provision of benefits
under the Major Medical Benefits may be conditioned on Employee or Employee's
wife, Xxx X. Xxxxxxxx, as the case may be, looking first to Government Benefits
for coverage before drawing on the Major Medical Benefits.
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, except as specifically set forth
herein, 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 by CryoLife or Employee with respect
to liability under or the interpretation of the validity or enforceability
of,
any provision of this Agreement, but only in the event and to the extent that
(i) the Employee receives a final, non-appealable judgment in his favor in
any
such action or receives a final judgment in his favor that has not been appealed
by the Company within 30 days of the date of the judgment; or (ii) the parties
agree to dismiss any such action upon CryoLife’s payment of the sums allegedly
due the Employee or performance of the covenants by CryoLife allegedly breached
by it.
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9. LIMITATION
OR EXPANSION OF BENEFITS.
(a) In
the event it shall be determined that any benefit, payment or distribution
by
CryoLife to or for the benefit of the Employee (whether payable or distributable
pursuant to the terms of this Agreement or otherwise) 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 CryoLife shall
pay to Employee an additional amount of cash (a "Gross-Up Payment") equal to
the
amount necessary to cause the amount of the aggregate after-tax compensation
and
benefits received by the Employee hereunder (after payment of the excise tax
under Section 4999 of the Code with respect to any excess parachute payment,
and
any state and federal income and employment taxes with respect to the Gross-Up
Payment) to equal the aggregate after-tax compensation and benefits the Employee
would have received if Sections 280G and 4999 of the Code had not been enacted.
A nationally recognized public accounting firm selected by CryoLife shall
initially determine, at CryoLife's expense, whether an "excess parachute
payment" will be made to Employee, and if so, the amount of the Gross-Up
Payment. In the event of a subsequent claim by the Internal Revenue
Service that, if successful, would result in Employee's liability for an Excise
Tax under Section 4999 of the Code in excess of the amount covered by any
previous Gross-Up Payment, the Employee shall promptly notify CryoLife in
writing of such claim. If CryoLife elects to contest such claim, it
shall so notify the Employee and shall bear and pay directly or indirectly
all
costs and expenses of contesting the claim (including additional interest and
penalties incurred in connection with such action), and shall indemnify and
hold
Employee harmless, on an after-tax basis, for any excise, income, or employment
tax, including interest and penalties with respect thereto, imposed as a result
of CryoLife's payment of costs of the contest. Employee shall cooperate fully
with CryoLife in the defense of any such IRS claim. If, as a result
of CryoLife's action with respect to a claim, Employee receives a refund of
any
amount paid by CryoLife with respect to such claim, Employee shall promptly
pay
such refund to CryoLife. In the event the IRS claim is finally
determined to result in the imposition of additional excise tax under Section
280G of the Code on Employee, CryoLife shall make an additional Gross-Up Payment
with respect to any such additional excise tax.
(b) Anything
in this Agreement to the contrary notwithstanding, aggregate severance,
separation and/or similar payments made to Employee pursuant to this Agreement
and otherwise shall be limited to the equivalent of Employee’s salary paid
during the three completed fiscal years ended prior to the Date of Termination,
including bonuses and guaranteed benefits paid during those years. If necessary,
any Gross-Up Payment will be reduced in order to comply with this provision;
provided, however, that the Company agrees that it shall not deem any Retention
Payment hereunder to be a “severance, separation and/or similar payment” for
purposes of this Section 9(b) and Article IV, Section 8 of the
Company’s Bylaws. In consideration of this agreement, Employee agrees
to indemnify the Company and the Board for any and all costs and expenses,
including reasonable legal expenses, they may reasonably incur as a direct
result of such agreement. As soon as practicable following November
3, 2009, the Company agrees to amend this Agreement to remove this
Section 9(b) and to amend its Bylaws to remove the second sentence of
Article IV, Section 8 thereof.
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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 superseded 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.
(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, in either case, accompanied by a
facsimile copy, addressed as follows:
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If
to the Employee:
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Xxxxxx
X. Xxxxxxxx
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0000
Xxxxxxxxx Xxxxx
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Xxxxxxx,
Xxxxxxx 00000
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Facsimile:
(000) 000-0000
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With
a copy to:
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Xxxxxx
X. Xxx
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Xxxxxx
& Hardin LLP
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2700
International Tower
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000
Xxxxxxxxx Xxxxxx, X.X.
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Xxxxxxx,
Xxxxxxx 00000-0000
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Facsimile:
(000) 000-0000
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If
to CryoLife:
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CryoLife,
Inc.
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0000
Xxxxxxx Xxxxxxxxx, X.X,
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Xxxxxxxx,
Xxxxxxx 00000
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Attention: Chief
Financial Officer
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Facsimile:
(000) 000-0000
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With
a copy to:
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B.
Xxxxxx Xxxxx, Xx.
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Xxxxxx
Xxxxxx Xxxxxxx LLP
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000
00xx
Xx.
X.X., Xxxxx 0000
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Xxxxxxx,
Xxxxxxx 00000
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Facsimile:
(000) 000-0000
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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 of 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) This
Agreement embodies the entire agreement between the parties with respect to
the
subject matter addressed herein. From and after the Effective Date,
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof including the Employment Agreement between
the parties dated September 5, 2005, which shall be null and void and of no
further force or effect. In the event of any conflict between this
Agreement and any benefits provision of CryoLife's Employee Handbook, the
provisions of this Agreement shall prevail.
(f) The
provisions of this Agreement are intended to satisfy the applicable requirements
of Section 409A of the Code and shall be performed and interpreted consistent
with such intent. If any provision of this Agreement does not satisfy such
requirements or could otherwise cause Employee to be subject to the interest
and
penalties under Section 409A of the Code, Employee and the Company agree to
negotiate in good faith an appropriate modification to maintain, to the maximum
extent practicable, the original intent of the applicable provision without
violating the requirements of Section 409A of the Code (or causing the
imposition of additional tax to Employee under Section 409A of the
Code).
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IN
WITNESS WHEREOF, the Employee has
hereunder set the Employee's hand and, pursuant to the authorization from its
Compensation Committee and Board, CryoLife has caused this Agreement to be
executed in its name on its behalf, all as of the day and year first above
written.
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/s/
Xxxxxx X. Xxxxxxxx
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XXXXXX
X. XXXXXXXX
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CRYOLIFE,
INC.
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By: /s/
Xxxxxx X. Xxxxxx, M.D.
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Xxxxxx
X. Xxxxxx, M.D.
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Director
and Chairman,
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Compensation
Committee
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