CHANGE OF CONTROL
AGREEMENT
This CHANGE OF
CONTROL AGREEMENT (this “Agreement”) dated as of the
5th day of May, 2009 is by and between CRYOLIFE, INC., a Florida
corporation (“CryoLife” or the “Company”)
and Albert E. Heacox (the “Officer”).
W I T N E S
S E T H :
WHEREAS, the
Board of Directors of the Company upon the recommendation of the
Compensation Committee, has determined that it is in the best
interests of the Company and its shareholders to enter into this
Change of Control Agreement in order to assure that the Company
will have the continued dedication of Officer, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined herein) of the Company; and
WHEREAS,
Officer has determined that it is in the best interests of Officer
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
.
CERTAIN DEFINITIONS .
(a) “
Effective Date ” means the first date during the
Change of Control Period (as defined herein) on which a Change of
Control occurs. Notwithstanding anything in this
Agreement to the contrary, if the Officer’s employment with
the Company is terminated by the Company without Cause or by
Officer for Good Reason (as such terms are defined herein) within
the six (6) month period prior to the date on which the Change of
Control occurs and if such Change of Control is consummated (such a
termination of employment, an “Anticipatory
Termination”), then for all purposes of this Agreement the
“Effective Date” means the date immediately prior to
the date of such termination of employment.
(b) “ Change
of Control Period ” means the period commencing on the
date hereof and ending on September 1, 2011; provided,
however , that, commencing on September 1, 2011, and each
three-year anniversary of such date (such date and each such
three-year anniversary thereof, the “Renewal Date”)
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three (3) years from such
Renewal Date, unless, at least thirty (30) days prior to the next
Renewal Date, the Company shall give notice to the Officer that the
Change of Control Period shall not be so extended.
(c) “
Affiliated Company ” means any company controlled by,
controlling or under common control with the Company.
(d) “ Change
of Control ” means a change in the ownership or effective
control of, or in the ownership of a substantial portion of the
assets of, the Company, as described in paragraphs (i) through
(iii) below.
(i)
Change in Ownership of the Company . A change in
the ownership of the Company shall occur on the date that any one
person, or more than one person acting as a group (within the
meaning of paragraph (iv)), other than a group of which Officer is
a member, acquires ownership of the Company stock that, together
with the Company stock held by such person or group, constitutes
more than 50% of the total voting power of the stock of the
Company.
(A) If
any one person or more than one person acting as a group (within
the meaning of paragraph (iv)), other than a group of which Officer
is a member, is considered to own more than 50% of the
total voting power of the stock of the Company, the acquisition of
additional the Company stock by such person or persons shall not be
considered to cause a change in the ownership of the Company or to
cause a change in the effective control of the Company (within the
meaning of paragraph (ii) below).
(B) An
increase in the percentage of the Company stock owned by any one
person, or persons acting as a group (within the meaning of
paragraph (iv)), as a result of a transaction in which the Company
acquires its stock in exchange for property, shall be treated as an
acquisition of stock for purposes of this paragraph (i).
(C) Except
as provided in (B) above, the provisions of this paragraph (i)
shall apply only to the transfer or issuance of the Company stock
if such stock remains outstanding after such transfer or
issuance.
(ii)
Change in Effective Control of the Company .
(A) A
change in the effective control of the Company 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 (iv)), other than a group of which Officer 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) ownership of stock of the Company possessing 30% or more
of the total voting power of the stock of the Company;
or
(2) A
majority of the members of the the Company 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 the Company also may occur with
respect to any transaction in which either of the Company 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 (iv)), is considered to effectively
control the Company (within the meaning of this paragraph (ii)),
the acquisition of additional control of the Company by the same
person or persons shall not be considered to cause a change in the
effective control of the Company (or to cause a change in the
ownership of the Company within the meaning of paragraph
(i)).
(iii)
Change in Ownership of a Substantial Portion of the
Company’s Assets . A change in the ownership
of a substantial portion of the Company’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 (iv)), other than a group
of which Officer 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 the Company 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 the Company immediately prior to such
acquisition or acquisitions.
(A) A
transfer of the Company’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 the Company (immediately before the asset transfer)
in exchange for or with respect to the Company stock;
(2) An
entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the Company;
(3) A
person, or more than one person acting as a group (within the
meaning of paragraph (iv)) that owns, directly or indirectly, 50%
or more of the total value or voting power of all of the
outstanding stock of the Company; 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 the Company assets, or the value of the assets being
disposed of, determined without regard to any liabilities
associated with such assets.
(iv) For
purposes of this Section 1(d), 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 the Company. If a
person, including an entity shareholder, owns stock in the Company
and another entity with which the Company 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 the Company at the same time, or as a
result of the same public offering of the Company’s
stock.
Officer and the
Company acknowledge that the employment of the Officer by the
Company is “at will” and Officer shall have no rights
under this Agreement unless Officer is terminated by the Company
without Cause or by the Officer with Good Reason during the period
commencing on the Effective Date and ending on the second
anniversary of such date.
3.
TERMS OF AT WILL EMPLOYMENT .
(a) During the term of
his or her employment by the Company, and excluding any periods of
vacation and sick leave to which the Officer is entitled, the
Officer agrees to devote reasonable attention and time to the
business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Officer by the Board
of Directors or the Chief Executive Officer, to use the
Officer’s reasonable best efforts to perform faithfully and
efficiently such responsibilities.
(b) During the term of
this Agreement, the Officer will not, without the prior written
consent of the Company, 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: (i) with respect to
any noncompetitive family businesses of the Officer for which the
rendering of such services will not have an adverse effect upon
Officer’s performance of his duties and obligations
hereunder; (ii) that Officer shall be permitted to engage in
charitable and community affairs provided that such activities do
not interfere with the performance of his duties and
responsibilities enumerated herein; and (iii) to give attention to
Officer’s investments provided that such activities do not
interfere with the performance of his duties and responsibilities
enumerated herein.
4
.
TERMINATION OF EMPLOYMENT .
(a)
Cause . For purposes of this Agreement,
“Cause” shall mean:
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an intentional
act of fraud, embezzlement, theft or any other material violation
of law that occurs during or in the course of the Officer’s
employment with the Company;
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intentional
damage by Officer to the Company’s assets;
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intentional
disclosure by Officer of the Company’s confidential
information contrary to the Company policies;
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material breach
of the Officer’s obligations under this Agreement;
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intentional
engagement by the Officer in any activity which would constitute a
breach of the Officer’s duty of loyalty or of the
Officer’s assigned duties;
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intentional
breach by the Officer of any of the Company’s policies and
procedures;
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the willful and
continued failure by Officer to perform the Officer’s
assigned duties (other than as a result of incapacity due to
physical or mental illness); or
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willful conduct
by the Officer that is demonstrably and materially injurious to the
Company, monetarily or otherwise.
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(b)
Good Reason . For purposes of this Agreement,
“Good Reason” shall mean the assignment to the Officer,
without the Officer’s consent, of any duties materially
inconsistent with the Officer’s position (including changes
in status, offices, or titles and any change in the Officer’s
reporting requirements that would cause Officer to report to an
officer who is junior in seniority to the officer to
whom Officer reports), authority, duties or responsibilities,
determined as of the later of the date of this Agreement or the
date of any modification to Officer’s position (including
status, offices, titles and reporting requirements, as described
above), authority, duties or responsibilities that is agreed to
b
