Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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 STEVEN
G. ANDERSON (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.
(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.
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.
(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.
(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)
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