cryolife8k73007ex10.htm


    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.

     

    
 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (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.

     

    
 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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.

     

    
 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (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.

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (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.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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;

     

    
 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (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.

     

    
 

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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, Ann B. Anderson, 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,
      Ann B. Anderson, 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.

     

    
 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e)           Limitations
      on Major Medical Benefits.  The Company's obligation to provide
      Major Medical Benefits to Employee and Ann B. Anderson, 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, Ann B.
      Anderson, 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, Ann B. Anderson, 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.

     

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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.

     

    
 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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:

    


    
      	 	
              If
                to the Employee:

            
	 	 
	 	
              Steven
                G. Anderson

            
	 	
              5040
                Northside Drive

            
	 	
              Atlanta,
                Georgia  30327

            
	 	
              Facsimile:
                (770) 590-3754

            


    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
 

    
      	 	 
	 	
              With
                a copy to:

            
	 	 
	 	
              Steven
                E. Fox

            
	 	
              Rogers
                & Hardin LLP

            
	 	
              2700
                International Tower

            
	 	
              229
                Peachtree Street, N.E.

            
	 	
              Atlanta,
                Georgia  30303-1601

            
	 	
              Facsimile:
                (404) 525-2224

            
	 	 
	 	
              If
                to CryoLife:

            
	 	 
	 	
              CryoLife,
                Inc.

            
	 	
              1655
                Roberts Boulevard, N.W,

            
	 	
              Kennesaw,
                Georgia 30144

            
	 	
              Attention:  Chief
                Financial Officer

            
	 	
              Facsimile:
                (770) 590-3754

            
	 	 
	 	 
	 	
              With
                a copy to:

            
	 	
              B.
                Joseph Alley, Jr.

            
	 	
              Arnall
                Golden Gregory LLP

            
	 	
              171
                17th
                St.
                N.W., Suite 2100

            
	 	
              Atlanta,
                Georgia 30363

            
	 	
              Facsimile:
                (404) 873-8689

            


    

    


    


    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).

     

    
 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    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.

    


    
      	 	
              /s/
                Steven G. Anderson

            
	 	
              STEVEN
                G. ANDERSON

            
	 	 
	 	 
	 	
              CRYOLIFE,
                INC.

            
	 	 
	 	 
	 	
              By:  /s/
                Ronald C. Elkins, M.D.

            
	 	
              Ronald
                C. Elkins, M.D.

            
	 	
              Director
                and Chairman,

            
	 	
              Compensation
                Committee

            


    

    


    


    


    


    


    



    
      
        
        

      

      
        14