Document:

EX-10.1

Exhibit 10.1

LOAN AGREEMENT

               THIS AGREEMENT is made as of February 26, 2009

A M O N G:

	 	 	 
	 

	 	BROOKFIELD HOMES HOLDINGS INC.
	 
	 	 
	 

	 	(the “Borrower”)
	 
	 	 
	 

	 	                 – and -
	 
	 	 
	 

	 	BROOKFIELD (US) CORPORATION
	 
	 	 
	 

	 	(the “Lender”)

RECITALS:

	A.	 	The Borrower has requested that the Lender make available to it the Facility for the purposes
and on the terms and conditions set out in this Agreement; and
	 
	B.	 	The Lender has agreed to provide the Facility on the terms and conditions set out in this
Agreement;

               NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements
herein contained, the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

	1.1	 	Definitions

               For the purposes of this Agreement:

1.1.1 “Acquired Property” means a Property in respect of which a Brookfield Homes’ Entity
acquires an interest after the date hereof where funds from the Loan are used to purchase
such Property in accordance with this Agreement;

1.1.2 “Acquired Property Financing” means any financing or refinancing that is secured,
directly or indirectly, by a lien against all or any part of an Acquired Property and that
is approved by the Lender, acting reasonably, other than any such financing or refinancing
arranged with the Lender;

1.1.3 “Advance” has the meaning ascribed thereto in Section 2.3.1;

 

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1.1.4 “Affiliate” means, with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common Control with,
such Person;

1.1.5 “Agreement” means this agreement and all schedules attached to this agreement, in
each case as they may be amended, restated or supplemented from time to time; the
expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions
refer to this Agreement as a whole and not to any particular article, Section, schedule or
other portion hereof, and the expression “article” and “Section” followed by a number, and
“schedule” followed by a number, mean and refer to the specified article or Section of or
schedule to this Agreement, except as otherwise specifically provided herein;

1.1.6 “Applicable Laws” means, in respect of any person, property, transaction, event or
course of conduct, all applicable laws (including common law), statutes, rules, by-laws
and regulations, regulatory policies and all applicable official directives, orders,
clean-up guidelines, judgments and decrees of Governmental Bodies;

1.1.7 “Brookfield Homes Entities” means, collectively, the Borrower and all of its present
and future Subsidiaries; and “Brookfield Homes Entity” means any one of them;

1.1.8 “Borrower” means BROOKFIELD HOMES HOLDINGS INC.;

1.1.9 “Borrower Financial Statements” means the consolidated audited financial statements
of the Borrower dated as of December 31, 2008;

1.1.10 “Borrowing Notice” means a notice substantially in the form of Schedule A;

1.1.11 “Business Day” means a day on which banks are generally open for business in New
York, New York;

1.1.12 “Change of Control” means any change in the Control (or agreement to effect a
change in the Control) of the Borrower, including the acquisition by a Person or group of
Persons of Control of the Borrower;

1.1.13 “Control” (including, with correlative meanings, the terms “Controlled by” and
“Controlled with” and “Controlling") means, in respect of any Person, (i) the ownership,
beneficially or legally, of voting securities or interests in the capital of such Person
to which are attached more than 50% of the votes that may be cast to elect the directors
or management of such Person, and where such votes are sufficient to elect a majority of
the directors or management thereof, including, in the case of a limited partnership, the
ownership of more than 50% of the limited partnership interests in such limited
partnership, or (ii) the ability, directly or indirectly, to direct or cause the direction
of the management and policies of the Person, whether through ownership of voting
securities or other interests, including, without limitation, through a limited
partnership interest, or by contract or otherwise;

 

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1.1.14 “Default” means any event which, but for the lapse of time, giving of notice or
both, would constitute an Event of Default;

1.1.15 “Designated Property” means an Acquired Property, and “Designated Properties”
means, collectively, all Acquired Properties;

1.1.16 “Designated Property Disposition” means any Disposition of a Designated Property
that is approved by the Lender, acting reasonably;

1.1.17 “Disposition” means any direct or indirect sale, transfer, lease or other
disposition of all or any part of a Property;

1.1.18 “Due Date” means the earlier of (a) the Maturity Date, and (b) such earlier date as
the entire balance of the Loan becomes due hereunder, whether by acceleration or
otherwise;

1.1.19 “Event of Default” has the meaning attributed to such term in Section 8.1;

1.1.20 “Facility” means the credit facility made available to the Borrower by the Lender
pursuant to Section 2.1, which facility will become due on the Due Date;

1.1.21 “Governmental Body” means any government, or any regulatory authority, agency,
commission or board of any government, or any court or (without limitation to the
foregoing) any other law, regulation or rule-making entity (including, without limitation,
any central bank, fiscal or monetary authority or authority regulating banks), having or
purporting to have jurisdiction in the relevant circumstances, or any Person acting under
the authority of any of the foregoing (including, without limitation, any arbitrator);

1.1.22 “Initial Advance” means the first Advance made under the Facility;

1.1.23 “Interest Rate” has the meaning ascribed thereto in Section 3.1;

1.1.24 “Interest Payment Period” has the meaning ascribed thereto in Section 3.2;

1.1.25 “Loan” means the loans outstanding under the Facility;

1.1.26 “Loan Documents” means this Agreement and each other agreement, instrument or
document now or hereafter executed and delivered to the Lender under, in connection with
or pursuant to any of them, and, in the singular, any one of such Loan Documents;

1.1.27 “Material Contracts” means, collectively, at any time, all contracts, agreements,
documents and instruments, now existing or from time to time entered into in the future,
which are material to the operation, use, ownership, management or development of any
Designated Property;

1.1.28 “Maturity Date” means December 31, 2012;

 

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1.1.29 “Maximum Available Amount” means $25,000,000;

1.1.30 “Person” means any individual, partnership, limited partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or without share capital,
unincorporated association, trust, trustee, executor, administrator or other legal
personal representative or Governmental Body;

1.1.31 “Obligations” means all indebtedness, liabilities and other obligations of the
Borrower to the Lender hereunder or under any Loan Document or other document delivered
pursuant to, or arising from dealings between the Lender and the Borrower, whether actual
or contingent, direct or indirect, matured or not, now existing or arising hereafter;

1.1.32 “Property” means any property (including all lands, buildings, improvements,
equipment, structures, appurtenant rights thereto, and other property owned in connection
therewith) in respect of which a Brookfield Homes Entity now or hereafter acquires an
interest; and “Properties” means, collectively, all such Properties and includes, without
limitation, the Designated Properties;

1.1.33 “Property Proceeds” means, in respect of any Designated Property or Acquired
Property, all direct and indirect gross proceeds received from any Designated Property
Disposition and/or Acquired Property Financing with respect thereto, less all reasonable
out-of-pocket fees, commissions, costs and expenses incurred by the relevant Brookfield
Homes Entity in respect thereof and the amount that is outstanding under any mortgage that
was secured against such Acquired Property as at the date of its acquisition by the
relevant Brookfield Homes Entity;

1.1.34 “Subsidiary” has the meaning given to that term under Rule 12b-2 of the Securities
and Exchange Act of 1934;

	1.2	 	Gender and Number

               Words importing the singular include the plural and vice versa and words importing gender
include all genders.

	1.3	 	Invalidity, etc

               Each of the provisions contained in any Loan Document is distinct and severable and a
declaration of invalidity, illegality or unenforceability of any such provision or part thereof by
a court of competent jurisdiction will not affect the validity or enforceability of any other
provision of such Loan Document or of any other Loan Document. To the extent permitted by
Applicable Laws, the parties waive any provision of Applicable Laws which renders any provision of
any Loan Document invalid or unenforceable in any respect. Without limiting the generality of the
foregoing, if any amounts on account of interest or fees or otherwise payable by the Borrower to
the Lender hereunder exceed the maximum amount recoverable under Applicable Laws, the amounts so
payable hereunder will be reduced to the maximum amount recoverable under Applicable Laws.

 

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	1.4	 	Headings, etc

               The division of a Loan Document into articles and Sections and the insertion of headings are
for convenience of reference only and will not affect the construction or interpretation of such
Loan Document.

	1.5	 	Governing Law

               Except as otherwise specifically provided, the Loan Documents will be governed by and
construed in accordance with the laws of the State of Delaware and the federal laws of the United
States applicable therein.

	1.6	 	References

               Except as otherwise specifically provided, reference in any Loan Document to any Loan
Document, contract, agreement or any other instrument will be deemed to include references to the
same as varied, amended, supplemented, restated, renewed, extended or replaced from time to time,
and reference in any Loan Document to any enactment, including without limitation, any statute,
law, by-law, regulation, ordinance or order, will be deemed to include references to such enactment
as re-enacted, amended or extended from time to time.

	1.7	 	Currency

               All monetary amounts in this Agreement are stated in United States dollars.

	1.8	 	This Agreement to Govern

               If there is any inconsistency between the terms of this Agreement and the terms of any other
Loan Document, the provisions hereof will prevail to the extent of the inconsistency.

	1.9	 	Actions on Days Other Than Business Days

               Except as otherwise specifically provided herein, where any payment is required to be made or
any other action is required to be taken on a particular day and such day is not a Business Day
and, as a result, such payment cannot be made or action cannot be taken on such day, then this
Agreement will be deemed to provide that such payment will be made or such action will be taken on
the first Business Day after such day. If the payment of any amount is deferred for any period
under this Section, then such period will, unless otherwise provided herein, be included for
purposes of the computation of any interest or fees payable hereunder.

	1.10	 	Incorporation of Schedules

               The following schedule annexed hereto will, for all purposes hereof, form part of this
Agreement:

               Schedule A  —  Borrowing Notice

 

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ARTICLE 2

CREDIT FACILITY

	2.1	 	Establishment of Facility

               Subject to the terms and conditions of this Agreement, the Lender hereby establishes a
revolving term credit facility (the “Facility”) in favor of the Borrower (the “Loan”) in an amount
equal to the Maximum Available Amount, if and to the extent permitted to be outstanding hereunder,
under which amounts may be borrowed, repaid and re-borrowed until the Due Date.

	2.2	 	Purpose of the Facility

               The Facility will be used by the Borrower to fund the acquisition of residential development
properties consistent with the existing business of the Borrower, provided that up to $5,000,000 of
the Facility may be used by the Borrower for general corporate purposes not specific to the
acquisition of an Acquired Property.

	2.3	 	Advances under Facility

2.3.1 Each request by the Borrower for an advance under the Facility (an “Advance”), will
be made by the delivery of a duly completed and executed Borrowing Notice to the Lender
not later than 12:00 p.m. (New York time) on the third Business Day prior to the date of
the proposed Advance. Each Borrowing Notice will specify the purpose of the proposed
Advance and if the purpose is to fund the acquisition of an Acquired Property, the
requirements of Section 4.1 will have been complied with in respect of such proposed
acquisition (including the Lender having approved the proposed Acquired Property).

2.3.2 Each Advance will be in an amount which is at least equal to $1,000,000 and is an
integral multiple of $100,000.

2.3.3 The aggregate of all Advances may not exceed the Maximum Available Amount.

2.3.4 No Advance will be made within 30 days of the Maturity Date.

2.3.5 At the option of the Lender, the proceeds of any Advance that is to be used by the
Borrower to acquire a property may, at the option of the Lender, be funded into a
solicitor’s account to be released concurrently with and for the purposes of the closing
of the Borrower’s acquisition of the particular property and such property becoming an
Acquired Property for purposes of this Agreement.

	2.4	 	Repayment

               The Borrower will repay all Obligations, including all principal, interest and other amounts
owing under the Loan, to the Lender in full on the Due Date.

 

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	2.5	 	Optional and Mandatory Prepayments

2.5.1 The Borrower may, upon three (3) Business Days’ notice to the Lender stating the
proposed date of the prepayment, prepay without penalty, bonus or premium, all of the
principal outstanding under the Loan or any part thereof (subject, in the case of partial
prepayment, to payment in multiples of $1,000,000, except for mandatory payments required
hereunder), which sum, subject to compliance with the terms herein, may be re-borrowed.
Any prepayments of the Loans in full must be accompanied with all interest and other
amounts due under the Loan Documents. Interest accrued and owing in respect of any other
principal prepayments will be paid on the last day of the current Interest Payment Period
in accordance with Section 3.2.

2.5.2 The Borrower will, upon the closing of each Designated Property Disposition or
Acquired Property Financing that is approved by the Lender, pay to the Lender an amount
equal to the Property Proceeds, and each repayment made pursuant to this Section 2.5.2
will be applied to reduce the principal amount of the Loan then outstanding.

	2.6	 	Terms of All Prepayments

               Upon the repayment of the Loan upon acceleration hereunder, the Borrower will pay to the
Lender all accrued interest to the date of such payment on the principal amount paid. With respect
to any other payment of any portion of the principal amount outstanding under the Loan prior to the
Maturity Date, whether such payment is an optional prepayment under Section 2.5.1, a mandatory
prepayment required by Section 2.5.2, or a mandatory prepayment required by any other provision of
this Agreement or any other Loan Document, accrued interest will continue to be payable on the last
day of each Interest Payment Period in accordance with the terms of Section 3.2 hereof.

	2.7	 	Payments Generally

               All payments in respect of the Loan (in respect of principal, interest, fees or otherwise)
will be made by the Borrower to the Lender no later than 12:00 p.m. (New York time) on the due date
thereof to the account specified therefor by the Lender in writing from time to time. Any payments
received after such time will be considered for all purposes as having been made on the following
Business Day unless the Lender otherwise agrees in writing.

	2.8	 	Control Accounts

               The Lender will maintain and keep accounts showing the amount of the Loan advanced by the
Lender, the date of each Advance, the interest, fees and other charges accrued thereon or
applicable thereto from time to time, and each payment of principal, interest and fees under the
Facility. The Lender will provide to the Borrower a monthly statement of the foregoing, provided
that, for certainty, the Lender will not be liable for any failure to deliver any such statement.
At all times and for all purposes, such accounts maintained by the Lender will constitute prima
facie evidence, in the absence of manifest error, of the matters recorded therein.

 

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ARTICLE 3

INTEREST AND FEES

	3.1	 	Interest Rate

               Subject to Section 3.3, the Loan will bear interest on the outstanding principal amount
thereof at a rate equal to (i) 12% from and including the date of first advance to December 31,
2010, (ii) 14% from and including January 1, 2011 to December 31, 2011, and (iii) 16% from and
including January 1, 2012 to December 31, 2012 (the “Interest Rate”).

	3.2	 	Calculation and Payment of Interest

               Interest on the Loan will accrue from day to day, both before and after default, demand,
maturity and judgment, will be calculated and compounded monthly on the basis of the actual number
of days elapsed and on the basis of a year of 365 or 366 days, as the case may be, and will be
payable to the Lender in arrears on the last Business Day of each calendar quarter (the “Interest
Payment Period”), provided that if such day is not a Business Day, such payment will be made on the
immediately following Business Day.

	3.3	 	Interest on Overdue Amounts

               All overdue amounts owing or deemed to be owing hereunder (“overdue amounts”), whether in
respect of principal, interest, fees, expenses or otherwise, both before and after judgment, and in
the case of expenses from the dates such expenses are incurred, will bear interest thereon at a
rate per annum equal to the applicable Interest Rate plus 3%. Such interest on overdue amounts
will accrue from day to day, be payable in arrears on demand and will be compounded monthly on the
last Business Day of each calendar month.

ARTICLE 4

ACQUIRED PROPERTIES

	4.1	 	Acquisition of an Acquired Property

               If the Borrower wishes to acquire an Acquired Property, the Borrower will notify the Lender in
writing at least ten (10) days prior to such acquisition and provide to the Lender the following
materials in respect of such proposed Acquired Property:

4.1.1 a copy of the purchase agreement for the proposed Acquired Property and notice of
the proposed closing date for the transaction;

4.1.2 financial, corporate and other information regarding such proposed Acquired Property
(including pro forma operating statements and Material Contracts), and the Borrower’s cash
flow projections for the proposed Acquired Property;

4.1.3 all existing environmental audits and reports with respect to such proposed Acquired
Property;

 

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4.1.4 details of any existing debt or other liens relating to the proposed Acquired
Property that will be assumed by one or more of the Brookfield Homes Entities;

4.1.5 such other information as the Lender may reasonably request relating to the proposed
Acquired Property.

               Within five (5) Business Days of receipt of the information listed in Sections 4.1.1 to 4.1.5
above, the Lender will advise the Borrower in writing whether it is satisfied with the information
provided and whether it has approved providing the Advance in respect of the proposed Acquired
Property. Without limiting the foregoing, the Borrower agrees that it will advise the Lender of
any proposed Acquired Property as soon as it becomes aware of same and will provide the Lender with
the information noted above in respect of such proposed Acquired Property as soon as it becomes
available.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

	5.1	 	Representations and Warranties of the Borrower

               The Borrower makes the following representations and warranties in favor of the Lender:

5.1.1 Creation and Status

5.1.1.1 The Borrower has been validly formed and is existing as a corporation under
the laws of the State of California and has all necessary power and authority to own
its properties and carry on its business as presently carried.

5.1.1.2 The Borrower is duly licensed, registered or qualified to carry on business
in each jurisdiction in which a Property is located.

5.1.2 Power and Capacity of Borrower The Borrower has the power and capacity to
enter into each of the Loan Documents to which it is a party and to do all acts and things
as are required or contemplated hereunder or thereunder to be done, observed and performed
by it.

5.1.3 Due Authorization of Borrower The Borrower has taken all necessary action
(including, where applicable, all necessary corporate action) to duly authorize the
execution, delivery and performance by it of the Loan Documents to which it is a party.

5.1.4 No Contravention The execution and delivery of this Agreement and the other
Loan Documents, and the performance by the Borrower of its obligations thereunder: (a) do
not and will not contravene, breach or result in any default under any organizational or
constating documents of the Borrower or under any mortgage, lease, agreement or other
legally binding instrument, license, permit or Applicable Laws to which it is a party or
by which any of its properties or assets may be bound; (b) will not oblige it to grant any
lien to any Person other than the Lender, and (c) will not result in

 

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or permit the acceleration of the maturity of any of its indebtedness, liabilities or
obligations under any mortgage, lease, agreement or other legally binding instrument of or
affecting it.

5.1.5 No Consents Required No authorization, consent or approval of, or filing
with or notice to, any Person (including any Governmental Body) is required in connection
with the execution, delivery or performance of this Agreement or any of the other Loan
Documents by the Borrower.

5.1.6 Enforceability Each of the Loan Documents constitutes, or upon execution
and delivery will constitute, a valid and binding obligation of the Borrower, enforceable
against it in accordance with its terms, subject only to bankruptcy and insolvency laws
affecting the enforcement of creditors’ rights generally and the availability, in the
discretion of a court of competent jurisdiction, of equitable remedies.

5.1.7 Non-Default No Default or Event of Default has occurred that is continuing.

5.1.8 Litigation and Other Proceedings There is no court, administrative,
regulatory or similar proceeding (whether civil, quasi-criminal, or criminal), arbitration
or other dispute settlement procedure, or any similar matter or proceeding, (each a
“proceeding”), against or involving any Brookfield Homes Entity which, if determined
adversely, would materially adversely affect its business, financial condition or
prospects, any Designated Property or its ability to perform any of the provisions of any
Loan Document to which it is a party or which purports to affect the legality, validity
and enforceability of any Loan Document. To the knowledge of the Borrower, there is no
investigation or enquiry by any Governmental Body, or any similar matter or proceeding,
and no event has occurred which might give rise to any such proceedings and there is no
judgment, decree, injunction, rule, award or order of any Governmental Body outstanding
against any Brookfield Homes Entity which has or may have a material adverse affect on its
respective business or financial condition or any Designated Property.

5.1.9 All Material Information Supplied As at the date hereof, the Borrower has
provided to the Lender all material information relating to the Designated Properties, and
all information which discloses any actual material or potential material adverse impact
on the financial condition of any Designated Property, and all such information is true,
accurate and complete in all material respects and omits no material fact necessary to
make such information not misleading. The Borrower has also provided to the Lender all
material information relating to the Borrower, the Brookfield Homes Entities and
Designated Properties, and all information which discloses any actual material or
potential material adverse impact on the financial condition or business of any of the
Borrower, Brookfield Homes Entity or Designated Property, and all such information is
true, accurate and complete in all material respects and omits no material fact necessary
to make such information not misleading.

5.1.10 Financial Statements The Borrower Financial Statements and all other
financial statements delivered to the Lender pursuant to this Agreement have been

 

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prepared in accordance with generally accepted accounting principles consistently applied
throughout the periods indicated and fairly, completely and accurately present the
financial position of the Borrower, and the results of the Borrower’s operations as of the
dates and throughout the periods indicated. There has been no material adverse change in
such business or the financial position of the Borrower from that reflected in the
Borrower Financial Statements.

	5.2	 	Survival and Repetition of Representations and Warranties

               The Borrower covenants that the representations and warranties made by it in Section 5.1 will
be true and correct on each day that this Agreement or any of the Loan Documents remains in force
and effect, with the same effect as if such representations and warranties had been made and given
on and as of such day, notwithstanding any investigation made at any time by or on behalf of the
Lender; except that (a) if any such representation and warranty is specifically given in respect of
a particular date or particular period of time, then such representation and warranty will continue
to be given as at such date or for such period of time, and (b) to the extent that the Borrower
discloses from time to time any changes in facts and matters referred to the representations and
warranties and such changes are approved by the Lender, in its sole and absolute discretion, such
representations and warranties, as so accepted by the Lender, will be the representations and
warranties that must remain true and correct from and after such acceptance.

ARTICLE 6

COVENANTS

	6.1	 	Affirmative Covenants of the Borrower

               So long as any Obligations remain outstanding or so long as the Borrower has the right to
utilize the Facility, and unless the Lender otherwise consents in writing, which consent it may
withhold in its sole and absolute discretion (unless expressly stated otherwise), the Borrower
covenants and agrees, that:

6.1.1 Punctual Payment It will pay or cause to be paid all Obligations falling
due hereunder on the dates and in the manner specified herein.

6.1.2 Use of Proceeds It will use the proceeds from the Loans as provided in
Section 2.2.

	6.2	 	Lender Entitled to Perform Covenants

               If the Borrower fails to perform any covenant or any provision of any Loan Document after the
applicable notice and cure period therefor, the Lender may, in its sole and absolute discretion and
without obligation, perform any such covenant capable of being performed by it, and if any such
covenant requires the payment of money the Lender may make any such payment. All sums so expended
by the Lender will form part of the Obligations and will bear interest at the Interest Rate plus 3%
and will be immediately due and payable.

 

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	6.3	 	Negative Covenants

               So long as any Obligations remain outstanding, and unless the Lender otherwise consents in
writing, which consent may be withheld in the Lender’s sole and absolute discretion (unless
expressly stated otherwise), the Borrower covenants and agrees that it will not do or permit any of
the following:

6.3.1 Encumber Acquired Properties permit, create, grant, assume or suffer to
exist any lien or any debt secured by a lien upon any Designated Property other than
encumbrances in the normal course;

6.3.2 Disposition of Acquired Properties permit any Disposition of any Acquired
Property;

6.3.3 Carry on Any Other Business acquire any assets or undertaking or carry on
any business other than the ownership and development of Properties consistent with the
business carried on by the Borrower as at the date hereof;

6.3.4 Non-Arm’s Length Contracts enter into any contract with any Person that is
not Arm’s Length with the Borrower other than contracts in the ordinary course and on
terms no less favorable than those obtainable in Arm’s Length transactions or, during such
time as an Event of Default has occurred hereunder that is continuing, make any payments
in respect of any non-arm’s length contracts;

6.3.5 Mergers and Amalgamations merge or amalgamate with or into or consolidate
with or into or acquire all or substantially all of the assets or stock of any Person.

	6.4	 	Reporting Requirements

6.4.1 Quarterly Reporting The Borrower will, as soon as practicable, and in any
event within seventy-five (75) days of the end of each quarter, deliver to the Lender
quarterly consolidated financial statements for the Borrower prepared in accordance with
United States generally accepted accounting principles.

6.4.2 Additional Information The Borrower will deliver such additional financial
statements and information as and when reasonably requested by the Lender.

ARTICLE 7

CONDITIONS PRECEDENT

	7.1	 	Conditions Precedent for Subsequent Advances

               On or before each Advance subsequent to the Initial Advance, the following conditions will be
satisfied:

 

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7.1.1 on not less than three (3) days’ notice of the requested Advance, the Lender will
have received a properly executed and completed Borrowing Notice from the Borrower,
substantially in the form attached as Schedule A, which confirms delivery of the materials
set out in Sections 4.1;

7.1.2 the Lender will be satisfied that the proceeds of such Advance are being used for
the purposes permitted under this Agreement (including any confirmation as the Lender may
reasonably require to the effect that a property has become an Acquired Property for
purposes of this Agreement);

7.1.3 the representations and warranties set forth in Article 5 will be true and accurate
in all material respects, except those disclosed to and accepted by the Lender;

7.1.4 no circumstance will exist or event have occurred with respect to the Designated
Properties or in the business, prospects, operations, financial condition or affairs of
the Borrower since the previous Advance, which would constitute a material adverse change
in respect of a material Property or the Borrower;

7.1.5 no Default or Event of Default has occurred and is continuing nor will the Advance
result in the occurrence of any such event; and

7.1.6 all fees and expenses due and payable hereunder prior to or on the date of such
Advance will have been paid.

ARTICLE 8

EVENTS OF DEFAULT AND REMEDIES

	8.1	 	Events of Default

               The occurrence of any of the following events will constitute an Event of Default:

8.1.1 default by the Borrower in payment when due of any amounts which require the payment
of money to the Lender, which default continues unremedied for thirty (30) days after such
payment was due;

8.1.2 if any representation or warranty made by or deemed to be made by the Borrower in
this Agreement, any certificate or any other Loan Document at any time delivered hereunder
to the Lender will prove to have been incorrect or misleading in any material adverse
respect on and as of the date thereof;

8.1.3 if an order is made in bankruptcy or an effective resolution is passed or order is
made for the winding up of the Borrower or any of its significant subsidiaries or, if the
Borrower or any of its significant subsidiaries consent to the appointment of a receiver
or a receiver is appointed and confirmed by a court;

8.1.4 if an encumbrancer takes possession of all or substantially all of the property of
the Borrower, or if any process of execution is levied or enforced upon or against all

 

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or substantially all of the property of the Borrower and remains unsatisfied for such
period as would permit any such property to be sold thereunder, unless the Borrower
actively and diligently contests in good faith such process, but in that event the
Borrower shall, if the Lender so requires, give security which, in the discretion of the
Borrower, is sufficient to pay in full the amount thereby claimed in case the claim is
held to be valid; or

8.1.5 if any change (or any condition, event or development involving a prospective
change) in the business, operations, affairs, assets, liabilities (including any
contingent liabilities that may arise through outstanding, pending or threatened
litigation or otherwise) capitalization, financial condition, licenses, permits, rights or
privileges, or prospects of the Borrower or any of its subsidiaries which in the judgment
of the Lender acting reasonably in the circumstances could reasonably be expected to
materially and adversely affect the Borrower and its subsidiaries taken as a whole.

	8.2	 	Remedies Upon Default

               Upon the occurrence of any Event of Default, the Lender may:

8.2.1 declare the Facility to be terminated;

8.2.2 declare all Obligations to be immediately due and payable;

8.2.3 take such actions and commence such proceedings as may be permitted at law or in
equity at such times and in such manner as the Lender in its sole and absolute discretion
may consider expedient,

all without, except as may be required by Applicable Laws, any additional notice, presentment,
demand, protest, notice of protest, dishonor or any other action.

	8.3	 	Remedies Cumulative and Waivers

               For greater certainty, it is expressly understood and agreed that the respective rights and
remedies of the Lender hereunder or under any other document or instrument executed pursuant to
this Agreement, are cumulative and are in addition to and not in substitution for any rights or
remedies provided by law or by equity, and any single or partial exercise by the Lender of any
right or remedy for a default or breach of any term, covenant, condition or agreement contained in
this Agreement or other document or instrument executed pursuant to this Agreement, will not be
deemed to be a waiver of or to alter, affect or prejudice any other rights or remedies to which the
Lender may be lawfully entitled for such default or breach. Any waiver by the Lender of the strict
observance, performance or compliance with any term, covenant, condition or agreement herein
contained or any other instrument or document delivered hereunder or thereunder and any indulgence
granted, either expressly or by course of conduct, by the Lender will be effective only in the
specific instance and for the purpose for which it was given and will be deemed not to be a waiver
of any rights and remedies of the Lender under this Agreement or under any other instrument or
document delivered hereunto or thereunder as a result of any other default or breach hereunder or
thereunder.

 

- 15 -

ARTICLE 9

GENERAL

	9.1	 	Reliance and Non-Merger

               All covenants, agreements, representations and warranties of the Borrower made herein or in
any other Loan Document or in any certificate or other document signed by any of its directors or
officers and delivered by or on behalf of any of them pursuant hereto or thereto are material, will
be deemed to have been relied upon by the Lender notwithstanding any investigation heretofore or
hereafter made by the Lender or any employee or other representative of the Lender and will survive
the execution and delivery of this Agreement and the other Loan Documents until the Borrowers will
have satisfied and performed all of their obligations hereunder.

	9.2	 	Amendment

               No amendment of any provision of any Loan Document is effective unless it is in writing and
signed by officers of the Borrower and the Lender. Such amendment will be effective only in the
specific instance and for the specific purpose for which it is given.

	9.3	 	No Set-Off by the Borrower

               The amounts payable by the Borrower hereunder will not be subject to any deduction,
withholding, set-off or counterclaim by the Borrower for any reason whatsoever.

	9.4	 	Set-Off by the Lender

               The Lender may at any time and from time to time, with notice to the Borrower, combine,
consolidate or merge all or any of the Borrower’s liabilities to the Lender and may set off any
other indebtedness and liability of the Lender to the Borrower, matured or unmatured, against and
on account of the Obligations when due.

	9.5	 	Action by and Consent of Lender

               Except as expressly provided to the contrary in this Agreement and except in respect of any
amendments or waivers of any part of this Agreement or the exercise by the Lender of any remedies
hereunder, where the terms of this Agreement refer to any action to be taken hereunder by the
Lender or to any such action that requires the consent, approval, satisfaction or agreement of, or
other determination given or made by, the Lender, the action taken by and the consent, approval,
satisfaction or agreement of, or other determination given or made by, the Lender will not be
unreasonably withheld or delayed.

	9.6	 	Reliance by the Lender

               The Lender will be entitled to rely upon any schedule, certificate, statement, report, notice
or other document or written communication (including any telecopy, telex, electronic mail or other
means of electronic communication) believed by it to be genuine and

 

- 16 -

correct, and upon the advice and statements of agents, legal counsel, accountants, appraisers,
consultants and other experts selected by it.

	9.7	 	Notices

               Any notice or other communication required or permitted to be given hereunder will be in
writing and will be given by telecopier or other means of electronic communication or by
hand-delivery as hereinafter provided. Any such notice, if sent by telecopier or other means of
electronic communication unless received by 5:00 p.m. on a Business Day, will be deemed to have
been received on the Business Day following the sending, or if delivered by hand will be deemed to
have been received at the time it is delivered to the applicable address noted below either to the
individual designated below or to a senior employee of the addressee at such address with
responsibility for matters to which the information relates. Notice of change of address will also
be governed by this Section. Notices and other communications will be addressed as follows:

	 	 	 	 	 
	 

	 	(a)
	 	if to the Borrower:
	 
	 	 	 	 
	 

	 	 	 	BROOKFIELD HOMES HOLDING INC.
	 

	 	 	 	8500 Executive Park Avenue, Suite 300
	 

	 	 	 	Fairfax, VA 22031
	 

	 	 	 	Attention: Craig J. Laurie
	 

	 	 	 	Tel: 858-481-2568
	 

	 	 	 	Fax: 858-481-1714
	 

	 	 	 	claurie@brookfieldhomes.com
	 
	 	 	 	 
	 

	 	(b)
	 	if to the Lender:
	 
	 	 	 	 
	 

	 	 	 	BROOKFIELD (US) CORPORATION
	 

	 	 	 	Corporation Trust Centre
	 

	 	 	 	1209 Orange Street
	 

	 	 	 	Wilmington, DE 2308615
	 

	 	 	 	Attention: Barry S. Blattman
	 

	 	 	 	Tel: 212-417-7000
	 

	 	 	 	Fax: 212-417-7196
	 

	 	 	 	bblattman@brookfield.com

	9.8	 	Time

               Time is of the essence of the Loan Documents.

	9.9	 	Further Assurances

               Whether before or after the happening of an Event of Default, the Borrower will at its own
expense do, make, execute or deliver, or cause to be done, made, executed or delivered, all such
further acts, documents and things in connection with the Loan and the Loan Documents as the Lender
may reasonably require from time to time for the purpose of giving effect to the Loan Documents,
all immediately upon the request of the Lender.

 

- 17 -

	9.10	 	Assignment

               The Borrower may not assign any of its rights or benefits under this Agreement. The Lender
may assign all or part of its rights in respect of the Obligations and have its corresponding
obligations hereunder assumed by any such assignee at no cost to the Borrower. Any assignment by
the Lender hereunder will become effective when the Borrower has been notified thereof by the
Lender and have received from the assignee an undertaking to be bound by this Agreement and the
other Loan Documents and to perform the obligations assumed by it. Any such assignee will be
treated as a party to this Agreement for all purposes of this Agreement and the other Loan
Documents, will be entitled to the full benefit hereof and thereof and will be subject to the
obligations of the Lender or Borrower, as applicable, to the same extent as if it were an original
party in respect of the rights assigned to it and obligations assumed by it and, in the case of an
assignment by the Lender, the Lender will be released and discharged accordingly.

	9.11	 	Entire Agreement

               The Loan Documents constitute the entire agreement between the parties pertaining to the
subject matter of the Loan Documents and supersede and replace any prior understandings or
arrangements pertaining to the Loan. There are no warranties, conditions, or representations
(including any that may be implied by statute) and there are no agreements in connection with such
subject matter except as specifically set forth or referred to in the Loan Documents. No reliance
is placed on any warranty, representation, opinion, advice or assertion of fact made either prior
to, contemporaneous with, or after entering into the Loan Documents, or any amendment or supplement
thereto, by any party to the Loan Documents or its directors, officers, employees or agents, to any
other party to the Loan Documents or its directors, officers, employees or agents, except to the
extent that the same has been reduced to writing and included as a term of the Loan Documents, and
none of the parties to the Loan Documents has been induced to enter into the Loan Documents or any
amendment or supplement by reason of any such warranty, representation, opinion, advice or
assertion of fact. Accordingly, there will be no liability, either in tort or in contract,
assessed in relation to any such warranty, representation, opinion, advice or assertion of fact,
except to the extent contemplated above.

	9.12	 	Recourse

               Nothing in any of the Loan Documents will mean, nor be construed to mean, that the recourse of
the Lender against the Borrower is anything other than full recourse with regard to its obligations
hereunder, the manner and order of realization or the exercise of remedies hereunder.

 

- 18 -

	9.13	 	Counterparts

               This Agreement may be signed in any number of counterparts, each of which will be deemed to be
an original, but all such separate counterparts will together constitute one and the same
instrument.

               IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first
written above.

	 	 	 	 	 
	 	 	BROOKFIELD HOMES HOLDINGS INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ CRAIG J. LAURIE
	 

	 	 	 	 
	 

	 	Name:
	 	Craig J. Laurie
	 

	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	BROOKFIELD (US) CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ BARRY S. BLATTMAN
	 

	 	 	 	 
	 

	 	Name:
	 	Barry S. Blattman
	 

	 	Title:
	 	President

 

 

SCHEDULE A

BORROWING NOTICE

	 	 	 
	TO:

	 	BROOKFIELD (US) CORPORATION,

               Reference is made to a loan agreement (the “Loan Agreement”) dated as of February 26, 2009
between BROOKFIELD HOMES HOLDINGS INC., as borrower, and BROOKFIELD (US) CORPORATION, as lender.
All terms used in this Borrowing Notice which are defined in the Loan Agreement have the meanings
attributed thereto in the Loan Agreement.

               The Borrower hereby requests the following Advance under the Loan:

	 	 	 	 	 	 	 
	 
	 	I.	 	Amount of Advance:	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	II.	 	Borrowing Date:	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	III.	 	Payment instructions (if any)	 	 
	 
	 	 	 	 	 

               In addition, the undersigned hereby certify that, as at the date of this Borrowing Notice:

               All of the representations and warranties of the Borrower in Article 5 of the Loan Agreement
are true and correct on the date hereof as if made on and as of the date hereof.

               No Default or Event of Default has occurred and is continuing nor will any Default or Event of
Default occur after giving effect to the aforementioned Advance.

               DATED this                      day of                                         , 2009.

	 	 	 	 	 	 	 
	 	 	BROOKFIELD HOMES HOLDINGS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:cryolife8k50509ex101.htm

    EXHIBIT
10.1

     

     

     

    
      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)).

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      (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.

       

      
 

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      2.           EMPLOYMENT.

      

      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:

      

      
        	
                (i)  

              	
                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;

              

      

      

      
        	
                (ii)  

              	
                intentional
      damage by Officer to the Company’s
assets;

              

      

      

      
        	
                (iii)  

              	
                intentional
      disclosure by Officer of the Company’s confidential information contrary
      to the Company policies;

              

      

      

      
        	
                (iv)  

              	
                material
      breach of the Officer’s obligations under this
  Agreement;

              

      

      

      
        	
                (v)  

              	
                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;

              

      

      

      
        	
                (vi)  

              	
                intentional
      breach by the Officer of any of the Company’s policies and
      procedures;

              

      

      

      
        	
                (vii)  

              	
                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

              

      

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
 

      
        	
                (viii)  

              	
                willful
      conduct by the Officer that is demonstrably and materially injurious to
      the Company, monetarily or
otherwise.

              

      

      

      (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 by Officer, or any other action by the
Company that results in a material diminution in such position, authority,
duties, responsibilities or Officer’s aggregate compensation, excluding for this
purpose an isolated, insubstantial and inadvertent action taken in good faith
and which is remedied by the Company within thirty (30) days after receipt of
notice thereof given by the Officer (each of these an “Event” for purposes of
this Section 4(b)).  Officer must notify the Company of any Event that
constitutes Good Reason within ninety (90) days following Officer’s knowledge of
the existence of such Event or such Event shall not constitute Good Reason under
this Agreement.

      

      (c)           Notice of
Termination.  Any termination by the Company for Cause, or by
the Officer for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 11(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 Officer’s employment under the provision so indicated and
(iii) specifies the termination date (which date shall not be more than thirty
(30) days after the giving of such notice; provided, however, if Officer
is terminating for Good Reason such date shall not be less than thirty (30) nor
more than forty-five (45) days after giving of such notice).  The
failure by the Officer or the Company 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 Officer or the Company, respectively, hereunder
or preclude the Officer or the Company, respectively, from asserting such fact
or circumstance in enforcing the Officer’s or the Company’s rights
hereunder.

      

      (e) Date of
Termination.  “Date of Termination” means the date of receipt
of the Notice of Termination, or any later date specified therein, as the case
may be. The Company and the Officer shall take all steps necessary (including
with regard to any post-termination services by the Officer) to ensure that any
termination described in this Section 4 constitutes a “separation from service”
within the meaning of Section 409A of the Code, and notwithstanding anything
contained herein to the contrary, the date on which the separation from service
takes place shall be the “Date of Termination.”

      

      (f)  Covenants Necessary to the
Company’s Business.

      

      (i)           Non-Solicitation of
Customers.  The Officer covenants and agrees that, during the
term of this Agreement and for a period of one (1) year following the
termination of this Agreement Officer will not, either directly or indirectly,
in competition with the Company Business (as defined below), solicit, entice or
recruit for a Competing Business (as defined below), attempt to solicit, entice
or recruit for a Competing Business, or attempt to divert or appropriate to a
Competing Business, any actual or prospective customer of the Company with whom
Officer had contact on behalf of the Company.  For the purposes of
this Agreement, “Company Business” shall mean the business of (A) processing
cardiac or vascular tissues, (B) marketing biological glue or protein
hydrogel technology products, (C) marketing transport or other solutions for use
with human organs to be transplanted and/or (D) marketing hemostatic agents for
use in surgeries.  “Competing Business” shall mean any person or
entity that engages in a commercial business that is the same as or
substantially similar to the Company Business, and only that portion of the
business that is in competition with the Company Business.

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
 

      (ii)           Non-Solicitation of
Employees.  Officer covenants and agrees that, during the term
of this Agreement for a period of one (1) year following the Date of
Termination, Officer will not, either directly or indirectly, solicit, entice,
encourage, cause, or recruit any person employed by the Company and with whom
Officer had contact during Officer’s employment with the Company to leave such
person’s employment with the Company to join a Competing Business.

      

      (iii)           Consideration for
Covenants.  Officer covenants and agrees that the payment of
any Severance Payment (as defined in Section 5(e)) shall be subject to and
expressly conditioned upon Officer’s compliance with the covenants set forth in
subparagraphs (i) and (ii) above.  Should Officer fail to comply with
these covenants, the Company shall not be required to make the Severance Payment
(or any portion of the Severance Payment that remains unpaid), and the Officer
shall be required to repay any portion of the Severance Payment that the Officer
has already received from the Company.

      

      

      5.           OBLIGATIONS OF THE COMPANY UPON
TERMINATION.

      

      (a)           If,
during the two year period commencing on the Effective Date and ending on the
second anniversary
of the Effective Date, (i) the Company shall terminate the Officer’s employment
without Cause, or (ii) the Officer shall terminate employment for Good Reason,
then the Company shall pay to Officer the Severance Payment (defined
below).

      

      (b) Severance
Payment.  The “Severance Payment” shall be an amount equal to
one (1) times the aggregate of Officer’s base salary as of the Date of
Termination and bonus compensation for the year in which the termination of
employment occurs. For purposes of determining Officer’s bonus compensation for
purposes of this Section 5(b), if the Date of Termination occurs before the
awarding of bonuses for the year in which the Date of Termination occurs, the
bonus compensation component of the Severance Payment shall be computed based on
Officer’s most recent awarded bonus.  Bonus compensation shall include
both the Annual Bonus paid in cash 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 the Company in computing the FAS 123R charge for the options, and any
shares of restricted stock will be valued at the closing price of the the
Company 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 the Company 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 Officer Incentive Plan shall be
bonus compensation for purposes of this Agreement for the year in which paid or
issued. The Severance Payment shall be payable to Officer as
follows:

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
 

      (i)           The
Severance Payment, if any is due hereunder, shall be paid to Officer in a lump
sum not later than thirty (30) days following Officer’s Date of
Termination. 

      

      (ii)           In
the event of an Anticipatory Termination, the Severance Payment shall be paid to
Officer in a lump sum not later than thirty (30) days following the date of the
Change of Control.

      

      Notwithstanding
the foregoing, if any amount paid pursuant to this Section 5(b) is deferred
compensation withing the meaning of Section 409A of the Code and as of the Date
of Termination Officer is a Specified Employee, amounts that would otherwise be
payable during the six-month period immediately following the Date of
Termination shall instead be paid, with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, on
the first business day after the date that is six months following Officer’s
“separation from service” within the meaning of Section 409A of the Code (the
“Delayed Payment Date”).   As used in this Agreement, the term
“Specified Employee” means a “specified employee” as defined in Section
409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”).
By way of clarification, “specified employee” means a “key employee” (as defined
in Section 416(i) of the Code, disregarding Section 416(i)(5) of the Code) of
the Company.  Officer shall be treated as a key employee if the
Officer meets the requirement of Section 416(i)(1)(A)(i), (ii), or (iii) at any
time during the twelve (12) month period ending on an “identification
date”.  For purposes of any “Specified Employee” determination
hereunder, the “identification date” shall mean the last day of each calendar
year.

      

      6.           FULL SETTLEMENT.

      

      In no event shall the Officer be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Officer
obtains other employment.  The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Officer may
reasonably incur as a result of any contest by the Company or Officer 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 Officer 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 the Company’s payment of the
sums allegedly due the Officer or performance of the covenants by the Company
allegedly breached by it.

      

      7.           LIMITATION OR EXPANSION OF
BENEFITS.

      

      (a) In the event it shall be determined
that all or any portion of any benefit, payment, acceleration right or
distribution by the Company to or for the benefit of the Officer (whether
payable or distributable pursuant to the terms of this Agreement or otherwise)
is treated as an “excess parachute payment” (as defined in Section 280G(b)(1) of
the Code) which is subject to the excise tax imposed by Section 4999 of the Code
(such excise tax, the “Excise Tax”), then the Company shall pay to Officer 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 Officer 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 Officer would have
received if the Excise Tax had not been imposed. The Gross Up Payment shall be
paid to Officer on the date that is thirty (30) days prior to the date on which
the Excise Tax with respect to any excess parachute payment is due.  A
nationally recognized public accounting firm selected by the Company shall
initially determine, at the Company’s expense, whether an “excess parachute
payment” will be made to Officer, 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 Officer’s liability for an Excise
Tax in excess of the amount covered by any previous Gross-Up Payment, the
Officer shall promptly notify the Company in writing of such
claim.  If the Company elects to contest such claim, it shall so
notify the Officer 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 Officer
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
the Company’s payment of costs of the contest. Officer shall cooperate fully
with the Company in the defense of any such IRS claim.  If, as a
result of the Company’s action with respect to a claim, Officer receives a
refund of any amount paid by the Company with respect to such claim, Officer
shall promptly pay such refund to the Company.  In the event the IRS
claim is finally determined to result in the imposition of additional Excise Tax
on Officer, the Company shall make an additional Gross-Up Payment with respect
to any such additional Excise Tax.

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
 

      (b) Anything in this Agreement to the
contrary notwithstanding, aggregate severance, separation and/or similar
payments made to Officer pursuant to this Agreement and otherwise shall be
limited to the equivalent of Officer’s salary paid during the three (3)
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.

      

      8.           CONFIDENTIAL
INFORMATION.

      

      The Officer and the Company 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; provided,
however, that to the extent that there is any conflict or overlap between the
provisions of this Agreement and any of the IP Agreements, those provisions that
provide the Company with the greatest rights and protections shall
control.

      

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

      

      9.           SUCCESSORS.

      

      (a) This Agreement is personal to the
Officer and without the prior written consent of the Company shall not be
assignable by the Officer otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Officer’s legal representatives.

      

      (b) This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and
assigns.

      

      (c) The Company 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 the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.  As used in this Agreement,
“the Company” 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.

      

      10.           COMPLIANCE
WITH SECTION 409A.

      

      (a)           This
Agreement is intended to comply with, or otherwise be exempt from, Section 409A
of the Code and any regulations and Treasury guidance promulgated
thereunder.

      

      (b)           The
Company and Officer agree that they will execute any and all amendments to this
Agreement as they mutually agree in good faith may be necessary to ensure
compliance with Section 409A of the Code.

      

      (c)           The
Company makes no representation or warranty as to the tax effect of any of the
preceding provisions, and the provisions of this Agreement shall not be
construed as a guarantee by the Company of any particular tax effect to Officer
under this Agreement.  the Company shall not be liable to Officer or
any other person for any payment made under this Agreement which is determined
to result in the imposition of an excise tax, penalty or interest under Section
409A of the Code, nor for reporting in good faith any payment made under this
Agreement as an amount includible in gross income under Section 409A of the
Code.

      

      11.           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
(which shall include delivery via Federal Express or UPS) to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	
                If
      to the Officer:

              
	 
      	 
      
	 
      	
                Albert
      E. Heacox

              
	 
      	
                4289
      Highborne Dr.

              
	 
      	
                Marietta,
      Georgia 30066

              
	 
      	 
      
	 
      	
                If
      to the Company:

              
	 
      	 
      
	 
      	
                CryoLife,
      Inc.

              
	 
      	
                1655
      Roberts Boulevard, N.W,

              
	 
      	
                Kennesaw,
      Georgia 30144

              
	 
      	
                Attention:  Chief
      Executive Officer

              
	 
      	
                Facsimile:
      (770) 590-3754

              

      

      

      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) If any provision of this Agreement
or the application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstance shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it valid, enforceable and legal; provided, however, if the provision so
held to be invalid, unenforceable or otherwise illegal cannot be reformed so as
to be valid and enforceable, then it shall be severed from, and shall not affect
the enforceability of, the remaining provisions of the Agreement.

      

      (d) The Company 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, except as specifically set forth in Section 9 above.  From and
after the Effective Date, this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof.

      

      

      

      

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

       

      IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.

      

      
        	 
      	
                /s/ Albert E. Heacox

              
	 
      	
                Albert
      E. Heacox

              
	 
      	 
      
	 
      	 
      
	 
      	
                CRYOLIFE,
      INC.

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:  /s/ Steven G. Anderson

              
	 
      	
                Steven
      G. Anderson

              
	 
      	
                Chairman,
      President and CEO

              

      

      

      

      
        
           

        

        
          11

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