CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), is executed as of this 5th day of
March, 1997, by and between CryoLife, Inc., a Florida corporation ("CryoLife"),
CryoLife Acquisition Corporation, a Florida corporation and wholly owned
subsidiary of CryoLife ("Newco") and J. Crayton Pruitt, Sr., M.D., a resident of
Florida ("Dr. Pruitt").
W I T N E S S E T H:
WHEREAS, CryoLife and Newco desire to engage Dr. Pruitt, and Dr. Pruitt
desires to accept such engagement, on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. ENGAGEMENT. CryoLife and Newco hereby engage Dr. Pruitt, and Dr. Pruitt
hereby accepts such engagement, on the terms and conditions set forth herein.
Subject to the general supervision of the President of CryoLife, Dr. Pruitt
shall perform those duties and services more specifically described on Exhibit A
attached hereto. During the term of his engagement, Dr. Pruitt will devote not
less than an aggregate of 20 hours per calendar month in providing such services
to Newco and CryoLife. Dr. Pruitt will render to CryoLife at regular and
frequent intervals, as set by CryoLife, reports and accounting of the status and
progress of any work he is performing.
2. TERM. This Agreement shall commence upon the date set forth above (the
"Commencement Date") and shall continue, subject to the provisions for early
termination set forth herein, until the fifth anniversary of the Commencement
Date.
3. COMPENSATION.
(a) For all services rendered by Dr. Pruitt during the term hereof and
subject to Section 14 below, Dr. Pruitt shall be entitled to receive a
consulting fee of $16,666.67 per month (the "Consulting Fee"), due and payable
not later than the fifth day of each calendar month with respect to services
rendered during the immediately preceding calendar month.
(b) During the term hereof and subject to compliance with the
reimbursement policies and procedures of CryoLife, CryoLife shall pay or
reimburse Dr. Pruitt for all reasonable travel and business expenses (including
air travel at coach rate) incurred or paid by Dr. Pruitt in the performance of
his duties hereunder, upon Dr. Pruitt's presentation of expense statements,
receipts, vouchers and such other information as CryoLife may reasonably require
in order to verify such expenses.
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(c) During the term hereof, Dr. Pruitt shall be entitled to an
automobile allowance of $800 per month.
4. DEFINITIONS. The following definitions shall apply to this Agreement:
(a) "Competing Business" means any person, concern, or entity that is
engaged in or conducts a business substantially the same as the Newco Business.
(b) "Newco Business" means the business of designing, manufacturing,
marketing and distributing specialized tubing products, catheters and medical
instruments for use in the field of vascular, general, and laparoscopic surgery,
including carotid shunts, occlusion catheters, Hutson dual balloon catheters,
embolectomy catheters, dual lumen catheters, aortic catheters, venous access
ports, cholangiogram catheters, and laparoscopic instruments. Newco Business
includes the design, manufacture, marketing and distribution of all products
identified in the product catalogue of Ideas for Medicine, Inc. as of the date
hereof.
(c) "Territory" means the United States, Germany, Italy, the
Netherlands, the United Kingdom, Canada, and France, which the parties hereby
acknowledge to be the geographic area in which the Newco conducts Newco Business
on the date of this Agreement.
(d) "Trade Secrets" means information relating to CryoLife or Newco or
the business and technology of CryoLife or Newco, including, but not limited to,
technical and nontechnical data, formulae, patterns, designs, compilations,
programs, devices, methods, techniques, drawings, processes, financial data,
financial plans, product plans, pricing information, marketing information, and
lists and information with respect to actual or potential customers or
suppliers, which (1) derives economic value, actual or potential, from not being
generally known to or readily ascertainable by proper means by persons other
than CryoLife or Newco who can obtain economic value from its disclosure or use;
and (2) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. Trade Secrets shall also include information that has been
disclosed to CryoLife or Newco by a third party and that CryoLife or Newco is
obligated to treat as confidential. Trade Secrets shall not include information
that falls into the public domain through no fault of Dr. Pruitt.
5. CONFIDENTIALITY. Dr. Pruitt covenants and agrees that, during and after
his engagement hereunder, he will treat as confidential and will not, without
the prior written approval of CryoLife, use (other than in the performance of
his designated duties for CryoLife and Newco) or disclose the Trade Secrets.
6. RECORDS. All records, notes, files, recordings, tapes, disks, memoranda,
reports, price lists, client lists, drawings, plans, sketches, documents,
equipment, apparatus, and like items, and all copies thereof, relating to the
business of Newco, CryoLife, or the
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Trade Secrets or otherwise constituting physical embodiments of the Trade
Secrets, which shall be prepared by Dr. Pruitt or which shall be disclosed to or
which shall come into the possession of Dr. Pruitt, whether after or prior to
the date hereof, shall be and remain the sole and exclusive property of CryoLife
and Newco. Dr. Pruitt agrees that at any time upon request from CryoLife, to
promptly deliver to CryoLife the originals and all copies of any of the
foregoing that are in Dr. Pruitt's possession, custody or control.
7. INVENTIONS. Any invention, improvement, discovery, process, formula,
device, technique, code, algorithm, program, system, method or visual works
(collectively, "Invention"), which is made , developed or conceived, either
solely or jointly with others, by Dr. Pruitt in the course of his engagement or
with the use of Newco's or CryoLife's time, materials or facilities will be
promptly and fully disclosed by Dr. Pruitt to the President of CryoLife. Any
such Invention will be the sole and absolute property of Newco, including all
patent, copyright, trademark, trade name, and other rights in respect thereof,
and Dr. Pruitt hereby assigns and agrees to assign to Newco any right, title or
interest he may have to such Invention in any medium, including all rights to
create derivative works thereof. At the request and expense of Newco, Dr. Pruitt
will execute and deliver all such documents and will do all such other acts as
may be in Newco's opinion necessary or desirable to secure to Newco all right,
title and interest in and to any such Invention. The provisions of this
paragraph shall be binding upon the heirs, successors, and assigns of Dr.
Pruitt.
8. COOPERATION. Dr. Pruitt agrees to cooperate at any time to the extent
and in the manner requested by Newco and at Newco's expense, in the prosecution
or defense of any claims, litigation or other proceeding involving the property
of Newco, CryoLife, or the Trade Secrets. Dr. Pruitt agrees to diligently
protect any and all Trade Secrets against loss by inadvertent or unauthorized
disclosure and will comply with regulations established by CryoLife or Newco for
the purpose of protecting such information.
9. NON-COMPETITION.
(a) Dr. Pruitt covenants that he shall not during the term of his
engagement hereunder and for a period of two years thereafter (the
"Non-Competition/Non-Solicitation Period"), directly or indirectly, in the
Territory, (a) for himself or (b) as a consultant, management, supervisory or
executive employee or owner of a Competing Business, engage in any business for
which he provides services which are the same or substantially similar to his
duties for CryoLife and Newco as described on Exhibit A attached hereto.
(b) Notwithstanding the foregoing, Dr. Pruitt shall not be prohibited
from acquiring as an investment not more than 2% of the capital stock of a
Competing Business whose stock is traded on a national securities exchange or
over-the-counter. Moreover, the covenant in subsection (a) above shall not apply
after termination of Dr. Pruitt's engagement in the event Dr. Pruitt's
engagement is terminated by CryoLife or Newco without cause (as that term is
defined in Section 13).
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10. CUSTOMER NON-SOLICITATION. During the Non-Competition/Non-Solicitation
Period, Dr. Pruitt covenants and agrees that he will not, directly or
indirectly, on his own behalf or in the service or on behalf of others, solicit,
or attempt to solicit, divert or appropriate to or for any Competing Business,
any persons and/or entities who were customers of Newco in the Territory during
the 12-month period immediately preceding the termination of Dr. Pruitt's
engagement hereunder.
11. EMPLOYEE NON-SOLICITATION. During the Non-Competition/Non-Solicitation
Period, Dr. Pruitt covenants and agrees that he will not, directly or
indirectly, on his own behalf or in the service or on behalf of others, hire or
attempt to hire any employee of CryoLife or Newco, or to cause any such employee
to leave his or her engagement, in order to perform services in the Territory
for a Competing Business.
12. REMEDIES.
(a) Dr. Pruitt acknowledges and agrees that, by virtue of the special
knowledge of CryoLife's and Newco's affairs, business, clients, customers and
operations that he has and will have as a consequence of the services being
rendered to CryoLife and Newco pursuant hereto, irreparable loss and damage will
be suffered by CryoLife and Newco if Dr. Pruitt should breach or violate any of
the covenants and agreements contained in Sections 5, 7, 9, 10, or 11 hereof;
and Dr. Pruitt further acknowledges and agrees that each of such covenants is
reasonably necessary to protect and preserve the Newco Business. Dr. Pruitt,
therefore, agrees and consents that, in addition to any other remedies available
to it, CryoLife and Newco shall be entitled to an injunction to prevent a breach
or contemplated breach by Dr. Pruitt of any of the covenants or agreements
contained in such Sections. In addition, CryoLife and Newco shall be entitled to
terminate this Agreement or suspend the payment of any and all compensation to
which Dr. Pruitt may be entitled hereunder during the period in which Dr. Pruitt
is in breach of or has violated any of the covenants and agreements contained in
Sections 5, 7, 9, 10, or 11 hereof.
(b) The existence of any claim, demand, action or cause of action of Dr.
Pruitt against CryoLife or Newco, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the enforcement by CryoLife or
Newco of any of the covenants contained in Sections 5, 7, 9, 10 or 11 hereof.
(c) Nothing contained in this Agreement shall limit, abridge or modify
the rights of the parties under applicable trade secret, trademark, copyright or
patent law or under the laws of unfair competition.
(d) Except as provided in this Section 12, Sections 5, 6, 7, 8, 9, 10,
11, 12, 13, 18, 20, and 21 shall survive any termination of this Agreement.
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13. TERMINATION.
(a) This Agreement may be terminated immediately by CryoLife or Newco
for "cause" upon written notice of termination, such "cause" being specified in
the notice. As used herein, "cause" shall mean and include Dr. Pruitt's death,
Dr. Pruitt's fraud, dishonesty, wilful misconduct, gross negligence, theft or
embezzlement; Dr. Pruitt's commitment of an act of moral turpitude or conviction
of a crime; or Dr. Pruitt's refusal to perform his duties hereunder for
non-medical reasons.
(b) Upon termination of this Agreement, Dr. Pruitt shall receive the
Consulting Fee prorated through the date of termination.
14. INDEPENDENT CONTRACTOR.
(a) Dr. Pruitt is hereby engaged as an independent contractor of
CryoLife and Newco, and, accordingly, neither Newco nor CryoLife shall withhold
or be responsible for any federal or state income taxes, social security
payments or employment taxes with respect to the payment of compensation to Dr.
Pruitt under this Agreement.
(b) As an independent contractor, Dr. Pruitt shall not be deemed or
construed to be an employee, partner or agent of CryoLife or Newco and shall not
have the power or authority to bind CryoLife or Newco to any obligations
whatsoever to third parties without the prior written consent of CryoLife or
Newco, as applicable.
15. SUCCESSORS AND ASSIGNMENT. This Consulting Agreement may not be
assigned by Dr. Pruitt.
16. SEVERABILITY. In the event any provision of this Agreement shall be
held void and unenforceable, the unaffected portion hereof shall remain in full
force and effect and this Agreement shall be deemed amended to excuse the
provisions held void and unenforceable and shall continue in full force and
effect, as amended.
17. NOTICES. Any notice to be given under this Agreement shall be given in
writing and may be effected by (a) personal delivery (including delivery by
Federal Express or similar guaranteed overnight delivery service), (b) placing
such in the United States certified mail, return receipt requested, or (c) by
telecopy, with written confirmation of receipt received and a copy sent by the
methods described in (a) or (b), sent as set forth below:
If to CryoLife or Newco: CryoLife, Inc.
1655 Roberts Boulevard, NW
Kennesaw, Georgia 30144
Attention: President and Chief Executive Officer
Telefax: (770) 426-0031
386650.7
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with a copy to: Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Clinton D. Richardson
Telefax: (404) 873-8665
If to Dr. Pruitt: J. Crayton Pruitt, M.D.
Ideas for Medicine, Inc.
12167 49th Street North
Clearwater, Florida 34622
Telefax: (813) 823-8606
with a copy to: Charles F. Arnold, Esq.
621 Sixth Avenue South
St. Petersburg, Florida 33701
Telefax: (813) 823-2742
Notices shall be effective upon receipt.
18. ENTIRE AGREEMENT AND AMENDMENT. This Agreement shall be governed and
construed in accordance with the laws of Florida. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior discussions, understandings and agreements among the
parties hereto. Any such prior agreements shall, from and after the effective
date hereof, be null and void. This Agreement may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, extension or discharge is sought.
Notwithstanding the foregoing, the rights of CryoLife and Newco under this
Agreement to protect its Trade Secrets, business records, and other proprietary
interests are in addition to, and not in lieu of, all other rights CryoLife and
Newco may have at law or in equity to protect its Trade Secrets and other
proprietary interests, including, but not limited to, their rights under that
certain Noncompetition Agreement of even date herewith executed by Dr. Pruitt in
connection with the merger of Ideas for Medicine, Inc., a company in which Dr.
Pruitt formerly was a stockholder with and into Newco.
19. WAIVER. The waiver by one party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach of the same or any other provision by the other party.
20. USE OF NAME. Dr. Pruitt hereby grants to CryoLife and Newco a
perpetual, worldwide right and license to use his name in connection with the
marketing, manufacture, distribution and sale of IFM's tubing products,
catheters and medical instruments for use in the field of vascular, general and
laparoscopic surgery, including carotid shunts, occlusion catheters, Hutson dual
balloon catheters, embolectomy catheters, dual lumen catheters,
386650.7
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aortic catheters, venous access ports, cholangiogram catheters and laparoscopic
instruments.
21. INDEMNIFICATION. CryoLife and Newco hereby agree to indemnify and hold
harmless Dr. Pruitt from and against any and all demands, claims, causes of
actions, actions, suits, damages, liabilities, costs, and expenses, including
reasonable attorney's fees and costs through all trials and appeals
(collectively, "Liability"), resulting or arising from Dr. Pruitt's performance
under this Consulting Agreement and/or the use of Dr. Pruitt's name under
Section 20, provided CryoLife shall have no obligations hereunder with respect
to Liability resulting from the negligence, willful misconduct, or criminal
activities by Dr. Pruitt; and, provided, further, the foregoing shall not be
deemed to limit, modify, or restrict the representations and warranties made by
Dr. Pruitt to CryoLife and Newco pursuant to that certain Agreement and Plan of
Merger dated March 5, 1997.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date set forth above.
CRYOLIFE:
CRYOLIFE, INC.
By: /s/ Steven G. Anderson
-----------------------
Steven G. Anderson,
Chairman of the Board, President and
Chief Executive Officer
NEWCO:
CRYOLIFE ACQUISITION CORPORATION
By: /s/ Steven G. Anderson
-----------------------
Steven G. Anderson,
Chairman of the Board, President and
Chief Executive Officer
DR. PRUITT:
/s/ J. Crayton Pruitt, Sr., M.D.
----------------------------
J. Crayton Pruitt, Sr., M.D.
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GUARANTY
CryoLife, Inc. hereby guarantees the timely and full performance by Newco
of its obligations pursuant to Section 3 of this Agreement.
CRYOLIFE, INC.
By: /s/ Steven G. Anderson
-----------------------
Steven G. Anderson,
Chairman of the Board, President and
Chief Executive Officer
386650.7
EXHIBIT A
DUTIES OF DR. PRUITT
Dr. Pruitt shall be responsible for assisting with the research and development
activities of Newco. Dr. Pruitt shall also assist with new product testing and
teaching surgeons regarding the use and advantages of the Newco products. Dr.
Pruitt shall attend conventions in which Newco participates and assist in the
general promotion and marketing of the Newco product line. Dr. Pruitt shall
serve as a member of the Vascular Advisory Board of CryoLife.
386650.7