SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
(ss.)240.14a-11(c) or (ss.)240.14a-12
CRYOLIFE, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[Logo of CryoLife, Inc. Appears Here]
1655 ROBERTS BOULEVARD, N.W.
[LOGO] KENNESAW, GEORGIA 30144
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF CRYOLIFE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CRYOLIFE,
INC. will be held at the Sheraton Suites Galleria-Atlanta, 2844 Cobb Parkway,
SE, Atlanta, Georgia 30339, on May 26, 2000 at 10:00 a.m., Atlanta time, for the
following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and have qualified.
2. To consider a proposal to approve an amendment to the CryoLife, Inc.
1998 Long-Term Incentive Plan (the "1998 Plan") to increase the number
of shares of CryoLife common stock which may be issued under the 1998
Plan by 300,000 shares.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The proxy statement dated April 14, 2000 is attached.
Only record holders of CryoLife's common stock at the close of business on
March 31, 2000 will be eligible to vote at the meeting.
Your attendance at the annual meeting is very much desired. However, if
there is any chance you may not be able to attend the meeting, please execute,
complete, date and return the proxy in the enclosed envelope. If you attend the
meeting, you may revoke the proxy and vote in person.
By Order of the Board of Directors:
/s/ Steven G. Anderson
STEVEN G. ANDERSON,
Chairman of the Board and President
Date: April 14, 2000
A copy of the Annual Report of CryoLife, Inc. for the fiscal year ended
December 31, 1999 containing financial statements is enclosed.
[Logo of CryoLife, Inc. Appears Here]
1655 ROBERTS BOULEVARD, N.W.
[LOGO] KENNESAW, GEORGIA 30144
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished for the solicitation by the Board of
Directors of proxies for the Annual Meeting of Shareholders of CryoLife, Inc. to
be held on May 26, 2000, at 10:00 a.m., Atlanta time, at the Sheraton Suites
Galleria-Atlanta, 2844 Cobb Parkway, SE, Atlanta, Georgia 30339. The sending in
of a signed proxy will not affect a shareholder's right to attend the meeting
and vote in person. A signed proxy may be revoked by the sending in of a timely,
but later dated, signed proxy. Any shareholder giving a proxy may also revoke it
at any time before it is exercised by giving oral or written notice to Ronald D.
McCall, Secretary of CryoLife, or Ms. Suzanne Gabbert, Assistant Secretary, at
the offices of CryoLife. Oral notice may be delivered by telephone call to Ms.
Gabbert, at the offices of CryoLife, at (770) 419-3355.
Holders of record of CryoLife's common stock at the close of business on
March 31, 2000 will be eligible to vote at the meeting. CryoLife's stock
transfer books will not be closed. At the close of business on March 31, 2000,
CryoLife had outstanding a total of 12,850,655 shares of common stock, excluding
a total of 1,075,893 shares of treasury stock held by CryoLife, which are not
entitled to vote. Each such share will be entitled to one vote, non-cumulative,
at the meeting.
Other than the matters set forth herein, management is not aware of any
other matters that may come before the meeting. If any other business should
properly come before the meeting, the persons named in the enclosed proxy will
have discretionary authority to vote the shares represented by the effective
proxies and intend to vote them in accordance with their best judgment.
This proxy statement and the attached proxy were first mailed to security
holders on behalf of CryoLife on or about April 14, 2000. Properly executed
proxies, timely returned, will be voted and, where the person solicited
specifies by means of a ballot a choice with respect to any matter to be acted
upon at the meeting, the shares will be voted as indicated by the shareholder.
If the person solicited does not specify a choice with respect to election of
directors or the proposal to increase the authorized shares under the 1998 Plan,
the shares will be voted for management's nominees for election as directors and
for the proposal to increase the authorized shares under the 1998 Plan. In
addition to the solicitation of proxies by the use of the mails, directors and
officers of CryoLife may solicit proxies on behalf of management by telephone,
telegram and personal interview. Such persons will receive no additional
compensation for their solicitation activities, and will be reimbursed only for
their actual expenses incurred. The costs of soliciting proxies will be borne by
CryoLife.
VOTING PROCEDURES AND VOTE REQUIRED
The Secretary of CryoLife, in consultation with the judges of election, who
will be employees of CryoLife's transfer agent, shall determine the eligibility
of persons present at the Annual Meeting to vote and shall determine whether the
name signed on each proxy card corresponds to the name of a shareholder of
CryoLife. The Secretary, based on such consultation, shall also determine
whether or not a quorum of the shares of CryoLife, consisting of a majority of
the votes entitled to be cast at the Annual Meeting, exists at the Annual
Meeting. Both abstentions from voting and broker non-votes will be counted for
the purpose of determining the presence or absence of a quorum for the
transaction of business.
Nominees for election as directors will be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election. Since
there are seven directorships to be filled, this means that the seven
individuals receiving the most votes will be elected. Abstentions and broker
non-votes will therefore not be relevant to the outcome.
The affirmative vote of holders of a majority of the outstanding shares of
common stock of CryoLife entitled to vote and present in person or by proxy at
the Annual Meeting is required for approval of the amendment to the 1998 Plan.
It is expected that shares held by executive officers and directors of CryoLife,
which in the aggregate represent approximately 18% of the outstanding shares of
common stock, will be voted in favor of the proposal. With respect to the
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proposal concerning the 1998 Plan, abstentions will have the effect of a vote
against the proposal and broker non-votes will be disregarded and will have no
effect on the outcome of the vote. There are no rights of appraisal or similar
dissenters' rights with respect to any matter to be acted upon pursuant to this
proxy statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of CryoLife recommends a vote "FOR" the election of
each of the nominees named below for election as director and "FOR" the proposal
to approve the amendment to the 1998 Plan.
ELECTION OF DIRECTORS
The proxy holders intend to vote "FOR" election of the nominees named
below, who are currently members of the Board, as directors of CryoLife and
"FOR" the proposal to approve the amendment to the 1998 Plan, unless otherwise
specified in the proxy. Directors of CryoLife elected at the Annual Meeting to
be held on May 26, 2000 will hold office until the next Annual Meeting or until
their successors are elected and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the Board may recommend.
The individuals listed below as nominees for the Board of Directors were
directors of CryoLife during all of 1999, except that Mr. Cook and Dr. Van Dyne
were elected to the Board in August 1999 and Mr. Schwartz was elected to the
Board in September 1999. Benjamin H. Gray, a director of CryoLife during 1999,
will not stand for reelection at the annual meeting and the Board has reduced
the size of the Board from eight to seven. The name and age of each nominee, and
the period during which such person has served as a director, together with the
number of shares of CryoLife's common stock beneficially owned, directly or
indirectly, by such person and the percentage of outstanding shares of
CryoLife's common stock such ownership represented at the close of business on
April 3, 2000, according to information received by CryoLife, is set forth
below:
Shares of
CryoLife Stock
Beneficially Owned Percentage of
Service as at Outstanding Shares
Name of Nominee Director Age April 3, 2000(1) of CryoLife Stock
- --------------- ----------- --- ------------------ ------------------
Steven G. Anderson Since 1984 61 1,175,645 (2) 9.54%
John M. Cook (4) Since 1999 58 22,500 (3) *
Ronald C. Elkins, M.D.(4)(5) Since 1994 63 104,243 (6) *
Virginia C. Lacy(4)(5) Since 1997 58 433,586 (7) 3.63%
Ronald D. McCall, Esq.(5) Since 1984 63 151,692 (8) *
Alexander C. Schwartz, Jr.(4) Since 1999 67 12,500 (9) *
Bruce J. Van Dyne, M.D.(5) Since 1999 59 12,700 (9) *
- ---------------
* Ownership represents less than 1% of outstanding shares of CryoLife common
stock.
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 105,333 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes options to acquire 36,200 shares of common
stock which are presently exercisable or will become exercisable within 60
days after the date of this proxy statement.
(3) Includes 10,000 shares which are held by CT Investments, LLC of which Mr.
Cook owns 90% of the membership interests. Includes options to acquire
12,500 shares of common stock which are presently exercisable or will
become exercisable within 60 days after the date of this proxy statement.
(4) Member of the Audit Committee.
(5) Member of the Compensation Advisory Committee.
(6) Includes options to acquire 68,500 shares of common stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
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(7) Includes 215,500 shares held as beneficiary of a trust, and 110,586 shares
held as beneficiary of an IRA, of Ms. Lacy's deceased spouse. Includes
15,000 shares held as administrator of a pension plan. Includes 68,500
shares subject to options which are presently exercisable or will become
exercisable within 60 days after the date of this proxy statement.
(8) Includes 10,000 shares of common stock owned of record by Ms. Marilyn B.
McCall, Mr. McCall's spouse. Includes options to acquire 77,500 shares of
common stock which are presently exercisable or will become exercisable
within 60 days after the date of this proxy statement.
(9) Includes options to acquire 12,500 shares of common stock which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
Steven G. Anderson, a founder of CryoLife, has served as CryoLife's
President, Chief Executive Officer and Chairman of the Board of Directors since
its inception. Mr. Anderson has more than 30 years of experience in the
implantable medical device industry. Prior to founding CryoLife, Mr. Anderson
was Senior Executive Vice President and Vice President, Marketing, from 1976
until 1983 of Intermedics, Inc. (now Guidant Corp.), a manufacturer and
distributor of pacemakers and other medical devices. Mr. Anderson is a graduate
of the University of Minnesota.
John M. Cook has served as a Director of CryoLife since August 1999. Mr.
Cook is Chairman and Chief Executive Officer of The Profit Recovery Group
International, Inc., an international, publicly held audit recovery firm
operating in 36 countries, with 1999 revenues exceeding $340 million. Mr. Cook
has served as Chief Executive Officer of The Profit Recovery Group since its
founding in January 1991. Prior to The Profit Recovery Group, he served in a
number of top financial and management positions in the retail industry,
including Senior Vice President and Chief Financial Officer of Caldor Stores and
Senior Vice President of Finance and Controller of Kaufmann's Department Stores,
both May Department Stores affiliates. He holds a B.S. degree in accounting from
Saint Louis University, where he serves as a member of the Board of Trustees and
holds a seat on the Executive Advisory Board of the University's School of
Business and Administration.
Ronald C. Elkins, M.D., has served as a Director of CryoLife since January
1994. Dr. Elkins is Professor and Chief, Section of Thoracic and Cardiovascular
Surgery, University of Oklahoma Health Science Center. Dr. Elkins has been a
physician at the Health Science Center since 1971, and has held his present
position since 1975. Dr. Elkins is a graduate of the University of Oklahoma and
Johns Hopkins Medical School.
Virginia C. Lacy has served as a Director of CryoLife since August 1997.
Ms. Lacy received her BA degree from Northwestern University in 1963. Ms. Lacy
is the Administrator of The Jeannette & John Cruikshank Memorial Foundation,
which provides assistance to those in need throughout the greater Chicago area.
Since 1974, Ms. Lacy has served as Secretary-Treasurer and Chief Financial
Officer of Precision Devices Corporation, a distributor of medical devices. She
was one of the founders of the company and serves as the Chairman of the Board
of Directors. For the past 12 years she has also served as the Chief Financial
Officer of A.I. Industries, a manufacturer of identification cards for the
health care industry. As an elected member of the Board of Education of District
203 of the State of Illinois, she served on its budget committee which was
responsible for planning and reviewing the spending of $100,000,000 in public
funds each year in a school district having 2,500 employees. Ms. Lacy also
provided leadership in State Education by serving on Committees that analyzed
state funding for education.
Ronald D. McCall, Esq. has served as a Director of CryoLife and as the
Secretary and Treasurer of CryoLife since January 1984. From 1985 to the
present, Mr. McCall has been the proprietor of the law firm of Ronald D. McCall,
Attorney at Law, based in Tampa, Florida. Mr. McCall was admitted to the
practice of law in Florida in 1961. Mr. McCall received his BA and JD degrees
from the University of Florida.
Alexander C. Schwartz, Jr. has served as a Director of CryoLife since
September 1999. Mr. Schwartz retired from Prudential Securities in 1996 after 33
years of service. While at Prudential Securities he held various positions,
including co-head of the Investment Banking Division, Managing Director of the
firm's International Division and Managing Director of the Health Care Group. As
co-head of the Investment Banking Division he was in charge of due diligence
teams reviewing and analyzing corporate finances. Mr. Schwartz was responsible
for the review of financial and accounting records of corporations and the
presentation of the corporation's financial performance in connection with
initial public offerings, debt offerings, leveraged buyouts, mergers and
acquisitions. Mr. Schwartz is a graduate of Columbia University, where he
received a B.S. Degree in Economics. Mr. Schwartz has served on the Boards of
Directors of several public and privately held companies and is currently a
private investor.
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Bruce J. Van Dyne, M.D. has served as a Director of CryoLife since August
1999. Dr. Van Dyne is a board-certified neurologist and has been in private
practice in Minneapolis, Minnesota since 1973. He has served in numerous
advisory positions, including as an Examiner in Neurology for the American Board
of Psychiatry and Neurology and as previous Chairman of the Department of
Neurology for Park Nicollet Medical Center in Minneapolis. He is a graduate of
the University of Minnesota and Northwestern University Medical School and is
the author of numerous publications in the fields of psychiatry and neurology.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
Meetings of the Board of Directors--During 1999, there were six meetings of
the Board of Directors.
Director Compensation--All non-employee directors of the Board of Directors
of CryoLife are paid $1,500 for each Board meeting attended. In addition,
directors are reimbursed for expenses incurred in connection with their services
as a director. In December 1997, CryoLife adopted the CryoLife, Inc. Amended and
Restated Non-Employee Directors Stock Option Plan, which replaced CryoLife's
1995 Non-Employee Directors Plan. Pursuant to this new plan, options to purchase
5,000 shares of common stock were granted to each of Dr. Elkins, Messrs. Gray
and McCall and Ms. Lacy immediately following the 1999 Annual Meeting of
Shareholders. In addition, in May 1999, each of these directors agreed to have
24,000 options that were granted in May 1998 pursuant to the 1998 Plan canceled
and replaced with a special grant of 24,000 options to purchase 24,000 shares at
$17.125, the exercise price of the May 1998 grant, in order to increase the
availability of options under the 1998 Plan for grants to employees. No other
changes were made to the terms in the May 1998 grant agreements. Additionally,
Messrs. Cook, Schwartz and Dr. Van Dyne received a special grant of options to
purchase 12,500 shares. The Amended and Restated Non-Employee Directors Stock
Option Plan provides that an annual grant will be made each year immediately
following CryoLife's Annual Meeting of Shareholders of an option to purchase
5,000 shares of common stock to each individual elected, reelected or continuing
as a non-employee director of CryoLife. All options granted pursuant to this
plan are granted at a purchase price equal to the last closing price of
CryoLife's common stock on the New York Stock Exchange on the day immediately
prior to the grant of the option and vest and become exercisable on the option's
grant date. No option granted pursuant to this plan may be exercised later than
five years following the date of grant. In addition to the foregoing, Dr. Elkins
received approximately $76,000 in consulting fees and Dr. Van Dyne received
approximately $3,000 in consulting fees from CryoLife in 1999.
Audit Committee--CryoLife's Audit Committee consisted of five non-employee
directors during 1999: Dr. Elkins, Mr. Gray, Mr. Cook, Mr. Schwartz and Ms.
Lacy. The Audit Committee will consist of the following four non-employee
directors during 2000: Dr. Elkins, Mr. Cook, Mr. Schwartz and Ms. Lacy. The
Audit Committee met three times in 1999. The Audit Committee reviews the general
scope of CryoLife's annual audit and the nature of services to be performed for
CryoLife in connection therewith, acting as liaison between the Board of
Directors and the independent auditors. The Audit Committee also formulates and
reviews various company policies, including those relating to accounting
practices and internal control systems of CryoLife. In addition, the Audit
Committee is responsible for reviewing and monitoring the performance by
CryoLife's independent auditors and for recommending the engagement or discharge
of CryoLife's independent auditors.
Compensation Advisory Committee--CryoLife's Compensation Advisory Committee
consisted of five non-employee directors during 1999: Mr. McCall, Ms. Lacy, Dr.
Elkins, Dr. Van Dyne and Mr. Gray. The Compensation Advisory Committee will
consist of the following four non-employee directors during 2000: Mr. McCall,
Ms. Lacy, Dr. Elkins and Dr. Van Dyne. The Compensation Advisory Committee met
three times in 1999. The Compensation Advisory Committee is responsible for
evaluating the performance of officers and setting the annual compensation for
all officers, including the salary and the compensation package of executive
officers. A portion of the compensation package includes a bonus award. The
Compensation Advisory Committee also administers CryoLife's benefit plans,
except that the Compensation Advisory Sub-Committee approves grants of stock
options to executive officers under CryoLife's benefit plans. Currently, the
Compensation Advisory Sub-Committee consists of three non-employee directors:
Ms. Lacy, Dr. Van Dyne and Mr. Gray. The Compensation Advisory Sub-Committee
will consist of the following two non-employee directors during 2000: Ms. Lacy
and Dr. Van Dyne. The Compensation Advisory Sub-Committee met two times in 1999.
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Nominating Committee--CryoLife does not have a standing nominating
committee of the Board of Directors.
During 1999, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board on which he or she served, except
that Dr. Elkins attended four of the six Board meetings.
Notwithstanding anything to the contrary set forth in any of CryoLife's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate other CryoLife filings,
including this proxy statement, in whole or in part, the following Report and
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION ADVISORY COMMITTEE ON
EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Advisory Committee of the Board of Directors of CryoLife,
Inc. is composed of non-employee directors and approves the compensation of
CryoLife's executive officers at least annually. The Committee believes the
actions of executive officers of CryoLife have a profound impact on the
short-term and long-term profitability of CryoLife. Therefore, the Committee
gives significant attention to the design of CryoLife's compensation package.
CryoLife's compensation package consists of three parts and is relatively
simple in design. The three primary parts are a base salary, a cash bonus and
stock-based incentive compensation. No significant perquisites are provided to
executive officers.
BASE SALARY
The Committee believes it is important for executive officers and other
employees of CryoLife to receive acceptable salaries so that CryoLife can
recruit and retain the talent it needs. For several years, the Committee has
obtained a salary survey report. This survey, which is entitled the "Radford
Salary Survey for U.S. Biotech Companies," contains information regarding
salaries paid to various biotech executives in the United States. The Committee
reviews this salary survey primarily for information regarding salaries, as
opposed to bonus and stock incentive information. In setting salaries, the
Committee takes into consideration the individual employee's performance, length
of service to CryoLife, and the information provided by the Radford Survey. The
Committee seeks to set compensation at levels which are reasonable under the
circumstances and near the midrange for U.S. biotech companies. For 1999, the
Compensation Advisory Committee considered it advisable to make significant
increases in salaries in order to provide its executive officers with
compensation in the same range as that of executives employed by other companies
in the industry. Salaries for executive officers were raised by 18%, on the
average, as compared to 1998. The range of increases was from 6% to 39%. The
base salary for each executive officer is set on a subjective basis, bearing in
mind an overall impression of that executive's relative skills, experience and
contribution to CryoLife. The Committee does not attempt to address the relative
weight assigned to the various factors, which are evaluated on a subjective
overall basis by each individual member of the Committee. Salaries of all
executive officers are reviewed annually by the Committee. In accordance with
this procedure, the Committee consults with Mr. Anderson, the President and
Chief Executive Officer of CryoLife, and an appropriate range of base salary,
bonus, and stock options is subjectively considered, based upon the range of
compensation received by the other executive officers and the requirements of
the particular positions to be filled. The Chief Executive Officer negotiates
with candidates for employment, subject to acceptance and ratification by the
Committee, and this negotiated base salary is reflected in each candidate's
employment agreement.
CASH BONUSES
Cash bonuses are the next component of executive officer compensation. In
determining the amount to be paid as bonuses to executive officers, the
Compensation Advisory Committee considers the performance of CryoLife in
reaching goals for increased revenues and pre-tax profit as well as the
performance of each executive officer. For 1999,
6
the Compensation Advisory Committee based its decision that bonuses should be
awarded to CryoLife's executive officers upon its subjective determination that
CryoLife's 1999 increases in total revenues together with the achievement of
certain goals justified the granting thereof. During 1999, CryoLife reached
significant goals with regard to the SynerGraft heart valves and the BioGlue
adhesive products, including US approval of the BioGlue HDE for limited
distribution of BioGlue. The amount of the bonus paid to individual executive
officers was determined based upon the Committee's subjective analysis of the
performance of each such officer. Excluding the cash bonus paid to the Chief
Executive Officer, 1999 executive officer bonuses ranged from $25,000 to $50,000
and were paid in 2000.
STOCK-BASED INCENTIVES
Stock-based incentives have been a supplemental component of compensation
for CryoLife's executive officers, and certain other employees, since the
formation of CryoLife. CryoLife adopted formal incentive stock option plans in
1984, 1989, 1993 and 1998. CryoLife has also made grants of non-qualified
options under an informal stock option program. The Sub-Committee approves
grants of stock options to executive officers under CryoLife's option plans.
Historically, grants made by CryoLife have generally vested at a rate of
20% per year and have had a term of five and one-half years. These options also
usually expire upon termination of employment, except in the event of disability
or death, in which case the term of the option may continue for some time
thereafter.
The Sub-Committee believes that CryoLife's stock option program has been
effective in focusing attention on shareholder value since the gain to be
realized by executive officers upon exercise of options will change as the stock
price changes. The Sub-Committee also believes that the long-term nature of the
options encourages CryoLife's executive officers to remain with CryoLife.
Finally, the Sub-Committee has found it appropriate to grant options to newly
employed executive officers in order to encourage such officers to identify
promptly with CryoLife's goal of increased shareholder value. The number of
shares to be granted is established utilizing the procedure described above at
"--Base Salary." The Sub-Committee subjectively determines the number of shares
to be granted based on its analysis of the number which would provide an
adequate incentive to the new executive officer to accept a position with
CryoLife.
In general, following initial employment, the granting of stock-based
incentives to executive officers is considered by the Sub-Committee to be
justified when CryoLife's revenues and earnings, coupled with the individual
executive's performance, warrant supplemental compensation in addition to the
salary and bonus paid with respect to a given year. Each of these factors is
weighed subjectively by Sub-Committee members in determining whether or not a
stock-based incentive should be granted, and such incentives are not granted
routinely. Stock-based incentives were granted to two executive officers to
purchase in the aggregate, 30,000 shares during fiscal 1999. The Committee
thinks it unlikely that any participants in CryoLife's stock plans will, in the
foreseeable future, receive in excess of $1 million in aggregate compensation
(the maximum amount for which an employer may claim a compensation deduction
pursuant to Section 162(m) of the Internal Revenue Code of 1986 unless certain
performance-related compensation exemptions are met) during any fiscal year, and
has therefore determined that CryoLife will not take any affirmative action at
this time to meet the requirements of such exemptions.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee fixed the 1999 salary of Mr. Steven G. Anderson, Chief
Executive Officer of CryoLife, at $442,750 and awarded Mr. Anderson a cash bonus
of $225,000 for his performance and significant service to CryoLife in 1999.
This bonus reflected an increase of $50,000 over the 1998 bonus. This exhibits
the philosophy of the Committee as set forth at "--Base Salary" and "--Cash
Bonuses" above. In 1999, Mr. Anderson was not granted any stock options to
purchase shares of common stock due to the grant of 40,000 options in May 1996,
which options were exchanged in May 1998 for 40,000 options to purchase shares
of CryoLife common stock. The Committee and Sub-Committee believe the
compensation of Mr. Anderson, a founder of CryoLife, reflects their subjective
opinions that Mr. Anderson has provided superlative leadership and fulfilled the
functions of an executive officer of CryoLife at the highest level.
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CONCLUSION
The Committee and Sub-Committee believe that the mix of a cash salary and
bonuses and a long-term stock incentive compensation program represents a
balance that has motivated and will continue to motivate CryoLife's management
team to produce the best results possible given overall economic conditions and
the difficulty of predicting CryoLife's performance in the short term.
COMPENSATION ADVISORY COMMITTEE:
RONALD D. McCALL, CHAIRMAN
VIRGINIA C. LACY
RONALD C. ELKINS, M.D.
BENJAMIN H. GRAY
BRUCE J. VAN DYNE, M.D.
COMPENSATION ADVISORY SUB-COMMITTEE:
VIRGINIA C. LACY
BENJAMIN H. GRAY
BRUCE J. VAN DYNE, M.D.
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PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
shareholder return on CryoLife's common stock, on an indexed basis, against
cumulative total returns of the Nasdaq stock market (U.S. companies) and the
Russell 2000 Index, and a new "peer group" and the old "peer group" selected by
management of CryoLife. Management has selected the Russell 2000 Index for the
fiscal year ending 1999 because they believe that the Russell 2000 Index
provides a better measure of performance of U.S. small company stocks than does
the Nasdaq stock market index. The new peer group selected for inclusion in this
proxy statement includes Advanced Tissue Sciences, Inc., Osteotech, Inc.,
Closure Medical Corp. and LifeCell Corporation. Each of these companies has
securities traded on the Nasdaq Stock Market. Advanced Tissue and Osteotech were
selected because they had been utilized as a basis for comparison with CryoLife
in reports by analysts for each of the two co-managers of CryoLife's initial
public offering. Management selected LifeCell to be included in the peer group
based on the fact that LifeCell, a developer of tissue engineered products, is
also a biomedical company and added Closure Medical to the peer group based on
the fact that Closure Medical has tissue adhesive products. The old peer group
consisted of Advanced Tissue Sciences, Inc., Osteotech, Inc. and LifeCell
Corporation. The returns for the new and old peer groups are weighted according
to each issuer's market capitalization. The performance graph shows total return
on investment for the period beginning December 31, 1994 and ending December 31,
1999.
[graph omitted]
VALUE OF $100 INVESTED ON DECEMBER 31, 1994 AT:
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
------------ ------------ ------------ ------------ ----------- ------------
CRYOLIFE $ 100.00 $ 238.46 $ 384.62 $ 419.23 $ 365.38 $ 361.54
OLD PEER GROUP $ 100.00 $ 126.76 $ 121.79 $ 202.67 $ 146.61 $ 82.47
NEW PEER GROUP $ 100.00 $ 126.76 $ 121.79 $ 206.35 $ 179.98 $ 90.46
NASDAQ MARKET $ 100.00 $ 129.71 $ 161.18 $ 197.63 $ 278.08 $ 490.46
RUSSELL 2000 INDEX $ 100.00 $ 128.44 $ 149.77 $ 183.23 $ 178.09 $ 212.98
Total return assumes reinvestment of dividends.
9
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by CryoLife
to CryoLife's Chief Executive Officer and the four other most highly paid
executive officers of CryoLife in 1999 (the "Named Executives"). The information
presented is for the years ended December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
Long -Term
Annual Compensation Compensation
------------------------- --------------
Securities
Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) (1) ($) (#) (2) ($) (3)
- -------------------------------------- -------- --------------------------- -------------- ---------------
Steven G. Anderson 1999 $ 442,750 $ 225,000 0 $ 27,388
Chairman of the Board of 1998 385,000 175,000 58,500 27,361
Directors, President and Chief 1997 345,000 135,000 8,000 34,750
Executive Officer
Kirby S. Black, PhD 1999 151,325 50,000 0 11,919
Vice President, Research and 1998 122,850 40,000 0 9,011
Development 1997 117,000 30,000 0 7,896
Albert E. Heacox, PhD 1999 168,000 50,000 0 7,235
Vice President, Laboratory 1998 152,250 42,000 0 7,894
Operations 1997 145,000 40,000 0 8,625
Edwin B. Cordell, Jr. 1999 152,276 50,000 0 3,719
Vice President and Chief 1998 131,250 42,000 0 3,268
Financial Officer 1997 125,000 30,000 10,000 3,098
James C. Vander Wyk, PhD. 1999 149,961 48,000 10,000 2,752
Vice President, Regulatory 1998 131,250 40,000 0 2,503
Affairs and Quality Assurance 1997 125,000 30,000 0 1,871
_________________
(1) Includes base salary earned by the Named Executives for the periods
presented and includes compensation deferred under CryoLife's 401(k) plan,
and amounts such officers elected to apply to CryoLife's supplemental life
insurance program. Amounts for perquisites and other personal benefits
extended to the Named Executives are less than the lesser of $50,000 or 10%
of the total of annual salary and bonus of such Named Executive.
(2) During the periods presented, the only form of long-term compensation
utilized by CryoLife has been the grant of stock options. CryoLife has not
awarded restricted stock or stock appreciation rights, or made any
long-term incentive payouts. Accordingly, the columns for "Restricted Stock
Award(s)" and "Long Term Incentive Payouts" have been omitted.
(3) Since the inception of CryoLife's 401(k) plan, CryoLife has been matching
contributions to the plan subject to certain limitations and vesting
requirements. In 1992, CryoLife adopted its supplemental life insurance
program for certain executive officers. The following table sets forth, for
each of the Named Executives, the amount of CryoLife's contributions to the
401(k) plan and the supplemental life insurance program:
10
1999 1998 1997
------------------------------------ ------------------------------- -------------------------------------
SUPPLEMENTAL SUPPLEMENTAL SUPPLEMENTAL
LIFE LIFE LIFE
401(K) INSURANCE 401(K) INSURANCE 401(K) INSURANCE
TOTAL CONTRIBUTION PROGRAM TOTAL CONTRIBUTION PROGRAM TOTAL CONTRIBUTION PROGRAM
------- ------------ ------------- ------- ------------ ------------ ---------- ------------- ------------
Steven G. Anderson $27,388 $ 5,000 22,388 $27,361 4,973 $ 22,388 34,759 $ 4,750 $ 30,000
Kirby S. Black, Ph.D. 11,919 2,748 9,171 9,011 2,547 6,464 7,896 2,421 5,475
Albert E. Heacox,PhD 7,235 3,504 3,731 7,894 3,743 4,151 8,625 3,625 5,000
Edwin B. Cordell, Jr. 3,719 3,719 0 3,268 3,268 0 3,098 3,098 0
James C. Vander Wyk, PhD 2,752 2,752 0 2,503 2,503 0 1,871 1,871 0
Grant of Options. During 1999, options were granted to James C. Vander Wyk
in recognition of his performance. No options were granted to any of the other
Named Executives during 1999. No stock appreciation rights (SARs) have been
granted by CryoLife. The following table sets forth information regarding the
grant of options in 1999:
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1999)
% of
Total Potential Realizable
Number of Options/SARs Value at Assumed
Securities Granted Annual Rates of
Underlying to Appreciation for
Options/SARs Employees Exercise Option Term
Granted in Fiscal Price Expiration -----------------------
Name (#) (1) Year ($/Sh)(2) Date (3) 5% ($) 10% ($)
- ----------------------------------- ------------ ------------ ---------- ----------- -----------------------
James C. Vander Wyk, PhD 10,000 5.9% $12.75 6/9/05 35,200 77,800
____________
(1) The option vests and becomes exercisable on each anniversary of the grant
date in the amount of 2,000 shares on each vesting date.
(2) The exercise price was fixed as the closing market price on the date of
grant.
(3) Options are subject to earlier termination in the event of death,
disability, retirement, or termination of employment.
Options Exercised. The following table sets forth information regarding the
exercise of options in 1999 and the number of options held by the Named
Executives as listed in the Summary Compensation Table, including the value of
unexercised in-the-money options, as of December 31, 1999. The closing price of
CryoLife's common stock on December 31, 1999 used to calculate such values was
$11.75 per share.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR (1999)
AND FISCAL YEAR-END OPTION/SAR VALUES (AS OF DECEMBER 31, 1999)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES VALUE AT YEAR END (#) AT YEAR END ($)
----------- ---------- --------------------------- ------------------------------
ACQUIRED ON
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------ ----------- ----------- ------------- ------------- -------------
Steven G. Anderson...... 27,012 $ 237,165 24,100 66,400 $ 127,920 $ 62,080
Kirby S. Black, PhD..... 0 0 24,000 6,000 $ 146,880 $ 36,720
Albert E. Heacox, PhD... 0 0 24,000 6,000 $ 102,000 $ 25,500
Edwin B. Cordell, Jr.... 0 0 16,000 6,000 $ 99,000 $ 0
James C. Vander Wyk, PhD 0 0 18,000 22,000 $ 58,500 $ 39,000
Long-Term Incentive Plan. On December 19, 1997, the Board of Directors
adopted, subject to approval of shareholders, the CryoLife 1998 Long-Term
Incentive Plan. The 1998 Long-Term Incentive Plan provides for the grant of
options, stock appreciation rights and other awards to acquire up to a maximum
of 300,000 shares of common stock, subject to certain adjustments. As of April
3, 2000, options for 215,000 shares were outstanding and options for 0 shares
had been exercised. Options may be granted under the 1998 Long-Term Incentive
Plan to employees, officers or directors of and consultants and advisors to
CryoLife and its subsidiaries. CryoLife estimates that, as of April 9, 2000,
approximately 410 employees (including officers) and 7 non-officer directors of
CryoLife were eligible to participate in the 1998 Long-Term Incentive Plan.
Unless sooner terminated by the Board, the 1998 Long-Term Incentive Plan
terminates in May 2008. Stock options granted under the Plan also usually expire
upon termination of employment or
11
shortly thereafter. In the event of a "change of control transaction" as defined
in the 1998 Long-Term Incentive Plan, limitations on exercisability of stock
options owned by executive officers shall be waived, and the limitations on
exercisability of stock options owned by others may be waived in the discretion
of the Compensation Advisory Committee. See "Proposal to Increase the Number of
Shares Covered by the CryoLife, Inc. 1998 Long-Term Incentive Plan" below.
CryoLife Amended and Restated Non-Employee Directors Stock Option Plan. The
CryoLife Amended and Restated Non-Employee Directors Stock Option Plan provides
for the grant of options to non-employee directors of CryoLife. This plan
provides for the grant of options to acquire up to a maximum of 175,000 shares
of common stock. At each Annual Meeting of Shareholders, each non-employee
director elected, re-elected or continuing as a non-employee director of
CryoLife receives an annual grant of options to purchase 5,000 shares on the
first business day after such Annual Meeting, which options shall vest and
become exercisable on the date of grant. Except as set forth below, options
granted under this plan are not transferable other than by will or the laws of
descent and distribution. Notwithstanding the foregoing, the optionee may
transfer the option for no consideration to or for the benefit of a member of
the optionee's immediate family (including, without limitation, to a trust or
IRA) subject to such limits as the Board may establish, and the transferee shall
remain subject to all the terms and conditions that were applicable to such
option prior to the transfer. Upon the death of a non-employee director, options
which were exercisable on the date of death are exercisable by his or her legal
representatives or heirs, but in no event may the option be exercised after the
last day on which it could have been exercised by the non-employee director. As
of December 31, 1999, options for 40,000 shares had been granted under this
plan.
Employment Agreements. CryoLife has entered into employment agreements with
each of the Named Executives. Except for Mr. Anderson's agreement, and other
than with respect to position specific terms, such as duties of employment and
compensation, these employment agreements are substantially identical and
provide that employment may be terminated by either party with or without cause
upon 30 days' written notice to the other. The agreements automatically
terminate upon death. Each employee is required to devote his full and exclusive
time and attention to his employment duties, and CryoLife reserves the right to
change the nature and scope of those duties. The agreement conditions employment
and continued employment upon the employee's signing CryoLife's standard Secrecy
and Noncompete Agreement.
A new employment agreement with Mr. Anderson was negotiated in February
1999 for a term of five years, which replaces a similar contract negotiated in
1995. The Compensation Advisory Committee approved the inclusion of a provision
in the agreement pursuant to which Ms. Ann B. Anderson, the spouse of Mr.
Anderson, would be provided with health care coverage throughout her life. The
agreement provides that either party may terminate Mr. Anderson's employment by
giving 180 days' written notice to the other. The termination may be with or
without cause. In the event CryoLife terminates employment without cause, Mr.
Anderson will be entitled to be paid for the remainder of his term or for two
years, whichever is greater. If the termination is with cause, after the 180
days' notice period no additional compensation is due.
Compensation Advisory Committee Interlocks and Insider Participation. The
following five directors serve on the Compensation Advisory Committee of
CryoLife's Board of Directors: Mr. McCall, Ms. Lacy, Dr. Elkins, Dr. Van Dyne
and Mr. Gray. Mr. McCall has been Secretary and Treasurer of CryoLife since
1984. CryoLife has engaged Ronald D. McCall, P.A., a law firm of which Mr.
McCall is the sole shareholder to perform legal services on an ongoing basis.
For the year ended December 31, 1999, CryoLife paid Ronald D. McCall, P.A.
approximately $50,762 for such legal services, including expense reimbursements.
Management believes that these services were provided on terms no less favorable
to CryoLife than terms available from unrelated parties for comparable services.
See "Information about the Board of Directors and Committees of the Board -
Director Compensation" regarding consulting fees paid by CryoLife to Dr. Elkins
and Dr. Van Dyne during fiscal 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires CryoLife's
executive officers and directors and persons who beneficially own more than 10%
of CryoLife's stock to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish CryoLife with copies of all Section 16(a) forms they file.
12
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934 or written representations
from reporting persons, CryoLife believes that with respect to 1999, all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than 10% beneficial owners were complied with, except that Mr. Anderson
filed one Form 4 late reporting one transaction and Ms. Lacy filed a late Form 5
reporting six transactions reportable on Form 4.
PROPOSAL TO INCREASE THE NUMBER OF SHARES
COVERED BY THE CRYOLIFE, INC.
1998 LONG-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
On March 16, 2000, the Board of Directors of CryoLife approved, adopted and
recommended to the shareholders an amendment to the 1998 Plan for an increase of
300,000 in the number of shares of common stock available under the 1998 Plan.
The 1998 Plan constitutes a key element of CryoLife's incentive program and is
utilized to attract, retain and motivate key employees of CryoLife and to align
key employee and shareholder interests.
As a result of the prior grant of stock options under the 1998 Plan, the
number of shares currently available for grant of additional stock options is
approximately 85,000. The Board of Directors has determined that this amount is
insufficient to continue to maintain CryoLife's needs under its incentive
program. As a result, the Board has adopted and proposes that the shareholders
approve an amendment to the 1998 Plan which will increase the total number of
shares authorized for issuance pursuant to the 1998 Plan by 300,000 shares,
thereby increasing the aggregate number of shares which would be available for
grants of options, including those previously granted to 600,000. No decision
has been reached regarding the benefits to be granted to any particular
individual or groups of individuals.
The Board believes that the increase in the number of shares available for
issuance under the 1998 Plan will strengthen CryoLife's ability to attract,
retain and motivate key employees of CryoLife. Proxies received by the Board of
Directors of CryoLife will be voted for such amendment unless shareholders
specify a contrary choice in their proxies. The affirmative vote by the holders
of a majority of the outstanding shares of common stock present, in person or by
proxy at the meeting is required to approve the amendment to the 1998 Plan. For
a description of the 1998 Plan, see "CryoLife, Inc. 1998 Long-Term Incentive
Plan" below.
CRYOLIFE, INC. 1998 LONG-TERM INCENTIVE PLAN
On December 19, 1997, the Board of Directors, subject to the approval of
shareholders, adopted the 1998 Long-Term Incentive Plan (the "1998 Plan"). The
1998 Plan was approved by the shareholders of CryoLife at the 1998 Annual
Meeting of Shareholders. The following discussion summarizes the 1998 Plan.
Shares Reserved Under the Plan
CryoLife's 1998 Plan currently provides for the grant of options
("Options"), stock appreciation rights ("SARs") and other stock awards ("Stock
Awards") (collectively "Awards") to acquire shares of common stock up to a
maximum ("Plan Maximum") of 300,000 shares of common stock. In addition, the
following provisions are imposed under the 1998 Plan: (i) a maximum of 300,000
shares issued under Options intended to be Incentive Stock Options ("ISOs")
under Section 422 of the Internal Revenue Code of 1986 (the "Code"), (ii) a
maximum of 100,000 shares issued under Options and SARs to any one individual
during any consecutive twelve month period, (iii) a maximum number of shares
under other Awards of 100,000 shares, and (iv) a maximum payment under other
Awards of $50,000 to any one individual for any Performance Goals established
for any performance period, including the Fair Market Value of stock subject to
Awards denominated in shares. These maximums are subject to adjustment in the
event of stock dividends, stock splits, combination of shares, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, exchange of shares or
other changes in the outstanding common stock ("Corporate Transactions"). Any
such adjustment will be made by the Committee, as defined below. The Plan
Maximum shall not be reduced for shares
13
subject to plans assumed by CryoLife in an acquisition of an interest in another
company. Shares subject to Awards that are forfeited or canceled shall again be
available for new Awards under the 1998 Plan. Shares issued under the 1998 Plan
may consist, in whole or in part, of authorized and unissued shares or treasury
shares.
The 1998 Plan permits the grant of ISOs, non-qualified stock options
("NSOs"), SARs and other Stock Awards. The Compensation Advisory Committee will
determine the terms and conditions of options granted under the 1998 Plan,
including the exercise price, which may not be less than the fair market value
of CryoLife's common stock on the date of grant, all subject to certain
limitations provided under the 1998 Plan.
Awards may be settled through cash payments, the delivery of shares of
common stock, the granting of replacement Awards, or a combination thereof as
the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred common
stock equivalents.
Purpose of Plan
CryoLife desires to (i) attract and retain persons eligible to participate
in the 1998 Plan ("Participants"); (ii) motivate Participants, by means of
appropriate incentives, to achieve long-range goals; (iii) provide incentive
compensation opportunities that are competitive with those of other similar
companies; and (iv) further identify Participants' interests with those of
CryoLife's other shareholders through compensation that is based on CryoLife's
common stock; and thereby promote the long-term financial interest of CryoLife
and the related companies, including the growth in value of CryoLife's equity
and enhancement of long-term shareholder return. The 1998 Plan is not qualified
under Section 401(a) of the Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974.
Administration of the Plan
The 1998 Plan will be administered by the Compensation Advisory Committee
(the "Committee") appointed by the Board of Directors of CryoLife. Subject to
the terms of the 1998 Plan, in administering the 1998 Plan and the Awards
granted under the 1998 Plan, the Committee will have the authority to (1)
determine the directors, officers and employees of CryoLife and its subsidiaries
and the consultants and advisors to whom Awards may be granted and the types of
Awards; (2) determine the time or times at which Awards may be granted; (3)
determine the option price for shares subject to each Option and establish the
terms, conditions, performance criteria, restrictions and other provisions of
each Award; (4) determine the extent to which Awards will be structured to
conform to Section 162(m) of the Code; (5) establish terms and conditions of
Awards to conform to requirements of jurisdictions outside the United States;
and (6) interpret the 1998 Plan and prescribe and rescind rules and regulations,
if any, relating to and consistent with the 1998 Plan.
The current Committee members are Ronald D. McCall, Chairman, Virginia C.
Lacy, Bruce J. Van Dyne, M.D., Ronald C. Elkins, M.D. and Benjamin H. Gray. The
terms of Mr. McCall, Ms. Lacy, Dr. Van Dyne, Dr. Elkins and Mr. Gray as
directors expire at the 2000 Annual Meeting of the Shareholders; they are all
candidates for reelection except for Mr. Gray, who is not standing for
reelection. Under the 1998 Plan, acts by a majority of the Committee, or acts
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.
14
Amendment of the Plan
The 1998 Plan may be terminated or amended by the Board of Directors at any
time, except that the following actions may not be taken without shareholder
approval: (a) materially increasing the number of shares that may be issued
under the 1998 Plan, except by certain adjustments provided for under the 1998
Plan; or (b) amending the 1998 Plan provisions regarding the limitations on the
exercise price of options. In addition, no amendment or termination may, in the
absence of written consent to the change by the affected Participant (or, if the
Participant is not then living, the affected beneficiary), adversely affect the
rights of any Participant or beneficiary under any Award granted under the 1998
Plan prior to the date such amendment is adopted by the Board. Options may not
be granted under the 1998 Plan after the date of termination of the 1998 Plan,
but Options granted prior to that date shall continue to be exercisable
according to their terms.
Eligibility for Participation
Each person who is serving as an officer, director, or employee of CryoLife
or any of its subsidiaries is eligible to participate in the 1998 Plan.
Furthermore, certain consultants and advisors to CryoLife may also be eligible
to participate in the 1998 Plan.
Nothing contained in the 1998 Plan or in any Option agreement may confer
upon any person any right to continue as director, officer or employee of
CryoLife or its subsidiaries or as a consultant or advisor, or limit in any way
any right of shareholders or of the Board, as applicable, to remove such person.
New Plan Benefits
During 1999, the number and exercise price of options granted to executive
officers, non-employee directors and non-executive employees pursuant to the
1998 Plan are as set forth below. For the period beginning January 1, 2000
through April 9, 2000, no options were granted pursuant to the 1998 Plan. See
"Option/SAR Grants in Last Fiscal Year (1999)" Table above for discussion
regarding number of securities underlying options granted to the Named
Executives. For a discussion of potential future grants to the non-employee
directors, see "Director Compensation" above.
1999
-----------------------------------
Exercise Price
Number of or Range of
Options Exercise Prices
----------------- -----------------
Executive Officers 30,000 $12.75
Non-Employee Directors 153,500 $11.88 to $12.38
Non-Executive Employees 139,500 $12.31 to $12.75
Option Exercise Price and Vesting
The exercise price per share for the shares subject to NSOs shall be at
whatever price is approved by the Committee, but not less than the greater of
the fair market value or par value per share of the common stock on the Pricing
Date, as defined below. The exercise price per share for the shares subject to
ISOs shall be not less than the fair market value per share of common stock on
the Pricing Date, except that in the case of an ISO to be granted to an employee
owning more than 10% of the total combined voting power of all classes of stock
of CryoLife, the exercise price per share shall be not less than 110% of the
fair market value per share of common stock on the Pricing Date. The "fair
market value" shall be the mean between the highest and lowest reported sale
prices on the New York Stock Exchange on the Pricing Date. The "Pricing Date" is
the date on which the Option or SAR is granted, except that the Committee may
provide that: (i) the Pricing Date is the date on which the recipient is hired
or promoted (or similar event), if the grant of the Option or SAR occurs not
more than 90 days after the date of such hiring, promotion or other event; and
(ii) if an Option or SAR is granted in tandem with, or in substitution for, an
outstanding Award, the Pricing Date is the date of grant of such outstanding
Award. The Committee determines the vesting provisions for each Option.
15
Adjustments to Exercise Price and Number of Shares; Change of Control
In the event of a Corporate Transaction, the Committee may adjust Awards to
preserve the benefits or potential benefits of the Awards. Action by the
Committee may include adjustment of: (i) the number and kind of shares which may
be delivered under the 1998 Plan; (ii) the number and kind of shares subject to
outstanding Awards; and (iii) the exercise price of outstanding Options and
SARs; as well as any other adjustments that the Committee determines to be
equitable.
In general, if CryoLife is merged into or consolidated with another
corporation under circumstances in which CryoLife is not the surviving
corporation, or if CryoLife is liquidated, or sells or otherwise disposes of
substantially all of its assets to another corporation (any such merger,
consolidation, etc., being hereinafter referred to as a "Change of Control
Transaction") while unexercised Options are outstanding under the 1998 Plan,
after the effective date of a Change of Control Transaction each holder of an
outstanding Option shall be entitled, upon exercise of such Option, to receive
such stock, or other securities as the holders of the same class of stock as
those shares subject to the Option shall be entitled to receive in such Change
of Control Transaction based upon the agreed upon conversion ratio or per share
distribution. However, any limitations on exercisability of Options owned by
executive officers or CryoLife shall be waived, and Options of non-executive
officers may be waived, in the discretion of the Committee, so that all such
Options, from and after a date prior to the effective date of such Change of
Control Transaction shall be exercisable in full. Furthermore, the right to
exercise shall, in the case of executive officers, and may, in the discretion of
the Committee, in the case of other option holders, be given to each holder of
an Option during a 15-day period preceding the effective date of such Change of
Control Transaction. Any outstanding Options not exercised within such 15-day
period may be canceled by the Committee as of the effective date of any such
Change of Control Transaction, as specified in the 15-day notice. To the extent
that the foregoing adjustments relate to stock or securities of CryoLife, such
adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive.
Duration and Termination of 1998 Plan and Options
The 1998 Plan shall be unlimited in duration and, in the event of 1998 Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that, to the extent required by the Code, no
ISOs may be granted under the 1998 Plan on a date that is more than ten years
from the date the 1998 Plan is adopted or, if earlier, the date the 1998 Plan is
approved by shareholders.
Each Option expires on the expiration date specified by the Committee. The
"expiration date" with respect to an Option means the date established as the
expiration date by the Committee at the time of the grant; provided, however,
that the expiration date with respect to any Option shall not be later than the
earliest to occur of: (a) the ten-year anniversary of the date on which the
Option is granted; (b) if the Participant's date of termination occurs for
Cause, as defined in the 1998 Plan, the date of termination; or (c) if the
Participant's date of termination occurs for reasons other than Cause,
retirement, early retirement, death or disability, the 30-day anniversary of
such date of termination.
Means of Exercise of Options
An Option or an SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the Committee. The
payment of the exercise price of an Option granted under the 1998 Plan shall be
subject to the following:
(a) The full exercise price for shares of common stock purchased upon the
exercise of any Option shall be paid at the time of such exercise,
except that, in the case of an exercise arrangement approved by the
Committee and described below, payment may be made as soon as
practicable after the exercise.
(b) The exercise price shall be payable in cash or by tendering shares of
common stock (by either actual delivery of shares or by attestation,
with such shares valued at fair market value as of the day of
exercise), or in any combination thereof, as determined by the
Committee.
16
(c) The Committee may permit a Participant to elect to pay the exercise
price upon the exercise of an Option by authorizing a third party to
sell shares of common stock, or a sufficient portion of the shares,
acquired upon exercise of the Option and remit to CryoLife a
sufficient portion of the sale proceeds to pay the entire exercise
price and any tax withholding resulting from such exercise, or
CryoLife may choose to retain sufficient shares from the Option
exercise in satisfaction of the exercise price and tax withholding.
Non-transferability of Options
Except as provided by the Committee, no Option is transferable except by
will or by the laws of descent and distribution. Shares subject to Options
granted under the 1998 Plan that have lapsed or terminated may again be subject
to Options granted under the 1998 Plan.
Restrictions on Stock Awards
Each Stock Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine. These may include continuous
service and/or the achievement of performance measures designated by the
Committee. The performance measures that may be used by the Committee for such
Awards shall be measured by revenues, income, or such other criteria as the
Committee may specify. If the right to become vested in a Stock Award granted
under the 1998 Plan is conditioned on the completion of a specified period of
service with CryoLife and its subsidiaries, without achievement of performance
measures or other objectives being required as a condition of vesting, then the
required period of service for vesting shall be not less than three years,
subject to acceleration of vesting, to the extent permitted by the Committee, in
the event of the Participant's death, disability, change in control or
involuntary termination.
Tax Treatment
The following discussion addresses certain anticipated federal income tax
consequences to recipients of awards made under the 1998 Plan. It is based on
the Code and interpretations thereof as in effect on the date of this proxy
statement. This summary is not intended to be exhaustive and, among other
things, does not describe state, local or foreign tax consequences.
A company, such as CryoLife, for which an individual is performing services
will generally be allowed to deduct amounts that are includable in the income of
such person as compensation income at the time such amounts are so includable,
provided that such amounts qualify as reasonable compensation for the services
rendered. This general rule will apply to the deductibility of a Participant's
compensation income resulting from participation in the 1998 Plan. The timing
and amount of deductions available to CryoLife as a result of the 1998 Plan
will, therefore, depend upon the timing and amount of compensation income
recognized by a Participant as a result of participation in the 1998 Plan. The
following discusses the timing and amount of compensation income which will be
recognized by Participants and the accompanying deduction which will be
available to CryoLife.
ISOs. A Participant to whom an ISO which qualifies under Section 422 of the
Code is granted generally will not recognize compensation income, and CryoLife
will not be entitled to a deduction, upon the grant or the exercise of the
Option. To obtain nonrecognition treatment on exercise of an ISO, however, the
Participant must be an employee of CryoLife or a subsidiary continuously from
the date of grant of the option until three months prior to the exercise of the
Option. If termination of employment is due to disability of the Participant,
ISO treatment will be available if the option is exercised within one year of
termination. If an Option originally designated as an ISO is exercised after
those periods, the option will be treated as an NSO for income tax purposes and
compensation income will be recognized by the Participant, and a deduction will
be available to CryoLife, in accordance with the rules discussed below
concerning NSOs.
The Code provides that ISO treatment will not be available to the extent
that the fair market value of shares subject to ISOs, determined as of the date
of grant of the ISOs, which become exercisable for the first time during any
year exceed $100,000. If the $100,000 limitation is exceeded, the Options in
excess of the limitation are treated as NSOs when exercised.
17
While a Participant may not recognize compensation income upon exercise of
an ISO, the excess of the fair market value of the shares of common stock
received over the exercise price for the option can affect the optionee's
alternative minimum tax liability under applicable provisions of the Code. The
increase, if any, in an optionee's alternative minimum tax liability resulting
from exercise of an ISO will not, however, create a deductible compensation
expense for CryoLife.
When a Participant sells shares of common stock received upon exercise of
an ISO more than one year after the exercise of the Option and more than two
years after the grant of the Option, the Participant will normally not recognize
any compensation income, but will instead recognize long-term capital gain or
loss from the sale in an amount equal to the difference between the sales price
for the shares of common stock and the option exercise price. After the exercise
of the ISO prior to their sale will be subject to a 20% maximum capital gains
rate. If, however, a Participant sells the shares of common stock within one
year after exercising the ISO or within two years after the grant of the ISO (an
"Early Disposition"), the Participant will recognize compensation income, and
CryoLife will be entitled to a deduction, in an amount equal to the lesser of
(i) the excess, if any, of the fair market value of the shares of common stock
on the date of exercise of the Option over the option exercise price, and (ii)
the excess, if any, of the sale price for the shares over the option exercise
price. Any other gain or loss on such sales, in addition to the compensation
income mentioned previously, will normally be capital gain or loss.
If a Participant exercises an ISO by using shares of common stock
("Tendered Shares") previously acquired by him under another ISO and held by the
Participant for less than one year after the date of exercise or two years after
the grant of the prior ISO, the surrender of the Tendered Shares will be an
Early Disposition. As a result the Participant will recognize ordinary income in
an amount equal to the difference between the exercise price at which the
Tendered Shares were acquired and the fair market value of the Tendered Shares,
either at the time the prior ISO was exercised or at the time of the surrender
of the Tendered Shares, whichever is less. A number of the shares of common
stock acquired by exercise of the ISO equal to the number of Tendered Shares
will have a basis equal to the basis of the Tendered Shares, increased, if
applicable, by the amount of ordinary income recognized as a result of the
disposition of the Tendered Shares. Such shares of common stock will have a
carryover capital gain holding period. The basis of the number of shares of
common stock received in excess of the number of Tendered Shares ("Excess
Shares") will be zero and their capital gain holding period will begin on the
date the ISO was exercised.
NSOs. A Participant to whom an NSO is granted will not normally recognize
income at the time of grant of the Option. When a Participant exercises an NSO,
the Participant will generally recognize compensation income, and CryoLife will
be entitled to a deduction, in an amount equal to the excess, if any, of the
fair market value of the shares of common stock when acquired over the option
exercise price. The amount of gain or loss recognized by a Participant from a
subsequent sale of shares of common stock acquired from the exercise of an NSO
will be equal to the difference between the sales price for the shares of common
stock and the sum of the exercise price of the Option plus the amount of
compensation income recognized by the Participant upon exercise of the Option.
A Participant who exercises a NSO by using Tendered Shares (i) will not
recognize income as a result of the exercise of the NSO with respect to the
number of shares of common stock which equal the number of Tendered Shares and
(ii) will receive a carryover of the basis and holding period of the Tendered
Shares for such number of shares of common stock. Receipt of Excess Shares will
cause the Participant to recognize ordinary income, and entitle CryoLife to a
deduction, in an amount equal to the fair market value of the Excess Shares on
the date the NSO was exercised. The Participant's basis for such number of
Excess Shares will equal the amount of ordinary income recognized as a result of
the exercise of the NSO and the capital gain holding period for the Excess
Shares will begin on the date the NSO was exercised.
SARs. The recipient of an SAR generally will not recognize any compensation
income upon grant of the SAR. At the time of exercise of an SAR, however, the
recipient should recognize compensation income in an amount equal to the amount
of cash, or the fair market value of the shares, received.
Restricted Stock Awards. If stock received pursuant to a stock award made
through the 1998 Plan is subject to a restriction based upon the recipient
continuing to perform services for CryoLife or its affiliated companies (a "risk
of forfeiture"), the Participant should not recognize compensation income upon
receipt of the shares of common stock unless he/she makes a so-called "83(b)
election" as discussed below. Instead, the Participant will recognize
18
compensation income, and CryoLife will be entitled to a deduction, when the
shares of common stock are no longer subject to a risk of forfeiture, in an
amount equal to the fair market value of the stock at that time. Absent a
Participant making an 83(b) election, dividends paid with respect to shares of
common stock which are subject to a risk of forfeiture will be treated as
compensation income to the Participant, and a compensation deduction will be
available to CryoLife for the dividend, until the shares of common stock are no
longer subject to a risk of forfeiture.
Different tax rules will apply to a Participant who receives shares of
common stock subject to a risk of forfeiture if the Participant files an
election pursuant to Section 83(b) of the Code (an "83(b) election"). If, within
30 days of receipt of the shares of common stock, a Participant files an 83(b)
election with the Internal Revenue Service and provides a copy of the election
to CryoLife, then, notwithstanding that the shares of common stock are subject
to a risk of forfeiture, the Participant will recognize compensation income upon
receipt of the shares of common stock, and CryoLife will be entitled to a
deduction, in an amount equal to the fair market value of the stock at the time
of the award. If the 83(b) election is made, any dividends paid with respect to
the shares of common stock will not result in compensation income to the
Participant, and will not entitle CryoLife to a deduction. Rather, the dividends
paid will be treated as any other dividends paid with respect to CryoLife stock.
Tax Withholding
Whenever CryoLife proposes, or is required, to distribute shares under the
1998 Plan, CryoLife may require the recipient to satisfy any Federal, state and
local tax withholding requirements prior to the delivery of any certificate for
such shares or, in the discretion of the Committee, CryoLife may withhold from
the shares to be delivered shares sufficient to satisfy all or a portion of such
tax withholding requirements.
Unfunded Status of the 1998 Plan
The 1998 Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Participant or optionee by CryoLife, nothing contained in the 1998 Plan shall
give any such Participant or optionee any rights that are greater than those of
a general creditor of CryoLife.
19
OWNERSHIP OF PRINCIPAL SHAREHOLDERS, NAMED EXECUTIVES,
AND EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP
The name and address of each person or entity who owned beneficially 5% or
more of the outstanding shares of common stock of CryoLife on April 3, 2000,
together with the number of shares owned and the percentage of outstanding
shares that ownership represents is set forth in the following table. The table
also shows information concerning beneficial ownership by each of the Named
Executives and by all directors and executive officers as a group. The number of
shares beneficially owned is determined under the rules of the SEC, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days after the
date hereof through the exercise of any stock option or other right. Unless
otherwise indicated, each person has sole investment and voting powers, or
shares such powers with his or her spouse, with respect to the shares set forth
in the following table:
Percentage of
Number of Shares of Outstanding
CryoLife Stock Shares of
Beneficial Owner Beneficially Owned CryoLife Stock
- -------------------------------------------------------------------- ---------------------- -----------------
Steven G. Anderson................................................ 1,175,645(1) 9.54%
Kirby S. Black, PhD............................................... 25,154(2) *
Albert E. Heacox, PhD............................................. 85,000(3) *
Edwin B. Cordell, Jr.............................................. 31,644(4) *
James C. Vander Wyk, PhD ......................................... 24,000(3) *
Benjamin H. Gray.................................................. 108,924(5) *
FMR Corp.......................................................... 780,100(6) 6.37%
Scudder Kemper Investments, Inc................................... 1,134,900(7) 9.30%
All current Directors and Executive Officers
as a group (14 persons)...................................... 2,225,134(8) 17.55%
__________________
* Ownership represents less than 1% of outstanding CryoLife common stock.
(1) Includes 105,333 shares held of record by Ms. Ann B. Anderson, Mr.
Anderson's spouse. Also includes 36,200 shares subject to options which are
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement. The business address for Mr. Anderson is: c/o
CryoLife, Inc., 1655 Roberts Blvd., N.W., Kennesaw, Georgia 30144.
(2) Includes 24,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement. Also includes 270 shares held by Dr. Black's
children.
(3) Includes 24,000 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement.
(4) Includes 2,300 shares in a trading account as to which Mr. Cordell has
signature authority and 16,000 shares subject to options which are either
presently exercisable or will become exercisable within 60 days after the
date of this proxy statement.
(5) Includes 68,500 shares subject to options which are either presently
exercisable or will become exercisable within 60 days after the date of
this proxy statement. Mr. Gray, a current director of CryoLife, will not
stand for reelection at the annual meeting.
(6) The business address of FMR Corp. is: 82 Devonshire Street, Boston,
Massachusetts 02109. Based on Schedule 13G/A filed with the Securities and
Exchange Commission on February 11, 2000.
(7) The business address of Scudder Kemper Investments, Inc. is: Two
International Place, Boston, MA 02110. Based on Schedule 13G filed with the
Securities and Exchange Commission on January 28, 2000.
20
(8) See "Election of Directors" for information as to the beneficial ownership
of shares attributed to directors who are not also Named Executives.
Includes 476,700 shares subject to options which are presently exercisable
or will become exercisable within 60 days after the date of this proxy
statement. Includes 2,300 shares held in a trading account as to which Mr.
Cordell has signature authority. Includes 270 shares held as trustee by an
executive officer. Includes 215,500 shares held as beneficiary of a trust,
and 110,586 shares held as beneficiary of an IRA, of Ms. Lacy's deceased
spouse. Includes 15,000 shares held as administrator of a pension plan.
Includes 115,333 shares held of record by the spouses of executive officers
and directors.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen, LLP has been the independent
certified public accountants of CryoLife since May, 1999. Approval or selection
of the independent certified public accountants of CryoLife is not submitted to
the shareholders at the Annual Meeting. The Board of Directors of CryoLife has
historically selected the independent certified public accountants of CryoLife
with the advice of the Audit Committee, and the Board believes that it would be
to the detriment of CryoLife and its shareholders for there to be any
impediment, such as selection or ratification by the shareholders, to its
exercising its judgment to select CryoLife's independent certified public
accountants or to remove them if, in its opinion, such removal is in the best
interest of CryoLife and its shareholders.
It is anticipated that a representative from the accounting firm of Arthur
Andersen, LLP will be present at the annual meeting of shareholders to answer
questions and make a statement if the representative desires to do so.
On May 27, 1999, at the recommendation of the Audit Committee, the Board of
Directors of CryoLife engaged the accounting firm of Arthur Andersen LLP as
independent auditors for CryoLife. Arthur Andersen LLP replaces the firm of
Ernst & Young LLP, whose engagement expired and was not renewed by CryoLife's
Board of Directors, also based on the recommendation of the Audit Committee,
effective as of May 27, 1999. Ernst & Young LLP was notified that their
engagement would not be renewed on June 1, 1999.
Neither CryoLife nor anyone engaged on its behalf has consulted with Arthur
Andersen LLP since the beginning of CryoLife's fiscal year ended December 31,
1997 with regard to (i) either: the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on CryoLife's financial statements which Arthur
Andersen LLP has concluded was an important factor considered by CryoLife in
reaching a decision as to the accounting, auditing, or financial reporting
issue; or (ii) any matter that was either the subject of a disagreement (as
defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as
described in Item 304(a)(1)(v) of Regulation S-K).
There were no disagreements between CryoLife and Ernst & Young LLP in
connection with the audits of the two most recent fiscal years ended December
31, 1998, and the subsequent interim period through May 27, 1999, on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements if not resolved to their
satisfaction would have caused Ernst &Young LLP to make reference in connection
with their reports to the subject matter of the disagreement. In addition, no
events of the type referenced in paragraphs (a) (1) (v) (A) through (D) of Item
304 of Regulation S-K occurred within CryoLife's two most recent fiscal years or
within the subsequent interim period through May 27, 1999.
The audit reports of Ernst & Young LLP on the consolidated financial
statements of CryoLife as of and for the years ended December 31, 1998 and 1997
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
On June 8, 1999, CryoLife received a letter of Ernst & Young LLP dated June
7, 1999. This letter was filed with the Securities and Exchange Commission as
Exhibit 16 to CryoLife's Current Report on Form 8-K/A dated May 22, 1999.
SHAREHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at
CryoLife's 2001 Annual Meeting of Shareholders pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934 must be received by
CryoLife by December 15, 2000 for inclusion in its proxy statement and form of
proxy relating to that meeting. In
21
addition, all shareholder proposals submitted outside of the shareholder
proposal rules promulgated pursuant to Rule 14a-8 under the Exchange Act must be
received by CryoLife by February 28, 2001, in order to be considered timely. If
such shareholder proposals are not timely received, proxy holders will have
discretionary voting authority with regard to any such shareholder proposals
which may come before the 2001 Annual Meeting. If the date of the next annual
meeting is advanced or delayed by more than 30 calendar days from the date of
the annual meeting to which this proxy statement relates, CryoLife shall, in a
timely manner, inform its shareholders of the change, and the date by which
proposals of shareholders must be received.
Upon The Written Request Of Any Record Or Beneficial Owner Of Common Stock
Of CryoLife Whose Proxy Was Solicited In Connection With The 2000 Annual Meeting
Of Shareholders, CryoLife Will Furnish Such Owner, Without Charge, A Copy Of Its
Annual Report On Form 10-K Without Exhibits For Its Fiscal Year Ended December
31, 1999. Request For A Copy Of Such Annual Report On Form 10-K Should Be
Addressed To Suzanne Gabbert, Assistant Secretary, CryoLife, Inc., 1655 Roberts
Boulevard, N.W., Kennesaw, Georgia 30144.
It Is Important That Proxies Be Returned Promptly. Shareholders Who Do Not
Expect To Attend The Meeting In Person Are Urged To Sign, Complete, Date And
Return The Proxy Card In The Enclosed Envelope, To Which No Postage Need Be
Affixed.
By Order of the Board of Directors
/s/ Steven G. Anderson
STEVEN G. ANDERSON, Chairman
of the Board, President and Chief
Dated: April 14, 2000 Executive Officer
22
ANNEX 1
CRYOLIFE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING ON MAY 26, 2000
The undersigned shareholder hereby appoints STEVEN G. ANDERSON and RONALD
D. McCALL, or any of them, with full power of substitution, to act as proxy for,
and to vote the stock of, the undersigned at the Annual Meeting of Shareholders
of CRYOLIFE, INC. to be held on May 26, 2000, and any adjournments thereof.
The undersigned acknowledges receipt of Notice of the Annual Meeting and
Proxy Statement, each dated April 14, 2000, and grants authority to said
proxies, or their substitutes, and ratifies and confirms all that said proxies
may lawfully do in the undersigned's name, place and stead. The undersigned
instructs said proxies to vote as indicated below and on the reverse hereof.
1. ELECTION OF DIRECTORS 3. Upon such other matters as may properly
come before the meeting.
Nominees:
--------- THE PROXIES SHALL VOTE AS SPECIFIED ABOVE,
OR IF NO DIRECTION IS MADE, THIS PROXY WILL
FOR election of the individuals Steven G. Anderson BE VOTED FOR EACH OF THE LISTED NOMINEES,
set forth at right (except as Marked AND FOR PROPOSAL 2 AT LEFT.
to the contrary) John M. Cook
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
--------------- Ronald C. Elkins, M.D. CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
REFRAIN FROM VOTING FOR election of Virginia C. Lacy Please enter your Social Security Number or
the nominees set forth at right Federal Employer Identification Number here:
Ronald D. McCall, Esq.
(INSTRUCTIONS): To withhold authority ____________________________________________
to vote for any individual nominee(s), Alexander c. Schwartz, Jr.
write that person's name on the space
provided below Bruce J. Van Dyne, M.D.
_________________________________________
2. PROPOSAL TO APPROVE AN INCREASE IN THE
NUMBER OF SHARES AVAILABLE FOR ISSUANCE
UNDER THE CRYOLIFE, INC. 1998 LONG-TERM
INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Signature __________________ Date__________________ Signature _________________ Date__________________
NOTE:(Shareholders should sign exactly as name appears on stock. When there is
more than one owner each should sign. Executors, Administrators, Trustees
and others signing in a representative capacity should so indicate.)
---------------------------------------------------------------------------
(continued on the reverse side)
FOLD AND DETACH HERE
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders of
CRYOLIFE, INC.
May 26, 2000
at
Sheraton Suites Galleria-Atlanta
2844 Cobb Parkway, SE
Atlanta, Georgia 30339
10:00 a.m.