As filed with the U.S. Securities and Exchange Commission on April 18, 2003
Registration Statement No. 333-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2417093
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1655 ROBERTS BOULEVARD, NW, KENNESAW,
GEORGIA 30144 (Address, including zip code, of
registrant's principal executive offices)
CRYOLIFE, INC. 2002 STOCK INCENTIVE PLAN
CRYOLIFE, INC. DIRECTORS STOCK OPTIONS
CRYOLIFE, INC. EXECUTIVE OFFICERS STOCK OPTIONS
(Full Title of Plan)
STEVEN G. ANDERSON, PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD OF DIRECTORS
CRYOLIFE, INC.
1655 ROBERTS BOULEVARD, NW
KENNESAW, GEORGIA 30144
(770) 419-3355
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
B. JOSEPH ALLEY, JR. ESQ.
ARNALL GOLDEN & GREGORY, LLP
2800 ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3450
CALCULATION OF REGISTRATION FEE
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
Proposed Proposed maximum Amount of
Title of securities Amount to be maximum offering aggregate registration
to be registered Registered(1) price per share offering price fee(2)
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
Common Stock, 60,000 Shares $31.99 $1,919,400.00 $155.28
$.01 par value
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
Common Stock, 57,959 Shares $29.25 $1,695,300.75 $137.15
$.01 par value
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
Common Stock, 974,000 Shares $6.335 $6,170,290.00 $499.18
$.01 par value
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
Total 1,091,959 Shares $9,784,990.75 $791.61
- ------------------------------- --------------------- ---------------------------- ------------------------------ ------------------
(1) Includes 974,000 shares reserved for issuance under the CryoLife, Inc. 2002
Stock Incentive Plan, 60,000 shares for grants pursuant to CryoLife, Inc.
Directors Stock Options and 57,959 shares for grants pursuant to CryoLife,
Inc. Executive Officers Stock Options.
(2) Calculated pursuant to Rules 457(c) and 457(h) under the Securities Act of
1933, as amended, as follows: (a) with respect to 60,000 shares, based upon
the exercise price on the date of grant of $31.99, (b) with respect to
57,959 shares, based upon the exercise price on the date of grant of $29.25
and (c) with respect to 974,000 shares, based upon the average of the high
and low price of the Registrant's Common Stock on April 16, 2003 as listed
on the New York Stock Exchange.
INFORMATION REGARDING CERTAIN FINANCIAL STATEMENTS
INCORPORATED BY REFERENCE INTO THIS
REGISTRATION STATEMENT
On April 5, 2002, our Audit Committee recommended and the Board approved
the dismissal of Arthur Andersen LLP as our independent auditors, effective
April 9, 2002. Arthur Andersen has been found guilty of federal obstruction of
justice arising from the government's investigation of Enron Corp. It is likely
that events arising out of this verdict may adversely affect the ability of
Arthur Andersen to satisfy any claims against it including claims that may arise
out of Arthur Andersen's audit of our financial statements as of December 31,
2001 and 2000 and for the years then ended, which are incorporated by reference
into this registration statement.
Section 11(a) of the Securities Act of 1933, as amended (the "Securities
Act"), provides that if any part of a registration statement at the time it
becomes effective contains an untrue statement of a material fact or an omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, any person acquiring a security pursuant to
the registration statement (unless it is proved that at the time of the
acquisition the person knew of the untruth or omission) may sue, among others,
every accountant who has consented to be named as having prepared or certified
any part of the registration statement or as having prepared or certified any
report or valuation which is used in connection with the registration statement,
with respect to the statement in the registration statement, report or valuation
that purports to have been prepared or certified by the accountant.
Prior to the date of this registration statement, the Arthur Andersen
partners who reviewed our audited financial statements, as of December 31, 2001
and 2000 and for each of the three years in the period ended December 31, 2001
resigned from Arthur Andersen. As a result, after reasonable efforts, we have
been unable to obtain Arthur Andersen's written consent to the incorporation by
reference into this registration statement of its audit reports with respect to
our financial statements.
Under these circumstances, Rule 437(a) under the Securities Act permits the
filing of this registration statement without including herein a written consent
from Arthur Andersen. Accordingly, Arthur Andersen will not be liable under
Section 11(a) of the Securities Act for statements made in this registration
statement because it has not consented to being named as an expert in the
registration statement. As a result, you will not be able to sue Arthur Andersen
pursuant to Section 11(a)(4) of the Securities Act and therefore, your right of
recovery under that section may be limited as a result of the lack of consent.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in the Registration
Statement:
(a) The Registrant's Annual Report on Form 10-K filed with respect to the
Registrant's fiscal year ended December 31, 2002.
(b) The Current Report on Form 8-K filed on April 3, 2003.
(c) The description of the Registrant's Common Stock contained in the
Registrant's registration statement filed under Section 12 of the Securities
Exchange Act of 1934, including any amendment or report filed for the purpose of
updating such description.
(d) All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this registration statement which
indicates that all of the shares of Common Stock offered have been sold or which
deregisters all of such shares then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is a Florida corporation. The following summary is qualified
in its entirety by reference to the complete text of the Florida Business
Corporation Act (the "FBCA"), the Registrant's Restated Articles of
Incorporation, and the Registrant's Bylaws.
Under Section 607.0850(1) of the FBCA, a corporation may indemnify any of
its directors and officers against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding (including any
appeal thereof) (i) if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and (ii) with respect to any criminal action or proceeding, he or
she had no reasonable cause to believe his or her conduct was unlawful. In
actions brought by or in the right of the corporation, however, Section
607.0850(2) provides that no indemnification shall be made in respect of any
claim, issue or matter as to which the director or officer shall have been
adjudged to be liable unless, and only to the extent that, the court in which
such proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Article X of the Registrant's Restated Articles of Incorporation and Article VI
of the Registrant's Bylaws require that, if in the judgment of the majority of
the Board of Directors (excluding from such majority any director under
II-1
consideration for indemnification) the criteria set forth under Section 607.0850
have been met, then the Registrant shall indemnify its directors and officers
for certain liabilities incurred in the performance of their duties on behalf of
the Registrant to the maximum extent allowed by Section 607.0850 of the FBCA
(formerly Section 607.014 of the Florida General Corporation Act).
The Agreement and Plan of Merger dated March 5, 1997, between Registrant
and Ideas for Medicine, Inc. ("IFM") and certain stockholders of IFM provides
that any investors exercising registration rights pursuant to such agreement
must indemnify the officers and directors signing the registration statement
against any liability arising from statements or omissions made in reliance upon
information furnished by such investors to the Registrant for use in such
registration statement.
The Registrant has purchased insurance to insure (i) the Registrant's
directors and officers against damages from actions and claims incurred in the
course of their duties, and (ii) the Registrant against expenses incurred in
defending lawsuits arising from certain alleged acts of its directors and
officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Exhibit
- ----------- -------
3.1 Restated Certificate of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 3.1 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2000).
3.2 ByLaws of the Company, as amended. (Incorporated by reference to
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995).
3.3 Articles of Amendment to the Articles of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.3 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2000).
4.1 Form of Certificate for the Company's Common Stock (Incorporated by
reference to Exhibit 4.1 to the Registrant's Registrant's Registration
Statement on Form S-1 (Commission File No. 33-56388).
4.2 Form of Certificate for the Company's Common Stock (Incorporated by
reference to Exhibit 4.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
5* Opinion of Arnall Golden & Gregory, LLP regarding legality
23.1* Consent of Arnall Golden & Gregory, LLP (included as part of Exhibit 5
hereto).
23.2* Consent of Deloitte & Touche LLP
99.1* CryoLife, Inc. 2002 Stock Incentive Plan
99.2* Form of Directors Stock Option Agreement and Grant
99.3* Form of Executive Officers Stock Option Agreement and Grant
- -----------------------
* Filed herewith.
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ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) shall not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 6, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceedings) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kennesaw, State of Georgia on April 18, 2003.
CRYOLIFE, INC.
By: /s/ Steven G. Anderson
------------------------------------
Steven G. Anderson
President, Chief Executive Officer
and Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven G. Anderson and D. Ashley Lee and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS AND DIRECTORS:
- ------------------------------------------------------------------
Name Title Date
- ---- ----- ----
/s/ Steven G. Anderson President, Chief Executive Officer April 18, 2003
- ------------------------------------- and Chairman of the Board of
Steven G. Anderson Directors (Principal Executive
Officer)
/s/ D. Ashley Lee Vice President of Finance,
- ------------------------------------- Treasurer and Chief Financial April 18, 2003
D. Ashley Lee Officer (Principal Financial and
Accounting Officer)
/s/ John M. Cook Director April 18, 2003
- -------------------------------------
John M. Cook
/s/ Ronald Charles Elkins, M.D. Director April 18, 2003
- -------------------------------------
Ronald Charles Elkins, M.D.
/s/ Virginia C. Lacy Director April 18, 2003
- -------------------------------------
Virginia C. Lacy
/s/ Ronald D. McCall Director April 18, 2003
- -------------------------------------
Ronald D. McCall
/s/ Bruce J. Van Dyne, M.D. Director April 18, 2003
- -------------------------------------
Bruce J. Van Dyne, M.D.
II-4
EXHIBIT 5
ARNALL GOLDEN GREGORY LLP
2800 ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3450
TELEPHONE (404) 873-8500 - FACSIMILE (404) 873-8501
(404) 873-8500
(404) 873-8501
April 18, 2003
CryoLife, Inc.
1655 Roberts Boulevard, N.W.
Kennesaw, Georgia 30144
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
This opinion is rendered in connection with the proposed issue and sale by
CryoLife, Inc., a Florida corporation (the "Company"), of up to 1,091,959 shares
of the Company's Common Stock, $.01 par value (the "Shares"), pursuant to stock
options issued under the CryoLife, Inc. 2002 Stock Incentive Plan and pursuant
to stock options granted to certain of the Company's directors and pursuant to
stock options granted to certain of the Company's executive officers
(collectively referred to as "Options") upon the terms and conditions set forth
in the Registration Statement on Form S-8 (the "Registration Statement") filed
by the Company with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act") and the prospectus utilized in connection
therewith. We have acted as counsel for the Company in connection with the
issuance and sale of the Shares by the Company.
In rendering the opinion contained herein, we have relied in part upon
examination of the Company's corporate records, documents, certificates and
other instruments and the examination of such questions of law as we have
considered necessary or appropriate for the purpose of this opinion. Based upon
the foregoing, we are of the opinion that the Shares have been duly and validly
authorized, and when sold in the manner contemplated by the Options, and upon
receipt by the Company of payment therefor (assuming that such payment at all
times exceeds the par value thereof) and issuance pursuant to a current
prospectus in conformity with the Act, the Shares will be legally issued, fully
paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement. This consent is not to be construed as an admission that we are a
party whose consent is required to be filed with the Registration Statement
under the provisions of the Act.
Sincerely,
/s/ ARNALL GOLDEN GREGORY, LLP
ARNALL GOLDEN GREGORY, LLP
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
(relating to 1,091,959 Shares of Common Stock) of CryoLife, Inc. on Form S-8 of
our reports dated February 24, 2003 relating to the consolidated financial
statements of CryoLife as of and for the year ended December 31, 2002 (which
report expresses an unqualified opinion and includes an explanatory paragraph
relating to the Company's change in its method of accounting for goodwill and
other intangible assets to conform with Statement of Financial Accounting
Standards No. 142) appearing in the Annual Report on Form 10-K of CryoLife, Inc.
for the year ended December 31, 2002.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
April 18, 2003
EXHIBIT 99.1
CRYOLIFE, INC. 2002
STOCK INCENTIVE PLAN
SECTION 1
GENERAL
1.1 Purpose. The CryoLife, Inc. 2002 Stock Incentive Plan (the "Plan") has
been established by CryoLife, Inc. ("CryoLife" or the "Company") to (i) attract
and retain persons eligible to participate in the Plan; (ii) motivate
Participants (as defined in subsection 1.2 below), 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 the Company's other
shareholders through compensation that is based on the Company's common stock;
and thereby promote the long-term financial interest of the Company and its
Subsidiaries, as hereinafter defined, including the growth in value of the
Company's equity and enhancement of long-term shareholder return. Pursuant to
the Plan, Participants may receive Options, Stock Appreciation Rights, or Stock
Awards, as defined herein.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee (as defined in Section 6) shall determine and designate, from time to
time, from among the Eligible Grantees, as hereinafter defined (including
transferees of Eligible Grantees to the extent the transfer is permitted by the
Plan and the applicable Award Agreement), those persons who will be granted one
or more Awards under the Plan, and thereby become "Participants" in the Plan. In
the discretion of the Committee, a Participant may be granted any Award
permitted under the provisions of the Plan, and more than one Award may be
granted to a Participant. Awards may be granted as alternatives to or
replacement of awards outstanding under the Plan, or any other plan or
arrangement of the Company or a Subsidiary (including a plan or arrangement of a
business or entity, all or a portion of which is acquired by the Company or a
Subsidiary).
1.3 Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 8 of the Plan).
SECTION 2
OPTIONS AND SARS
2.1 Definitions.
(a) The grant of an "Option" entitles the Participant to purchase
shares of Stock at an Exercise Price established by the Committee. Options
granted under this Section 2 may either be Incentive Stock Options ("ISOs")
or Non-Qualified Options ("NQOs"), as determined in the discretion of the
Committee. An "ISO" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option" described in section
422(b) of the Code. An "NQO" is an Option that is not intended to be an
"incentive stock option" as that term is described in section 422(b) of the
Code.
(b) A stock appreciation right (an "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection
2.5), value equal to (or otherwise based on) the excess of: (a) the Fair
Market Value (as defined in Section 8) of a specified number of shares of
Stock at the time of exercise; over (b) an Exercise Price established by
the Committee.
2.2 Exercise Price. The Exercise Price of each Option and SAR granted under
this Section 2 shall be established by the Committee or shall be determined by a
method established by the Committee at the time the Option or SAR is granted.
The Exercise Price shall not be less than 100% of the Fair Market Value of a
share of Stock on the date of grant of the Award.
2.3 Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
1
Committee; provided, however, that if a Participant shall die while in the
employ of the Company or a Subsidiary and shall not have fully exercised an
Option or SAR, the Option or SAR may be exercised, subject to the condition that
no Option or SAR shall be exercisable after the expiration of ten years from the
date it is granted or beyond its original term, to the extent that the
Participant's right to exercise such Option or SAR had accrued pursuant to this
Section 2 of the Plan at the time of his death and had not previously been
exercised, at any time within one (1) year after the Participant's death, by the
executors or administrators of the Participant or by any person or persons who
shall have acquired the Option or SAR directly from the Participant by bequest
or inheritance.
2.4 Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4, the
full Exercise Price for shares of 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 in
paragraph 2.4(c), payment may be made as soon as practicable after the
exercise).
(b) The Exercise Price shall be payable in cash or by tendering, by
either actual delivery of shares or by attestation if permitted by the
Committee, shares of Stock acceptable to the Committee and which have been
held by the participant for at least six months, and valued at Fair Market
Value as of the day of exercise, or in any combination thereof, as
determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by irrevocably authorizing a
third party to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.
2.5 Settlement of Award. Shares of Stock delivered pursuant to the exercise
of an Option or SAR shall be subject to such conditions, restrictions and
contingencies as the Committee may establish in the applicable Award Agreement.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its discretion,
may impose such conditions, restrictions and contingencies with respect to
shares of Stock acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 Definitions.
(a) A "Stock Unit" Award is the grant of a right to receive shares of
Stock in the future.
(b) A "Performance Share" Award is a grant of a right to receive
shares of Stock or Stock Units which is contingent on the achievement of
performance or other objectives during a specified period.
(c) A "Restricted Stock" Award is a grant of shares of Stock, and a
"Restricted Stock Unit" Award is the grant of a right to receive shares of
Stock in the future, with such shares of Stock or right to future delivery
of such shares of Stock subject to a risk of forfeiture or other
restrictions that will lapse upon the achievement of one or more goals
relating to completion of service by the Participant, or achievement of
performance or other objectives, as determined by the Committee.
3.2 Restrictions on Stock Awards. Each Stock Unit Award, Restricted Stock
Award, Restricted Stock Unit Award and Performance Share Award shall be subject
to the following:
(a) Any such Award shall be subject to such conditions, restrictions
and contingencies as the Committee shall determine.
2
(b) The Committee may designate whether any such Awards being granted
to any Participant are intended to be "performance-based compensation" as
that term is used in Code Section 162(m) of the Code. Any such Awards
designated as intended to be "performance-based compensation" shall be
conditioned on the achievement of one or more Performance Measures. The
Performance Measures that may be used by the Committee for such Awards
shall be based on any one or more of the following, as selected by the
Committee: return on capital or increase in pretax earnings of the Company
and/or one or more divisions and/or subsidiaries, return on shareholders'
equity of the Company, increase in earnings per share of the Company, sales
of the Company and/or one or more divisions and/or subsidiaries, pretax
earnings of the Company and/or one or more divisions and/or subsidiaries,
net earnings of the Company and/or one or more divisions and/or
subsidiaries, control of operating and/or non-operating expenses of the
Company and/or one or more divisions and/or subsidiaries, margins of the
Company and/or one or more divisions and/or subsidiaries, market price of
the Company's securities and other objectively measurable factors directly
tied to the performance of the Company and/or one or more divisions and/or
subsidiaries. For Awards intended to be "performance-based compensation,"
the grant of the Awards and the establishment of the Performance Measures
shall be made during the period required under Code Section 162(m).
SECTION 4
OPERATION AND ADMINISTRATION
4.1 Effective Date; Duration. Subject to the approval of the shareholders
of the Company at the Company's 2002 annual meeting of its shareholders, the
Plan shall be effective as of the date of approval of shareholders (the
"Effective Date"). The Plan shall have a duration of ten years from the date the
Plan is adopted, or, if earlier, the date the Plan is approved by shareholders;
provided that in the event of Plan termination, the Plan shall remain in effect
as long as any Awards under it are outstanding; provided, further however, that,
no Award may be granted under the Plan on a date that is more than ten years
from the date the Plan is adopted or, if earlier, the date the Plan is approved
by shareholders.
4.2 Awards Subject to Plan. Awards granted under the Plan shall be subject
to the following:
(a) Subject to the following provisions of this subsection 4.2, the
maximum number of shares of Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be 974,000 shares of Stock.
(b) The following limitations are imposed under the Plan: (i) a
maximum of 974,000 shares may be issued under Options intended to be
Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), (ii) a maximum of 100,000 shares may
be issued under Options and SARS to any one individual during any
consecutive twelve-month period, (iii) a maximum of 100,000 shares may be
issued under other Awards, and (iv) a maximum payment of $400,000 under
other Awards may be made 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
(c) To the extent any shares of Stock covered by an Award are not
delivered to a Participant or beneficiary because the Award is forfeited or
canceled, or the shares of Stock are not delivered because the Award is
settled in cash or used to satisfy the applicable tax withholding
obligation, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. The maximum number of shares of Stock available
for delivery under the Plan shall not be reduced for shares subject to
plans assumed by the Company in an acquisition of an interest in another
company.
(d) If the exercise price of any Option granted under the Plan is
satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation), only the number of shares of Stock issued net
3
of the shares of Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Stock available for delivery
under the Plan.
(e) Subject to adjustment in accordance with paragraph 4.2(f), no more
than 100,000 shares of Stock may be subject to Stock Unit Awards,
Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share
Awards that are intended to be "performance-based compensation" (as that
term is used for purposes of Code section 162(m)) granted to any one
individual during any one fiscal-year period (regardless of when such
shares are deliverable).
(f) Subject to any required action by the shareholders, the number of
shares covered by each outstanding Award, and the price per share in each
such Award, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of the Company resulting from a Corporate
Transaction or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company.
(g) If the Company merges or consolidates with another corporation,
whether or not the Company is a surviving corporation, or if the Company is
liquidated or sells or otherwise disposes of substantially all of its
assets while unexercised Options or other Awards remain outstanding under
this Plan, (A) subject to the provisions of clause (C) below, after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option or
other Award shall be entitled, upon exercise of that Option or Award or in
place of it, as the case may be, to receive, in lieu of shares of Stock,
the number and class or classes of shares of Stock or other securities or
property to which the holder would have been entitled if, immediately prior
to the merger, consolidation, liquidation, sale or other disposition, the
holder had been the holder of record of a number of shares of Stock equal
to the number of shares of Stock as to which that Option may be exercised
or are subject to the Award; (B) if Options or other Awards have not
already become exercisable under Section 5 hereof, the Board of Directors
may waive any limitations set forth in or imposed pursuant to this Plan so
that all Options or other Awards, from and after a date prior to the
effective date of that merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Board of Directors, shall
be exercisable in full; and (C) all outstanding Options or SARs may be
cancelled by the Board of Directors as of the effective date of any merger,
consolidation, liquidation, sale or other disposition provided that any
optionee or SAR holder shall have the right immediately prior to such event
to exercise his or her Option or SAR to the extent such optionee or holder
is otherwise able to do so in accordance with this Plan (including Section
5 hereof) or his individual Option or SAR agreement.
(h) In the event of a change in the shares of the Company as presently
constituted, which is limited to a change of all of its authorized shares
with par value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be
deemed to be the shares within the meaning of this Plan.
(i) To the extent that the foregoing adjustments relate to Stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive;
provided, that each Option which, upon grant of the Option, is specifically
designated as an ISO shall not be adjusted in a manner that causes the
Option to fail to continue to qualify as an ISO without the consent of the
Option holder.
(j) Except as hereinbefore expressly provided in this Section 4, a
Participant shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation, and no
issue by the Company of shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Stock subject to an Award, unless the Committee shall
otherwise determine.
(k) The grant of any Award pursuant to this Plan shall not affect in
any way the right or power of the Company (A) to make adjustments,
reclassifications, reorganizations or changes of its capital or business
4
structure, (B) to merge or consolidate, (C) to dissolve, liquidate or sell,
or transfer all or any part of its business or assets or (D) to issue any
bonds, debentures, preferred or other preference stock ahead of or
affecting the Stock. If any action described in the preceding sentence
results in a fractional share for any Participant under any Award
hereunder, such fraction shall be completely disregarded and the
Participant shall only be entitled to the whole number of shares resulting
from such adjustment.
4.3 General Restrictions. Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the
applicable requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance may
be effected on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
4.4 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Stock which the Participant already owns, or through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan.
4.5 Use of Shares. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.
4.6 Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with respect to Stock
subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Participant, and may be settled in cash or Stock
as determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
4.7 Payments. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or any combination thereof
as the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, 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 Stock
equivalents. Each Subsidiary shall be liable for payment of cash due under the
Plan with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Subsidiary by the Participant.
Any disputes relating to liability of a Subsidiary for cash payments shall be
resolved by the Committee.
4.8 Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
4.9 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
5
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10 Agreement With Company. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document as is
determined by the Committee. A copy of such document shall be provided to the
Participant, and the Committee may, but need not, require that the Participant
shall sign a copy of such document. Such document is referred to in the Plan as
an "Award Agreement" regardless of whether any Participant signature is
required.
4.11 Action by Company or Subsidiary. Any action required or permitted to
be taken by the Company or any Subsidiary shall be by resolution of its board of
directors, or by action of one or more members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company.
4.12 Gender and Number. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
4.13 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to any assets,
funds or property of the Company or any Subsidiary whatsoever, including,
without limitation, any specific funds, assets, or other property which the
Company or any Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have only a
contractual right to the Stock or amounts, if any, payable under the Plan,
unsecured by any assets of the Company or any Subsidiary, and nothing
contained in the Plan shall constitute a guarantee that the assets of the
Company or any Subsidiary shall be sufficient to pay any benefits to any
person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any participating employee the
right to be retained in the employ of the Company or any Subsidiary, nor
any right or claim to any benefit under the Plan, unless such right or
claim has specifically accrued under the terms of the Plan. Except as
otherwise provided in the Plan, no Award under the Plan shall confer upon
the holder thereof any rights as a shareholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such
rights.
4.14 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and shall be signed, made or presented by
the proper party or parties.
SECTION 5
CHANGE IN CONTROL
Subject to the provisions of paragraph 4.2(f) (relating to the adjustment
of shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, upon the occurrence of a Change in Control as
defined in Section 8:
(a) All outstanding Options held by executive officers and directors
of the Company (regardless of whether in tandem with SARs) shall become
fully exercisable.
(b) All outstanding SARs held by executive officers and directors of
the Company (regardless of whether in tandem with Options) shall become
fully exercisable.
(c) All Stock Units, Restricted Stock, Restricted Stock Units, and
Performance Shares held by executive officers and directors of the Company
shall become fully vested.
6
SECTION 6
COMMITTEE
6.1 Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 6. The Committee shall be selected by the Board,
and shall consist solely of two or more members of the Board who are nonemployee
directors within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and are outside directors within the meaning of Code Section
162(m). If the Committee does not exist, or for any other reason determined by
the Board, the Board may take any action under the Plan that would otherwise be
the responsibility of the Committee. Unless otherwise determined by the Board,
the Compensation Advisory Committee of the Company shall be designated as the
"Committee" hereunder.
6.2 Powers of Committee. The Committee's administration of the Plan shall
be subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Grantees those
persons who shall receive Awards, to determine the time or times of
receipt, to determine the types of Awards and the number of shares covered
by the Awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards, and (subject to the
restrictions imposed by Section 7) to cancel or suspend Awards.
(b) To the extent that the Committee determines that the restrictions
imposed by the Plan preclude the achievement of the material purposes of
the Awards in jurisdictions outside the United States, the Committee will
have the authority and discretion to modify those restrictions as the
Committee determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside of the United
States.
(c) The Committee will have the authority and discretion to interpret
the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any Award
Agreement made pursuant to the Plan, and to make all other determinations
that may be necessary or advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan is final and binding on all persons.
(e) In controlling and managing the operation and administration of
the Plan, the Committee shall take action in a manner that conforms to the
certificate of incorporation and by-laws of the Company, and applicable
state corporate law.
6.3 Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
6.4 Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an employee's or Participant's employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
7
SECTION 7
AMENDMENT AND TERMINATION
The 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 Plan (except by certain adjustments provided for under the Plan); or
(b) amending the Plan provisions regarding the limitations on the Exercise
Price. 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 Plan prior to the
date such amendment is adopted by the Board. Options may not be granted under
the Plan after the date of termination of the Plan, but Options granted prior to
that date shall continue to be exercisable according to their terms.
SECTION 8
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
(a) Award. The term "Award" shall mean any award or benefit granted
under the Plan, including, without limitation, the grant of Options, SARs,
Stock Unit Awards, Restricted Stock Awards, Restricted Stock Unit Awards
and Performance Share Awards.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Change in Control. The term "Change in Control" means a change in
the beneficial ownership of the Company's voting stock or a change in the
composition of the Board which occurs as follows:
(i) Any "person," including a "syndication" or "group" as those
terms are used in Section 13(d)(3) of the Securities Exchange Act of
1934, is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding "Voting Securities,"
which is any security which ordinarily possesses the power to vote in
the election of the Board of Directors of a corporation without the
happening of any precondition or contingency;
(ii) The Company is merged or consolidated with another
corporation and immediately after giving effect to the merger or
consolidation less than 80% of the outstanding Voting Securities of
the surviving or resulting entity are then beneficially owned in the
aggregate by (x) the shareholders of the Company immediately prior to
such merger or consolidation, or (y) if a record date has been set to
determine the shareholders of the Company entitled to vote on such
merger or consolidation, the shareholders of the Company as of such
record date;
(iii) If at any time the following do not constitute a majority
of the Board of Directors of the Company (or any successor entity
referred to in clause (ii) above): Persons who, prior to their
election as a director of the Company (or successor entity if
applicable) were nominated, recommended or endorsed by a formal
resolution of the Board of Directors of the Company; or
(iv) The Company transfers substantially all of its assets to
another corporation which is a less than 80% owned subsidiary of the
Company.
(d) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference
to any successor provision of the Code.
8
(e) Eligible Grantee. The term "Eligible Grantee" shall mean any
employee, consultant or director of the Company or a Subsidiary. An Award
may be granted to an employee, in connection with hiring, retention or
otherwise, prior to the date the employee first performs services for the
Company or the Subsidiaries, provided that such Award shall not become
vested prior to the date the employee first performs such services.
(f) Fair Market Value. For purposes of determining the "Fair Market
Value" of a share of Stock as of any date, then the "Fair Market Value" as
of that date shall be the closing price of the Stock on that date on the
New York Stock Exchange.
(g) Subsidiaries. The term "Subsidiary" means any subsidiary of the
Company, and any business venture designated by the Committee in which the
Company has a significant interest, as determined in the discretion of the
Committee.
(h) Stock. The term "Stock" shall mean shares of common stock of the
Company.
SECTION 9
GOVERNING LAW
This Plan shall be governed by, and construed in accordance with, the laws
of the State of Georgia, except to the extent that the Florida Business
Corporation Act shall be applicable.
9
EXHIBIT 99.2
DIRECTORS STOCK OPTION AGREEMENT AND GRANT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of the ___ day of
________, (the "Grant Date"), by, between and among CYROLIFE, INC., a Florida
Corporation (the "Corporation"), and _______________________________, a member
of the Board of Directors of the Corporation (a "Director") and an individual
residing in __________________________ (the "Optionee").
WITNESSETH:
WHEREAS, the Corporation wishes to grant to the Optionee an option (the
"Option") to purchase the number of shares of Common Stock set forth in this
Agreement and under the terms and conditions set forth herein including the
provision that the Option is not an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended ("Code");
NOW THEREFORE, in consideration of the foregoing, the mutual promises and
covenants contained herein and the mutual benefit to be derived therefrom and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Grant of Option: Subject to the terms and conditions set forth herein,
the Corporation hereby grants to the Optionee the option to purchase, in the
aggregate, up to ______ shares of the Common Stock (the "Shares") which shall
consist of treasury shares of Common Stock. The Option shall be deemed granted
by the Corporation to the Optionee as of the Grant Date. This Option is not
granted pursuant to the CryoLife, Inc. Amended and Restated Non-Employees
Directors Plan (the "Plan").
2. Option Price: The price of the Option shall be the last closing price of
the Corporation's Common Stock on the New York Stock Exchange on the day of the
grant of the Option. The Option exercise price is the sum of $_____ per share
(the "Option Exercise Price").
3. Option Period: This Option shall vest and become exercisable on the
Option's Grant Date. This Option may be exercised at any time after its Grant
Date. Notwithstanding the foregoing, no Option may be exercised later than five
years after the date of grant thereof.
4. Termination of Option: Except as herein otherwise stated, the Option, to
the extent not previously exercised, shall terminate sixty (60) months following
the Grant Date.
5. Cessation of Service: If a grantee leaves the Board of Directors for any
reason, including without limitation resignation or death, such grantee's
Options shall remain in effect and exercisable, and shall expire as if the
grantee had remained a Non-Employee Director of the Company. Upon the death of a
Non-Employee Director, his or her Options shall be exercisable by his/her legal
representatives or heirs, but in no event may the Options be exercised beyond
the last date which they could have been exercised had the Non-Employee Director
not died.
6. Delivery of Notice: The Optionee may exercise the Option only bye
delivering written notice to the Corporation of his intent to exercise the
Option (the "Notice'). The Notice shall be delivered to the Corporation at its
principal office at:
1655 Roberts Blvd., N.W.
Kennesaw, Georgia 30144
or to such other address as may be designated by the Corporation. The Notice
shall specify the number of Shares to be purchased in accordance with this
Agreement and shall include payment in full of the Option Price.
7. Payment: The Option Exercise Price shall be paid in cash in U.S. Dollars
at the time the Option is exercised or in shares of Common Stock of the Company
having an aggregate value equal to the Option Exercise Price. If the Option
Exercise Price is paid by transfer of shares of Common Stock of the Corporation
1
then the value of such shares will be determined by the last closing price of
the Corporation's Common Stock on the New York Stock Exchange prior to the
exercise of the options. The Option Exercise Price may be paid by a combination
of cash and Common Stock. Subject to approval by the Board, the phrase "shares
of stock of the Company," may include shares which the director is entitled to
purchase by reason of a stock option grant, sometimes called "option shares."
8. Delivery of Shares to Optionee: Upon the Optionee's proper exercise of
the Option, the Corporation shall deliver to the Optionee one or more
certificates evidencing the number of Shares purchased pursuant to the exercise
of the Option and such Shares shall be fully paid and nonassessable.
9. Transferability: Except as otherwise provided in this paragraph 9, the
Options granted under this Plan are not transferable other than as designated by
the grantee by will or by the laws of the descent and distribution, and during
the grantee's life, may be exercised only by the grantee. However, the grantee
may transfer the Option for no consideration to or for the benefit of the
grantee's Immediate Family (including, without limitation, to a trust for the
benefit of the grantee's Immediate Family or to a partnership or limited
liability company for one or more members of the grantee's Immediate Family or
to an IRA for the benefit of one or more members of his Immediate Family),
subject to such limits as the Board may establish, and the transferee shall
remain subject to all the terms and conditions applicable to such Option prior
to such transfer. The foregoing right to transfer the Option shall apply to the
right to consent to amendments to the grant agreement and shall also apply to
the right to transfer ancillary rights associated with the Option. The term
"Immediate Family" shall mean the grantee's spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers and grandchildren (and,
for this purpose, shall also include the grantee).
10. Optionee Not a Shareholder: The Optionee shall not be deemed, by reason
of this option agreement, for any purposes to be a shareholder of the
Corporation with respect to any of the shares of the capital stock of the
Corporation or with respect to any of the Shares, except to the extent that the
Option has been exercised, in whole or in part, and a stock certificate
representing Shares has been issued to the Optionee. Notwithstanding this
provision, it is understood and agreed that the Corporation and the Optionee
shall make any required disclosure of the "beneficial ownership" of Shares which
may be received upon a future exercise of the Option.
11. No Restrictions on the Corporation: The grant of the Option shall not
affect in any way the right or power of the Corporation or its shareholders to
make or authorize any or all adjustments, recapitalizations, reorganizations, or
any other changes in the Corporation's capital structure or its business, or any
merger or consolidation of the Corporation, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock, or
the rights thereof, or dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of the assets or business of the
Corporation, or any other corporate act or proceeding, whether of a similar
character or otherwise.
12. Reclassification, Consolidation or Merger: The number of Option Shares
may be adjusted by the Board of Directors if certain events such as merger,
reorganization, consolidation, recapitalization, stock dividends, stock splits,
or other changes in the Company's corporate structure affecting its Common Stock
occur. No adjustments or substitution provided for in this Subsection, however,
shall require the Corporation in any Agreement to sell a fractional share, and
the total substitution or adjustment herein is and shall be limited accordingly.
13. Optionee's Representations and Warranties: By execution of this
Agreement, Optionee represents and warrants to the Company as follows:
A. Investment Representations and Warranties: The Optionee warrants and
represents to the Corporation that he is acquiring the Option and, upon exercise
of the Option, in whole or in part, the Shares for his own account for
investment purposes and not with a view to distribution, as defined in the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
The Optionee further agrees that he will not sell, assign, transfer or pledge
the Option or any of the Shares purchased by him pursuant to the exercise of the
Option, unless and until either (i) a registration statement under the
Securities Act covering the Shares becomes effective or (ii) the Corporation has
received an opinion of counsel in form and substance satisfactory to the
Corporation and its counsel that such sale, transfer, assignment or pledge may
be accomplished without registration under the Securities Act.
2
B. Compliance with Withholding Rules: The Corporation shall have the right to
adopt and apply rules governing the exercise of the Option and the issuance of
Shares pursuant thereto which will ensure that the Corporation will be able to
comply with the applicable provisions of any federal, state or local laws
relating to the withholding of taxes.
C. No Tax Advice: The Optionee understands that neither the Corporation nor any
of its affiliates, has given any advice regarding the federal income tax
consequences of (i) the Agreement, or (ii) the grant of the Option, or (iii) the
acquisition of the Shares upon exercise of the Option. The Optionee acknowledges
that he has been encouraged to seek independent advice regarding the grant and
the exercise of the Option herein.
14. Legends: The Corporation shall have the discretion to require that the
certificates representing the Shares shall bear such legends as are necessary to
ensure the enforceability of the conditions and limitations set forth herein.
15. Binding Effect: This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors-in-interest. All
parties bound by this Agreement shall take any and all actions necessary or
appropriate to effectuate the purposes and provisions hereof.
16. Definition of "Affiliate": The term "affiliate" whenever used in this
Agreement, shall mean a person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
Corporation.
17. Amendments and Waivers: Except as otherwise provided herein, no change
or modification of this Agreement shall be valid unless the same is in writing
and signed by all the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the person against whom
it is sought to be enforced. The failure of any party at any time to insist upon
strict performance of any condition, promise, agreement or understanding set
forth herein shall not be construed as a waiver or relinquishment of the right
to insist upon strict performance of the same condition, promise, agreement or
understanding at a future time.
18. Complete Agreement: This Agreement constitutes and sets forth all of
the final and complete promises, agreements, conditions, understandings,
warranties and representations among the parties hereto with respect to the
Option and the Shares, and there are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, among them with respect to the matters set forth herein other than as
set forth herein as it may be amended from time to time.
19. Extension of Time to Perform: Whenever the time for the performance of
any action or condition contained in this Agreement falls on a Saturday, Sunday
or legal holiday, such time shall be extended to the next business date.
20. Captions and Pronouns: The captions contained in this Agreement are for
convenience of reference only and shall not in any way modify or limit the
meaning or interpretation of this Agreement. All terms and words used in this
Agreement, regardless of the number and gender in which they are used, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the context or sense of this
Agreement or any section, paragraph or clause herein may require, as if such
words had been fully and properly written in the appropriate number and gender.
21. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
22. Counterparts: Any number of counterparts of this Agreement may be
signed and delivered, and each shall be considered an original and together they
shall constitute one agreement.
23. Severability: This Agreement shall not be severable in any way, but if
any provision should be held to be invalid, the invalidity shall not effect the
validity of the remainder of this Agreement.
3
24. Restricted Securities: Optionee recognizes and understands that this
option and the Option Shares have not been and may not be in the future
registered under the Securities Act of 1933, as amended (the "Act"), the Georgia
Securities Act of 1973, as amended (the "Georgia Act"), or any other state
securities law. Any transfer of the option (if otherwise permitted hereunder,
and once exercised, the Option Shares) will not be recognized by the Corporation
unless such transfer is registered under the Act, the Georgia Act, and any other
applicable state securities laws or effected pursuant to an exemption from such
registration which may then be available. Any share certificates representing
the Option Shares may be stamped with legends restricting transfer thereof in
accordance with the Corporation's policy with respect to unregistered shares of
its Common Stock issued as a result of exercise of options. The Corporation may
make a notation in its stock transfer records of the aforementioned restrictions
on transfers and legends. Optionee recognizes and understands that the Option
Shares may be restricted securities within the meaning of Rule 144 promulgated
under the Act; that the exemption from registration under Rule 144 may not be
available under certain circumstances and that Optionee's opportunity to utilize
such Rule 144 to sell the Option Shares may be limited or denied. The
Corporation shall be under no obligation to maintain or promote a public trading
market for the class of shares for which the option is granted or to make
provision for adequate information concerning the Corporation to be available to
the public as contemplated under Rule 144. The Corporation will be under no
obligation to recognize any transfer or sale of any Option Shares unless the
terms and conditions of Rule 144 are complied with by the Optionee. By
acceptance hereof, Optionee agrees that no permitted disposition of this option
or any Option Shares shall be made unless and until (i) there is then in effect
a registration statement under the Act, the Georgia Act, and applicable state
securities laws covering such proposed disposition and such disposition is made
in accordance with such registration statement, or (ii) Optionee shall have
notified the Corporation of a proposed disposition and shall have furnished to
the Corporation a detailed statement of the circumstances surrounding such
disposition, together with an opinion of counsel acceptable in form and
substance to the Corporation that such disposition will not require registration
of the shares so disposed under the Act, the Georgia Act, and any applicable
state securities laws. The Corporation shall be under no obligation to permit
such transfer or disposition on its stock transfer books unless counsel for the
Corporation shall concur as to such matters.
25. APPLICABLE TAXES: No later than the date as of which an amount first
becomes includable in the gross income of the Optionee for Federal income tax
purposes with respect to the exercise of the Option, the Optionee shall pay to
the Corporation, or make arrangements satisfactory to the Corporation regarding
the payment of, any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such amount. The obligations of the Corporation
under this Agreement shall be conditional upon such payment or arrangements and
the Corporation shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Optionee.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
executed by its duly authorized officers and the Optionee has executed this
Agreement as of the date and year first above written.
(SEAL) THE CORPORATION:
CRYOLIFE, INC.
-----------------------------------------
Attest:
- -------------------------------------
Secretary for Corporation
OPTIONEE:
-----------------------------------------
-----------------------------------------
(Print name of Optionee)
4
EXHIBIT 99.3
CRYOLIFE, INC.
1655 ROBERTS BOULEVARD N.W.
KENNESAW, GEORGIA 30144
(770) 419-3355 - (800) 438-8285
(800) 533-6406 IN CANADA - FAX (770) 426-0031
____________________
Re: GRANT OF NON-QUALIFIED STOCK OPTION
Dear ___________________:
This letter sets forth the agreement between you and CryoLife, Inc., a
Florida corporation (the "Company"), regarding your option to acquire shares of
the Company's Common Stock.
1. Grant of Option. Subject to the terms set forth below, the Company
hereby grants to Employee the right, privilege, and option to purchase up to
__________ shares (the "Option Shares") which shall consist of treasury shares
of Common Stock at the purchase price of $29.25 per share, which price is equal
to the mean of the high and low price of the Company's Common Stock on the New
York Stock Exchange on the date of grant . The date of grant ("Grant Date") of
the option is ________________. This option is intended to be and shall be
treated as a "Non-Qualified Stock Option", as that term is defined in Section
422 of the Internal Revenue Code of 1986, as amended. This option is not granted
pursuant to the CryoLife, Inc. 1998 Long Term Incentive Plan (the "Plan").
2. Time of Exercise of Option. Prior to its termination as set forth in
Section 5 below, this option shall vest, and the Employee may exercise the
option granted herein on the following dates, or thereafter provided the option
is exercised prior to its termination:
Cumulative Percentage of
Exercise Date Option Shares Exercisable
------------- -------------------------
First Anniversary of Grant Date 20%
Second Anniversary of Grant Date 40%
Third Anniversary of Grant Date 60%
Fourth Anniversary of Grant Date 80%
Fifth Anniversary of Grant Date 100%
1
Grant of Non-Qualified Stock Option
"Grant Date" - ___________________
Page Two
3. Method of Exercise. The option shall be exercised by written notice
directed to the Compensation Advisory Committee (the "Committee"), at the
Company's principal executive office, accompanied by payment of the option price
for the number of Option Shares purchased in accordance with the Plan's
requirements. The Company shall make delivery of such shares in accordance with
the Plan provided that if any law or regulation requires the Company to take any
action with respect to the shares specified in such notice before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to take such action.
4. The Plan. The Company's 1998 Long Term Incentive Plan, as amended from
time to time by the Board of Directors of the Company, is hereby incorporated in
this letter and to the extent that anything in this letter is inconsistent with
the Plan, the terms of the Plan shall control. Employee acknowledges that the
Company has provided a copy of the Plan to Employee. The Optionee has received a
Prospectus covering the Shares subject to this Option.
5. Termination of Option. Except as herein otherwise stated, the option, to
the extent not previously exercised, shall terminate in accordance with the Plan
and upon the first to occur of the following events:
(a) Disability. The expiration of 36 months after the date on which
Employee's employment by the Company is terminated, if such termination be by
reason of Employee's permanent and total Disability (as defined in the Plan),
provided, however, that (i) the option shall be exercisable only to the extent
that Employee had the right to exercise the option at the time of termination
and (ii) if the Employee dies within such 36 months period, any unexercised
option held by such Employee shall thereafter be exercisable in accordance with
the provisions of and shall terminate upon the first to occur of the events
described in Sections 5(b) and (d);
(b) Death. In the event of Employee's death while in the employ of the
Company, the expiration of 12 months following the date of his or her death,
provided that the option shall be exercisable following the Employee's death
only to the extent that Employee had the right to exercise the option at the
time of his or her death.
(c) Retirement. In the event Employee's employment with the Company
terminates by reason of Normal or Early Retirement (as defined in the Plan), any
option held by such Employee may be exercised by the Employee for a period of 36
months from the date of such termination; provided, however, that if the
Employee dies within such 36 months period any unexercised option held by
Employee shall thereafter be exercisable in accordance with the provisions of
and shall terminate upon the first to occur of the events described in Section
5(b) and (d); or
2
Grant of Non-Qualified Stock Option
"Grant Date" - ___________________
Page Three
(d) Other. Upon the earlier to occur of (i) 66 months following the Grant
Date, or (ii) upon termination of Employee's employment by the Company (except
if such termination be by reason of death, Disability, or Normal or Early
retirement).
Except as set forth above, the option may not be exercised unless Employee,
at the time he or she exercises the option, is, and has been at all times since
the date of grant of the option, an employee of the Company. Employee shall be
deemed to be employed by the Company if he or she is employed by the Company or
any of its subsidiaries. Notwithstanding the above, in no event may the option
be exercised after 66 months following the Grant Date.
6. Reclassification, Consolidation, or Merger. The number of Option Shares
may be adjusted in accordance with the Plan if certain events such as merger,
reorganization, consolidation, recapitalization, stock dividends, stock splits,
or other changes in the Company's corporate structure affecting its Common Stock
occur.
7. Rights Prior to exercise of Option. This Option is not transferrable by
Employee, except by will or by the laws of descent and distribution or as
otherwise set forth in the Plan, and during Employee's lifetime shall be
exercisable only by Employee. This option shall confer no rights to the holder
hereof to act as stockholder with respect to any of the Option Shares until
payment of the option price and delivery of a share certificate has been made.
8. Employee's Representations and Warranties. By execution of this
agreement, Employee represents and warrants to the Company as follows:
(a) The entire legal and beneficial interest of the option and the Option
Shares are for and will be held for the account of the Employee only and neither
in whole nor in part for any other person.
3
Grant of Non-Qualified Stock Option
"Grant Date" - ___________________
Page Four
(b) Employee resides at the following address:
(c) Employee is familiar with the Company and its plans, operations, and
financial condition. Prior to the acceptance of this option, Employee has
received all information as he or she deems necessary and appropriate to enable
an evaluation of the financial risk inherent in accepting the option and has
received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof.
9. Restricted Securities. Employee recognizes and understands that this
option and the Option Shares are not currently registered under the Securities
Act of 1933, as amended (the "Act"), and if registered in the future may not
remain so registered and are not registered under any state securities law. Any
transfer of the option (if otherwise permitted hereunder, and once exercised,
the Option Shares) will not be recognized by the Company unless such transfer is
registered under the Act, the Georgia Securities Act of 1973, as amended, (the
"Georgia Act") and any other applicable state securities laws or effected
pursuant to an exemption from such registration which may then be available. If
the Option Shares are not registered, any share certificates representing the
Option Shares may be stamped with legends restricting transfer thereof in
accordance with the Company's policy with respect to unregistered shares of its
Common Stock issued to employees as a result of exercise of options granted
under the Plan. The Company may make a notation in its stock transfer records of
the aforementioned restrictions on transfers and legends. Employee recognizes
and understands that the Option Shares may be restricted securities within the
meaning of Rule 144 promulgated under the Act; that the exemption from
registration under Rule 144 may not be available under certain circumstances and
that Employee's opportunity to utilize such Rule 144 to sell the Option Shares
may be limited or denied. The Company shall be under no obligation to maintain
or promote a public trading market for the class of shares for which the option
is granted or to make provision for adequate information concerning the Company
to be available to the public as contemplated under Rule 144. The Company will
be under no obligation to recognize any transfer or sale of any Option Shares
pursuant to Rule 144 unless the terms and conditions of Rule 144 are complied
with by the Employee. By acceptance hereof, Employee agrees that no permitted
disposition of any Option Shares shall be made unless and until (i) there is at
the time of exercise of the option in effect a registration statement under the
Act, or (ii) Employee shall have notified the Company of a proposed Option
disposition and shall have furnished to the Company a detailed statement of the
circumstances surrounding such disposition, together with an opinion of counsel
acceptable in form and substance to the Company that such disposition will not
require registration of the shares so disposed under the Act, the Georgia Act,
and any applicable state securities laws. The Company shall be under no
4
Grant of Non-Qualified Stock Option
"Grant Date" - ___________________
Page Five
obligation to permit such transfer or disposition on its stock transfer books
unless counsel for the Company shall concur as to such matters. Employee
recognizes and understands that as long as Employee remains a designated Section
16 officer of the Company, and for up to six months thereafter, any sales of
Option Shares will be subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the regulations promulgated
thereunder. Employee also recognizes and understands that any sale of the Option
Shares will also be subject to Rule 10b-5 promulgated under the Exchange Act.
Employee agrees that any disposition of the Option Shares shall be made only in
compliance with the Act, the Exchange Act, and the rules and regulations
promulgated thereunder.
10. Tax Matters. The Employee hereby agrees to comply with any applicable
federal, state, and local income and employment tax requirements which might
arise with regard to a disposition of any Option Shares and to inform the
Company of any such disposition which occurs prior to the expiration of (i) two
years from the date of grant of the option, and (ii) one year from the date of
transfer to him of Option Shares. No later than the date as of which an amount
first becomes includable in the gross income of the Employee for federal income
tax purposes with respect to the exercise of any option under the Plan, Employee
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any federal, state, or local taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
the Company under the Plan are conditional on such payment or arrangements and
the Company shall have the right to deduct any such taxes from any payment of
any kind otherwise due to Employee.
11. Payment: The Option Exercise Price shall be paid in cash in U.S.
Dollars at the time the Option is exercised or in shares of Common Stock of the
Company held by the employee for at least six months and having an aggregate
value equal to the Option Exercise Price. If the Option Exercise Price is paid
by transfer of shares of Common Stock of the Corporation then the value of such
shares will be determined by the mean of the high and low prices of the
Corporations's Common Stock on the New York Stock Exchange on the date of the
exercise of the option. The Option Exercise Price may be paid by a combination
of cash and Common Stock. Notwithstanding the foregoing, Employee may elect to
pay the Option Exercise Price by authorizing a third party to sell shares of
stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Option Exercise Price and any tax withholding resulting from such
exercise.
5
Grant of Non-Qualified Stock Option
"Grant Date" - ___________________
Page Six
12. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors, and permissible assigns.
13. Miscellaneous. This Agreement shall be governed by and construed under
the laws of the State of Georgia. If any term or provision hereof shall be held
invalid or unenforceable, the remaining terms and provisions hereof shall
continue in full force and effect. Any modification to this Agreement shall not
be effective unless the same shall be in writing and such writing shall be
signed by authorized representatives of both of the parties hereto. The terms of
paragraphs 8 and 9 hereof shall survive exercise of the option by Employee and
shall attach to the Option Shares. The option contained in this letter shall not
confer upon Employee any right to continued employment with the Company, nor
shall it interfere in any way with the right of the Company to terminate the
employment of Employee at any time. This letter can be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
Please signify your acceptance of the option and your agreement to be bound
by the terms hereof by promptly signing one of the two original letters provided
to you and returning the same to the President of the Company.
Thank you for your good work and service. The Company looks forward to a
long and mutually beneficial relationship.
Very truly yours,
CRYOLIFE, INC.
(SEAL)
BY:
----------------------------------------
Title: President & CEO
----------------------------------------
ATTEST:
RONALD D. McCALL
ACCEPTED AND AGREED on this ______ day of _______________________.
EMPLOYEE:
-------------------------------------------
Print Name:
-------------------------------------------
6