UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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FORM
8-K
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CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): August 1, 2006
_______________________
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
_________________________
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Florida
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1-13165
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59-2417093
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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1655
Roberts Boulevard, N.W., Kennesaw, Georgia 30144
(Address
of principal executive office) (zip code)
Registrant's
telephone number, including area code: (770) 419-3355
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
1 Registrant’s
Business and Operations
Item
1.01 Entry
into a Material Definitive Agreement.
Restricted
Stock Grants to Non-Employee Directors
On
August
1, 2006,
the
Compensation Committee of the CryoLife, Inc. (“CryoLife” or the “Company”) Board
of Directors granted the right to receive 2,500 shares of restricted stock,
to
be issued effective August 7, 2006 (the “Effective Date”), to each non-employee
director: Thomas F. Ackerman,
James S. Benson, Daniel J. Bevevino, John M. Cook,
Ronald C. Elkins M.D., Virginia C. Lacy, Ronald D. McCall Esq.
and Bruce J. Van Dyne M.D.
Each
grant vests ratably over twelve months. Any unvested portion of the grant will
be forfeited upon the grantee’s ceasing to serve as a director of the Company
for any reason. All such grants were made under the 2002 Stock Incentive Plan.
Each non-employee director will also receive, to be paid in 2006, a cash payment
equal to 35% of the fair value of the grant, in order to help offset the income
tax expense that may result from the grant.
As
a
result of its annual review, the Board has determined that none of the
non-employees directors has a material relationship with the Company, other
than
his or her position as a director; however, in 2003, Mr. Benson was engaged
by the law firm representing a Special Litigation Committee of the Board of
Directors of the Company to serve as an expert witness to the Special Litigation
Committee's independent investigation into allegations made by the Plaintiffs
in
the shareholder derivative lawsuit filed against the Company's directors, which
was settled in 2005. Mr. Benson billed that law firm a total of
approximately $52,500 for services provided in 2003. Mr. Benson was engaged
to serve as an expert witness by a different law firm representing the Company
in the securities class action shareholder lawsuit filed against the Company,
which was also settled in 2005. Mr. Benson billed a total of approximately
$38,000 in expert witness fees for services provided in 2004 (approximately
$28,500) and 2005 (approximately $9,500).
A
copy of
the form of restricted stock award agreement is filed as Exhibit 10.1 hereto,
and incorporated herein by reference.
Option
Grants to Certain Executive Officers
On
August
1, 2006, the Company’s Compensation Committee granted stock options to Gerald B.
Seery, Senior Vice President, Sales and Marketing, David M. Fronk, Vice
President, Regulatory Affairs and Quality Assurance, and Albert E. Heacox,
Senior Vice President, Research and Development, under the Company’s 1998
Long-Term Incentive Plan to purchase 100,000, 50,000 and 50,000 shares,
respectively, of CryoLife’s common stock, to be issued effective August 7, 2006.
The options are governed by the 1998 Long-Term Incentive Plan and a
separate option agreement.
The
option agreement provides in part that the options will have an exercise price
equal to the mean of the high and low reported sale prices for the Company’s
common stock on the New York Stock Exchange on August 7, 2006 and will become
exercisable, subject to the employee remaining continuously employed by
CryoLife, as follows: 20% of the shares will become exercisable on the first
anniversary of August 7, 2006, and 20% more shares will become exercisable
on
each subsequent anniversary thereof until all shares (100%) of the option are
exercisable (on the fifth anniversary, assuming continuous employment). The
option has a term of 66 months but the option may terminate earlier as stated
in
the option agreement.
2
Messrs.
Seery, Fronk and Heacox have no material relationships with the Company and
its
affiliates other than their positions as officers.
Section
5 Corporate
Governance and Management
Item
5.02 Departure
of Directors or Principal Officers; Election of Directors;
Appointment
of Principal Officers.
On
August
1, 2006, the CryoLife Board of Directors appointed Amy D. Horton, CPA, age
36,
to be the Company’s Chief Accounting Officer, effective August 7, 2006. Ms.
Horton received her Masters in Accounting from Brigham Young University in
1992.
She has been employed by the Company since January 1998, serving first as a
Senior Financial Analyst, then as Assistant Controller and from April 2000 to
August 7, 2006 as the Controller. She will receive an annual salary of $200,000,
is eligible to receive option and other equity grants under the Company’s stock
incentive plans, and may receive a 2006 bonus of up to 31% of her base salary
under the Company’s performance-based bonus plan if certain performance targets
are achieved, as well as an additional bonus of up to 15% of her base salary
if
certain additional, higher performance targets are achieved. Ms. Horton will
be
entitled to participate in all compensation and bonus plans made available
to
CryoLife’s executive employees. If
CryoLife terminates Ms. Horton’s employment other than for cause, death or
disability or Ms. Horton terminates employment for good reason, then
Ms.
Horton’s employment agreement provides for a severance payment in
an
amount equal to one times the aggregate of Ms. Horton’s annual salary and bonus
compensation for the year in which the termination of employment
occurs. The Company will increase the severance payments otherwise due by one
times the aggregate of Ms. Horton’s annual salary and bonus compensation upon
termination of employment by the Company without cause following change of
control, or if her employment was terminated without cause within six months
prior to the change of control. Ms. Horton’s employment agreement also subjects
Ms. Horton to standard non-compete provisions.
Section
9 Financial
Statements and Exhibits.
Item
9.01(c) Exhibits.
(a)
Financial Statements.
Not
applicable.
(b)
Pro
Forma Financial Information.
Not
applicable.
(c)
Shell
Company Transactions.
Not
applicable.
(d)
Exhibits.
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10.1
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Form
of Restricted Stock Award
Agreement.
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3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, CryoLife, Inc.
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CRYOLIFE,
INC.
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Date:
August 7, 2006
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By:
/s/
D. A. Lee
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Name:
D. Ashley Lee
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Title:
Executive
Vice President, Chief
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Operating
Officer and Chief
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Financial
Officer
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4
EXHIBIT
10.1
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Your
Name:
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Total
No. of Shares:
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2,500
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CRYOLIFE
RESTRICTED STOCK AWARD AGREEMENT
CRYOLIFE,
INC.
(“CryoLife”) is pleased to grant you the restricted stock award described below
(“Stock Award”). This grant is made subject to the further terms and conditions
set forth in this Agreement and the terms of the CryoLife, Inc. 2002 Stock
Incentive Plan (the “Plan”).
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Effective
Date:
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August
7, 2006
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Total
Number of Shares of Stock Award:
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2,500
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Vesting:
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Vesting
occurs at the rate of 1/12 of the Stock
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Award
on the seventh of each month for a period
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of
twelve months from the Effective Date, with the
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first
vesting date occurring on September 7, 2006 and
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the
final vesting date occurring on August 7,
2007.
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The
following documents accompany this Award Agreement:
Additional
Terms and Conditions of Your Restricted Stock Award
describes transferability of your award, what happens if you cease to be a
member of the CryoLife Board of Directors (the “Board of Directors” or “Board”)
before all or a portion of your Stock Award vests, where to send notices and
other matters.
The
Plan
contains
the detailed terms that govern your Stock Award. If
anything in this Agreement or the other attachments is inconsistent with the
Plan, the terms of the Plan, as amended from time to time, will control.
The
Plan Prospectus Document
covering
the Stock Award contains important information, including federal income tax
consequences.
2005
Annual Report of CryoLife (not
attached if you previously received the 2005 Annual Report).
Please
sign below to show that you accept this Stock Award after review of the above
documents. Keep a copy and return both originals to Suzanne K. Gabbert,
CryoLife, Inc., 1655 Roberts Blvd., NW, Kennesaw, GA
30144.
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CRYOLIFE,
INC.
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GRANTEE:
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By:
_______________________________________________
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|||
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Name:
_____________________________________________
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Print
Your Name:
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__________________________________ | |
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Its:
_______________________________________________
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Date:
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__________________________________ | |
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Date:
_____________________________________________
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ADDITIONAL
TERMS AND CONDITIONS OF YOUR RESTRICTED STOCK AWARD
EFFECT
OF TERMINATION OF SERVICE.
You
must
be a member of the CryoLife Board of Directors on the applicable vesting date
to
be entitled to the vesting of your Stock Award on such date. If you cease to
be
a member of the CryoLife Board of Directors (including, without limitation,
by
reason of death, disability or retirement from the Board), then the portion
of
your Stock Award which has not vested as of the date of termination of Board
service shall automatically be forfeited and cancelled as of the date of such
termination of Board service.
STOCK
AWARD SHARE CERTIFICATES.
Certificates representing the shares of Common Stock to be issued pursuant
to
the Stock Award shall be issued in your name and shall be held in by CryoLife
until the Stock Award is vested or forfeited as provided herein. Following
vesting of your Stock Award, upon your written request, CryoLife shall promptly
deliver to you a certificate or certificates representing the shares as to
which
the Stock Award has vested, free of the restrictions described in the following
section. Your rights in your Stock Award are contingent upon your executing
and
returning to the Company a form of stock power with respect to the shares
subject to your Stock Award.
RIGHTS
WITH RESPECT TO STOCK AWARD PRIOR TO VESTING.
You may
not transfer your Stock Award or the shares to be issued hereunder prior to
vesting. Once this Stock Award vests, you may receive transferable certificates
representing the vested portion. Prior to vesting, you are entitled to all
other
rights as a shareholder with respect to the shares underlying the Stock Award,
including the right to vote such shares and to receive dividends and other
distributions, if any, payable with respect to such shares after the date of
grant.
NOTICES.
All
notices delivered pursuant to this Agreement shall be in writing and shall
be
(i) delivered by hand, (ii) mailed by United States certified mail, return
receipt requested, postage prepaid, (iii) sent by an internationally recognized
courier which maintains evidence of delivery and receipt, (iv) sent by fax
to
(770) 590-3754 , or (v) sent by email to gabbert.suzanne@cryolife.com. All
notices or other communications shall be directed to the following addresses
(or
to such other addresses as such parties may designate by notice to the other
parties):
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To
CryoLife:
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CryoLife,
Inc.
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1655
Roberts Blvd., NW
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Kennesaw,
GA 30144
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Attention:
Secretary
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To
you:
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The
address set forth in the Agreement
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MISCELLANEOUS.
Failure
by you or CryoLife at any time or times to require performance by the other
of
any provisions in your Restricted Stock Award Agreement (“Agreement”) will not
affect the right to enforce those provisions. Any waiver by you or CryoLife
of
any condition or of any breach of any term or provision in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall apply
only
to that instance and will not be deemed to waive conditions or breaches in
the
future. If any court of competent jurisdiction holds that any term or provision
of this Agreement is invalid or unenforceable, the remaining terms and
provisions will continue in full force and effect, and this Agreement shall
be
deemed to be amended automatically to exclude the offending provision. This
Agreement may be executed in multiple copies and each executed copy shall be
an
original of this Agreement. This
Agreement shall be subject to and governed by the laws of the State of
Georgia. No
change
or modification of this Agreement shall be valid unless it is in writing and
signed by the party against which enforcement is sought, except where
specifically provided to the contrary herein. This
Agreement shall be binding upon, and inure to the benefit of, the permitted
successors, assigns, heirs, executors and legal representatives of the parties
hereto. The
headings of each section of this Agreement are for convenience only. This
Agreement, together with the Plan, contains the entire Agreement of the parties
hereto, and no representation, inducement, promise, or agreement or other
similar understanding between the parties not embodied herein shall be of any
force or effect, and no party will be liable or bound in any manner for any
warranty, representation, or covenant except as specifically set forth herein
or
in the Plan.
2