| Section 1 | Registrant’s Business and Operations |
| Item 1.01 | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On September 2, 2020, CryoLife, Inc. (the “Company”) entered into an agreement to acquire all of the equity interests of Ascyrus Medical LLC, a Florida limited liability company (“Ascyrus”), pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), by and among the Company, Ascyrus, the securityholders of Ascyrus (the “Securityholders”), and the Securityholder Representative (as defined in the Purchase Agreement). Ascyrus has developed the Ascyrus Medical Dissection Stent, an aortic arch remodeling device used for the treatment of acute Type A aortic dissections (“AMDS”). Pursuant to the Purchase Agreement, the Company will acquire 100% of the outstanding equity interests of Ascyrus. The Company’s board of directors and Ascyrus’s members and sole manager each have approved the Purchase Agreement.
Under the terms of the Purchase Agreement, the Company will pay an aggregate of up to $200.0 million in consideration, consisting of (i) a cash payment of approximately $60.0 million at the closing of the acquisition (subject to customary purchase price adjustments) and the issuance of $20.0 million in shares of the Company’s common stock (based on the 10-day volume weighted average closing price of a share of the Company’s common stock as of the date immediately prior to the closing), (ii) if the U.S. Food and Drug Administration (the “FDA”) approves an Investigational Device Exemption application for the AMDS, a cash payment of $10.0 million and the issuance of $10.0 million in shares of the Company’s common stock (based on the 10-day volume weighted average closing price of a share of the Company’s common stock as of the date immediately prior to such approval), (iii) if the FDA approves a Premarket Approval application submitted for the AMDS, a cash payment of $25.0 million, (iv) if regulatory approval of the AMDS is obtained in Japan on or before June 30, 2027, a cash payment of $10.0 million, (v) if regulatory approval of the AMDS is obtained in China on or before June 30, 2027, a cash payment of $10.0 million and (vi) a potential cash payment of up to $55.0 million (or (x) up to $65.0 million if regulatory approval in Japan or regulatory approval in China has not been obtained on or before June 30, 2027 or (z) up to $75.0 million if neither regulatory approval in Japan nor regulatory approval in China have been obtained on or before June 30, 2027) calculated as two times the incremental worldwide sales of the AMDS (or any other acquired technology or derivatives of such acquired technology) outside of the European Union during the three-year period following the date the FDA approves a Premarket Approval application submitted for the AMDS. The stock portion of the consideration payable at the closing consists of an aggregate of 991,800 shares of the Company’s common stock. A portion of the cash consideration may also be used to pay off Ascyrus’s outstanding indebtedness and certain transaction costs of Ascyrus and the Securityholders in connection with the acquisition.
The equity portion of the acquisition consideration shall be issued pursuant to a private placement under Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). In addition, the Securityholders have agreed not to sell or otherwise transfer any shares issued pursuant to the Purchase Agreement during the six-month period following the date of the Purchase Agreement or, in the case of Ascyrus’s founder and his family members and affiliates, the 12-month period following the date of the Purchase Agreement.
Pursuant to the Purchase Agreement, $8.25 million in cash will be held in escrow as partial security for the indemnification obligations of the Securityholders under the Purchase Agreement and to satisfy any post-closing purchase price adjustments. The funds remaining in the indemnification escrow account will be released approximately 16 months from the date of closing of the acquisition, less the aggregate amount of any pending and unresolved claims as of such date.
