EXHIBIT 10.3
CRYOLIFE, INC.
1655 ROBERTS BOULEVARD N.W.
KENNESAW, GEORGIA 30144
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(Date)
Re: GRANT OF INCENTIVE STOCK OPTION
Dear ____________________________:
This letter sets forth the agreement (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 (of Common Stock the "Option Shares") at the purchase price of $_______
per share. The date of grant ("Grant Date") of the option is ___________. This
option is intended to be and shall be treated as an "Incentive Stock Option", as
that term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended ("Section 422"). Provided, however, that to the extent that the option
fails for any reason to comply with the provisions of Section 422, it shall be
treated as a "Non-Qualified Stock Option" (as defined in the Plan). The Company
shall have no liability whatsoever to Employee in the event the option fails for
any reason to satisfy the requirements for Incentive Stock Options set forth in
Section 422. This option is granted pursuant to the CryoLife, Inc. 2004 Employee
Stock 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
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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%
3. Method of Exercise. The option shall be exercised by written notice
directed to the Compensation Committee (the "Committee"), at the Company's
principal executive office, and except as set forth below, must be accompanied
by payment of the option price for the number of Option Shares purchased in
accordance with the Plan's requirements. The payment for the number of Option
Shares purchased may be payable in cash or by tendering (by actual delivery of
shares) shares of the Company's common stock in accordance with the Plan. To the
extent permitted by applicable law, you may elect to pay for the number of
Option Shares purchased by irrevocably authorizing a third party to sell shares
of the Company's common stock acquired upon exercise of the Option Shares and
remitting to the Company a sufficient portion of the sale proceeds as payment of
the entire option price for the number of Option Shares purchased, including any
tax withholding resulting from such exercise. 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 2004 Employee Stock Incentive Plan, as amended
from time to time by the Board of Directors of the Company, is hereby
incorporated in this Agreement and to the extent that anything in this Agreement
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.
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, 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 month 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, 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 month 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
(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). It is in Compensation Committee's sole discretion to
determine whether the Employee's employment with the Company terminates by
reason of disability, 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.
(b) Employee resides at the following address:
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(c) Employee is familiar with the Company and its plans, operations,
and financial condition. Prior to the acceptance of this option, Employee has
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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
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: Except as set forth below, 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 Company then
the value of such shares will be the fair market value as of the day the shares
are tendered, which is the closing sale price of the Stock on that day on the
New York Stock Exchange. The Option Exercise Price may be paid by a combination
of cash and Common Stock. Notwithstanding the foregoing, to the extent permitted
by applicable law, 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.
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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.
Sincerely,
(SEAL) THE COMPANY:
CRYOLIFE, INC.
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Attest:
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Secretary for the Company
EMPLOYEE:
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(Print name of Employee)
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