cryolifes31108.htm
As filed
with the Securities and Exchange Commission on November 21, 2008
Registration
No. 333-_______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
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Florida
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59-2417093
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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1655
Roberts Boulevard, NW, Kennesaw, Georgia 30144
(Address,
including zip code, of registrant's principal executive offices)
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:
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Jeffrey
W. Burris, Esq., General Counsel
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B.
Joseph Alley, Jr., Esq.
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CryoLife,
Inc.
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Arnall
Golden Gregory LLP
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1655
Roberts Boulevard, NW
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Suite
2100
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Kennesaw,
Georgia 30144
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171
17th
Street, NW
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(770)
419-3355
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Atlanta,
Georgia 30363-1031
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(404)
873-8500
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Approximate Date of Commencement of
Proposed Sale to the Public: From time to time after the effective
date of this Registration Statement.
If the only securities being
represented on this Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following
box: [ ]
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box: [ X ]
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering: [ ]
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same
offering: [ ]
If this Form is a registration
statement pursuant to General Instruction I.D. or a post-effective amendment
thereto that shall become effective upon filing with the Commission pursuant to
Rule 462(e) under the Securities Act, check the following
box: [ ]
If this Form is a post-effective
amendment to a registration statement filed pursuant to General Instruction I.D.
filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following
box: [ ]
Indicate by a check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
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Large
accelerated filer ¨
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Accelerated
filer ý
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Non-accelerated
filer ¨ (Do
not check if a smaller reporting company)
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Smaller
reporting company ¨
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The
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until this Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
CALCULATION
OF REGISTRATION FEE
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Proposed
Maximum
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Aggregate
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Amount
of
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Offering
Price
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Registration
Fee
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Title
of Each Class of Securities to be Registered (1)
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(2)
(3)
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(2)
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Preferred
Stock
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Depositary
Shares (4)
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Common
Stock (including attached preferred share purchase rights)
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Total
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$ 50,000,000
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$ 1,965
(5)
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Pursuant
to Rule 416 under the Securities Act of 1933, as amended, the shares being
registered hereunder include
such indeterminate number of shares of common
stock, preferred stock and depositary shares as may be issuable with
respect to the shares being registered hereunder as a result of stock
splits, stock dividends or similar transactions. |
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(2)
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Rule
457(o) under the Securities Act of 1933, as amended, permits the
registration fee to be calculated on the basis of the maximum offering
price of all of the securities listed and, therefore, the table does not
specify by each class information as to the amount to be registered, the
proposed maximum offering price per security or the amount of the
registration fee. An indeterminate amount of preferred stock,
depositary shares and common stock may be issued from time to time at
indeterminate prices, with an aggregate offering price not to exceed
$50,000,000.
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(3)
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This
registration statement also covers an indeterminate amount of securities
that may be issued in exchange for, or upon conversion or exercise of, as
the case may be, any securities registered hereunder that provide for
conversion, exercise or exchange. Any securities registered
hereunder may be sold separately or as units with other securities
registered hereunder.
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(4)
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The
depositary shares registered hereunder will be evidenced by depositary
receipts issued pursuant to a depositary agreement. If
the Registrant elects to offer to the public fractional interests in
shares of preferred stock, then depositary receipts will be distributed to
those persons purchasing the fractional interests and the shares will be
issued to the depositary under the depositary
agreement.
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(5)
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Calculated
pursuant to Rule 457(o) at the statutory rate of $39.30 per $1,000,000
of securities registered.
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The
information in this prospectus is incomplete and may be changed. The
registrant may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
PROSPECTUS
$50,000,000
CRYOLIFE,
INC.
Common
Stock
Preferred
Stock
Depositary
Shares
We may
from time to time offer and sell common stock, preferred stock and depositary
shares.
This
prospectus provides you with a general description of the securities that may be
offered. Each time securities are sold, we will provide one or more
supplements to this prospectus that will contain additional information about
the specific offering and the terms of the securities being
offered. The supplements may also add, update or change information
contained in this prospectus. You should carefully read this
prospectus and any accompanying prospectus supplement before you invest in any
of our securities.
Our
common stock is listed for trading on the New York Stock Exchange under the
symbol “CRY.” Our executive offices are located at 1655 Roberts
Boulevard, NW, Kennesaw, Georgia 30144. Our telephone number is (770)
419-3355. The last reported sale price of the common stock on
November 18, 2008 was $9.68 per share.
This
investment involves risks. See “RISK FACTORS” beginning on page
4.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date
of this prospectus is ______________, 2008.
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You
should rely only on the information included or incorporated by reference in
this prospectus and any accompanying prospectus supplement. We have
not authorized any dealer, salesman or other person to provide you with
additional or different information. This prospectus and any
accompanying prospectus supplement are not an offer to sell or the solicitation
of an offer to buy any securities other than the securities to which they relate
and are not an offer to sell or the solicitation of an offer to buy securities
in any jurisdiction to any person to whom it is unlawful to make an offer or
solicitation in that jurisdiction. You should not assume that the
information in this prospectus or any accompanying prospectus supplement or in
any document incorporated by reference in this prospectus or any accompanying
prospectus supplement is accurate as of any date other than the date of the
document containing the information.
This summary highlights information
that we believe is especially important concerning our business and this
offering. It does not contain all of the information that may be
important to your investment decision. You should read the entire
prospectus, including the documents incorporated herein by reference, “Risk
Factors” and our financial statements and related notes, before deciding to
purchase our securities.
This
prospectus is part of a registration statement on Form S-3 that we filed with
the Securities and Exchange Commission, which we refer to as the “SEC,” using a
“shelf” registration process. Under this shelf process, we may, over
time, sell any combination of the securities described in this prospectus in one
or more offerings up to a total dollar amount of $50,000,000. This
prospectus provides you with a general description of the securities we may
offer pursuant to this prospectus. Each time we sell securities, we
will provide one or more prospectus supplements that will contain specific
information about the terms of that offering. This prospectus does
not contain all of the information included in the registration
statement. For a complete understanding of the offering of
securities, you should refer to the registration statement relating to this
prospectus, including its exhibits. A prospectus supplement may also
add, update or change information contained in this prospectus. You
should read both this prospectus and any accompanying prospectus supplement
together with the additional information described under the heading “Where You
Can Find More Information.”
CryoLife
develops and commercializes biomaterials and medical devices and preserves and
distributes human tissues for cardiac and vascular transplant
applications. Our products are often sold in international markets
several years before they can be marketed in the U.S Our biomaterials
and medical devices include:
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BioGlue®
Surgical Adhesive, or BioGlue,
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CryoLife-O’Brien®
Stentless Porcine Aortic Bioprosthesis,
and
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ProPatch™
Soft Tissue Repair Matrix.
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Additionally,
we distribute:
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Hemostase
MPH®,
an absorbable powder used to stop hemorrhaging,
and
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CardioWrap®, a
replacement for the pericardium used in cardiac
surgery.
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Products
and Preservation Services
Tissue Preservation
Services. We distribute preserved human cardiac and vascular
tissue to implanting institutions throughout the U.S., Canada, and
Europe. We preserve cardiac and vascular human tissue using special
freezing techniques, or cryopreservation. Management believes the human tissues
it distributes offer specific advantages over mechanical, synthetic, and
animal-derived alternatives. Depending on the alternative, these
advantages include more natural blood flow properties for its preserved human
heart valves, the elimination of a long-term need for drug therapy to prevent
excessive blood clotting, and a reduced risk of catastrophic failure,
thromboembolism (stroke), or calcification. On February 7, 2008
we received a Section 510(k) clearance from the U.S. Food and Drug
Administration, or FDA, for our CryoValve® SG
pulmonary human heart valve processed with our proprietary SynerGraft
technology, which we began shipping late in the first quarter of
2008.
BioGlue. Our
proprietary product BioGlue, designed for cardiac, vascular, pulmonary, and
general surgical applications, is a polymer based on bovine blood protein and an
agent for cross-linking proteins. We are authorized to distribute
BioGlue throughout the U.S. and in more than 70 other countries for designated
applications. In the U.S, BioGlue is FDA approved as an adjunct to sutures and
staples for use in adult patients in open surgical repair of large
vessels. We distribute BioGlue under Conformité Européene Mark,
commonly referred to as CE Mark, product certification in the European Economic
Area for soft tissue repair procedures, which include cardiac, vascular,
pulmonary, and general surgery soft tissue repair procedures. We have
also received approval and distribute BioGlue for soft tissue repair in Canada
and Australia. Additional marketing approvals have been granted for
specified applications in several other countries in Central and South America,
and Asia.
Hemostase MPH. On
April 17, 2008 we signed an exclusive three-year agreement with
Minneapolis-based Medafor, Inc. to distribute Hemostase MPH for cardiac and
vascular surgery in the U.S. and for cardiac, vascular and general surgery,
other than orthopaedic and ear, nose and throat surgery, internationally, with
the exception of China and Japan. Hemostase MPH is a unique,
absorbable powder that is able to stop bleeding or hemorrhaging, which received
CE Mark approval in 2003 and FDA pre-market approval in September
2006.
CardioWrap. In
2007 we began exclusive distribution of CardioWrap, a product of MAST
BioSurgery, Inc., in the U.S. and the United Kingdom. CardioWrap is a
bioresorbable sheet used to replace the pericardium in cardiac reconstruction
and other cardiac surgeries where the patient may face re-operation within six
months.
CryoLife-O’Brien Stentless Porcine
Aortic Bioprosthesis. We distribute a porcine heart valve, the
CryoLife-O’Brien Stentless Porcine Aortic Bioprosthesis, in Europe. This valve
contains minimal amounts of synthetic material compared to other
glutaraldehyde-fixed porcine valves, which management believes decreases the
risk of endocarditis, a debilitating and potentially fatal
infection.
ProPatch. In
December 2006 we received 510(k) clearance from the FDA for
ProPatch. ProPatch, developed from bovine pericardial tissue, is used
to reinforce weakened soft tissues and provides a resorbable scaffold that is
replaced by the patient’s own soft tissue. We are seeking
commercialization for ProPatch, which may include partnering with third parties
as well as obtaining clinical data to support applications that we would market
directly.
Research
and Development
Through
continuing research and development activities, we endeavor to use our expertise
in protein chemistry, biochemistry, and cell biology, and our understanding of
the cardiac and vascular surgery medical specialties, to acquire and develop
useful products and technologies. We seek to identify market areas
that can benefit from preserved living tissues, medical devices, and other
related technologies, to develop innovative techniques and products within these
areas, to secure their commercial protection, to establish their efficacy, and
then to market these techniques and products. In order to expand our
service and product offerings, we are in the process of developing or
investigating several technologies and products. The products in
development have not been subject to completed clinical trials and have not
received FDA or other regulatory approval, so we may not derive any revenues
from them. We generally perform significant research and development
work before offering our services and products, building on either existing
proprietary and non-proprietary knowledge or acquired technology and
know-how. Our current tissue preservation services were developed
internally. We developed our BioGlue product from a substance
originally developed by a third party that we acquired.
BioGlue
is the first product to be developed from our Protein Hydrogel Technology, or
PHT. Our PHT is the base for several potential products in
development. We are researching the use of derivatives of PHT for use
in trauma surgery and are undertaking clinical evaluations to determine its
utility as a nucleus pulposus replacement in spinal disc repair. Potential
product line extensions include modifications to the BioGlue delivery
system.
Risk
Factors
Our
business is subject to a number of risks, including:
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the
possibility of FDA actions and other regulatory
actions,
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additional
expenses and losses from product
recalls,
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possible
losses from product liability, securities, and other
litigation,
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lower
demand for our products and adverse publicity resulting from product
recalls and other FDA activity,
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the
possible inability to obtain sufficient insurance
coverage,
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the
possible inability to protect our intellectual property
rights,
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the
possible inability to obtain necessary regulatory
approvals,
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and
possible future lack of adequate
capital.
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See “Risk Factors” below for a more
detailed discussion of risks relating to our business and our
securities.
______________________
CryoLife,
Inc. was incorporated January 19, 1984 in Florida. All
references to “CryoLife,” the “Company,” “we,” “us” or “our” in this
prospectus mean CryoLife, Inc., a Florida corporation, and all entities owned or
controlled by CryoLife, Inc., except where it is made clear that the term means
only the parent company.
Our
principal executive offices are located at 1655 Roberts Boulevard, NW, Kennesaw,
Georgia 30144. Our
telephone number is (770) 419-3355 and our Web site is located at
www.cryolife.com. Information contained on our Web site is not part
of this prospectus.
______________________
.
For
purposes of determining the ratio of earnings to combined fixed charges and
preferred dividends, earnings are defined as the sum of pre-tax income (loss)
from continuing operations, fixed charges and amortization of capitalized
interest; less interest capitalized. Fixed charges means the sum of
interest expensed and capitalized, amortized premiums, discounts and capitalized
expenses related to indebtedness and an estimate of the interest within rental
expense. For this
purpose, we assumed one-third of rental expense should be included in fixed
charges. Preferred stock dividend means the amount of pre-tax
earnings that is required to pay the dividends on outstanding preference
securities.
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Year
Ended December 31,
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Nine
Months
Ended
Sept. 30,
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2003
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2004
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2005
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2006
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2007
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2008
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(dollars
in thousands)
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Ratio
of earnings to fixed charges and preferred
stock dividends
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(a)
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(a)
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(a)
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1.24
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5.08
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13.15
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Deficiency
of earnings to fixed charges and preferred
stock
dividends
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($29,168)
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($21,708)
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($19,905)
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N/A
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N/A
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N/A
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(a)
Earnings for this period were insufficient to cover fixed charges and preferred
dividends.
You
should carefully consider the following risk factors and all other information
contained in this prospectus before you make any investment decisions with
respect to our securities.
If
any of the adverse events described in the following factors actually occur our
business, financial condition and operating results could be materially and
adversely affected, the value of your securities could decline and you could
lose all or part of your investment.
Risks
Relating To Our Business
We
Are Significantly Dependent On Our Revenues From BioGlue And Are Subject To A
Variety Of Risks Affecting This Product.
BioGlue is a significant source of our
revenues. Should the product be the subject of adverse developments
with regard to its safety, efficacy, or reimbursement practices, or if a
competitor’s product obtains greater acceptance, or our rights to manufacture
and market this product are challenged, the result could have a material adverse
effect on our business, financial position, results of operations, and cash
flows. Also, we have only two suppliers of bovine serum albumen,
which is necessary for the manufacture of BioGlue. Furthermore, we
presently have only one supplier for our BioGlue syringe. If we lose
one or more of these suppliers, our ability to manufacture and sell BioGlue
could be adversely impacted. We cannot be sure that we would be able
to replace any such loss on a timely basis, if at all. In addition
our U.S. patent for BioGlue expires in 2012 and our patents in the rest of the
world expire in 2013. Following expiration of these patents,
competitors may utilize the inventions disclosed in the BioGlue patents in
competing products, which could materially reduce our revenues and income from
BioGlue. See “Uncertainties Related To Patents And Protection of
Proprietary Technology May Adversely Affect The Value Of Our Intellectual
Property,” below.
We
May Receive A Form 483 Notice Of Observations, A Warning Letter, Or Other
Similar Communication From The FDA And We May Be Unable To Address The Concerns
Raised By The FDA In Such Correspondence or Communication, Or Addressing The
Concerns May Be Costly Or Could Materially and Adversely Affect Our
Operations.
The FDA has issued Form 483 Notices of
Observations, or Form 483, and Warning Letters to us in the past that have noted
deficiencies in our operations, including process validation, complaint
handling, and reporting, and analysis of certain testing results, among other
items. Although we have had positive FDA inspections recently, we
could still be subject to an FDA inspection that results in a Form
483. If the FDA deems our responses to a Form 483 unsatisfactory, it
could take further action, such as issuing us a Warning Letter, or in the
alternative even before issuing a Form 483, the FDA could issue a Warning Letter
or other similar communication directly to us. Corrective actions
taken by us to address these regulatory actions could materially and adversely
affect our business, results of operations, financial position, or cash
flows. If we are unable to implement adequate corrective actions
required by a Warning Letter or similar request made by the FDA, the FDA could
institute additional recalls of tissues or products, require us to perform
additional tests, begin to require prescriptions for tissues or products where
they are not currently required, halt the shipping or processing of tissues or
products, require additional approvals for marketing our tissue services or
products or assess civil penalties, which could materially and adversely affect
our revenues, profitability, and cash flows.
SynerGraft®
Processed Human Pulmonary Heart Valves and Other SynerGraft Products May Not Be
Accepted By The Marketplace.
CryoValve®
SG pulmonary human heart valves may not perform as well as expected or provide
all of the benefits anticipated by the marketplace and, as a result, the Company
may not be able to continue to process a portion of its human pulmonary valves
with its SynerGraft technology. If such an event were to occur, the
Company would need to return to processing most or all of its pulmonary human
heart valves without the SynerGraft technology, which could significantly reduce
the expected benefits of the SynerGraft technology. In addition other
products being developed for commercialization by CryoLife that utilize the
SynerGraft process, such as ProPatch®,
CryoLife’s soft tissue repair matrix for use in hernia repair and certain
orthopaedic related conditions, may not provide the anticipated benefits or
otherwise achieve marketplace acceptance.
SynerGraft
Processed Human Pulmonary Heart Valves Have A One Year Shelf Life.
We are currently using the SynerGraft
technology for a portion of our human pulmonary heart valve processing pursuant
to the 510(k) clearance we have received for the SynerGraft treated
valves. Our SynerGraft pulmonary human heart valves currently have a
one year shelf life, whereas our non-SynerGraft processed pulmonary human heart
valves have a five year shelf life. We are currently in discussions
with the FDA to extend the shelf life of our SynerGraft pulmonary human heart
valves. We do not know when the shelf life of the SynerGraft
pulmonary human heart valves may be extended, if at all. Accordingly,
if we do not implant our SynerGraft pulmonary human heart valves within one year
of cryopreservation, we may be required to discard these valves, and as a result
we may lose more tissues than before we started processing pulmonary human heart
valves with the SynerGraft technology, which could have a material adverse
effect on our revenues, profitability, and cash flows.
We
Are Dependent On The Availability Of Sufficient Quantities Of Tissue From Human
Donors.
The success of our tissue preservation
services depends upon, among other factors, the availability of sufficient
quantities of tissue from human donors. We rely primarily upon the
efforts of third party procurement organizations, tissue banks, most of which
are not-for-profit, and others to educate the public and foster a willingness to
donate tissue. If the supply of donated human tissue is materially
reduced, this would restrict our growth and adversely affect our business,
results of operations, financial condition, and cash flows.
Our
CryoValve SG Pulmonary Human Heart Valve Post-clearance Study May Not Provide
Expected Results.
At the FDA’s request, we are conducting
a post-clearance study to seek evidence for the potential and implied long-term
benefits of the SynerGraft process used to process the CryoValve SG pulmonary
human heart valve. We expect the data to be collected to include
long-term safety and hemodynamic function, immune response, and explant
analysis. Although we believe that this information may help us
ascertain whether the SynerGraft process reduces the immune response of the
transplanted human heart valve and allows for the collagen matrix to
recellularize with the recipient’s own cells, it is possible that the results of
the study will not be as expected. If this study shows that the
SynerGraft process does not reduce immune response and/or cause the collagen
matrix to recellularize with the recipient’s cells, we may be unable to realize
some or all of the long-term benefits that we anticipated for the use of this
process.
The
FDA Has Previously Issued A Recall Of Certain Of Our Products And Has The
Ability To Inspect Our Facilities, Suspend Our Operations, And Issue A Recall Of
Our Products In The Future.
On August 13, 2002 we received an
order from the FDA regarding the non-valved cardiac, vascular, and orthopaedic
tissues processed by the Company since October 3, 2001, referred to as the
FDA Order. Pursuant to the FDA Order, we placed non-valve cardiac,
vascular, and orthopaedic tissue processed since October 3, 2001 on quality
assurance quarantine and recalled the portion of those tissues that had been
distributed but not implanted. In addition we ceased processing
non-valved cardiac and vascular tissues until mid-September 2002 and ceased
processing orthopaedic tissues until 2003. The FDA Order resulted in
the destruction of much of our tissue, required that we adjust revenue for
tissue recall returns, curtailed our processing activities, and subjected us to
intense FDA scrutiny and additional regulatory requirements that increased
costs. We also suffered decreased revenues due to lack of processing
ability and decreased market demand for our services. These
challenges reduced our revenues, increased our costs to process tissues and our
operating expenses, and strained management resources and available
cash. Although we resumed processing and distribution of the types of
tissues subject to the FDA Order and resolved many of the product liability
suits pending against us, we incurred losses and did not produce cash from
operations for many years. Any future recalls or other regulatory
action by the FDA would likely have a material adverse impact on our revenues,
profitability, and cash flows.
The FDA can reinspect our facilities,
review complaints against us, monitor the efficacy of our products and the
claims we make regarding our products’ benefits, and issue reports to us on
areas that require improvement. If the FDA believes that we are not
responsive to their requests for any suggested improvement or that our products
are not in compliance with regulatory norms, the FDA has the ability to suspend
our operations and issue an order for the recall of any or all of our
products. If the FDA issues such an order, our revenues,
profitability, and cash flows could be materially and adversely
affected.
Our
Products And The Tissues We Process Allegedly Have Caused And May In The Future
Cause Injury To Patients, And We Have Been And May Be Exposed To Product
Liability Claims And Additional Regulatory Scrutiny As A Result.
The processing, preservation, and
distribution of human tissue, bovine tissue products, porcine tissue products,
and the manufacture and sale of medical devices entail inherent risks of medical
complications for patients and have resulted and may result in product liability
claims against us and adverse publicity. Plaintiffs have asserted
that our tissue or medical devices have caused a variety of injuries, including
death. When patients are injured, die, or have other adverse results
following procedures using our tissue or medical devices, we have been and may
be sued and our insurance coverage has been and may be
inadequate. Adverse judgments and settlements in excess of our
available insurance coverage could materially and adversely affect our business,
financial position, results of operations, and cash flows.
As a result of medical complications
that are alleged to have been caused by or occur in connection with medical
procedures involving our tissue or medical devices, we have been and may be
subject to additional FDA and other regulatory scrutiny and inspections and
adverse publicity. For example, shortly after the FDA Order, the FDA
posted a notice, now archived, on its website stating its concerns regarding our
heart valve preservation services. As a result, some surgeons and
hospitals decided not to use our heart valves. Cautionary statements
from the FDA or other regulators regarding our tissue services or products,
adverse publicity, changes to our labeling, or required prominent warnings or
negative reviews from the FDA or regulators of our processing and manufacturing
facilities have decreased and may in the future decrease demand for our tissue
services or products and could reduce our revenues and materially and adversely
affect our business, financial position, results of operations, and cash
flows.
In addition to the recall resulting
from the FDA Order, we have in the past suspended or recalled, and in the future
may have to suspend the distribution of or recall, particular types of tissues
as a result of reported adverse events in connection with our
tissues. Suspension of the distribution of, or recall of, our tissue
services or products could materially and adversely affect our revenues,
profitability, and cash flows.
Key
Growth Strategies Identified As A Result Of Our Strategic Review May Not
Generate The Anticipated Benefits.
In January 2006 we engaged a financial
advisor to assist our management and Board of Directors in identifying and
evaluating potential strategies to enhance shareholder value. As a
result of this review, the Board of Directors has directed management to
actively pursue three key strategies to generate revenue and earnings growth in
addition to continuing to focus on growing our business and leveraging our
strengths and expertise in our core marketplaces. These three
strategies are:
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Identifying
and evaluating acquisition opportunities of complementary product lines
and companies,
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Licensing
our technology to third parties for non-competing uses,
and
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Analyzing
and identifying underperforming assets for possible sale or other
disposition.
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Although management has begun
implementing these strategies, we cannot be certain that they will ultimately
enhance shareholder value.
Our
Ability To Borrow Under Our Credit Facility May Be Limited
Our credit facility contains a number
of affirmative covenants that we must satisfy before we can
borrow. For example, we must satisfy specified leverage ratios, and
there are also increasing levels of adjusted earnings before interest taxes
depreciation and amortization (“EBITDA”) under the credit facility that we have
covenanted to maintain during the term of the credit
facility. Failure to satisfy any of these requirements could limit
our borrowing ability and materially and adversely affect our
liquidity. In addition, our credit facility does not obligate the
lender to make funds available to us in a timely fashion or at all, even when
requested. See “Financial and Credit Crisis May Adversely Affect Our
Ability to Borrow Money or Raise Capital” below.
Our
Credit Facility Limits Our Ability To Pursue Significant
Acquisitions.
Our credit facility prohibits mergers
and acquisitions other than certain permitted acquisitions. Permitted
acquisitions include non-hostile acquisitions that have been approved by the
Board of Directors and/or the stockholders of the target company, if after
giving effect to the acquisition, there is no event of default under the credit
facility and there is still at least $1.5 million available to be borrowed under
the credit facility. The total consideration that we pay or are
obligated to pay for all acquisitions consummated during the term of the credit
facility, less the portion of any such consideration funded by the issuance of
common or preferred stock, may not exceed a specified aggregate
amount. As a result, our ability to consummate acquisitions, and
fully realize our growth strategy, may be materially and adversely
affected.
The
Financial and Credit Liquidity Crisis May Adversely Affect Our Ability to Borrow
Money or Raise Capital.
If the financial and credit liquidity
crisis were to continue or become more severe it may impact our ability to
obtain money under our credit facility. Our credit facility does not
require that funds be made available to us in a timely fashion when requested or
at all, and if the current financial and credit liquidity crisis continues or
worsens, our lender may be unable or unwilling to lend money pursuant to our
line of credit. In addition, if we determined that it was appropriate
or necessary to raise funds in the future, the financial and credit liquidity
crisis, if it continues or worsens, may make the future cost of raising funds
through the debt or equity markets more expensive or make those markets
unavailable. If we were unable to use our line of credit or raise
funds through debt or equity markets it could materially and adversely affect
our liquidity or our ability to follow our key growth strategies outlined by our
Board of Directors.
There
Are Limitations On The Use Of Our Net Operating Loss Carryforwards.
We estimate that as of our last
measurement date, December 31, 2007, we had approximately $37.0 million in U.S.
Federal net operating loss carryforwards, which could be used to offset future
taxable income. These carryforwards begin to expire in the 2023 tax
year. We may be unable to generate enough profits, if any, prior to
their expiration to utilize our net operating loss carryforwards.
In addition, the amount of net
operating loss carryforwards that we can utilize on an annual basis is capped
after an ownership change within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended. Accordingly, a change in control of
our Company within the meaning of Section 382 could substantially reduce
the annual benefit of our net operating loss carryforwards and could, thereby,
result in a portion of our net operating loss carryforwards expiring
unused.
Continued
Deflation Of Foreign Currencies Relative To The U.S. Dollar Could Materially and
Adversely Impact Our Business
The majority of our foreign BioGlue
revenues are denominated in British Pounds and Euros, and as such are sensitive
to changes in exchange rates. In addition, a portion of our
dollar-denominated BioGlue sales are made to customers in other countries who
must convert local currencies into U.S. dollars in order to purchase
BioGlue. We also have balances, such as cash, accounts receivable,
accounts payable, and accruals that are denominated in foreign
currencies. These foreign currency transactions and balances are
sensitive to changes in exchange rates. The recent devaluation of
British Pounds and Euros in relation to the U.S. dollar, should it continue or
accelerate, or deflation of other currencies which affect our customers could
materially reduce our fourth quarter 2008 and 2009 BioGlue revenue growth or
could result in a material decrease in revenues in these periods as compared to
the comparable prior periods. Should this occur, it could have a
material and adverse impact on our revenues, profitability and cash
flows.
Regulatory
Action Outside Of The U.S. Has Affected Our Business In The Past And
May Also Affect Our Business In The Future.
After the FDA issued the FDA Order,
discussed above, Health Canada also issued a recall of the same types of
tissue. In addition, other countries have made inquiries regarding
the tissues that we export, although these inquiries are now, to our knowledge,
complete. In the event other countries raise additional regulatory
concerns, we may be unable to export tissues to those
countries. Regulatory concerns could also be raised regarding the
other products we market internationally, including BioGlue. Revenue
from international human tissue preservation services was approximately
$896,000, $572,000, and $193,000 for the years ended December 31, 2007,
2006, and 2005, respectively, and approximately $898,000 for the nine months
ended September 30, 2008. International revenue from product sales,
which includes international BioGlue revenue, was approximately $12.8 million,
$11.3 million, and $10.2 million for the years ended December 31, 2007,
2006, and 2005, respectively, and approximately $10.9 million for the nine
months ended September 30, 2008. Loss of all or a material portion of
our international revenues would have a material adverse impact on our revenues,
profitability, and cash flows.
Physicians
Have Been And May Continue To Be Reluctant To Implant Our Preserved Tissues Or
Use Our Other Products.
Some physicians or implanting
institutions have been reluctant to choose our preserved tissues for use in
implantation, due to a perception that the tissue may not be safe or a belief
that the implanting physician or hospital may be subject to a heightened
liability risk if our tissues are used. In addition, for similar
reasons, some hospital risk managers have not allowed implanting surgeons to
utilize our tissues when alternatives are available. Several risk
managers and physicians have refused to use our products due to these
concerns. These conditions have materially and adversely affected
demand for our preserved human tissues. If these conditions persist,
our results of operations and cash flows will continue to be adversely
affected. If additional implanting hospitals or physicians
representing significant revenues refuse to use tissues that we preserve or our
other products, including BioGlue, and we are unable to replace the revenues
lost, our revenues and profitability would be materially and adversely
affected.
Our
Failure To Adequately Comply With Government Regulations Could Result In Loss Of
Revenues And Customers As Well As Additional Compliance Expense.
The FDA, certain international
governments, and some states regulate the facilities and processes that we
use. For example, the FDA, pursuant to regulations it promulgated
under the Public Health Service Act, currently regulates human
tissue. These regulations establish requirements for donor testing
and screening of human tissue and record keeping relating to these activities
and impose certain registration and product listing requirements on
establishments that process or distribute human tissue or cellular-based
products. The FDA has also implemented good tissue practice
regulations akin to good manufacturing practices, which must be followed by
tissue banks and processors of human tissue. These regulations
increase regulatory oversight of CryoLife and other processors of human
tissue. The FDA also regulates BioGlue through its medical device
regulations. These medical device regulations include the
establishment of requirements for manufacturer registration, good manufacturing
practices through the Quality System Regulations, premarket approval, and
medical device reporting.
Our facilities are subject to periodic
inspection by the FDA, state, and international regulatory authorities to ensure
our compliance with applicable laws and regulations. Certain of our
facilities and processes are subject to international standards set by the
International Organization for Standardization with respect to which our
compliance is reviewed by our Notified Body. If we fail to comply
with these laws and regulations, we can be subject to sanctions, such as written
observations of deficiencies made following inspections, warning letters,
product recalls, fines, product seizures and consent decrees, all of which would
be made available to the public. Such actions and publicity could
affect our ability to market our products and services. In the past,
the FDA has sent us notifications and warning letters relating to deficiencies
in our compliance with FDA requirements. We were required to take
measures to respond, including labeling our processed tissue with a
warning. We also were subject to the FDA Order, which decreased our
revenues, increased our processing costs, and materially and adversely affected
our business, financial position, results of operations, and cash
flows. We cannot be certain that the FDA, or state or international
regulatory authorities will not request that we take additional steps to correct
deficiencies that may be raised in the future. Correcting any such
deficiencies could materially and adversely affect our business.
We
Have Experienced Operating Losses And Negative Cash Flows, And We Must Continue
To Address The Underlying Causes In Order To Continue To Operate Profitably And
Generate Positive Cash Flows.
Due principally to factors mentioned
above, we suffered net losses in the years ended December 31, 2002 through
2005 and generated negative operating cash flow each year in the five year
period ended December 31, 2006. There is no guarantee that we
can continue to address the causes of our previous losses.
Our Existing Insurance Policies May
Not Be Sufficient To Cover Our Actual Claims Liability.
Our products and the tissues we process
allegedly have caused and may in the future cause injury to patients using our
products or tissues and we have been and may be exposed to product liability
claims.
Following the FDA Order, lawsuits
related to our tissue preservation services increased to unprecedented numbers
for us. These claims involved assertions that infections and related
morbidity, including death, were the result of inadequacies in our
procedures. We maintain claims-made insurance policies to mitigate
our financial exposure to product liability claims. Claims-made
insurance policies generally cover only those asserted claims and incidents that
are reported to the insurance carrier while the policy is in
effect. Thus, a claims-made policy does not generally represent a
transfer of risk for claims and incidents that have been incurred but not
reported to the insurance carrier during the policy period.
As of September 30, 2008, we know of
one pending lawsuit against us arising out of our allograft orthopaedic tissue
preservation services. We believe that our product liability
insurance covers this lawsuit. In addition other parties have made
complaints against us that may result in lawsuits in future
periods. We ceased accepting orthopaedic tissue for processing in
January 2007.
Our September 30, 2008 Summary
Consolidated Balance Sheet reflects a liability of approximately $330,000 for
the estimated cost of resolving this claim. The amount recorded was
an estimate and does not reflect actual settlement arrangements or final
judgments, the latter of which could include punitive damages, nor does it
represent cash set aside for the purpose of making payments. This
balance sheet also reflects a $5.2 million liability which is included as a
component of accrued expenses of $2.6 million and other long-term liabilities of
$2.6 million for the estimated cost of resolving unreported product liability
claims. We believe that the liability could be estimated to be as
high as $10.3 million, after including a reasonable margin for statistical
fluctuations. Based on an actuarial valuation, we estimated that as
of September 30, 2008, $1.7 million of the accrual for unreported liability
claims would be recoverable under our insurance policies. These
amounts represent management’s estimate of the probable losses and anticipated
recoveries for unreported liability claims related to services performed and
products sold prior to September 30, 2008. Actual results may
differ from this estimate. Our product liability insurance policies
do not include coverage for any punitive damages.
Several putative class action lawsuits
were filed in July through September 2002 against us and certain of our
officers, alleging violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, based on a series of purportedly materially false and
misleading statements to the market. On July 21, 2005 we reached
an agreement in principle to settle the securities class action lawsuit and the
settlement became final later in the year. In August 2002 and January
2003 purported shareholder derivative actions were filed. A
settlement was also reached in those cases and became final in
2005. Our insurance proceeds were insufficient to fund the costs of
defending and settling the securities class action and derivative
lawsuits.
If we are unsuccessful in arranging
acceptable settlements of current or future product liability, or future
securities class action or derivative claims, we may not have sufficient
insurance coverage and liquid assets to meet these
obligations. Additionally, if one or more claims, in which we are a
defendant, whether now pending or hereafter arising, should be tried with a
substantial verdict rendered in favor of the plaintiff(s), such verdict(s) could
exceed our available insurance coverage and liquid assets. If we are
unable to meet required future cash payments to resolve the outstanding or any
future claims, this will materially and adversely affect our financial position,
results of operations, and cash flows. Further, if the costs of
pending or incurred but unreported product liability claims exceed our current
estimates, our business, financial position, and results of operations may be
materially and adversely affected. If we do not have sufficient
resources to pay the claims against us, we may be forced to cease operations or
seek protection under applicable bankruptcy laws.
We
May Be Unable To Obtain Adequate Insurance At A Reasonable Cost, If At
All.
If we are unable to obtain satisfactory
insurance coverage in the future, we may be subject to additional future
exposure from product liability claims. Additionally, insurance rates
may be significantly higher than in the past, and insurers may provide less
coverage, which may adversely impact our profitability. In addition,
should we be subject to liability, whether imposed by a court or the result of a
settlement that results in a large insurance claim, our insurance rates could
increase significantly. Our current product liability insurance
policy is a six-year claims-made policy covering claims incurred during the
period April 1, 2003 through March 31, 2009 and reported during the period April
1, 2008 through March 31, 2009. Claims incurred prior to
April 1, 2003 that have not been reported are uninsured. Any
punitive damage components of claims are also uninsured.
We
May Be Unable To Successfully Market Hemostase MPH.
Part of our plans for future growth
involve anticipated revenues from the sale of Hemostase MPH, a private label
hemostatic agent which we currently market, pursuant to a distribution
agreement, for use in cardiac and vascular surgery in the U.S. and for cardiac,
vascular, and general surgery, other than orthopaedic and ear, nose and throat
surgery, in certain international markets, subject to certain
exclusions. Our ability to successfully market Hemostase MPH is
subject to a number of risks, including:
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The
possibility that surgeons may not accept Hemostase
MPH,
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We
may be unable to effectively leverage our existing sales force to market
Hemostase MPH,
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Hemostase
MPH may not perform as expected or provide all expected benefits,
and
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Other
distributors of the Hemostase MPH product may interfere with or otherwise
impede our ability to market the product to new or existing
customers.
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Uncertainties
Related To Patents And Protection Of Proprietary Technology May Adversely Affect
The Value Of Our Intellectual Property.
We own several patents, patent
applications, and licenses relating to our technologies, which we believe
provide us with important competitive advantages. In addition, we have certain
proprietary technologies and methods that provide us with important competitive
advantages. We cannot be certain that our pending patent applications
will issue as patents or that no one will challenge the validity or
enforceability of any patent that we own. We also cannot be certain
that if anyone does make such a challenge, that we will be able to successfully
defend that challenge. We may have to incur substantial litigation
costs to uphold the validity and prevent infringement of a patent or to protect
our proprietary technologies and methods. Furthermore, we cannot be
certain that competitors will not independently develop similar technologies or
duplicate our technologies or design around the patented aspects of such
technologies. We cannot be sure that our proposed technologies will
not infringe patents or other rights owned by others, or that others will not
infringe our patents.
We have filed suit in Germany against
Tenaxis, Inc. because we believe that Tenaxis is infringing one of our BioGlue
patents in Germany. This company has filed a separate suit to nullify
this same BioGlue patent in Germany. Should we be unsuccessful in our lawsuit
regarding infringement of our BioGlue patent or in prohibiting any other
infringements of our patents, or should this nullity lawsuit filed by Tenaxis be
successful, or the validity of our patents be successfully challenged by a third
party, our revenues and profitability could be materially and adversely
affected. We continue to investigate potential infringements of our
U.S. BioGlue patents.
We protect our proprietary technologies
and processes in part by confidentiality agreements with our collaborative
partners, employees, and consultants. We cannot be sure that these
entities and persons will not breach these agreements, that we will have
adequate remedies for any breach, or that our trade secrets will not otherwise
become known or independently discovered by competitors. If any of
these events occur, they could result in our loss of the economic benefits
associated with our key products and services and could materially and adversely
affect our business, financial position, results of operations, and cash
flows.
Uncertainties
Related To Patents and Protection Of Proprietary Technology For Products
Distributed By CryoLife May Adversely Affect The Ability of CryoLife To
Distribute Those Products.
We distribute two products, Hemostase
MPH and CardioWrap, that are manufactured by third parties. These
third parties have patents, licenses, and proprietary technologies that give
their products competitive advantages. We cannot be certain that no
one will challenge the validity or enforceability of any patent that they
own. Our contracts require that these third parties pursue
infringements of patents owned or licensed by them for the products that we
distribute. We may choose to assist our third party manufacturers and
may incur substantial costs in any efforts to uphold the validity and prevent
infringement of a patent or to protect proprietary technologies and
methods. We cannot be certain that if anyone does make such a
challenge, that these third parties will be able to successfully defend that
challenge, with or without our assistance. Furthermore, we cannot be
certain that competitors will not independently develop similar technologies,
duplicate technologies, design around the patented aspects of such technologies,
or attempt to duplicate their proprietary technologies that have no patent
protection. In addition, we cannot be sure that these third parties’
technologies will not infringe patents or other rights owned by others, or that
others will not infringe these third parties’ patents or use their proprietary
rights inappropriately.
We believe that an entity may be
infringing the patent licensed by the company that supplies Hemostase MPH to
us. We have notified the supplier of Hemostase MPH about this
potential infringement. We are not able to predict what actions the
supplier will take. If the supplier does not take any action or if
they are ultimately unsuccessful in their attempt to halt the infringement or in
prohibiting other infringements of their patents or inappropriate uses of their
company’s proprietary technology, or should the validity of their licensed
patents be successfully challenged, our revenues and profitability could be
materially and adversely affected.
We
May Not Be Successful In Obtaining Necessary Clinical Results And Regulatory
Approvals For Products And Services In Development, And Our New Products And
Services May Not Achieve Market Acceptance.
Our growth and profitability will
depend, in part, upon our ability to complete development of and successfully
introduce new products and services. We are uncertain whether we can
develop new products and services to a commercially acceptable
form. We must also expend much time and money to obtain the required
regulatory approvals. Although we have conducted preclinical studies
on certain products under development which indicate that such products may be
effective in a particular application, we cannot be certain that the results we
obtain from expanded clinical studies will be consistent with earlier trial
results or be sufficient for us to obtain any required regulatory approvals or
clearances. We cannot give assurance that we will not experience
difficulties that could delay or prevent us from successfully developing,
introducing, and marketing new products. We also cannot give
assurance that the regulatory agencies will clear or approve these or any new
products on a timely basis, if ever, or that the new products will adequately
meet the requirements of the applicable market or achieve market
acceptance.
Our ability to complete the development
of any of our products is subject to all of the risks associated with the
commercialization of new products based on innovative
technologies. Such risks include unanticipated technical or other
problems, manufacturing difficulties, and the possibility that we have allocated
insufficient funds to complete such development. Consequently, we may
not be able to successfully develop or manufacture our products which are under
development. If we do develop or manufacture these products, we may
not do so on a timely basis. These products may not meet price or
performance objectives, and may not prove to be as effective as competing
products.
If we are unable to successfully
complete the development of a product, application, or service, or if we
determine for financial, technical, or other reasons not to complete development
or obtain regulatory approval of any product, application, or service,
particularly in instances when we have expended significant capital, this could
materially and adversely affect our business, financial position, results of
operations, and cash flows. Research and development efforts are time
consuming and expensive and we cannot be sure that these efforts will lead to
commercially successful products or services. Even the successful
commercialization of a new service or product in the medical industry can be
characterized by slow growth and high costs associated with marketing,
under-utilized production capacity, and continuing research and development and
education costs. The introduction of new products or services, which
could include new indications for our BioGlue products, new products based on
our Protein Hydrogel Technology, such as BioFoam and BioDisc, CryoValve SG
aortic human heart valve, and other products such as ProPatch, SynerGraft
processed animal heart valves and vascular tissue, and products related to the
cold storage and preservation of internal organs prior to transport, may require
significant physician training and years of clinical evidence derived from
follow-up studies on human implant recipients in order to gain acceptance in the
medical community.
Intense
Competition May Affect Our Ability To Operate Profitably.
We face competition from other
companies engaged in the following lines of business:
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The
processing of human tissue;
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The
marketing of mechanical valves and synthetic and animal tissue for
implantation; and
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The
marketing of surgical adhesives, surgical sealants, and hemostatic
agents.
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Management believes that at least two
domestic tissue banks offer preservation services for human heart valves and
many companies offer processed porcine heart valves and mechanical heart valves,
including St. Jude Medical, Inc., Medtronic, Inc., and Edwards Life
Sciences.
Our BioGlue product competes with other
surgical adhesives and surgical sealants, including Baxter International, Inc.’s
Tisseel, FloSeal, and CoSeal, Ethicon, Inc.’s Evicel, Surgiflo, and Surgifoam,
and Covidien, Ltd.’s Duraseal product. We are also aware that a few
companies have surgical adhesive products under development. For
example, Johnson & Johnson is under FDA review for a surgical adhesive
for approval in vascular sealing that could compete with BioGlue in certain
applications. Tenaxis, Inc. currently has approval for a surgical
adhesive that could compete with BioGlue in certain
applications. Other large medical device, pharmaceutical, and
biopharmaceutical companies may also be developing competitive
products. Our BioGlue product competes on the basis of its high
tensile strength and ease of use.
Our Hemostase MPH product competes with
thrombin products, including King Pharmaceuticals, Inc.'s Thrombin JMI,
ZymoGenetics, Inc.'s Recothrom, and Omrix Biopharmaceuticals, Inc.'s Evithrom;
and surgical hemostats, including Pfizer, Inc.'s Gelfoam, C.R. Bard, Inc.'s
Avitene, Baxter International, Inc.’s FloSeal, and Ethicon, Inc.’s
Surgicel, Surgiflo, and Surgifoam products. In addition, Starch
Medical, Inc. has a hemostatic product that has CE approval and that will
compete in the future in Europe. We are also aware that a few
companies have surgical hemostat products under development. For
example, Omrix Biopharmaceuticals, Inc. is currently developing a hemostatic
patch for control of surgical bleeding that could compete with Hemostase MPH in
certain applications. Other medical device, pharmaceutical, and
biopharmaceutical companies may also be developing competitive
products. Our Hemostase MPH product competes on the basis of its
safety profile and ease of use.
Many of our competitors have greater
financial, technical, manufacturing, and marketing resources than we do and are
well established in their markets. We have increased fees and prices
on a number of our services and products since January 1,
2008. This increase may provide an opportunity for our competitors to
gain market share. If we are unable to continue to increase prices as
planned and retain or improve our market share, our ability to grow revenues and
profits may be adversely affected.
We cannot give assurance that our
products and services will be able to compete successfully. Any
products that we develop that gain regulatory clearance or approval will have to
compete for market acceptance and market share. In addition, our
competitors may gain competitive advantages that may be difficult to
overcome. If we fail to compete effectively, this could materially
and adversely affect our business, financial position, results of operations,
and cash flows.
Our
Products In Development May Never Generate Significant Revenues Or
Income.
Our plans for future growth are also
partially dependent upon our products in development, including, without
limitation:
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Our
BioDisc spinal disc nucleus
replacement,
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Our
CryoValve SG aortic human heart
valve,
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Our
BioFoam for hemostasis and trauma
repair,
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Products
related to the cold storage and preservation of internal organs during
transport,
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Our
SynerGraft processed animal heart valves and vascular tissue,
and
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Our
ProPatch for hernia repair.
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BioGlue
Aesthetic® to
be distributed by a third party for plastic surgery
indications,
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These products are in various stages of
testing and regulatory approval, and it is possible that some or all of them may
not prove effective for the purposes that we have developed them, may not
receive regulatory approval, or may not be accepted by the medical
community. Should this be the case, these products may never generate
significant revenues or profits.
Investments
In New Technologies And Acquisitions Of Products Or Distribution Rights May Not
Be Successful.
We may invest in new technology
licenses, and acquire products or distribution rights that may not succeed in
the marketplace. In such cases, we may be unable to recover our
initial investment, which could include acquiring license or distribution
rights, acquiring products, or purchasing initial
inventory. Inability to recover our initial investment may adversely
impact our profitability.
If
We Are Not Successful In Expanding Our Business Activities In International
Markets, We Will Not Be Able To Pursue One Of Our Strategies For Increasing Our
Revenues.
Our international operations are
subject to a number of risks which may vary from the risks we face in the U.S.,
including:
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Unexpected
changes in regulatory requirements and
tariffs;
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Difficulties
and costs associated with staffing and managing foreign operations,
including foreign distributor
relationships;
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Longer
accounts receivable collection cycles in certain foreign countries and
additional cost of collection of those
receivables;
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Adverse
economic or political changes;
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More
limited protection for intellectual property in some
countries;
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Changes
in currency exchange rates;
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Potential
trade restrictions, exchange controls, and import and export licensing
requirements; and
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Potentially
adverse tax consequences of overlapping tax
structures.
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Future
Health Care Reimbursement Methods And Policies May Affect The Availability,
Amount, And Timing Of Our Revenues.
Even though we do not receive payments
directly from third-party health care payors, their reimbursement methods and
policies impact demand for our preserved tissue and other services and
products. Our preservation services with respect to the cardiac and
vascular tissues we preserve may be particularly susceptible to third-party cost
containment measures. For example, the initial cost of a preserved
human heart valve generally exceeds the cost of a mechanical, synthetic, or
animal-derived valve. We are unable to predict what changes will be
made in the reimbursement methods and policies utilized by third-party health
care payors or their effect on us.
If third-party health care payors,
including Medicare, change their reimbursement methods and policies with respect
to preserved tissues provided for implant by us and other services and products
that we offer, this could have a material and adverse effect on
us. Significant uncertainty exists as to the reimbursement status of
newly approved health care products and services, and there can be no assurance
that adequate third-party coverage will be available for us to maintain price
levels sufficient to realize an appropriate return on our investment in
developing new products.
If government-mandated health insurance
is adopted, the demand for and prices obtained for our services and products
could be negatively impacted because government-mandated health insurance could
result in higher cost surgeries not being approved or could limit the level of
reimbursement for new products, such as the CryoValve SG pulmonary human heart
valve.
Government, hospitals, and other
third-party payors are increasingly attempting to contain health care costs by
limiting both coverage and the level of reimbursement for new products approved
for marketing by the FDA. In some cases, these entities refuse to
provide any coverage for uses of approved products for indications for which the
FDA has not granted marketing approval. If government and other
third-party payors do not provide adequate coverage and reimbursement levels for
uses of our new products and services, market acceptance of these products would
be adversely affected, which could negatively impact revenue growth and
materially and adversely affect our business, financial position, results of
operations, and cash flows.
Rapid
Technological Change Could Cause Our Services And Products To Become
Obsolete.
The technologies underlying our
products and services are subject to rapid and profound technological
change. Competition intensifies as technical advances in each field
are made and become more widely known. We can give no assurance that
others will not develop products or processes with significant advantages over
the products and processes that we offer or are seeking to
develop. Any such occurrence could materially and adversely affect
our business, financial position, results of operations, and cash
flows.
Extensive
Government Regulation May Adversely Affect Our Ability To Develop And Sell
Products And Services.
Government regulation in the U.S. and
in Europe, the Middle East, and Africa, and other jurisdictions can determine
the success of our and our competitors’ efforts to market and develop services
and products. Most of our products and services in development and
those of our competitors, if successfully developed, will require regulatory
approvals from the FDA and perhaps other regulatory authorities before they may
be commercially distributed. The process of obtaining premarket
approvals from the FDA normally involves clinical trials as well as an extensive
premarket approval application and often takes many years. In
addition, the 510(k) notification process may also require clinical trials and
take many years; for example the 510(k) clearance for the CryoValve SG pulmonary
human heart valve took four years. The process for approval from the
FDA is expensive and can vary significantly based on the type, complexity, and
novelty of the product. We cannot give any assurance that any
products developed by us or our competitors, independently or in collaboration
with others, will receive the required approvals for manufacturing and
marketing.
Delays in obtaining U.S. or foreign
approvals could result in substantial additional cost and adversely affect our
competitive position. The FDA may also place conditions on product
approvals that could restrict commercial applications of our
products. The FDA may withdraw product marketing approvals or
clearances if we do not maintain compliance with regulatory standards or if
problems occur following initial marketing. Delays imposed by the
governmental clearance process may materially reduce the period during which we
have the exclusive right to commercialize patented products.
Delays or rejections may also be
encountered by us during any stage of the regulatory approval process if
clinical or other data fails to satisfactorily demonstrate compliance with, or
if the product fails to meet, the regulatory agency’s requirements for safety,
efficacy, and quality. Those requirements may become more stringent
due to changes in applicable laws, regulatory agency policies, or the adoption
of new regulations. Clinical trials may also be delayed due to
unanticipated side effects, inability to locate, recruit, and qualify sufficient
numbers of patients, lack of funding, the inability to locate or recruit
clinical investigators, the redesign of clinical trial programs, the inability
to manufacture or acquire sufficient quantities of the particular product or any
other components required for clinical trials, changes in development focus, and
disclosure of trial results by competitors.
Even if we or one of our competitors
are able to obtain regulatory approval for any products or services offered, the
scope of the approval may significantly limit the indicated usage for which such
products or services may be marketed. The unapproved use of our
products or our preserved tissues could adversely affect the reputation of our
Company and our products or services. Products or services marketed
pursuant to FDA or foreign oversight or approvals are subject to continuing
regulation and periodic inspections. Labeling and promotional
activities are also subject to scrutiny by the FDA and, in certain instances, by
the Federal Trade Commission. The export of devices and biologics is
also subject to regulation and may require FDA approval. From time to
time, the FDA may modify such regulations, imposing additional or different
requirements. If we fail to comply with applicable FDA requirements,
which may be ambiguous, we could face civil and criminal enforcement actions,
warnings, citations, product recalls or detentions, and other
penalties. This could materially and adversely affect our business,
financial position, results of operations, and cash flows.
In addition, the National Organ
Transplant Act of 1984, or NOTA, prohibits the acquisition or transfer of human
organs for “valuable consideration” for use in human
transplantation. NOTA permits the payment of reasonable expenses
associated with the removal, transportation, implantation, processing,
preservation, quality control, and storage of human organs. We cannot
be certain that restrictive interpretations of NOTA will not be adopted in the
future which will challenge one or more aspects of industry methods of charging
for preservation services. Our laboratory operations and those of our
competitors are subject to the U.S. Department of Labor, Occupational
Safety and Health Administration, and U.S. Environmental Protection Agency
requirements for prevention of occupational exposure to infectious agents and
hazardous chemicals and protection of the environment. Some states
have enacted statutes and regulations which govern the processing,
transportation, and storage of human organs and tissue.
U.S. and foreign governments and
regulatory agencies may adopt more restrictive laws or regulations in the future
that could materially and adversely affect our business, financial position,
results of operations, and cash flows.
We
Are Dependent On Our Key Personnel.
Our business and future operating
results depend in significant part upon the continued contributions of our key
technical personnel and senior management, many of whom would be difficult to
replace, including our CEO, Steven G. Anderson. Our
business and future operating results also depend in significant part upon our
ability to attract and retain qualified management, processing, technical,
marketing, sales, and support personnel for our
operations. Competition for such personnel is intense and we cannot
ensure that we will be successful in attracting and retaining such
personnel. We do not have key life insurance policies on any of our
key personnel. If we lose any key employees, if any of our key
employees fail to perform adequately, or if we are unable to attract and retain
skilled employees as needed, this could materially and adversely affect our
ability to efficiently operate our business.
Risks
Related To Our Common Stock
Trading
Prices For Our Common Stock, And For The Securities Of Biotechnology Companies
In General, Have Been, And May Continue To Be, Volatile.
The trading price of our common stock
has been subject to wide fluctuations and may continue to be volatile in the
future. Trading price fluctuations can be caused by a variety of
factors, including variations in operating results, regulatory actions such as
the adverse FDA activity, product liability claims, announcement of
technological innovations or new products by us or our competitors, governmental
regulatory acts, developments with respect to patents or proprietary rights,
general conditions in the medical device or service industries, actions taken by
government regulators, changes in earnings estimates by securities analysts, or
other events or factors, many of which are beyond our control. If our
revenues or operating results in future quarters fall below the expectations of
securities analysts and investors, the price of our common stock would likely
decline, perhaps substantially. Changes in the trading price of our
common stock may bear no relation to our actual operational or financial
results.
If our
share prices do not meet the requirements of the New York Stock Exchange, our
shares may be delisted. The closing price of our common stock has
ranged from a high of $16.35 to a low of $2.99 in the period from
January 1, 2005 to September 30, 2008.
The market prices of the securities of
biotechnology companies have been highly volatile and are likely to remain
highly volatile in the future. This volatility has often been
unrelated to the operating performance of particular companies. In
the past, companies that experienced volatility in the market price of their
securities have often faced securities class-action
litigation. Moreover, market prices for stocks of biotechnology and
technology companies frequently reach levels that bear no relationship to the
operating performance of these companies. These market prices
generally are not sustainable and are highly volatile. Whether or not
meritorious, litigation brought against us could result in substantial costs,
divert our management’s attention and resources, and materially and adversely
affect our business, financial position, and results of operations.
Anti-Takeover
Provisions May Discourage Or Make More Difficult An Attempt To Obtain Control Of
CryoLife.
Our Articles of Incorporation and
Bylaws contain provisions that may discourage or make more difficult any attempt
by a person or group to obtain control of our company, including provisions
authorizing the issuance of preferred stock without shareholder approval,
restricting the persons who may call a special meeting of the shareholders, and
prohibiting shareholders from taking action by written consent. In
addition, we are subject to certain provisions of Florida law that may
discourage or make more difficult takeover attempts or acquisitions of
substantial amounts of our common stock. Further, pursuant to the
terms of a shareholder rights plan adopted in 1995 and amended in 2005, each
outstanding share of common stock has one attached right. The rights
will cause substantial dilution of the ownership of a person or group that
attempts to acquire our company on terms not approved by the Board of Directors
and may deter hostile takeover attempts. These provisions could
potentially deprive our stockholders of opportunities to sell shares of our
stock at above-market prices.
We
Are Not Likely To Pay Common Stock Dividends In The Foreseeable Future, And We
May Not Be Able To Pay Cash Dividends On Our Capital Stock Due To Legal or
Contractual Restrictions And Lack Of Liquidity.
We have not paid, and do not presently
intend to pay, cash dividends on our common stock. In addition our
credit agreement prohibits us from paying cash dividends, and under Florida law
we may not be able to pay cash dividends on our capital stock. Under
Florida law, no distribution may be paid on our capital stock, if after giving
it effect:
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We
would not be able to pay our debts as they become due in the usual course
of business; or
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Our
total assets would be less than the sum of our total liabilities plus the
amount that would be needed, if we were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of any
preferred shareholders whose preferential rights are superior to those
receiving the distribution.
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The terms of any future financing
arrangements that we may enter into may also restrict our ability to pay
dividends.
This prospectus includes and
incorporates by reference “forward-looking statements” within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements give our current expectations or
forecasts of future events. The words “could,” “may,” “might,”
“will,” “would,” “shall,” “should,” “pro forma,” “potential,” “pending,”
“intend,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “future” and
other similar expressions generally identify forward-looking statements,
including, in particular, statements regarding future services, market
expansion, revenues, cost savings, regulatory activity, available funds and
capital resources, and pending litigation. These forward-looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned not
to place undue reliance on these forward-looking statements, which are as of
their respective dates. Such forward-looking statements reflect the
views of our management at the time such statements are made and are subject to
a number of risks, uncertainties, estimates and assumptions, including, without
limitation, in addition to those identified in the text surrounding such
statements, those identified under “Risk Factors” and elsewhere in this
prospectus.
All statements, other than statements
of historical facts, included herein that address activities, events or
developments that the Company expects or anticipates will or may occur in the
future, are forward-looking statements, including statements
regarding:
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The
Company’s ability to increase, and methods for increasing, BioGlue,
Hemostase MPH, and preserved tissue market
penetration;
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Potential
BioGlue product line extensions;
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The
expected benefits of surgical adhesives and
sealants;
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Expected
usage of SynerGraft technology;
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The
anticipated competitive advantages and potential impact on revenues of
SynerGraft;
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Expectations
that CryoValve SG will continue to command premium fees over the standard
processed CryoValve;
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Expected
continued increase in 2008 of cardiac preservation service revenues as a
result of shipments of CryoValve
SG;
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Expectations
regarding the impact of CryoValve SG pulmonary human heart valve on cost
of preservation services as a percentage of preservation services
revenues;
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Expectations
regarding the expected SynerGraft post-clearance
study;
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The
expected outcome of lawsuits filed by or against the
Company;
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The
Company’s estimated future liability for existing product liability
lawsuits and for product liability claims incurred but not yet
reported;
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Expectations
regarding, and possible increases in the cost and retention of, future
insurance coverage;
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Anticipated
future demand for cardiac and vascular
tissues;
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Management’s
beliefs that current cardiac and vascular procurement levels are
sufficient to support future
demand;
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The
Company’s continued use of human tissue implant
data;
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The
Company’s competitive position, including the impact of price
increases;
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Competitive
advantages offered by the Company’s patents, trade secrets, trademarks,
and technology licensing rights;
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The
anticipated impact of the Company’s strategic plans and its ability to
implement them;
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Commercialization
plans and potential benefits of our products in
development;
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Expectations
regarding capital expenditures;
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The
amount and type of future research and development
expenses;
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The
ability to expand the Company’s service and product
offerings;
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Expected
seasonality trends;
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Expected
impact of adoption of new accounting
pronouncements;
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Anticipated
impact of changes in interest rates and foreign currency exchange
rates;
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Expected
continued decreases in revenues from the distribution of orthopaedic
tissue;
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Expected
increases in grant revenues;
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The
receipt of governmental grants for BioFoam
development;
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The
Company’s plans to apply for further federal funding for the development
of BioFoam;
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The
adequacy of the Company’s financial
resources;
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Current
intentions not to pay cash dividends on our common
stock;
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Current
intentions to retain future earnings for capital
requirements;
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Expectations
regarding the use of net operating loss
carryforwards;
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Expectations
regarding the ability of the Company to distribute Hemostase
MPH;
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Expectations
regarding the potential reversal of the valuation allowances on the
Company’s deferred tax assets and subsequent changes in our effective
income tax rate;
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Issues
that may impact the Company’s future financial performance and cash
flows;
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Estimated
compensation payment obligations related to 2008 performance based bonus
plans and post employment benefits;
and
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Other
statements regarding future plans and strategies, anticipated events, or
trends.
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These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions, and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether
actual results and developments will conform with the Company’s expectations and
predictions is subject to a number of risks and uncertainties which could cause
actual results to differ materially from the Company’s expectations, including
the risk factors discussed in this prospectus and other factors, many of which
are beyond the control of CryoLife. Consequently, all of the
forward-looking statements made or incorporated by reference in this prospectus
are qualified by these cautionary statements and there can be no assurance that
the actual results or developments anticipated by the Company will be realized
or, even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business or
operations. The Company assumes no obligation to update publicly any
such forward-looking statements, whether as a result of new information, future
events, or otherwise.
Except as
may otherwise be described in an accompanying prospectus supplement, the net
proceeds from the sale of the securities offered pursuant to this prospectus and
any accompanying prospectus supplement will be used for general corporate
purposes. Any specific allocation of the net proceeds of an offering
of securities to a specific purpose will be determined at the time of the
offering and will be described in an accompanying prospectus
supplement.
Description
Of Capital Stock
The
Company is authorized to issue up to 75,000,000 shares of Common Stock, $.01 par
value, and 5,000,000 shares of Preferred Stock, $.01 par value. As of
November 18, 2008, there were 28,138,639 shares of Common Stock outstanding net
of 955,396 treasury shares. They were held by approximately 443
shareholders of record. There were no shares of Preferred Stock
outstanding as of November 18, 2008.
The
following summary is qualified in its entirety by reference to the Company’s
Amended and Restated Articles of Incorporation, the Company’s Amended and
Restated Bylaws and the Florida Business Corporation Act (the
“FBCA”).
Common
Stock
Holders
of Common Stock are entitled to one vote per share of Common Stock held of
record on all matters to be voted upon by the Company’s shareholders
generally. Holders of Common Stock are not entitled to cumulative
voting rights. As a result, the holders of a majority of the shares
of Common Stock voting for the election of directors may elect all of the
Company’s directors if they choose to do so, and, in such event, the holders of
the remaining shares of Common Stock will not be able to elect any person or
persons to the Board of Directors.
Holders
of Common Stock are entitled to receive, on a pro rata basis, such dividends and
distributions, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to any preferential
dividend right of any issued and outstanding shares of Preferred
Stock. In the event of liquidation, dissolution or winding up of the
Company, after payment of creditors, holders of Common Stock are entitled to
share ratably in all assets, subject to the payment of any liquidation
preference of any issued and outstanding shares of Preferred
Stock. The shares of Common Stock currently outstanding are validly
issued, fully paid and non-assessable.
Preferred
Stock
The Board
of Directors of the Company is empowered, without approval of the Company’s
shareholders, to cause shares of Preferred Stock (the “Preferred Stock”) to be
issued in one or more series and to fix and determine the relative rights and
preferences of the shares of any such series, subject to the limits of Florida
law. Because the Board of Directors has the power to establish the
preferences and rights of each series, it may afford the holders of any series
of Preferred Stock preferences, powers and rights, voting or otherwise, senior
to the rights of holders of Common Stock. The issuance of Preferred
Stock could have the effect of delaying or preventing a change in control of
CryoLife.
While
providing desirable flexibility for possible acquisitions and other corporate
purposes, and eliminating delays associated with a shareholder vote on specific
issuances, the issuance of Preferred Stock could adversely affect the voting
power of holders of common stock, as well as dividend and liquidation payments
on both Common Stock and Preferred Stock. It also could have the
effect of delaying, deferring or preventing a change in control.
The
prospectus supplement relating to an offering of Preferred Stock will specify
the terms of any series of Preferred Stock offered by it including:
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the
series, the number of shares offered and the liquidation value of the
Preferred Stock;
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the
price at which the Preferred Stock will be
issued;
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the
dividend rate, the dates on which the dividends will be payable and other
terms relating to the payment of dividends on the Preferred
Stock;
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the
liquidation preference of the Preferred
Stock;
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whether
the Preferred Stock is redeemable or subject to a sinking fund, and the
terms of any such redemption or sinking
fund;
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whether
the Preferred Stock is convertible into or exchangeable for any other
securities, and the terms of any such conversion or exchange;
and
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any
additional rights, preferences, qualifications, limitations or
restrictions of the Preferred
Stock.
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The
description of the terms of the Preferred Stock to be set forth in an applicable
prospectus supplement will not be complete and will be subject to and qualified
in its entirety by reference to the statement of resolution relating to the
applicable series of Preferred Stock. The registration statement of
which this prospectus forms a part will include the statement of resolution as
an exhibit or incorporate it by reference.
Stock
Options and Restricted Stock Awards
As of
November 18, 2008, the Company had issued and outstanding options to purchase an
aggregate of approximately 1,790,000 shares of Common Stock (net of forfeitures,
expirations and cancellations) pursuant to its Stock Option Plans, at exercise
prices between $4.25 and $30.86. Of such options, approximately
662,000 were exercisable as of November 18, 2008. As of November 18,
2008, the Company had issued and outstanding approximately 152,000 shares of
restricted stock that are subject to future time-based vesting and a risk of
forfeiture.
Articles
Of Incorporation And Bylaws
Certain
provisions of the Articles of Incorporation and Bylaws of the Company, which are
summarized below, could have the effect of making it more difficult to change
the composition of the Company’s Board of Directors or for any person or entity
to acquire control of the Company.
Special
Meetings
Pursuant
to the Company’s Articles of Incorporation and Bylaws, special meetings of the
shareholders may be called only by the President or Secretary at the request in
writing of a majority of the Board of Directors then in office or at the request
in writing of shareholders owning not less than 50% of all votes entitled to be
cast at the special meeting.
Prohibition
of Shareholder Action Without Meeting
Under the
Company’s Articles of Incorporation, the shareholders may not take action by
written consent. Any and all action by the shareholders is required
to be taken at the annual shareholders’ meeting or at a special shareholders’
meeting.
Anti-Takeover
Statute
The
Company is subject to FBCA Section 607.0901, which provides that, subject to
certain exceptions, an “affiliated transaction” must be approved by the holders
of two-thirds of the voting shares other than those beneficially owned by an
“interested shareholder” unless the corporation has elected to opt out of this
requirement in its Articles of Incorporation or its Bylaws. The
Company has not elected to opt out of this requirement, which may have the
effect of making it more difficult for any person or group to acquire the
Company or substantial amounts of the Company’s Common Stock.
Ability
To Consider Other Constituencies
The
Directors of the Company are subject to the “general standards for Directors”
provisions set forth in Section 607.0830 of the FBCA. These
provisions provide that, among other things, in discharging his or her duties
and determining what is in the best interests of the Company, a Director may
consider such factors as the Director deems relevant, including the long-term
prospects and interests of the Company and its shareholders, and the social,
economic, legal or other effects of any proposed action on the employees,
suppliers or customers of the Company, the communities in which the Company
operates and the economy in general. Consequently, in connection with
any proposed corporate action, the Board of Directors is empowered to consider
interests of other constituencies in addition to the interests of the Company’s
shareholders. Shareholders should be aware that Directors who take
into account these other factors may make decisions which are less beneficial to
the shareholders than if the law did not permit consideration of such other
factors.
Shareholder
Rights Plan
In
November 1995, the Board of Directors of the Company established a rights plan,
pursuant to which one preferred share purchase right (a “Right”) is attached to
each outstanding share of Common Stock. The description and terms of
the Rights were set forth in a rights agreement dated as of November 27, 1995,
between the Company and Chemical Mellon Shareholder Services, the original
“Rights Agent.” The agreement was amended effective June 1, 1997,
when the Company’s Board appointed American Stock Transfer and Trust Company
successor Rights Agent. On November 2, 2005, the Company amended and
restated the agreement to extend its expiration date to November 23, 2015, and
make other changes. The First Amended and Restated Rights Agreement
(the “Rights Agreement”) between the Company and American Stock Transfer and
Trust Company became effective as of November 23, 2005.
Each
share of Common Stock outstanding on December 11, 1995 (the "First Record Date")
is entitled to one Right, as defined in and subject to the terms and conditions
of the Rights Agreement. Under the Rights Agreement, a Right entitles
the holder to purchase from the Company one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $.01 per Share (the "Preferred
Shares") at a price of $33.33 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. Each share of
Common Stock that becomes outstanding after the First Record Date is also
entitled to a Right, subject to the terms of the Rights Agreement.
Currently,
each Right is non-exercisable and is evidenced only by the certificate of Common
Stock to which it is attached. The Rights will not be exercisable and
will not be evidenced by separate certificates (“Right Certificates”, as further
defined below) until the Distribution Date. Rights Certificates will
be issued upon the “Distribution Date,” which will occur on the earlier
of:
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10
days following a public announcement that a person or group of affiliated
or associated persons (with certain exceptions, an “Acquiring Person”) has
acquired beneficial ownership of 15% or more of the outstanding Common
Stock; or
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10
business days following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of 15%
or more of the outstanding Common Stock (except that the Board of
Directors may extend the 10-business-day period before a person or group
becomes an Acquiring Person).
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Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
the Rights will be transferred with and only with the shares of common stock
that are entitled to receive rights under the Rights Agreement (“Eligible
Shares”).
The
Rights entitle holders to acquire company securities under defined circumstances
after the Distribution Date. Rights beneficially owned by an
Acquiring Person (and its affiliates, associates, and transferees (collectively,
the "Acquiring Persons")), however, become void from and after the time such
persons become Acquiring Persons, and Acquiring
Persons have no rights whatsoever under the Rights Agreement. The
benefits of the Rights held by shareholders that are not Acquiring Persons and
that are not so voided are described below. All references to Rights that follow
refer only to Rights held by persons who are not Acquiring Persons.
As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Eligible Shares as of the close of business on the Distribution Date, and
such separate Right Certificates will thereafter alone evidence the
Rights. The Rights are not exercisable until the Distribution Date
and expire on November 23, 2015 (the "Final Expiration Date"), unless
the Final Expiration Date is advanced or extended or unless
the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below. Until a Right
is exercised, the Right confers no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
The
Rights entitle holders to purchase Preferred Shares in certain circumstances.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution upon any of the following
events:
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in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred
Shares;
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upon
the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or
purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the
then-current market price of the Preferred Shares;
or
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upon
the distribution to holders of the Preferred Shares of
evidences of indebtedness or
assets (excluding regular periodic cash dividends or
dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to
above).
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The
number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment in the
event of a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
Preferred
Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per Common Share. In the event of liquidation, the holders
of the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1.00 per share but will be entitled to an aggregate payment of 100
times the payment made per Common Share. Each Preferred Share will
have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by
customary antidilution provisions.
Because
of the nature of the Preferred Shares, dividend, liquidation and voting rights,
the value of the one one-hundredth interest in a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common Share. In
the event that any person or group becomes an Acquiring Person, each holder of a
Right will have the right to receive upon exercise of a Right, and in lieu of
Preferred Shares, that number of Common Shares having a market value of two
times the exercise price of the Right.
In
the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
of a Right and in lieu of Preferred Shares or Common Shares of the
Company, that number of shares of common stock of the person with whom the
Company has engaged in the foregoing transaction (or its parent) that at the
time of such transaction will have a market value of two times the
exercise price of the Right.
At
any time after any person or group becomes an Acquiring Person and prior to the
acquisition by any person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights, in whole
or in part, at an exchange ratio of one Common Share, or a fractional share of
Preferred Shares (or other preferred stock) equivalent in value thereto, per
Right (subject to adjustment).
With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts) and in lieu thereof, an adjustment in cash will be made based on the
current market price of the Preferred Shares or the Common Shares.
At
any time prior to the time an Acquiring Person becomes such, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the "Redemption Price") payable, at the option of the
Company, in cash, Common Shares or such other form of consideration as the Board
of Directors of the Company shall determine. The redemption of the
Rights may be made effective at such time on such basis with such conditions as
the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The
Company may amend the Rights Agreement in any manner, provided, after (a) such
time as a person or group becomes an Acquiring Person, or (b) the Distribution
Date, whichever is earlier, the Company may not amend the Rights Agreement in
any manner that adversely affects the interests of the holders of the Rights
(other than the interests of an Acquiring Person or an affiliate or associate of
an Acquiring Person).
The
description of the Rights contained herein is qualified in its entirety by
reference to the First Amended and Restated Rights Agreement, which is
incorporated by reference into the registration statement of which this
Prospectus forms a part.
Shareholder
Action
Except as
otherwise provided by law or in our articles of incorporation or bylaws, the
approval by holders of a majority of the shares of common stock present in
person or represented by proxy at a meeting and entitled to vote is sufficient
to authorize, affirm, ratify or consent to a matter voted on by
shareholders. The FBCA requires the approval of the holders of a
majority of the outstanding stock entitled to vote for certain extraordinary
corporate transactions, such as a merger, sale of substantially all assets,
dissolution or amendment of the articles of incorporation.
Transfer
Agent And Registrar
The
Transfer Agent and Registrar for the Common Stock is American Stock Transfer
& Trust Company. It is located at 59 Maiden Lane, Plaza Level,
New York, NY 10038, and its telephone number is (718) 921-8124.
General
We may
offer fractional shares of preferred stock, rather than full shares of preferred
stock. If we decide to offer fractional shares of preferred stock, we will issue
receipts for depositary shares. Each depositary share will represent
a fraction of a share of a particular series of preferred stock. The
prospectus supplement will indicate that fraction. The shares of
preferred stock represented by depositary shares will be deposited under a
depositary agreement between us and a bank or trust company that meets certain
requirements and is selected by us (the “Bank Depositary”). Each
owner of a depositary share will be entitled to all the rights and preferences
of the preferred stock represented by the depositary share. The
depositary shares will be evidenced by depositary receipts issued pursuant to
the depositary agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the offering.
We have
summarized selected provisions of a depositary agreement and the related
depositary receipts. The summary is not complete. The
forms of the deposit agreement and the depositary receipts relating to any
particular issue of depositary shares will be filed with the SEC on a Current
Report on Form 8-K prior to our offering of the depositary shares, and you
should read such documents for provisions that may be important to
you.
Dividends
and Other Distributions
If we pay
a cash distribution or dividend on a series of preferred stock represented by
depositary shares, the Bank Depositary will distribute such dividends to the
record holders of such depositary shares. If the distributions are in
property other than cash, the Bank Depositary will distribute the property to
the record holders of the depositary shares. If the Bank Depositary,
however, determines that it is not feasible to make the distribution of
property, the Bank Depositary may, with our approval, sell such property and
distribute the net proceeds from such sale to the record holders of the
depositary shares.
Redemption
of Depositary Shares
If we
redeem a series of preferred stock represented by depositary shares, the Bank
Depositary will redeem the depositary shares from the proceeds received by the
Bank Depositary in connection with the redemption. The redemption
price per depositary share will equal the applicable fraction of the redemption
price per share of the preferred stock. If fewer than all the
depositary shares are redeemed, the depositary shares to be redeemed will be
selected by lot or pro rata as the Bank Depositary may determine.
Voting
the Preferred Stock
Upon
receipt of notice of any meeting at which the holders of the preferred stock
represented by depositary shares are entitled to vote, the Bank Depositary will
mail the notice to the record holders of the depositary shares relating to such
preferred stock. Each record holder of these depositary shares on the
record date (which will be the same date as the record date for the preferred
stock) may instruct the Bank Depositary as to how to vote the preferred stock
represented by such holder’s depositary shares. The Bank Depositary
will endeavor, insofar as practicable, to vote the amount of the preferred stock
represented by such depositary shares in accordance with such instructions, and
we will take all action which the Bank Depositary deems necessary in order to
enable the Bank Depositary to do so. The Bank Depositary will abstain
from voting shares of the preferred stock to the extent it does not receive
specific instructions from the holders of depositary shares representing such
preferred stock.
Amendment and Termination of the Depositary
Agreement
The form
of depositary receipt evidencing the depositary shares and any provision of the
depositary agreement may be amended by agreement between the Bank Depositary and
us. However, any amendment that materially and adversely alters the
rights of the holders of depositary shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The depositary agreement may be
terminated by the Bank Depositary or us only if (i) all outstanding depositary
shares have been redeemed or (ii) there has been a final distribution in respect
of the preferred stock in connection with any liquidation, dissolution or
winding up of our company and such distribution has been distributed to the
holders of depositary receipts.
Charges
of Bank Depositary
We will
pay all transfer and other taxes and governmental charges arising solely from
the existence of the depositary arrangements. We will pay charges of
the Bank Depositary in connection with the initial deposit of the preferred
stock and any redemption of the preferred stock. Holders of depositary receipts
will pay other transfer and other taxes and governmental charges and any other
charges, including a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided for their accounts
in the depositary agreement.
Withdrawal
of Preferred Stock
Upon
surrender of depositary receipts at the principal office of the Bank Depositary,
subject to the terms of the depositary agreement, the owner of the depositary
shares may demand delivery of the number of whole shares of preferred stock,
represented by those depositary shares. Partial shares of preferred
stock will not be issued. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of whole shares of preferred stock to
be withdrawn, the Bank Depositary will deliver to such holder at the same time a
new depositary receipt evidencing the excess number of depositary
shares. Holders of preferred stock thus withdrawn may not thereafter
deposit those shares under the depositary agreement or receive depositary
receipts evidencing depositary shares therefor.
Resignation
and Removal of Bank Depositary
The Bank
Depositary may resign at any time by delivering to us notice of its election to
do so, and we may at any time remove the Bank Depositary. Any such
resignation or removal will take effect upon the appointment of a successor Bank
Depositary and its acceptance of such appointment. Such successor
Bank Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company meeting the
requirements of the depositary agreement.
Any of
the securities being offered hereby may be sold in any one or more of the
following ways from time to time:
|
·
|
to
or through underwriters;
|
The
distribution of the securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.
Offers to
purchase securities may be solicited by agents designated by us from time to
time. Any such agent involved in the offer or sale of the securities
in respect of which this prospectus is delivered will be named, and any
commissions payable by us to such agent will be set forth, in the applicable
prospectus supplement. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a reasonable best efforts basis for
the period of its appointment. Any such agent may be deemed to be an
underwriter, as that term is defined in the Securities Act of 1933, of the
securities so offered and sold. We may periodically engage agents or
underwriters in connection with at-the-market offerings or negotiated
transactions involving our common stock.
If
securities are sold by means of an underwritten offering, we will execute an
underwriting agreement with an underwriter or underwriters at the time an
agreement for such sale is reached, and the names of the specific managing
underwriter or underwriters, as well as any other underwriters, the respective
amounts underwritten and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the applicable prospectus supplement that will be used by
the underwriters to make resales of the securities in respect of which this
prospectus is being delivered to the public. If underwriters are
utilized in the sale of any securities in respect of which this prospectus is
being delivered, such securities will be acquired by the underwriters for their
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices determined by the underwriters at the time of sale. Securities
may be offered to the public either through underwriting syndicates represented
by managing underwriters or directly by one or more underwriters. If
any underwriter or underwriters are utilized in the sale of securities, unless
otherwise indicated in the applicable prospectus supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale of
such securities will be obligated to purchase all such securities if any are
purchased.
We may
grant to the underwriters options to purchase additional securities, to cover
over-allotments, if any, at the price at which securities are first offered to
the public (with additional underwriting commissions or discounts), as may be
set forth in the prospectus supplement relating thereto. If we grant
any over-allotment option, the terms of such over-allotment option will be set
forth in the prospectus supplement for such securities.
If a
dealer is utilized in the sale of the securities in respect of which this
prospectus is delivered, we will sell such securities to the dealer as
principal. The dealer may then resell such securities to the public
at varying prices to be determined by such dealer at the time of
resale. Any such dealer may be deemed to be an underwriter, as such
term is defined in the Securities Act of 1933, of the securities so offered and
sold. The name of the dealer and the terms of the transaction will be
set forth in the prospectus supplement relating thereto.
Offers to
purchase securities may be solicited directly by us and the sale thereof may be
made by us directly to institutional investors or others, who may be deemed to
be underwriters within the meaning of the Securities Act of 1933 with respect to
any resale thereof. The terms of any such sales will be described in
the prospectus supplement relating thereto.
If so
indicated in the applicable prospectus supplement, we may authorize agents and
underwriters to solicit offers by certain institutions to purchase securities
from us at the public offering price set forth in the applicable prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on the date or dates stated in the applicable prospectus
supplement. Such delayed delivery contracts will be subject to only
those conditions set forth in the applicable prospectus supplement. A
commission indicated in the applicable prospectus supplement will be paid to
underwriters and agents soliciting purchases of securities pursuant to delayed
delivery contracts accepted by us.
Agents,
underwriters and dealers may be entitled under relevant agreements with us to
indemnification by us against certain liabilities, including liabilities under
the Securities Act of 1933, or to contribution with respect to payments that
such agents, underwriters and dealers may be required to make in respect
thereof.
Each
series of securities will be a new issue and, other than our common stock, which
is listed on The New York Stock Exchange, will have no established trading
market. We may elect to list any series of securities on an exchange,
and in the case of common stock, on any additional exchange, but, unless
otherwise specified in the applicable prospectus supplement, we shall not be
obligated to do so. No assurance can be given as to the liquidity of
the trading market for any of the securities.
Agents,
underwriters and dealers may be customers of, engage in transactions with, or
perform services for, us and our subsidiaries in the ordinary course of
business.
We file
annual, quarterly and current reports, proxy and information statements and
other information with the Securities and Exchange Commission. We
have filed a registration statement on Form S-3 with the SEC to
register under the Securities Act of 1933 the common stock offered
hereby. This prospectus constitutes a part of that registration
statement. As allowed by the SEC’s rules, this prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the SEC. Please refer to the registration statement and related
exhibits and schedules filed therewith for further information with respect to
us and the securities offered hereby. Although the prospectus
describes the material provisions of documents referenced herein and filed as
exhibits, statements contained herein concerning the provisions of any such
document are not necessarily complete. In each instance, reference is
made to the copy of such document filed as an exhibit to the registration
statement or otherwise filed by us with the SEC and each such statement is
qualified in its entirety by such reference.
The
following documents, which we have filed with the SEC (file number 001-13165),
are incorporated by reference in and made a part of this
prospectus:
|
·
|
The
Registrant’s Annual Report on Form 10-K filed with respect to the
Registrant’s fiscal year ended December 31,
2007.
|
|
·
|
The
Registrant’s Quarterly Reports on Form 10-Q filed with respect to the
three month periods ended March 31, 2008, June 30, 2008, and September 30,
2008.
|
|
·
|
The
Registrant’s Current Reports on Forms 8-K filed on February 12, 2008,
February 25, 2008, March 28, 2008, April 21, 2008, October 28, 2008 and
November 3, 2008.
|
|
·
|
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.
|
We are
also incorporating by reference any future filings we make with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering. These documents will be deemed to be incorporated by
reference in this prospectus and to be a part of it from the date they are filed
with the SEC. You may read and copy any document we file at the SEC’s
public reference room located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference room. Our SEC filings are also available to
the public from commercial document retrieval services and at the Web site
maintained by the SEC at http://www.sec.gov. This information is also
available without charge upon written or oral request to:
CryoLife,
Inc.
Attn: Secretary
1655
Roberts Boulevard, NW
Kennesaw,
Georgia 30144
(770)
419-3355
You
should rely only on the information contained or incorporated by reference in
this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We may not
make an offer of securities in any state where the offer is not
permitted. The delivery of this prospectus does not, under any
circumstances, mean that there has not been a change in our affairs since the
date of this prospectus. It also does not mean that the information
in this prospectus is correct after this date.
The
validity of the common stock (including any common stock issuable upon the
conversion of any preferred stock), preferred stock (including any preferred
stock underlying any depositary shares) and the depositary shares offered by
this prospectus have been passed upon for us by Arnall Golden Gregory
LLP. Legal counsel to any underwriters may pass upon legal matters
for such underwriters.
The
consolidated financial statements and the related financial statement schedule
incorporated in this Registration Statement on Form S-3 by reference from
Cryolife's Annual Report on Form 10-K for the year ended December 31, 2007 and
the effectiveness of Cryolife’s internal control over financial reporting have
been audited by Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are incorporated herein by
reference (which report on the consolidated financial statements expressed an
unqualified opinion and includes an explanatory paragraph relating to the
Company’s adoption on October 1, 2005 of Statement of Financial Accounting
Standards No. 123R, “Share Based Payment,” and on January 1, 2007 of Financial
Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes”). Such financial statements and financial statement schedule
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
CRYOLIFE,
INC.
$50,000,000
Common
Stock
Preferred
Stock
Depositary
Shares
__________________,
2008
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
14. Other Expenses of Issuance and Distribution
All
expenses, other than fees and expenses of legal or other advisors to the selling
shareholders, will be paid by CryoLife. Such expenses are as
follows:*
|
SEC
registration fee
|
|
$ |
1,965 |
|
NYSE
listing fee
|
|
|
25,000 |
|
Printing
expenses
|
|
|
25,000 |
|
Accounting
fees and expenses
|
|
|
150,000 |
|
Legal
fees and expenses
|
|
|
125,000 |
|
Miscellaneous
|
|
|
15,000 |
|
|
|
|
|
|
Total
|
|
$ |
341,965 |
*The
amounts set forth, except for the filing fees for the SEC, are
estimated.
ITEM
15. 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 Amended and Restated
Articles of Incorporation, and the Registrant's Amended and Restated
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 requires that, if in the judgment of the majority of the Board of
Directors (excluding from such majority any director under 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 in the manner and to the extent contemplated by Section 607.0850 of
the FBCA (formerly Section 607.014 of the Florida General Corporation
Act). Article VI of the Registrant’s Amended and Restated
Bylaws provides that indemnification is available to directors and officers only
if the person to be indemnified acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was unlawful. The
Registrant will have no obligation to provide indemnification until a
determination has been made that the appropriate standard of conduct has been
met and that indemnification is not prohibited by relevant law. With
respect to proceedings brought by or in the right of the Registrant, no
indemnification shall be made if the officer or director is adjudged to be
liable unless a court of competent jurisdiction shall determine that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to
indemnification. The Registrant’s Amended and Restated Bylaws also
state that the rights to indemnification are binding contract rights which are
binding on the Registrant with respect to any conduct that takes place while the
provision remains in place, even if the provision is later amended, and that the
rights continue as to a person who has ceased to be an officer or
director. Expenses, including reasonable attorneys’ fees and court
costs, incurred by a director or officer in defending a proceeding for which
indemnification is provided will be paid by the Registrant in advance of the
final disposition of such proceeding provided that the director or officer
represents that he or she has met the applicable standard of conduct in relation
to the proceeding and will repay such amount if he or she is ultimately found
not to be entitled to indemnification.
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.
The
Registrant has entered into indemnification agreements with each of its
directors and its Executive Vice President, Chief Operating Officer and Chief
Financial Officer ("Indemnitees"). Pursuant to such
agreements, the Registrant shall indemnify each Indemnitee
whenever he or she is or was a party or is threatened to be made a party to
any proceeding, including without limitation
any such proceeding brought by or in the right of the Registrant, because he or
she is or was a director or officer of the Registrant or is or was serving at
the request of the Registrant as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise, or because of anything done or not done by the Indemnitee
in such capacity, against expenses
and liabilities (including the costs of any investigation,
defense, settlement or appeal) actually and reasonably incurred by the
Indemnitee or on his or her behalf in connection with such proceeding, if he or
she 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 Registrant, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that an
Indemnitee did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Registrant, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful. Unless a determination
has been made that the Indemnitee is not entitled to indemnification pursuant to
the agreement, all reasonable expenses incurred by or on behalf of such
Indemnitee shall be advanced from time to time by the Registrant to the
Indemnitee within thirty (30) days after the Registrant's receipt of a written
request for an advance of expenses by such Indemnitee, whether prior to or after
final disposition of a proceeding. If required by law, Indemnitee
shall agree, at the time of such advance, to repay the amounts advanced if it is
ultimately determined that Indemnitee is not entitled to be indemnified under
the terms of the agreement. Any advances made shall be unsecured and no interest
shall be charged thereon.
ITEM
16. Exhibits
|
3.1
|
Amended
and Restated Articles of Incorporation of the Company. (Incorporated
herein by reference to Exhibit 3.1 to the Registrant’s Form 10-K for the
year ended December 31, 2007.)
|
|
3.2
|
Amended
and Restated ByLaws of the Company. (Incorporated by reference
to Exhibit 3.1 to the Registrant’s Report on Form 8-K filed October 28,
2008.)
|
|
4.1
|
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
fiscal year ended December 31,
1997.)
|
|
4.2
|
First
Amended and Restated Rights Agreement, dated as of November 2, 2005,
between CryoLife, Inc. and American Stock Transfer & Trust Company.
(Incorporated herein by reference to Exhibit 4.1 to Registrant’s Current
Report on Form 8-K filed November 3,
2005.)
|
|
4.3+
|
Form
of Depositary Agreement.
|
|
4.4+
|
Form
of Depositary Receipt.
|
|
5.1*
|
Opinion
of Arnall Golden Gregory LLP regarding legality of the common stock,
preferred stock and depositary
shares.
|
|
12.1*
|
Computation
of Ratio of Earnings to Fixed
Charges.
|
|
23.1*
|
Consent
of Arnall Golden Gregory LLP (included as part of Exhibit 5
hereto.)
|
|
23.2*
|
Consent
of Deloitte & Touche LLP.
|
|
24.1*
|
Power
of Attorney (included in the signature pages of this registration
statement.)
|
|
99.1
|
Form
of Indemnification Agreement entered into with each of the Registrant’s
directors, except Harvey
Morgan, and its Executive Vice President, Chief Operating Officer and
Chief Financial Officer
(Incorporated herein by reference to Exhibit 99.1 to the Form S-3/A filed
by Registrant on January
4,
2005.)
|
|
99.2*
|
Form
of Indemnification Agreement entered into with Harvey
Morgan.
|
+ To be
filed by amendment or as an exhibit to a Current Report on Form 8-K of the
Registrant
* Filed
with this Form S-3
ITEM
17. 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
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(iii)
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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;
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Provided
however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to
the Commission 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, or is contained in a form of prospectus filed pursuant
to Rule 424(b) that is part of 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.
(4) That
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser.
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(i)
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Each
prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be
deemed tobe part of the registration statement as of the date the filed
prospectus was deemed part ofand included in the registration statement;
and
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(ii)
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Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x)
for the purpose of providing the information required by section 10(a) of
the Securities Act of 1933 shall be deemed to be part of and included in
the Registration Statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date;
or
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(5) That,
for the purpose of determining liability of the Registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities: The
undersigned Registrant undertakes that in a primary offering of securities of
the undersigned Registrant pursuant to this Registration Statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
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i.
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Any
preliminary prospectus or prospectus of the undersigned Registrant
relating to the offering required to be filed pursuant to Rule
424;
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ii.
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Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned Registrant or used or referred to by the undersigned
Registrant;
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iii.
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The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned Registrant or its
securities provided by or on behalf of the undersigned Registrant;
and
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iv.
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Any
other communication that is an offer in the offering made by the
undersigned Registrant to the
purchaser.
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(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 foregoing provisions, or otherwise,
the Registrant has been informed 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 proceeding) 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.
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-3 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 November 21, 2008.
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CRYOLIFE,
INC. |
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By:
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/s/ Steven
G. Anderson |
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Steven
G. Anderson |
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President,
Chief Executive Officer and Chairman of |
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the
Board of Directors
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KNOW ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Steven G.
Anderson and Jeffrey W. Burris and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place, and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments and amendments pursuant to Rule 462(b)) 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 or she 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 or her 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:
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Name
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Title
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Date
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/s/ Steven G.
Anderson
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President,
Chief Executive Officer and Chairman of the Board of Directors (Principal
Executive Officer)
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November
21, 2008
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Steven
G. Anderson |
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/s/
D. A. Lee
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Executive
Vice President, Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
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November
21, 2008
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| D.
Ashley Lee |
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/s/
Amy D. Horton
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Chief
Accounting Officer (Principal Accounting Officer)
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November
21, 2008
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| Amy
D. Horton |
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/s/
Thomas F. Ackerman
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Director
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November
21, 2008
|
| Thomas
F. Ackerman |
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/s/
James S. Benson
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Director
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November
21, 2008
|
| James
S. Benson |
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/s/
Daniel J. Bevevino
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Director
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November
21, 2008
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| Daniel
J. Bevevino |
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/s/
John M. Cook
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Director
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November
21, 2008
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| John
M. Cook |
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| /s/ Ronald C.
Elkins, M.D. |
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Director |
November
21, 2008 |
| Ronald
C. Elkins, M.D. |
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/s/
Ronald D. McCall
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Director
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November
21, 2008
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| Ronald
D. McCall |
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/s/
Harvey Morgan
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Director
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November
21, 2008
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| Harvey
Morgan |
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EXHIBIT
INDEX
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3.1
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Amended
and Restated Articles of Incorporation of the Company. (Incorporated
herein by reference to Exhibit 3.1 to the Registrant’s Form 10-K for the
year ended December 31, 2007.)
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3.2
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Amended
and Restated ByLaws of the Company. (Incorporated by reference
to Exhibit 3.1 to the Registrant’s Report on Form 8-K filed October 28,
2008.)
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4.1
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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
fiscal year ended December 31,
1997.)
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4.2
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First
Amended and Restated Rights Agreement, dated as of November 2, 2005,
between CryoLife, Inc. and American Stock Transfer & Trust Company.
(Incorporated herein by reference to Exhibit 4.1 to Registrant’s Current
Report on Form 8-K filed November 3,
2005.)
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4.3+
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Form
of Depositary Agreement.
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4.4+
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Form
of Depositary Receipt.
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5.1*
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Opinion
of Arnall Golden Gregory LLP regarding legality of the common stock,
preferred stock and depositary
shares.
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12.1*
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Computation
of Ratio of Earnings to Fixed
Charges.
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23.1*
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Consent
of Arnall Golden Gregory LLP (included as part of Exhibit 5
hereto.)
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23.2*
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Consent
of Deloitte & Touche LLP.
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24.1*
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Power
of Attorney (included in the signature pages of this registration
statement.)
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99.1
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Form
of Indemnification Agreement entered into with each of the Registrant’s
directors, except Harvey
Morgan, and its Executive Vice President, Chief Operating Officer and
Chief Financial Officer
(Incorporated herein by reference to Exhibit 99.1 to the Form S-3/A filed
by Registrant on January
4,
2005.)
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99.2*
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Form
of Indemnification Agreement entered into with Harvey
Morgan.
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+ To be
filed by amendment or as an exhibit to a Current Report on Form 8-K of the
Registrant
* Filed
with this Form S-3