EXHIBIT 10.22

TECHNOLOGY LICENSE

This Agreement entered into this 28th day of March, 1996, between Colorado State
University Research Foundation of Fort Collins, Colorado, 80522, (hereinafter
referred to as (“CSURF”), CryoLife, Inc. of 2211 New Market Parkway, Suite 142,
Marietta, Georgia 30067, (hereinafter referred to as “Company”).

W I T N E S E T H:

WHEREAS, Dr. Chris Orton has invented, is developing and may develop in the
future certain Trade Secrets, Know-How and Patents dealing with methods,
procedures and sciences relating to the science of enhancing fibroblast and
other cellular ingrowth into homograft, xenograft and bioprosthetic grafts;

WHEREAS, CSURF by virtue of its contractual relationship with Colorado State
University (“CSU”) and by virtue of CSU’s contractual relationship with
Dr. Orton, is the owner of all right and title to the Technology;

WHEREAS, the parties entered into a Technology Option Agreement dated March 1,
1991 (the “1991 Agreement”) pursuant to which the Company evaluated the
Technology for use in certain products currently under development;

WHEREAS, the Company now desires to license the Technology in order to continue
its product development and eventually commercialize products utilizing the
Technology and to obtain as part of the license certain assistance from
Dr. Orton; and

WHEREAS, the parties desire to enter into the following Agreement to license the
Technology and provide for Dr. Orton’s assistance upon the terms and conditions
hereinafter set forth.

NOW THEREFORE, in consideration of the premises, the Company’s continued
investment in product development incorporating the Technology in reliance upon
the promises hereinafter set forth, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

SECTION I. DEFINITIONS. The following terms shall have the meanings as
hereinafter set forth:

“Commercialization” shall mean the ability after the Company is satisfied with
the safety and efficacy of any Product to market and distribute the Product
without regulatory restraint within the United States following receipt of
premarket approval from the FDA. Commercialization shall not include limited
sales within the United States under an investigatory device exemption or
similar conditional sale approval received from the FDA.

 

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“FDA” shall mean the United States Food and Drug Administration or successor
agency.

“Milestone Payments” shall mean the payments required to be made to CSURF
pursuant to Section III(4).

“Minimum Royalties” shall mean the payments required to be made to CSURF
pursuant to Section III(3).

“Patent(s)” shall mean U.S. patent number 5,192,312 together with any and all
domestic and foreign patents and patent applications which may in the future be
filed on the Science which are owned, developed or acquired by CSURF. The term
Patents shall also include any and all U.S. or foreign divisions, continuations,
continuations in part, substitutions, reissues and extensions of the said
Patents.

“Percentage Royalties” shall mean the payments required to be made to CSURF
pursuant to Section III(1).

“Principal Investigator” shall mean Dr. Orton or his successor, if any, and
shall be responsible for all technical communications with the Company. Nothing
in this Agreement shall be construed so as to require CSURF to pursue the
Science in the event that Dr. Orton leaves CSU.

“Products” shall mean any chemical, device, process, substance or technique
which utilizes the Technology and is intended or adapted for use to enhance
fibroblast or other cellular ingrowth into homograft, xenograft and
bioprosthetic grafts.

“Science” shall mean the field relating to enhancing fibroblast and other
cellular ingrowth into homograft, xenograft and bioprosthetic grafts, including
any methods, procedures and materials related thereto.

“Subsidiaries” shall mean (a) any person or entity directly or indirectly
owning, controlling, or holding power to vote 25% or more of the outstanding
voting securities of Company, (b) any person or entity 25% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by Company, or (c) any executive officer, director, or
general partner of an entity defined under (a) or (b) in the foregoing. As used
in this definition, “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and polices of an
entity or of Company.

“Technology” shall mean any trade secrets, know-how and patents heretofore or
hereafter owned, developed or acquired by CSURF which are related to the
Science, including, without limitation, the Patents.

 

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SECTION II. LICENSE.

1. License Grant. CSURF hereby grants Company the sole and exclusive, worldwide
license to the Technology to develop, manufacture, use and sell Products. Such
license shall continue for the longer of 15 years or the life of any and all
Patent(s).

2. Sublicenses. The Company shall have the right to grant sublicenses of any
rights granted to it under this License, provided that Company shall have
received the prior approval of CSURF, which shall not be unreasonably withheld.
CSURF’s consent shall not be required for sublicenses to Company Subsidiaries or
for contract processing or manufacturing sublicenses entered into to facilitate
the Company’s development or production of Products.

3. Performance Goals. The Company agrees to use its reasonable best efforts to
achieve performance goals agreed upon by CSURF and the Company. The Company’s
performance goals for the 1996 Calendar year are set forth on “Exhibit A”
attached hereto. Performance goals will be determined by CSURF and the Company
upon consultation with the Principal Investigator in the years following 1996.
The performance goals shall be replaced by the Company’s payment of minimum
royalties under Section III(3) once payments are first made pursuant to Section
III(3)(b).

4. Receipt and Delivery of Technology. The Company acknowledges both the receipt
of the information which presently constitutes the Technology and fact that
neither CSURF nor Principal Investigator represent or promise that they will
develop or acquire any additional information or rights that would fall within
the definition of Technology. To the extent CSURF or Principal Investigator
develop or acquire any such information or rights, CSURF agrees to promptly
disclose same to the Company.

SECTION III. PAYMENT OBLIGATIONS.

1. Percentage Royalties. Company shall pay CSURF a royalty on Net Sales (gross
sales minus sales tax, returns, discounts and freight, if any) of Product(s) in
each country where Product(s) are protected by a Patent(s) equal to:

(i) 6% of the first $1 million in Net Sales;

(ii) 4% of Net Sales in excess of $1 million and up to and including $5 million;
plus

(iii) 3% of Net Sales in excess of $5 million.

Percentage Royalties on Net Sales of Product(s) where Product(s) are not
protected by Patent(s) shall be payable at one-half of the foregoing rates.

2. Sublicenses. In the event that the Company sublicenses the License granted in
Section II(1), the Company shall remain obligated to the terms of this
agreement. Company shall either require the sublicensee to pay the Percentage
Royalties required by this Section III(1)

 

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or, at the election of the Company in sublicenses that are not to Subsidiaries,
the Company shall pay CSURF one third of the Percentage Royalties received by
Company from such sublicenses. Company shall also pay CSURF one third of any
upfront, milestone, benchmark or any other miscellaneous income received from a
sublicensee.

3. Minimum Royalties. In consideration of the exclusive nature of the license
grant contained in Section II, Company agrees to pay CSURF Minimum Royalties as
follows:

(a) $10,000 per year beginning with a first payment on March 31, 1996 and
continuing each year thereafter until such time as the Company receives U.S.
Government approval permitting Commercialization of Products.

(b) $20,000 per year beginning in two equal $10,000 installments payable on
January 31, and July 31, in each of the first two years after the Company
receives U.S. Government approval permitting Commercialization of the Products;
and,

(c) $50,000 per year thereafter in quarterly installments of $12,500 each
payable on January 31, April 30, July 31, and October 31.

The Company shall be entitled to credit Minimum Royalties paid in any year
against Percentage Royalties earned in the same year but not against Percentage
Royalties earned in prior years or subsequent years.

4. Milestone Payments. The Company shall make the following Milestone Payments
to CSURF:

(a) $10,000 within 30 days after the filing of a product license application.

(b) $20,000 within 30 days after receipt of premarket approval from the FDA
permitting Commercialization of the Products within the United States.

The Company shall be entitled to credit Milestone Payments made as well as
out-of-pocket expenses incurred by the Company in the prosecution of the
Patent(s) against future Percentage Royalties but the amount of the credit that
may be taken in any year shall be limited, in that year, to the 50% of the
amount by which Percentage Royalties exceed Minimum Royalties in that year. For
example, if $30,000 in Milestone Payments and Patent prosecution costs were
incurred before year 2 and Percentage Royalties in year 2 exceeded Minimum
Royalties paid in year 2 by the sum of $40,000, the Company would be entitled to
credit only $20,000 of such amount as a credit to Milestone Payments and Patent
prosecution costs in that year. The remaining $10,000 of Milestone Payments and
unreimbursed Patent prosecution costs would be reimbursed in the same, fashion
in future years.

5. Nonexclusive License Payments. At any time after the third anniversary of
Commercialization, the Company may elect to convert this License from an
exclusive license to a nonexclusive license by notifying CSURF in writing. In
the event the license is converted to a nonexclusive license as provided in the
preceding sentence, the Company’s obligation thereafter

 

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to make minimum royalty and milestone payments shall terminate. If CSURF
thereafter relicenses the Technology to any third party at a lower percentage
royalty rate than that provided in this Agreement, CSURF shall notify the
Company of the lower royalty rate and offer the Company the opportunity to
thereafter pay such lower royalty rate in lieu of the rate it would otherwise be
obligated to pay hereunder.

6. Accounting for Payments.

(a) Payments of Percentage Royalties shall be made on or before the last
business day of January, April, July and October of each year for the sale of
all Products sold during the preceding quarterly periods ending on the last days
of December, March, June and September. Such payments shall be accompanied by a
statement showing the sales of the Products by the Company to all parties, and
such other particulars as are necessary or which may be reasonably requested by
CSURF for an account of the royalties payable pursuant to this Agreement.
Payment of the amount of royalties due shall accompany such statement.

(b) The Company shall keep complete and accurate records of the sales by the
Company of Products. Within 60 days following the end of each quarter of a
calendar year during which the royalties are due under this Agreement, the
Company shall render to CSURF a written report setting forth the amount of
royalties due and payable based on sales of Products during such quarter, and
upon rendering such report, remit to CSURF the amount of royalties shown thereby
to be due on sales of products.

(c) CSURF shall have the right for a period of five years after receiving any
royalty report to appoint an independent certified public accountant who is
acceptable to the Company who shall have access to the Company’s records during
reasonable business hours for the purpose of verifying the royalties payable
under this Agreement, but this right may not be exercised more than once in any
calendar year, and the accountant shall disclose to CSURF only information
relating solely to the accuracy of the royalty report and the royalty payments
made in accordance with this Agreement. The failure of CSURF to request
verification of any royalty report during said five year period shall be
considered acceptance of the accuracy of such report and the Company shall have
no obligation to maintain any records pertaining to such report beyond said five
year period.

SECTION IV. REGULATORY AND PATENT RESPONSIBILITIES.

1. Regulatory Approvals. The Company agrees, at its own expense, to take
reasonable steps to obtain regulatory approval from the FDA to manufacture, use
and sell Product(s) within the United States. If at any time the Company ceases
to use reasonable efforts to seek regulatory approval from the FDA, the Company
shall notify CSURF in writing identifying the reasons the Company no longer
seeks FDA approval and the Agreement shall terminate. However, if CSURF is
successful in licensing the Technology to a third party, CSURF will pay to the
Company 50% or any income (royalties, upfront payments, milestone, benchmark or
other miscellaneous payments) received from such license in any given fiscal
year, for the term of such license in consideration of the Company’s efforts and
expenses incurred in

 

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development and commercialization costs and in consideration of patent related
expenses incurred by the Company in connection with the Technology.

2. Patent Prosecution.

(a) The Company shall upon written request from CSURF bear the reasonable costs
and responsibility for the preparation, filing and prosecution of the United
States Patent Applications under the Technology, but in no case beyond an appeal
to and a decision by the United States Patent and Trademark Office Board of
Appeals, unless the Company specifically agrees otherwise in writing. With
respect to foreign patent applications, the procedure shall be as follows:
foreign patent applications shall be filed by the Company on behalf of CSURF in
such countries as selected by the Company. Such selection of countries is to be
made in writing by the Company to CSURF within nine months after the filing date
of any corresponding U.S. application, and the filing of such designated foreign
patent application will be made, in CSURF’s name within one year after the
filing date of the corresponding U.S. application. The Company will pay the
reasonable costs of the preparation, filing and prosecution of such foreign
applications and the maintenance of the resulting patents for so long as the
Company remains a licensee under the patents. CSURF may file and prosecute
applications and maintain the resulting foreign patents at its own expense in
countries not selected by the Company. The Company having elected to file a
foreign patent application, may advise CSURF without loss of any right granted
by this Agreement that it does not wish to pursue further prosecution or
maintenance in a particular country and the Company will have no further
obligations for payment of any costs for patent prosecution or maintenance in
the country. CSURF may then, if it so desires, continue such prosecution or
maintenance at its expense. Such election by the Company to discontinue
prosecution or maintenance in a particular country shall not prejudice the
Company’s rights under this Agreement in other countries.

(b) Company will keep CSURF informed of all patent activity related to the
Technology by sending CSURF copies of all Patent filings (U.S. and foreign) and
Patent prosecution related information. Company will also notify and allow the
Principal Investigator the opportunity to be involved in the decisions related
to the Science of any Patent application or Patent prosecution related to the
Technology.

(c) In the event that during the course of this Agreement, a patentable
invention is made jointly by one or more members of the Company and one or more
researchers at CSU, as determined by the laws of patent inventorship, title to
any Patent or Patents maturing therefrom shall be held by CSURF.

(d) If CSURF files Patent applications or otherwise obtains rights which relate
to the Technology, the Company shall have a right to an exclusive worldwide
license under such Patent rights as are set forth in Section II(1) and the
exclusive license granted to the Company under Section II(1) shall be extended
to the expiration date of the last expired patent which issues in any particular
country. If CSURF decides not to file a Patent application on any CSURF
invention which relates to the Technology, CSURF will promptly notify the
Company of the decision and disclose such invention to the Company. The Company
will then, at its option, have the right to file Patent applications throughout
the world and to have an exclusive license,

 

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with a right to grant sublicenses, under such Patent rights as are set forth in
Section II(1) and exclusive license granted to the Company under Section II(1)
shall be extended through the expiration date of the last to expire patent which
issues in any particular country.

(e) CSURF shall be the sole and exclusive owner of said Patent(s), subject to
the terms of this Agreement.

3. Patent Enforcement.

(a) CSURF does not warrant that the Technology licensed hereunder shall not
infringe any patents. However, CSURF is not presently aware of the existence of
such patents owned by third parties.

(b) CSURF and Company agree to inform each other in the event that it becomes
aware of any potential infringement of the Technology. CSURF shall then, at its
expense, have the right to take appropriate action against any potential
infringer. In the event that CSURF elects not to take action against the
potential infringer, the Company may elect to do so at its expense, in either
its own name or in CSURF’s name. In either event, CSURF and the Company agree to
cooperate fully with any such proceedings. The Company may not, as part of
settlement negotiations, offer or grant non-exclusive licenses without the
written consent of CSURF, such consent shall not be unreasonably withheld. If
the Company pursues litigation, it shall be entitled to offset the cost of
litigation against 50% of the royalty payments coming due during the litigation.
If the Company succeeds in obtaining a damage judgment in the litigation, it
shall be entitled to recoup its costs of litigation, to the extent not
previously recouped out of royalties, plus 2/3 of the remaining amount of the
judgment, if any. The remainder of the judgment, if any, shall be paid to CSURF
as payment, in full, of royalties withheld by the Company during the litigation.
If neither party pursues litigation and there is no acceptable settlement, the
Company shall be entitled to withhold royalties until a settlement is reached,
but only after obtaining an opinion from patent counsel reasonably acceptable to
both parties that the Patents have been infringed.

SECTION V. ASSISTANCE FROM DR. ORTON AND REPORTING.

1. Assistance from Dr. Orton. CSURF warrants, that at the time of the signing of
this Agreement, Dr. Orton has agreed to provide reasonable assistance (as long
as he is a CSU employee) to the Company, as reasonably requested by the Company,
in evaluating or testing Product(s) prototypes. The Company agrees to pay
Dr. Orton a reasonable amount for out-of-pocket expenses and time in excess of
ten hours per month associated with Dr. Orton’s assistance.

2. Reporting Responsibilities. CSURF, through the Principal Investigator, will
provide semi-annual written reports to the Company summarizing the progress of
ongoing research conducted by Dr. Orton and CSU on the Technology and will
otherwise keep the Company fully and promptly informed of all progress on the
Technology. The Company will provide semi-annual written reports to CSURF which
summarize the progress of the Company’s efforts to meet its Performance Goals
and to complete development of the Product.

 

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SECTION VI. REPRESENTATION OF CSURF. CSURF hereby represents and warrants that
it owns all right, title, and interest in and to the Technology and has the
authority to enter into and perform its obligations under this Agreement. Except
as provided in this Agreement, CSURF expressly disclaims all Warranties, express
or implied, including without limitation warranties of merchantability or
fitness of Technology for a particular purpose. CSURF further warrants that
neither Dr. Chris Orton nor any other Colorado State University employee or
others involved with Dr. Orton in the development of the Technology retains any
rights in or to the Technology which are inconsistent with or encumber or limit
the rights to the Technology which are granted to the Company by this Agreement.

SECTION VII. INDEMNIFICATION. Except as provided above, Company shall indemnify,
defend, and hold CSURF harmless from and against any and all Damages incurred by
CSURF arising out of any Claim of a third party based upon the production,
distribution, or marketing by Company of the Products or upon an allegation that
any of the Products infringes upon any patent of a third party.

SECTION VIII. CONFIDENTIALITY. Except as otherwise expressly .provided in this
Agreement, the Company and CSURF shall use their best efforts to retain in
confidence for a period of five years after the termination of the Agreement all
information received from the other party in the course of pursuing the Science,
provided, however, that such information may be disclosed insofar as such
disclosure is necessary to defend itself against litigation, to file and
prosecute patent applications or to comply with governmental regulations, and
provided, further, that such obligation of confidentiality shall be waived as to
information which (i) is in the public domain, (ii) which comes into the public
domain through no fault of the party claiming waiver, or (iii) was known to the
party claiming waiver prior to its disclosure by the other party.

SECTION IX. PUBLICATIONS. While it is understood that CSURF and the Principal
Investigator are free to publish the results of their studies carried out under
this Agreement, CSURF agrees to provide the Company the opportunity to review
any proposed manuscripts at least thirty (30) days prior to their intended
submission for publication and, at the Company’s request, shall delay submission
for a period sufficient to permit adequate steps to be taken to secure patent
protection for any patentable subject matter.

SECTION X. TERMINATION. This license shall continue in full force and effect
until the end of its term as determined by Section II(1). CSURF may earlier
terminate this Agreement should Company commit any material breach of the terms
and conditions of this Agreement and if such failure or breach shall continue
for a period of 30 days after written notice thereof is delivered by CSURF to
Company, said termination to be effective at the expiration of said 30 day
period if such failure or breach is not cured, likewise Company may terminate
this Agreement if CSURF commits any material breach of the terms and conditions
of this Agreement and such failure or breach shall continue for a period of 30
days after written notice thereto is delivered by Company to CSURF, said
termination to be effective at the expiration of said 30 day period if such
failure or breach is not cured.

This Agreement will automatically terminate if Company makes any general
assignment for the benefit of its creditors, a petition is filed by or against
Company initiating a proceeding

 

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under any provision of the Bankruptcy Act, or a receiver or similar officer is
appointed by a court of competent jurisdiction to take charge of all or any part
of Company’s property.

SECTION XI. GENERAL PROVISIONS.

1. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the Technology and supersedes and
terminates all other prior commitments, arrangements, or understandings, both
oral and written, including the 1991 Agreement, between the parties with respect
to the Technology.

2. Modification. This Agreement may not be modified or amended except by an
instrument in writing executed by each of the parties.

3. Binding; Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. This
Agreement shall not be assignable by CSURF without the prior written consent of
the Company. This Agreement shall not be assignable by the Company without the
prior written consent of CSURF except that the Company may assign to a successor
in ownership of all or substantially all of the business assets to which the
Agreement pertains, which successor shall expressly assume in writing the
performance of all the terms and conditions of this Agreement to be performed by
the Company.

4. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Colorado.

5. Notices. Any notices or other communications required or permitted hereunder
shall be in writing and shall be sent by (a) personal delivery (including
delivery by Federal Express or similar overnight courier), (b) mailed registered
or certified mail, return receipt requested, postage prepaid, or (c) transmitted
by facsimile, telex, or telecopy to the numbers set forth below and with
originals of such transmissions sent by registered or certified mail. Notices
shall be sent to the addresses as set forth below or to such other addresses as
may be hereafter furnished by one party to the other party in compliance with
the terms hereof.

 

If to CSURF:

   CSURF    Attn: President    P.O. Box 483    Fort Collins, CO 80522

If to Company:

   CryoLife, Inc.    Attn: President    Suite 142    2211 New Market Parkway   
Marietta, Georgia 30067    Facsimile Number: 404-952-9743

 

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With a copy to:

   Arnall Golden Gregory LLP    171 17th Street NW    Atlanta, Georgia
30363-1031    Attn: Clinton D. Richardson, Esq.    Facsimile Number:
404-873-8665

Notices shall be effective (a) upon receipt by the addressee, if sent by
personal delivery or mail, or (b) upon transmission, if sent by telecopy, telex,
or facsimile provided that the telecopy, telex or facsimile transmittal is
verified by an officer of the receiving party that the document was actually
received.

6. Waiver. None of the provisions of this Agreement shall be deemed to have been
waived by any act or acquiescence on the part of either party, their agents or
employees, but may be waived only by instruments in writing signed by an
authorized officer of the respective party. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision or of the same
provision on another occasion.

7. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date set forth herein by their duly authorized representatives.

 

COLORADO STATE UNIVERSITY RESEARCH FOUNDATION By:   /s/ Title:     Date:    
CRYOLIFE, INC. By:   /s/ Title:     Date:    

 

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EXHIBIT A

 

GOALS AND OBJECTIVES – 1996
SYNERGRAFT HEART VALVE DEVELOPMENT CryoLife Responsibilities

Objective

  

Completion

Demonstrate applicability of SynerGraft technology to intact heart valve
construct which includes unstented leaflets and unfixed conduit   

October – December 1996

(in stages described below)

Large animal model Stage I

Allograft aortic valve: test of depopulation effects on valve integrity;
implants in sheep

   February 1996

Large animal model Stage II

Depopulated xenograft aortic valve: test of insertion of pig valve in aortic
position in sheep; evaluation of size matching parameters

   April 1996 Decision point: do non-repopulated valve appear to function well
without cellular repopulation. If so, go into long-term 6-9 month study. If not,
precede with stages III and IV.

Large animal model Stage III

Repopulated allograft heart valve; assessment of autogenous dermal fibroblast
survival in an allograft heart valve matrix

   July 1996

Large animal model Stage IV

Repopulated xenograft heart valve; assessment of autogenous dermal fibroblast
survival and function in an xenograft heart valve matrix

   October 1996 Colorado State Responsibilities Parallel studies to animal
implant models as noted above, but in pig to dog model of aortic valve grafting
   October – December 1996

 

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