Document:

EXHIBIT 10.3

                        SETTLEMENT AND RELEASE AGREEMENT

     THIS SETTLEMENT AND RELEASE AGREEMENT (the "Agreement") is made and entered
into this the 2nd day of August,  2002 (the  "Effective  Date"),  by and between
Colorado  State  University   Research   Foundation  ("CSURF"  or  "Plaintiff"),
CryoLife,  Inc.  ("CryoLife"  or  "Defendant"),  and Dr.  E.  Christopher  Orton
("Orton").

                                   I. RECITALS

     1. The case of Colorado State University  Research  Foundation v. CryoLife,
Inc.,  Civil Action No.  01-N-933 (OES) (the "Lawsuit") is pending in the United
States  District  Court for the  District  of  Colorado  between  Plaintiff  and
Defendant.

     2. In the Lawsuit,  Plaintiff alleges,  among other things,  that Defendant
breached a certain Technology License (the "Technology License") dated March 26,
1996 between  Plaintiff and  Defendant,  improperly  identified the inventors on
certain  patents,  and violated the Lanham Act (15 U.S.C. ss.  1125(a)(1)),  and
seeks  damages,  termination of the  Technology  License,  assignment of certain
patents,  and other relief from Defendant.  Defendant  denies all allegations in
the Lawsuit and denies  that  Plaintiff  is entitled to the relief it seeks from
Defendant.

     3. Defendant has filed a  counterclaim  against  Plaintiff for  declaratory
judgment that it did not breach the  Technology  License.  Plaintiff  denies the
allegations contained in Defendant's counterclaim.

     4. Orton,  the inventor of the ORTON  PATENTS (as defined  below),  who has
assigned  to CSURF all of his  rights in the ORTON  Patents  and  certain  other
technology  licensed under the  Technology  License to CryoLife , is a necessary
party to this Agreement.

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     5.  Plaintiff,  Defendant,  and Orton desire to  compromise  and settle all
claims and disputes existing amongst themselves as of the Effective Date of this
Agreement.

                        II. SETTLEMENT AND RELEASE TERMS

     NOW,  THEREFORE,  in consideration of the foregoing  recitals,  the payment
described  below,  and other good and  valuable  consideration,  the receipt and
sufficiency of which is hereby  acknowledged,  Plaintiff and  Defendant,  by and
through authorized  representatives  whose signatures appear below, and Orton do
hereby agree as follows:

A.       Definitions

     1.  ORTON  PATENTS  shall  mean all U.S.  and  foreign  patents  and patent
applications filed as of the Effective Date or directed to inventions made as of
the  Effective  Date naming Orton as inventor or  co-inventor  together with all
U.S.  and foreign  future  applications,  continuations,  continued  prosecution
applications, continuations-in-part,  divisions, or substitutions thereof. ORTON
PATENTS include, but are not limited to, U.S. Patent Nos. 5,192,312;  5,772,695;
5,863,296;  5,855,617, and U.S. Provisional Application Serial No. 60/219,548 as
well as corresponding  Non-Provisional  Application Serial No. 09/909914 and PCT
Application Serial No. PCT/US01/22018.

     2.  GOLDSTEIN  PATENTS shall mean U.S.  Patent Nos.  5,613,982;  5,632,778;
5,843,182;  5,899,936; and all pending and future applications and patents, both
U.S. and  foreign,  arising from these  patents,  as well as any  continuations,
continued  prosecution   applications,   continuations-in-part,   divisions,  or
substitutions thereof.

     3. TISSUE DECELLULARIZATION PATENT APPLICATIONS shall mean U.S. Application
Serial Nos.  08/838,852 and  09/735,522 and all pending and future  applications

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and patents, both U.S. and foreign,  arising from these patent applications,  as
well    as    any    continuations,    continued    prosecution    applications,
continuations-in-part, divisions, or substitutions thereof.

     4. TISSUE GRAFT PATENT APPLICATIONS shall mean U.S. Application Serial Nos.
60/178,632 and 09/769,769 and all pending and future  applications  and patents,
both U.S. and foreign arising from these patents,  as well as any continuations,
continued  prosecution   applications,   continuations-in-part,   divisions,  or
substitutions thereof.

     5. UNSTENTED HEART VALVE PATENT  APPLICATIONS  shall mean U.S.  Application
Serial No. 09/540,525 and all pending and future applications and patents,  both
U.S. and  foreign,  arising from these  patents,  as well as any  continuations,
continued  prosecution   applications,   continuations-in-part,   divisions,  or
substitutions thereof.

     6. DECELLULARIZATION  PROCESS shall mean any method that removes endogenous
cells or cellular  material by methods  which  include (a)  cellular  lysis in a
hypotonic  solution followed by nuclease  digestion  utilizing RNAse or DNAse or
other nucleases,  or (b) irradiation  followed by nuclease  digestion  utilizing
RNAse and/or DNAse or other nucleases.

     7.  PROCESSED  TISSUE shall mean  xenograft and allograft  tissue  CryoLife
processed or processes using a DECELLULARIZATION PROCESS.

     8. NET RECEIPTS FROM  XENOGRAFT  TISSUE SALES shall mean  CryoLife's  gross
receipts  from the sale of  xenograft  PROCESSED  TISSUE  minus any  sales  tax,
returns,  discounts and freight  charges  attributable  to the sale or return of
xenograft PROCESSED TISSUE.

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     9. ALLOGRAFT  STANDARD  TISSUE shall mean allograft  tissues which have not
undergone a DECELLULARIZATION PROCESS.

     10.  PROCESSING FEES FOR ALLOGRAFT  PROCESSED  TISSUE shall mean CryoLife's
gross  receipts from  processing  fees  collected with the transfer of allograft
PROCESSED  TISSUE minus any sales tax,  returns,  discounts and freight  charges
attributable to the sale or return of allograft PROCESSED TISSUE.

     11.  PROCESSING  FEE FOR ALLOGRAFT  STANDARD  TISSUE shall mean  CryoLife's
gross  receipts from  processing  fees  collected with the transfer of ALLOGRAFT
STANDARD  TISSUE minus any sales tax,  returns,  discounts  and freight  charges
attributable to the sale or return of ALLOGRAFT STANDARD TISSUE.

     12. NET INCREASED  RECEIPTS FROM ALLOGRAFT TISSUE PROCESSING shall mean all
PROCESSING  FEES FOR  ALLOGRAFT  PROCESSED  TISSUE  multiplied  by the following
fraction (the "Fraction")

       (Average Per Unit Processing Fee for Allograft Processed Tissue) -
        (Average Per Unit PROCESSING FEE FOR ALLOGRAFT STANDARD TISSUE)
               _________________________________________________

         Average Per Unit Processing Fee for Allograft Processed Tissue

The  Processing  Fees used for purposes of  calculation of the Fraction shall be
CryoLife's  average unit  processing  receipts during the royalty period (except
only that the Fraction calculated for the royalty period January 1, 2002 to June
30, 2002 shall be applied to determine royalties payable for allograft PROCESSED
TISSUE  transferred or sold from March 26, 1996 to and including June 30, 2002).
A  calculation  of the  Fraction  for all tissues  currently  processed  using a
DECELLULARIZATION  PROCESS is attached hereto as Exhibit "A". The  determination

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of the Fraction for tissues, if any, processed using a DECELLULARIZATION PROCESS
in the  future  which  are not  currently  processed  using a  DECELLULARIZATION
PROCESS will be  determined  at the end of the first  royalty  period after such
tissues are first offered by CryoLife on a commercial basis.

B.   Payments

     1. CryoLife will pay CSURF a royalty as described below on PROCESSED TISSUE
transferred  or sold from March 26, 1996 to and including  March 28, 2011.  Upon
payment of royalties accruing pursuant to this Section B, Cryolife shall have no
further  payment  obligations  whatsoever,  but  all  other  provisions  of this
Agreement shall remain in full force and effect.

     2.  CryoLife  will pay to CSURF the sum of four  hundred  thousand  dollars
($400,000.00)  (the "Advance") as a  nonrefundable  advance payment of royalties
which have accrued or which will accrue pursuant to paragraphs  B(1),  B(3), and
B(4) herein. Promptly upon execution of this Agreement, North Star Trust Company
("Escrow  Agent")  shall be  directed,  by a letter in the form of the  attached
Exhibit "B," to terminate  the Escrow  Agreement  entered into between CSURF and
Cryolife and to transfer to CSURF the accumulated  balance of the escrow account
(No. 70 - 4139), pursuant to the Escrow Agreement, as the initial payment of the
Advance.  CryoLife  will wire  transfer  to CSURF the  remaining  portion of the
Advance  within ten (10)  business  days  following  distribution  of the Escrow
funds.

     3. The royalty  payable  with respect to  xenograft  PROCESSED  TISSUE sold
shall be  determined  by  multiplying  0.75% times NET RECEIPTS  FROM  XENOGRAFT
TISSUE SALES.

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     4.  The  royalty  payable  with  respect  to  allograft   PROCESSED  TISSUE
transferred  shall be  determined  by  multiplying  0.75%  times  NET  INCREASED
RECEIPTS FROM ALLOGRAFT TISSUE PROCESSING.

     5. CryoLife will pay royalties to CSURF on a semi-annual  calendar basis in
arrears.  Payments  with respect to each royalty  period shall be due before the
end of the  following  calendar  quarter and shall be  accompanied  by a written
report,  signed by a Cryolife  officer who certifies the accuracy of the report,
which  shows  royalties  accrued  since  March 26,  1996  through the end of the
preceding royalty period, royalties accrued in the preceding royalty period, and
royalties payable, if any, after adjustment for the Advance. The written report,
and the information  contained therein,  shall be kept confidential by CSURF and
Orton and shall not be disclosed to any other person or entity unless disclosure
is required by judicial or  administrative  process,  in which case CSURF and/or
Orton will promptly notify CryoLife in order to allow CryoLife a reasonable time
to oppose such process.  The parties  acknowledge that no royalty payments shall
be due or payable  unless and until the  amount of the total  accrued  royalties
exceeds the amount of the Advance.

     6.  CSURF  shall  have the right  for a period  of three  (3)  years  after
receiving  any  royalty  calculation  and/or  payment to appoint an  independent
certified  public  accountant,  who is acceptable to CryoLife and who shall have
access to CryoLife's  records during reasonable  business hours, for the purpose
of verifying the royalties payable under this Agreement. This verification right
may not be  exercised  by CSURF  more than once in any  calendar  year,  and the
accountant  shall  disclose  to CSURF only  information  relating  solely to the

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accuracy of the royalty  calculation and the royalty payments made in accordance
with this  Agreement.  Such  certified  public  accountant  must agree to sign a
confidentiality  agreement prior to receiving access to CryoLife's records.  Any
information disclosed to CSURF by such certified public accountant shall be kept
confidential  by CSURF and shall not be disclosed to any other person or entity.
The failure of CSURF to request  verification of any royalty  calculation during
said three year period shall be  considered  acceptance  of the accuracy of such
calculation,  and  CryoLife  shall have no  obligation  to maintain  any records
pertaining to such calculation beyond the three year period.

     7.  Orton and CSURF  agree and  acknowledge  that  Orton,  by virtue of his
separate  agreement(s)  with Colorado  State  University  ("CSU"),  will receive
financial  compensation  directly  from  CSURF  as a  result  of the  settlement
contained in this Agreement. Orton hereby acknowledges this as good and valuable
consideration  for his  entering  into this  Agreement.  CryoLife  shall have no
obligation to make any payment to Orton.

C.   Termination of Technology License

     The  Technology  License is  terminated  as of the  Effective  Date of this
Agreement.   All  obligations,   undertakings  and  payments  contained  in  the
Technology License are no longer in effect.

D.   Disposition of Patent, Other Intellectual Property and Rights to Technology

     1.  CSURF  and Orton  hereby  assign to  CryoLife  all  rights to the ORTON
PATENTS  and  their  interests  in  the  Unstented  Heart  Valve   Applications.
Simultaneously  with the  execution  of this  Agreement,  CSURF and  Orton  will

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execute the assignment to CryoLife in the form of the attached Exhibit "C".

     2. CSURF and Orton  hereby  assign to  CryoLife  all  rights to  inventions
(whether patentable or not), technology,  patents,  trade secrets,  know-how and
information,  owned or controlled by CSURF or Orton, and developed or identified
by Orton or those working with Orton, related to tissue decellularization and/or
recellularization.  Simultaneously  with the execution of this Agreement,  CSURF
and Orton will  execute the  assignment  to CryoLife in the form of the attached
Exhibit  "C".  Neither  CSURF nor Orton shall have any  obligation  to assign to
Cryolife any inventions (whether patentable or not), technology,  patents, trade
secrets,  know-how and information,  related to tissue  decellularization and/or
recellularization which they may create after the Effective Date .

     3. CSURF and Orton represent and warrant that the only patent  applications
which  they  have  placed  on  file   anywhere   and  which   relate  to  tissue
decellularization  or  tissue  recellularization  are  U.S.  Patent  Serial  No.
09/909,914,   PCT  Application  Serial  No.  PCT/US01/22018,   U.S.  Provisional
Application  Serial No. 60/306,673 and U.S.  Provisional  Application Serial No.
60/309,454 ("Pending Orton Applications").  Within ten (10) business days of the
Effective Date, CSURF shall expressly abandon the Pending Orton Applications and
shall  immediately  forward copies of the  abandonment  documents to counsel for
CryoLife.  CSURF further agrees not to file any additional patent  applications,
extensions  or   substitutions   thereof   claiming   priority  to  any  of  the
above-referenced applications or the ORTON PATENTS.

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     4. CSURF and Orton shall not voluntarily  take any action to interfere with
or oppose any CryoLife  patent  applications or future  applications  related to
tissue decellularization or tissue recellularization or to deter the issuance of
any such patent or patents that might issue  therefrom.  CSURF and Orton further
agree  not to  contest  the  inventorship,  enforceability  or  validity  of the
GOLDSTEIN  PATENTS,  the  TISSUE  DECELLULARIZATION  PATENT  APPLICATIONS,   the
UNSTENTED   HEART  VALVE  PATENT   APPLICATIONS   or  the  TISSUE  GRAFT  PATENT
APPLICATIONS.

     5. Upon reasonable request,  payment of a reasonable  consulting fee and as
may be reasonably  necessary,  CSURF and Orton shall  provide  assistance to and
cooperate  with Cryolife in  prosecution  of patent  applications  related to or
arising   from  the  ORTON   PATENTS,   the   GOLDSTEIN   PATENTS,   the  TISSUE
DECELLULARIZATION  PATENT APPLICATIONS,  the TISSUE GRAFT PATENT APPLICATIONS or
the UNSTENTED HEART VALVE PATENT APPLICATIONS.

E.   Releases

     1. CSURF and Orton,  for and in  consideration  of the  payments  and other
undertakings  of CryoLife set forth in this  Agreement,  the receipt of which is
hereby acknowledged, do hereby release, acquit, and forever discharge Defendant,
and  all of its  past  and  present  affiliates,  agents,  subsidiaries,  parent
companies,   officers,   directors,   employees,   insurers,  attorneys,  heirs,
successors,  and  assigns  and the  affiliates,  agents,  partners,  principals,
employees,  insurers,  officers,  directors,  attorneys,  heirs,  successors and
assigns of their subsidiaries and parent companies (hereinafter collectively and
individually referred to as "CryoLife Released Parties") of and from any and all
claims,  causes  of  action,  suits,  torts,  fraud,   negligence,   bad  faith,
defamation,   accounts,  covenants,  contracts,   agreements,   representations,

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promises,  judgments,  damages,  expenses, any extra-contractual damages and any
act known or unknown,  foreseen or unforeseen,  in law or in equity, which CSURF
or Orton have ever had or may have against any of the CryoLife  Released Parties
from the beginning of time to the date of the Effective Date of this  Agreement,
except as to any obligations or undertakings pursuant to this Agreement.

     2.  CryoLife,  for  and in  consideration  of  the  assignments  and  other
undertakings  of CSURF and Orton set forth in this  Agreement,  the  receipt  of
which is hereby acknowledged, does hereby release, acquit, and forever discharge
Plaintiff  and  Orton,  and all of its  past  and  present  affiliates,  agents,
subsidiaries,   parent  companies,  officers,  directors,  employees,  insurers,
attorneys, heirs, successors, and assigns and the affiliates,  agents, partners,
principals,   employees,   insurers,  officers,  directors,   attorneys,  heirs,
successors and assigns of their  subsidiaries and parent companies  (hereinafter
collectively  and individually  referred to as "CSURF Released  Parties") of and
from any and all claims, causes of action, suits, torts, fraud, negligence,  bad
faith, defamation, accounts, covenants, contracts, agreements,  representations,
promises,  judgments,  damages,  expenses, any extra-contractual damages and any
act  known or  unknown,  foreseen  or  unforeseen,  in law or in  equity,  which
CryoLife has ever had or may have against any of the CSURF Released Parties from
the  beginning  of time to the  date of the  Effective  Date of this  Agreement,
except as to any obligations or undertakings pursuant to this Agreement.

F.   Use of Disclosed Technology, Trade Secrets, Know-How

     1. CryoLife  shall be authorized  to freely and forever  make,  use,  sell,
license,  sublicense and/or  commercialize any inventions (whether patentable or
not), technology patents, trade secrets,  know-how and information that Orton or

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CSURF disclosed to CryoLife up to the Effective Date of this Agreement.

     2. Orton  shall have the  royalty-free,  non-exclusive  and  non-assignable
right to use the ORTON  PATENTS  solely for  non-commercial,  academic  research
purposes and solely at an academic institution. Other than this limited right to
use the  ORTON  PATENTS,  neither  CSURF  nor Orton  may  disclose,  use,  sell,
commercialize,  license,  sublicense  or encumber  confidential  or  proprietary
CryoLife technology, patents, information, trade secrets, and/or know-how.

     3.  Notwithstanding  anything to the contrary  herein,  CSURF and Orton are
free  to use  any  information,  whether  originally  provided  by  CryoLife  or
otherwise,  which is otherwise  available for use by the public,  subject to the
restrictions  of 35 U.S.C.  ss. 1, et. seq. and related  foreign laws.  However,
information  shall not be deemed to fall within the foregoing  exception  merely
because  it  may be  embraced  within  a  body  of  generally  available  public
information, nor shall any combination of features be deemed to fall within such
exception merely because the individual features thereof are publicly available.

G.   Dismissal of Lawsuit

     Promptly  after the  execution of this  Agreement,  Plaintiff and Defendant
will file a Joint  Stipulation  of Dismissal  With  Prejudice in the form of the
attached Exhibit "C".

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H.   Warranty

     1. CSURF hereby  represents  and warrants  that it has not sold,  conveyed,
licensed,  encumbered, or otherwise transferred all or any portion of the claims
asserted in the Lawsuit or its claimed  rights in the ORTON  PATENTS,  GOLDSTEIN
PATENTS,  TISSUE  DECELLULARIZATION  PATENT  APPLICATIONS,  TISSUE  GRAFT PATENT
APPLICATIONS  or  UNSTENTED  HEART VALVE  PATENT  APPLICATIONS  to any person or
entity.

     2. Orton hereby  represents  and warrants  that he has not sold,  conveyed,
licensed,  encumbered, or otherwise transferred all or any portion of the claims
asserted in the Lawsuit or his claimed  rights in the ORTON  PATENTS,  GOLDSTEIN
PATENTS,  TISSUE  DECELLULARIZATION  PATENT  APPLICATIONS,  TISSUE  GRAFT PATENT
APPLICATIONS  or  UNSTENTED  HEART VALVE  PATENT  APPLICATIONS  to any person or
entity except CSURF.

     3. CryoLife hereby represents and warrants that it has not sold,  conveyed,
licensed,  encumbered, or otherwise transferred all or any portion of the claims
asserted in the Lawsuit.

     4. CSURF and CryoLife each hereby  represents  and warrants that it is duly
authorized  to enter into this  Agreement  and the  individuals  executing  this
Agreement  represent  and warrant that they are duly  authorized to execute this
Agreement on behalf of their respective principals.

     5. CryoLife  represents and warrants that it currently processes certain of
its allograft tissue products using a DECELLULARIZATION PROCESS.

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I.   Confidentiality

     1. Pursuant to Paragraph 14 of the Protective Order entered in the Lawsuit,
the Protective Order shall remain in full force and effect and survive the entry
of any other order by the Court resulting in the termination of the Lawsuit. The
parties agree,  however,  that the  provisions of the Protective  Order shall be
modified by CryoLife's right,  pursuant to Paragraph F(1) of this Agreement,  to
use information disclosed to it by CSURF or Orton.

     2. CSURF and Orton  hereby  represent  and warrant that neither of them has
had access to any CryoLife information or documents  designated  "Attorneys Eyes
Only" and produced in this lawsuit pursuant to the Protective  Order.  CSURF and
Orton  shall  return to their  counsel all  CryoLife  information  or  documents
designated  "Confidential " pursuant to the Protective  order for disposition in
accordance with the terms of the Protective Order.

     3. CryoLife represents and warrants that it has not had access to any CSURF
or Orton information or documents designated "Attorney's Eyes Only" and produced
in this lawsuit pursuant to the Protective Order.

J.   Miscellaneous

     1.  Each  party  to this  Agreement  agrees  to pay  all of its own  costs,
attorney's fees and other expenses  related to the Lawsuit.  No additional claim
shall be filed by any  party,  or on its  behalf  or by its  attorneys,  for any
additional fees or costs pertaining in any way to the Lawsuit.

     2. This Agreement constitutes the entire agreement between the parties with
respect to the resolution and settlement of the Lawsuit and the claims  released
by CSURF  hereunder,  and  supersedes all prior or  contemporaneous  agreements,
promises,  or  understandings  between  the  parties  thereto.   Neither  CSURF,

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CryoLife,   nor   Orton  is   relying   upon  any   representations,   promises,
understandings or agreements except as expressly set forth herein.

     3. This  Agreement  does not constitute an admission by any party hereto of
liability  to the other with  respect to any claim  asserted  in the  Lawsuit or
otherwise,  but is entered into solely for purposes of compromising and settling
the  disputes  between the parties and the  Lawsuit,  and  avoiding the time and
expense that would be involved in proceeding with litigation.

     4. Each of the  parties  has fully,  finally,  and  completely  compromised
matters  involving  disputed issues of law and fact as between them. The parties
hereto assume the risk that the facts or law may be otherwise  than it believes,
whether through  ignorance,  oversight,  error,  negligence,  or otherwise,  and
which,  if known,  would  materially  affect  its  decision  to enter  into this
Agreement.

     5. The parties hereto each have been represented by competent legal counsel
of its or his own choosing in the negotiation, preparation and execution of this
Agreement.  The parties further agree that they each have participated fully and
freely in the  negotiation  and drafting of this Agreement and that as a result,
this  Agreement  shall not be  construed  in favor of or  against  either  party
hereto.

     6. It is further  understood  and agreed  that  should any  portion of this
Agreement  be held  invalid by  operation  of law or  otherwise,  the  remaining
portion  shall be given  full  force  and  effect  and  shall  not in any way be
affected thereby.

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     7. This  Agreement  may be  executed  in multiple  counterparts  and,  when
executed by each of the parties, shall constitute a single agreement.

     8. Facsimile signatures are acceptable to bind the parties hereto.

     9. Venue for any action  filed to enforce  this  Agreement  shall be in the
United States District Court for the District of Colorado.  Any disputes arising
out of or related to this Agreement shall be governed by Colorado law.

     IN  WITNESS  WHEREOF,   Colorado  State  University  Research   Foundation,
CryoLife,  Inc., and Dr. E. Christopher Orton have hereunder set their hands and
seals on this the 2nd day of August, 2002.

                            [SIGNATURES ON NEXT PAGE]

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                      PLEASE READ CAREFULLY BEFORE SIGNING

                                    I HAVE READ, UNDERSTAND AND
                                    AGREE TO THE FOREGOING.

                                    Colorado State University Research
                                    Foundation

                                    By:  /s/ Kathleen Henry
                                         ------------------------------

                                    Its: President/CEO
                                         ------------------------------

                                   With express authority to enter
                                   this  agreement on behalf of Colorado
                                   State   University Research Foundation

STATE OF COLORADO   )
COUNTY OF LARIMER   )

     I, Dian Marie  Kammeyer,  a Notary Public in and for said county and state,
hereby certify that Kathleen Henry,  President/CEO  of Plaintiff  Colorado State
University Research Foundation, whose name is signed to the foregoing Settlement
and Release Agreement,  and who is known to me,  acknowledged  before me on this
day that,  being  informed of the contents of such  instrument,  he executed the
same voluntarily on the day the same bears date.

     Given under my hand and seal, this 2nd day of August, 2002.

                                   /s/ Dian Marie Kammeyer
                                   --------------------------------------

(SEAL)                             Notary Public

                                   My Commission Expires: 4-9-04
                                                          ------------------

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                      PLEASE READ CAREFULLY BEFORE SIGNING

                                    I HAVE READ, UNDERSTAND AND
                                    AGREE TO THE FOREGOING.

                                    CryoLife, Inc.

                                    By:  /s/ Steven G. Anderson
                                       ---------------------------------------
                                    Its: President/CEO
                                       ---------------------------------------

                                    With express authority to enter this
                                    agreement on behalf of CryoLife, Inc.

STATE OF GEORGIA             )
         --------------------
COUNTY OF COBB               )
          -------------------

     I, Suzanne K.  Gabbert,  a Notary  Public in and for said county and state,
hereby certify that Steven G. Anderson,  President & CEO of Defendant  CryoLife,
Inc.,  whose name is signed to the foregoing  Settlement and Release  Agreement,
and who is known to me,  acknowledged before me on this day that, being informed
of the contents of such instrument,  he executed the same voluntarily on the day
the same bears date.

     Given under my hand and seal, this 30th day of July, 2002.

                                     /s/ Suzanne K. Gabbert
                                     -------------------------------------

(SEAL)                               Notary Public

                                     My Commission Expires: 9-13-04
                                                           ---------------

                                  Page 17 of 29

<PAGE>

                      PLEASE READ CAREFULLY BEFORE SIGNING

                                       I HAVE READ, UNDERSTAND AND
                                       AGREE TO THE FOREGOING.

                                       Dr. E. Christopher Orton

                                       /s/ Dr. E. Christopher Orton
                                       ---------------------------------------

STATE OF COLORADO        )
         ----------------

COUNTY OF LARIMER        )
         ----------------

     I, Dian Marie  Kammeyer,  a Notary Public in and for said county and state,
hereby  certify  that Dr.  E.  Christopher  Orton,  whose  name is signed to the
foregoing Settlement and Release Agreement, and who is known to me, acknowledged
before me on this day that,  being informed of the contents of such  instrument,
he executed the same voluntarily on the day the same bears date.

     Given under my hand and seal, this 5th day of August, 2002.

                                     /s/ Dian Marie Kammeyer
                                     --------------------------

(SEAL)                               Notary Public

                                     My Commission Expires: 4-9-04
                                                           ----------

                                  Page 18 of 29
<PAGE>

                                    EXHIBITS

A.   Paragraph A(8) Calculation of the "Fraction."

B.   Paragraph  B(2) Joint letter to Escrow Agent  authorizing  release of funds
     and termination of Escrow Agreement.

C.   Paragraph  D(1,  2)  Assignment  of ORTON  PATENTS  and all of Orton's  and
     CSURF's technology related to  decellularization  and  recellularization to
     CryoLife.

D.   Paragraph G Joint Stipulation of Dismissal with Prejudice.

                                  Page 19 of 29
<PAGE>

                                                                       EXHIBIT A

                       Average Service
                         Fees as of
                           6/30/02         Fraction
                      ------------------ --------------

AV                            6,863
AV-SG                         8,764         21.69%
PV                            6,376
PV-SG                         8,640         26.20%
NVC/P                         1,973
NVC/P-SG                      2,303         14.33%
FV                            2,714
FV-SG                         3,203         15.27%
SFA                           2,634
SFA-SG                        2,934         10.22%

                                  Page 19 of 29

<PAGE>

                                                                       EXHIBIT B

Ms. Kathleen Henry                               Mr. Steven G. Anderson
Colorado State University Research Foundation    CryoLife, Inc.
4100 University Services Center                  1655 Roberts Boulevard
Fort Collins, Colorado 80523                     Kennesaw, Georgia 30144

                                 August 1, 2002

E.   Via Federal Express

Andrew Dobzyn, Esq.
North Star Trust Company
500 West Madison Street
Suite 3800
Chicago, Illinois 60661

     Re:  Escrow Account No. 70 - 4139
          Termination of Escrow Agreement

Dear Mr. Dobzyn:

     This  letter is to  inform  you that  Colorado  State  University  Research
Foundation  ("CSURF")  and  CryoLife,  Inc.  ("CryoLife"),  the  parties  to the
December 4, 2001 Escrow Agreement  appointing North Star Trust Company as Escrow
Agent and funding Escrow Account No. 70 - 4139, have settled the dispute between
them.

     Under the terms of the settlement  entered into between CSURF and CryoLife,
the Escrow Agreement has been terminated.  Please immediately wire the remaining
balance  of  Escrow  Account  No.  70 - 4139 to  CSURF.  CSURF's  wire  transfer
information is as follows:

         Bank:  First National Bank, Fort Collins, Colorado

         ABA Routing Number:  107000262

         Account Number:  00 9050 1

         Account Name:  CSURF

As of Friday,  June 21, 2002,  there was  approximately  $192,416.00 held in the
Escrow Account.  Pursuant to Paragraph 7(b) of the Escrow  Agreement,  upon your
delivery of the  remaining  balance to CSURF,  North Star Trust Company shall be
released and discharged from all further obligations under the Escrow Agreement.

<PAGE>

     Finally,  if there are any outstanding  expenses pursuant to Paragraph 8 of
the Escrow Agreement,  please send an invoice to CryoLife for payment. Likewise,
if CryoLife is due a refund of its expenses under the Escrow  Agreement,  please
send the refund to CryoLife.

     Thank you for your prompt cooperation.

                                   Sincerely,

COLORADO STATE UNIVERSITY                   CRYOLIFE, INC.
RESEARCH FOUNDATION

____________________________                _________________________________
Kathleen Henry                              Steven G. Anderson
President                                   President and CEO

cc:   Robert R. Brunelli, Esq.
      Kevin B. Getzendanner, Esq.

<PAGE>
                                                                      EXHIBIT C

                                   ASSIGNMENT

         In  consideration  of other good and valuable  consideration,  of which
receipt is  acknowledged,  Colorado  State  University  Research  Foundation,  a
corporation  formed under the laws of the state of Colorado,  and E. Christopher
Orton each hereby sell and assign to CryoLife,  Inc., a corporation  of Florida,
its and his entire right,  title, and interest in and to all inventions (whether
patentable  or  not),   technology,   patents,   trade  secrets,   know-how  and
information,   owned  or  controlled  by  Colorado  State  University   Research
Foundation  or  E.  Christopher   Orton,  and  developed  or  identified  by  E.
Christopher Orton or those working with E. Christopher Orton,  related to tissue
decellularization and recellularization to be held and enjoyed by CryoLife Inc.,
its successors,  and assigns,  as fully and entirely as the same would have been
held and enjoyed by the Colorado  State  University  Research  Foundation  or E.
Christopher Orton had this assignment and sale not been made. The Colorado State
University Research Foundation and E. Christopher Orton further agree to execute
all  further  papers  and do all  further  acts  appropriate  to  fully  vest in
CryoLife, Inc. the rights herein conveyed.

     In testimony whereof, the Colorado State University Research Foundation and
E.  Christopher  Orton  have  caused  this  assignment  to be signed by its duly
authorized officers and its seal to be attached and by E. Christopher Orton this
__________ day of _________, 2002.

                                                ________________________________
                                                COLORADO STATE UNIVERSITY
                                                RESEARCH FOUNDATION

Attest
                                                ________________________________
                                                By:  Kathleen Henry, President

                                                (CORPORATE SEAL)

__________________________
         Secretary

State of Colorado
                        ss

County of ______________

<PAGE>

     On this the ____ day of ___________,  2002,  before me personally  appeared
Kathleen Henry, who  acknowledged  herself to be the President of Colorado State
University Research Foundation,  a corporation,  that she knows the seal of said
corporation,  that the seal affixed to the  foregoing  instrument  is that seal,
that  it  was  so  affixed  by  authority  of  the  Board  of  Directors  of the
corporation,  and that, by like  authority,  she executed the instrument for the
purposes  stated in it by  signing  the name of the  corporation  by  herself as
President.

     In witness whereof I hereunto set my hand and the seal of my office.

                                  ________________________________________
                                  Notary Public

                                  ________________________________________
                                  E. CHRISTOPHER ORTON

State of Colorado
                       ss
County of ______________

     On this the ____ day of ___________, 2002, before me personally appeared E.
Christopher  Orton, who executed the instrument for the purposes stated in it by
signing his name.

     In witness whereof I hereunto set my hand and the seal of my office.

                                  _________________________________________
                                  Notary Public

<PAGE>

                                   ASSIGNMENT

     In consideration of other good and valuable consideration, of which receipt
is acknowledged,  Colorado State University Research  Foundation,  a corporation
formed  under  the laws of the state of  Colorado,  owner of the  entire  right,
title,  and interest in the following  United States Letters  Patents and patent
applications:

     1.  Letters  Patent No.  5,192,312,  granted in the name of E.  Christopher
Orton, on March 3, 1993, by assignment recorded in the U.S. Patent and Trademark
Office on Reel 006169, Frame 0272,

     2.  Letters  Patent No.  5,772,695,  granted in the name of E.  Christopher
Orton, on June 30, 1998, by assignment recorded in the U.S. Patent and Trademark
Office on Reel 009128, Frame 0392,

     3.  Letters  Patent No.  5,863,296,  granted in the name of E.  Christopher
Orton,  on January 26,  1999,  by  assignment  recorded  in the U.S.  Patent and
Trademark Office on Reel _____________, Frame __________,

     4.  Letters  Patent No.  5,855,617,  granted in the name of E.  Christopher
Orton,  on  January 5,  1999,  by  assignment  recorded  in the U.S.  Patent and
Trademark Office on Reel 009128, Frame 0392,

     5.  U.S.  Non-Provisional  Patent  Application  No.  09/909,914,  naming E.
Christopher  Orton as inventor,  by assignment  recorded in the U.S.  Patent and
Trademark Office on Reel 012269, Frame 0694.

     6.  U.S.   Provisional   Application  Serial  No.  60/219,545,   naming  E.
Christopher  Orton as inventor,  by assignment  recorded in the U.S.  Patent and
Trademark Office on Reel ____, Frame _____.

     7. PCT Application Serial No.  PCT/US01/22018,  naming E. Christopher Orton
as inventor,  by assignment  recorded in the U.S. Patent and Trademark Office on
Reel ____, Frame _____.

     8. U.S.  Application  Serial No.  09/540,525,  naming E. Christopher Orton,
inter alia,  as an inventor,  by  assignment of E.  Christopher  Orton's  rights
solely,  recorded in the U.S.  Patent and Trademark  Office on Reel ____,  Frame
_____.

<PAGE>

and E.  Christopher  Orton,  inventor of the  above-listed  Letters  Patents and
patent applications,  hereby sell and assign to CryoLife, Inc., a corporation of
Florida,  its and his entire  right,  title,  and  interest in the said  Letters
Patents,  together with all reissues or  reexaminations of said Letters Patents,
all divisions and continuations of said  applications,  and all applications and
patent rights for said  inventions  set forth in these  applications  in foreign
countries, to be held and enjoyed by CryoLife Inc., its successors, and assigns,
as fully and  entirely  as the same  would  have been  held and  enjoyed  by the
Colorado State University  Research  Foundation or E. Christopher Orton had this
assignment  and sale not been  made.  The  Colorado  State  University  Research
Foundation and E. Christopher  Orton further agree to execute all further papers
and do all further acts  appropriate to fully vest in CryoLife,  Inc. the rights
herein conveyed.

     In testimony whereof, the Colorado State University Research Foundation and
E.  Christopher  Orton  have  caused  this  assignment  to be signed by its duly
authorized officers and its seal to be attached and by E. Christopher Orton this
__________ day of _________, 2002.

                                              _______________________________
                                              COLORADO STATE UNIVERSITY
                                              RESEARCH FOUNDATION

Attest
                                              _______________________________
                                              By:  Kathleen Henry, President

                                              (CORPORATE SEAL)
___________________________
         Secretary

State of Coloardo
                         ss
County of ______________

     On this the ____ day of ___________,  2002,  before me personally  appeared
Kathleen Henry, who  acknowledged  herself to be the President of Colorado State
University Research Foundation,  a corporation,  that she knows the seal of said

<PAGE>

corporation,  that the seal affixed to the  foregoing  instrument  is that seal,
that  it  was  so  affixed  by  authority  of  the  Board  of  Directors  of the
corporation,  and that, by like  authority,  she executed the instrument for the
purposes  stated in it by  signing  the name of the  corporation  by  herself as
President.

     In witness whereof I hereunto set my hand and the seal of my office.

                                ____________________________________
                                Notary Public

                                ____________________________________
                                E. CHRISTOPHER ORTON

State of Coloardo
                          ss
County of ______________

     On this the ____ day of ___________, 2002, before me personally appeared E.
Christopher  Orton, who executed the instrument for the purposes stated in it by
signing his name.

     In witness whereof I hereunto set my hand and the seal of my office.

                                  ____________________________________
                                  Notary Public

<PAGE>

                                                                      EXHIBIT D

                       IN THE UNITED STATES DISTRICT COURT
                          FOR THE DISTRICT OF COLORADO

Civil Action No. 01-N-0933 (OES)

COLORADO STATE UNIVERSITY
RESEARCH FOUNDATION, a Colorado
non-profit corporation,

        Plaintiff/ Counterclaim Defendant,

        vs.

CRYOLIFE, INC., a Florida corporation,

        Defendant/Counterclaimant.

________________________________________________________________________________

                  JOINT STIPULATION OF DISMISSAL WITH PREJUDICE

________________________________________________________________________________

     WHEREAS Plaintiff/Counterclaim Defendant Colorado State University Research
Foundation   ("Plaintiff")   and   Defendant/Counterclaimant    CryoLife,   Inc.
("Defendant") having settled all claims pending the above-referenced action, and
it being the intent of Plaintiff  and  Defendant  that all claims and actions be
dismissed with prejudice, pursuant to their mutual consents set forth below;

     COMES NOW Plaintiff,  by and through its  undersigned  attorneys of record,
and pursuant to F.R.C.P.  41(a),  dismisses with prejudice its Complaint and all
claims and actions it has asserted or instituted in the above-referenced action;
and

     COMES NOW Defendant,  by and through its  undersigned  attorneys of record,
and pursuant to F.R.C.P. 41(a, c), dismisses with prejudice its Counterclaim and
all claims and actions it has  asserted or  instituted  in the  above-referenced
action.

<PAGE>

     The parties will bear their own costs and attorneys' fees.

     This 2nd day of August, 2002.

___________________________________         ____________________________________
Robert R. Brunelli                          Kevin B. Getzendanner
Joseph. E. Kovarik                          Stephen M. Dorvee
Scott R. Bialecki                           Aaron M. Danzig
SHERIDAN ROSS P.C.                          ARNALL GOLDEN GREGORY LLP
1560 Broadway, Suite 1200                   1201 W. Peachtree Street, Suite 2800
Denver, Colorado 80202-5141                 Atlanta, Georgia 30309-3450
(303) 863-9700                              (404) 873-8500

Attorneys for Plaintiff CSURF               HOLME ROBERTS & OWEN LLP
                                            Richard L. Gabriel
                                            Katheryn Jarvis Coggon
                                            1700 Lincoln, Suite 4100
                                            D.C. Box No. 07
                                            Denver, Colorado  80203
                                            Telephone:  (303) 861-7000

                                            BRINKS HOFER GILSON & LIONE
                                            Jeffery M. Duncan
                                            Helen A. Odar
                                            455 North Cityfront Plaza Drive
                                            Suite 3600
                                            Chicago, Illinois  60611
                                            (312) 321-4200

                                            Attorneys for Defendant
                                            Cryolife, Inc.

1474312EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

     This Agreement ("the Agreement") dated as of the 3rd day of September, 2002
(the "Effective Date"), is by and between CryoLife,  Inc., a Florida corporation
("CryoLife") and David Ashley Lee (the "Employee").

                                   WITNESSETH:

     WHEREAS,  the Board of Directors of CryoLife (the "Board"),  has determined
that it is in the best interests of CryoLife and its  shareholders to enter into
this  Employment  Agreement  in order  to  assure  the  Employee  of  CryoLife's
commitment  and, in so doing, to motivate the Employee to continue in Employee's
dedicated  service to CryoLife even in  circumstances  such as a possible future
threat or occurrence of a Change of Control (defined below) of CryoLife; and,

     WHEREAS,  in order to  accomplish  these  objectives,  the Board has caused
CryoLife to enter into this Agreement.

     NOW, THEREFORE,  in consideration of the premises, the promises hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledges, it is hereby agreed as follows:

     1. Employment.

     (a) CryoLife hereby employs  Employee in the capacity of Vice President and
Chief  Financial  Officer  and  Employee  hereby  accepts  such  duties  as  are
customarily  performed and exercised by such officer  subject to the supervision
of the President of CryoLife.  The duties of Employee shall include those duties
more  specifically  described on Exhibit A attached  hereto  together  with such
additional duties as are assigned by the President of CryoLife.

     (b)  CryoLife  agrees to  continue  the  Employee  in its  employ,  and the
Employee hereby agrees to remain in the employ of CryoLife  subject to the terms
and  conditions of this  Agreement,  for the period  commencing on the Effective
Date  and  ending  on the  second  anniversary  of such  date  (the  "Employment
Period"). Unless either party elects not to extend the term of this Agreement by
so  notifying  the  other  in  writing  at  least  30 days  prior  to the  first
anniversary of the Effective  Date, the  Employment  Period shall  automatically
extend for an additional one year.

<PAGE>

     2. Employment Duties.

     (a) During the Employment  Period, (A) the Employee's  position  (including
status,  offices,  titles and  reporting  requirements),  authority,  duties and
responsibilities  shall be at least  commensurate in all material  respects with
the most  significant  of those held,  exercised and assigned at any time during
the  120-day  period  immediately  preceding  the  Effective  Date  and  (B) the
Employee's  services  shall be performed at the location  where the Employee was
employed immediately preceding the Effective Date.

     (b) During the Employment Period, and excluding any periods of vacation and
sick leave to which the  Employee is  entitled,  the  Employee  agrees to devote
reasonable  attention  and time to the business and affairs of CryoLife  and, to
the extent necessary to discharge the responsibilities  assigned to the Employee
hereunder,  to use the Employee's  reasonable best efforts to perform faithfully
and efficiently such responsibilities.

     (c) During the Employment  Period, the Employee will not, without the prior
written  consent  of  CryoLife,   directly  or  indirectly  other  than  in  the
performance of the duties hereunder, render services of a business, professional
or commercial  nature to any other person or firm,  whether for  compensation or
otherwise,  except with respect to any  noncompetitive  family businesses of the
Employee  for which the  rendering  of such  services  will not have an  adverse
effect upon Employee's performance of his duties and obligations hereunder.

     3. Compensation, Benefits and Business Expenses.

     (a) For all  services  which  Employee  renders to  CryoLife  or any of its
subsidiaries  or affiliates  during the term hereof,  CryoLife agrees to pay the
Employee the salary and bonus  compensation as set by the Compensation  Advisory
Committee of the Board of Directors.  Employee's salary at the Effective Date is
set forth on Exhibit A.

     (b) CryoLife  shall pay all  reasonable  expenses  incurred by the Employee
directly related to performance of his  responsibilities and duties for CryoLife
hereunder.  Employee  shall  submit  to  CryoLife  statements  that  justify  in
reasonable detail all reasonable expenses so incurred. Subject to such audits as
CryoLife may deem necessary,  CryoLife shall reimburse  Employee the full amount
of any such expenses advanced by Employee.

     (c) Employee  shall be entitled to a vacation  each year of his  employment
with CryoLife,  according to the standard  vacation policy, as well as insurance
and other  employment  benefits,  as more  particularly  described on Exhibit A.
Vacations not taken shall be cumulative and carried over to a subsequent year.

     4. Change of Control. For the purposes of this Agreement,  the term "Change
of Control" shall mean a change in the beneficial ownership of CryoLife's voting
stock or a change in the composition of the Board that occurs as follows:

                                       2
<PAGE>

     (a) Any "person,"  including a "syndication"  or "group" as those terms are
used in Section  13(d)(3) of the Securities  Exchange Act of 1934, is or becomes
the  beneficial  owner,  directly  or  indirectly,  of  securities  of  CryoLife
representing  20% or  more of the  combined  voting  power  of  CryoLife's  then
outstanding  "Voting   Securities,"  which  is  any  security  which  ordinarily
possesses  the  power to vote in the  election  of the Board of  Directors  of a
corporation without the happening of any precondition or contingency;

     (b)  CryoLife  is merged  or  consolidated  with  another  corporation  and
immediately after giving effect to the merger or consolidation  less than 80% of
the outstanding  Voting Securities of the surviving or resulting entity are then
beneficially  owned  in  the  aggregate  by (x)  the  shareholders  of  CryoLife
immediately prior to such merger or  consolidation,  or (y) if a record date has
been set to  determine  the  shareholders  of CryoLife  entitled to vote on such
merger or consolidation, the shareholders of CryoLife as of such record date;

     (c) If at any time the following do not  constitute a majority of the Board
of  Directors of CryoLife (or any  successor  entity  referred to in clause (ii)
above):  individuals  who, prior to their election as a director of CryoLife (or
successor  entity if applicable)  were  nominated,  recommended or endorsed by a
formal resolution of the Board; or

     (d)  CryoLife  transfers   substantially  all  of  its  assets  to  another
corporation which is a less than 80% owned subsidiary of CryoLife.

     5. Termination of Employment.

     (a)  Disability  or Death.  If CryoLife  determines  in good faith that the
Disability of the Employee has occurred during the Employment  Period  (pursuant
to the  definition of Disability  set forth below),  it may give to the Employee
written  notice  in  accordance  with  Section  12(b) of this  Agreement  of its
intention to terminate the Employee's employment.  In such event, the Employee's
employment with CryoLife shall terminate effective on the 30th day after receipt
of such notice by the Employee (the "Disability Effective Date"), provided that,
within the 30 days after such receipt,  the Employee  shall not have returned to
full-time  performance of the Employee's duties. For purposes of this Agreement,
"Disability"  shall mean the absence of the Employee from the Employee's  duties
with CryoLife on a full-time basis for 180 consecutive business days as a result
of incapacity due to mental or physical  illness which is determined to be total
and permanent by a physician selected by CryoLife or its insurers and acceptable
to  the  Employee  or  the  Employee's  legal  representative.   The  Employee's
employment  shall terminate  automatically  upon the Employee's death during the
Employment Period.

     (b) Cause.  CryoLife may terminate  the  Employee's  employment  during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

                                       3
<PAGE>

     (i)  the  willful  and  continued   failure  of  the  Employee  to  perform
substantially  the Employee's  duties with CryoLife (other than any such failure
resulting from  incapacity due to physical or mental  illness),  after a written
demand for substantial  performance is delivered to Employee by the Board or the
Chief Executive Officer of CryoLife which specifically  identifies the manner in
which CryoLife  believes that the Employee has not  substantially  performed the
Employee's duties, or

     (ii) the  willful  engaging  by the  Employee  in illegal  conduct or gross
misconduct which is materially and demonstrably injurious to CryoLife.

For  purposes  of this  provision,  no act or failure to act, on the part of the
Employee,  shall be  considered  "willful"  unless it is done,  or omitted to be
done,  by the  Employee  in bad  faith or  without  reasonable  belief  that the
Employee's action or omission was in the best interests of CryoLife. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the  instructions of the Chief Employee Officer or a senior
officer of CryoLife or based upon the advice of counsel  for  CryoLife  shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of CryoLife.

     (c)  Good  Reason.  The  Employee's  employment  may be  terminated  by the
Employee for Good Reason.  For purposes of this  Agreement,  "Good Reason" shall
mean:

     (i) the  assignment  to the  Employee  of any  duties  inconsistent  in any
respect with the Employee's  position  (including  status,  offices,  titles and
reporting requirements),  authority,  duties or responsibilities as contemplated
by Section 1(a) of this Agreement, or any other action by CryoLife which results
in a  diminution  in  such  position,  authority,  duties  or  responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by CryoLife  promptly  after receipt of
notice thereof given by the Employee;

     (ii) any  failure  by  CryoLife  to comply  with any of the  provisions  of
Section 3(a) or 3(b) of this  Agreement,  other than an isolated,  insubstantial
and  inadvertent  failure  not  occurring  in bad faith and which is remedied by
CryoLife promptly after receipt of notice thereof given by the Employee;

     (iii) any purported or threatened termination by CryoLife of the Employee's
employment otherwise than for Cause, Death or Disability; or

     (iv) any failure by CryoLife  to comply with and satisfy  Section  11(c) of
this Agreement.

                                       4
<PAGE>

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the  Employee  shall be  conclusive.  Anything in this  Agreement to the
contrary notwithstanding,  a termination by the Employee for any reason at least
90 but not more than 120 days following  consummation  of a Change of Control or
during the 30 day period immediately following the first anniversary of a Change
of Control shall be deemed to be a termination  for Good Reason for all purposes
of this Agreement.

     (d) Notice of Termination. Any termination by CryoLife for Cause, or by the
Employee for Good Reason,  shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 12(b) of this Agreement. For
purposes of this  Agreement,  a "Notice of  Termination"  means a written notice
which (i) indicates the specific termination  provision in this Agreement relied
upon, (ii) to the extent  applicable,  sets forth in reasonable detail the facts
and  circumstances  claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined  below) is other than the date of receipt of such notice,  specifies
the termination date (which date shall be not more than 30 days after the giving
of such  notice).  The  failure by the  Employee or CryoLife to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good  Reason or Cause  shall not waive any right of the  Employee  or  CryoLife,
respectively, hereunder or preclude the Employee or CryoLife, respectively, from
asserting  such fact or  circumstance  in enforcing the Employee's or CryoLife's
rights hereunder.

     (e) Date of Termination.  "Date of Termination" means (i) if the Employee's
employment  is  terminated  by CryoLife  for Cause,  or by the Employee for Good
Reason,  the date of  receipt of the  Notice of  Termination,  or any later date
specified  therein,  as the case may be, (ii) if the  Employee's  employment  is
terminated  by  CryoLife  other  than  for  Cause  or  Disability,  the  Date of
Termination  shall be the date on which  CryoLife  notifies the Employee of such
termination  and (iii) if the  Employee's  employment is terminated by reason of
death or Disability,  the Date of Termination  shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.

     6. Obligations of CryoLife upon Termination.

     (a) Good Reason; Other Than for Cause, Death or Disability.  If, during the
Employment Period, (i) CryoLife shall terminate the Employee's  employment other
than  for  Cause,  Death or  Disability  or (ii) the  Employee  shall  terminate
employment  for Good Reason,  then  CryoLife  shall pay to Employee as severance
compensation an amount equal to  $330,000.00.  Such payment shall be in addition
to sums due to Employee  through the Date of Termination and shall be subject to
normal withholding requirements of CryoLife. Payment of the amount shall be made
in one lump sum payment or in six equal monthly  installments as directed by the
Employee.

     (b) Death.  If the  Employee's  employment  is  terminated by reason of the
Employee's  death during the Employment  Period,  this Agreement shall terminate
without further obligations to the Employee's legal  representatives  under this
Agreement,  other than for payment of obligations  accruing  through the Date of
Termination.

                                       5
<PAGE>

     (c) Disability. If the Employee's employment is terminated by reason of the
Employee's  Disability  during  the  Employment  Period,  this  Agreement  shall
terminate  without further  obligations to the Employee,  other than for payment
obligations accruing through the Date of Termination.

     (d) Cause;  Other than for Good Reason. If the Employee's  employment shall
be  terminated  by CryoLife  for Cause or by the  Employee  without  Good Reason
during the Employment  Period,  this Agreement shall  terminate  without further
obligations to the Employee other than the obligation to pay to the Employee his
or her salary through the Date of Termination.

     7.  Non-exclusivity  of Rights.  Nothing in this Agreement shall prevent or
limit the Employee's  continuing or future  participation in any plan,  program,
policy or practice  provided by CryoLife or any of its affiliated  companies and
for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
CryoLife or any of its affiliated  companies.  Amounts which are vested benefits
or which the Employee is otherwise entitled to receive under any plan,  practice
or  program  of or  any  contract  or  agreement  with  CryoLife  or  any of its
affiliated  companies  at or  subsequent  to the  Date of  Termination  shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

     8. Full  Settlement.  In no event shall the  Employee be  obligated to seek
other  employment  or take any other action by way of  mitigation of the amounts
payable to the Employee  under any of the  provisions of this Agreement and such
amounts  shall  not  be  reduced  whether  or not  the  Employee  obtains  other
employment.  CryoLife agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses  which the Employee may  reasonably  incur as a
result of any contest  (regardless  of the outcome  thereof)  by  CryoLife,  the
Employee or others of the validity or enforceability of, or liability under, any
provision of this Agreement.

     9. Limitation or Expansion of Benefits.

     (a)  Anything in this  Agreement to the  contrary  notwithstanding,  in the
event it shall be determined  that any benefit,  payment or  distribution by the
Company to or for the benefit of the Employee  (whether payable or distributable
pursuant to the terms of this  Agreement or otherwise) (a "Payment")  would,  if
paid,  be  subject to the excise  tax  imposed by Section  4999 of the  Internal
Revenue  Code of 1986,  as amended  (the  "Code";  such excise tax,  the "Excise
Tax"),  then the Payment  shall be reduced to the extent  necessary of avoid the
imposition  of the Excise Tax. The Employee may select the Payment to be limited
or reduced.

                                       6
<PAGE>

     (b) All determinations  required to be made under this Section 9, including
whether  an Excise Tax would  otherwise  be imposed  and the  assumptions  to be
utilized in arriving at such  determination  and the value of the maximum amount
payable  without  imposition  of the Excise Tax,  shall be made by the certified
public accounting firm regularly engaged by the Company (the "Accounting  Firm")
which shall provide detailed supporting calculations both to the Company and the
Employee within 30 business days of the receipt of notice from the Employee that
a  Payment  is due to be  made,  or such  earlier  time as is  requested  by the
Company.  In the event that the  Accounting  Firm is serving  as  accountant  or
auditor for the individual, entity or group effecting the Change of Control, the
Employee may appoint another nationally  recognized  accounting firm to make the
determinations  required hereunder (which accounting firm shall then be referred
to as the Accounting  Firm  hereunder).  All fees and expenses of the Accounting
Firm shall be borne solely by the Company.  Any  determination by the Accounting
Firm shall be binding  upon the  Company  and the  Employee.  As a result of the
uncertainty  in the  application  of Section 4999 of the Code at the time of the
initial  determination  by the Accounting  Firm  hereunder,  it is possible that
Payments  hereunder  will  have been  unnecessarily  limited  by this  Section 9
("Underpayment"),   consistent  with  the  calculations   required  to  be  made
hereunder.  The Accounting Firm shall  determine the amount of the  Underpayment
that has occurred and any such  Underpayment  shall be paid by the Company to or
for the benefit of the Employee.

     (c) The  provisions  of this  Section 9 shall not  apply  unless  and until
amounts become payable to Employee pursuant to Section 6(a) hereof.

     10. Confidential Information.  The Employee and CryoLife are parties to one
or more separate agreements respecting confidential information,  trade secrets,
inventions and non-competition (collectively,  the "IP Agreements"). The parties
agree that the IP  Agreements  shall not be  superceded  or  terminated  by this
Agreement and shall survive any termination of this Agreement.

     11. Successors.

     (a) This  Agreement  is  personal  to the  Employee  and  without the prior
written  consent of CryoLife  shall not be assignable by the Employee  otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.

     (b) This  Agreement  shall  inure to the  benefit  of and be  binding  upon
CryoLife and its successors and assigns.

                                       7
<PAGE>

     (c) CryoLife will require any  successor  (whether  direct or indirect,  by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of CryoLife to assume expressly and agree to perform this
Agreement  in the same  manner and to the same  extent  that  CryoLife  would be
required to perform it if no such  succession  had taken place.  As used in this
Agreement,  "CryoLife"  shall mean  CryoLife  as  hereinbefore  defined  and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

     12. Miscellaneous.

     (a) This  Agreement  shall be governed by and construed in accordance  with
the laws of the State of Georgia, without reference to principles of conflict of
laws. The captions of this  Agreement are not part of the provisions  hereof and
shall have no force and effect.  This  Agreement  may not be amended or modified
otherwise  than by a written  agreement  executed by the parties hereto or their
respective successors and legal representatives.

     (b) All notices and other communications  hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

      If to the Employee:

      David Ashley Lee
      3802 Wieuca Terrace NE
      Atlanta, GA  30342

      If to CryoLife:

      CryoLife, Inc.
      1655 Roberts Boulevard, N.W,
      Kennesaw, Georgia 30144
      Attention:  President

or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

     (c) The invalidity or  unenforceability  or any provision of this Agreement
shall not affect the validity or  enforceability  of any other provision of this
Agreement.

     (d) CryoLife may withhold  from any amounts  payable  under this  Agreement
such Federal,  state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

                                       8
<PAGE>

     (e) From and after the Effective  Date this Agreement  shall  supersede any
other agreement between the parties with respect to the subject matter hereof.

     IN WITNESS WHEREOF, the Employee has hereunder set the Employee's hand and,
pursuant to the authorization from its Board, CryoLife has caused these presents
to be executed in its name on its behalf, all as of the day and year first above
written.

                                    /s/ D.A. Lee
                                    --------------------------------------------
                                    David Ashley Lee

                                    CRYOLIFE, INC.

                                    By:  /s/ Steven G. Anderson
                                       -----------------------------------------
                                        Steven G. Anderson
                                        Chairman, President and CEO

                                       9
<PAGE>

                                    Exhibit A

Duties and Responsibilities of DAVID ASHLEY LEE:
-----------------------------------------------

     All duties of Vice  President  and Chief  Financial  Officer and duties not
     inconsistent with such duties that are assigned by the President.

Compensation:
------------

     Salary of $220,000 and bonus set by the  Compensation  Advisory  Committee.
     Salary & Bonus  subject  to  yearly  review  by the  Compensation  Advisory
     Committee of the Board of Directors:

Vacation and Employee Benefits:
------------------------------

     See attached  Company  vacation  plan,  standard  Company  medical plan and
     contributory 401K plan.

Company Business:
----------------

     The development,  marketing,  sale and distribution of tissue  preservation
     services and biomedical and medical products.

1546367v1

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