in re: cryo-cell international inc. securities litigation 03-cv-1011...
TRANSCRIPT
UNITED STATES DISTRICT COURTFOR THE MIDDLE DISTRICT OF FLORID A
TAMPA DIVISIO N
CASE NO.8:03-CV 1011-T-17 EAJJUDGE KOYACHEVICII
In re CRYO-CELL INTERNATIONAL, INC .SECURITIES LITIGATIO N
NOTICE OF PENDENCY OF CLASS ACTION ,HEARING ON PROPOSED SETTLEMENT AND ATTORNEYS' FEE PETITION
AND RIGHT TO SHARE IN SETTLEMENT FUN D
TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED THE COMMONSTOCK OF CRYO-CELL INTERNATIONAL, INC . ("CRYO-CELL") DURING THEPERIOD FROM MARCH 16, 1999 THROUGH AND INCLUDING NNE 27, 2003(THE "CLASS PERIOD"). 1
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY . YOUR RIGHTSWILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION. IF YOU ARE A CLASSMEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFITSPURSUANT TO THE PROPOSED SETTLE MENT DESCRIBED HEREIN .
CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THEFORM ACCOMPANYING THIS NOTICE, POSTMARKED ON OR BEFOREi11f CH !' , 2005 .
EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SUBMITTEDPOSTMARKED ON OR BEFORE F eBk P-y it, 200S
SECURITIES BROKERS AND OTHER NOMINEES : PLEASE SEE INSTRUCTIONS ATPARAGRAPH 45 HEREIN .
In the Complaint, the Class Period is defined as March 16, 1999, through May 20, 2003 .At the insistence of the Defendants, the Class Period, for purposes of settlement, has beenextended through June 27, 2003 . As reflected in the plan of allocation referred to below, there isonly a de minimus loss, if any, from May 20, 2003 through June 27, 2003 .
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SUMMARY OF SETTLEMENT AND RELATED MATTER S
1 . Purpose of this Notic e
1 . This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedur e
and an Order of the Court dated Auyy% i'3 , 200j. The purpose of this Notice is to inform
you that this Action, and the proposed Settlement, will affect all Class Members ' rights. This
Notice desc ribes rights you may have under the proposed Settlement and what steps you may
take in relation to this Action . This Notice is not an expression of any opinion by the Court as to
the merits of any claims or any defenses asse rted by any party in this Action , or the fairness or
adequacy of the proposed Settlement. All de fined terms used herein have the definitions given
them in the part ies' Stipulation and Agreement of Settlement dated September 17, 2004 (the
"Stipulation") .
Il . Statement of Plaintiff Recovery
2. Pursuant to the Settlement described herein, a Gross Settlement Fund consistin g
of Seven Million Dollars ($7,000,000), plus interest, has been established . Plaintiffs estimate
that there were approximately 8 .8 million shares of Cryo-Cell common stock traded during the
Class Period which may have been damaged as a result of the alleged wrongdoing described at
paragraphs 13 to 15 below. Plaintiffs estimate that the average recovery per damaged share of
Cryo-Cell common stock under the Settlement is $ .0795 per damaged share before deduction of
Court-awarded attorneys' fees and reimbursement of expenses . Depending on the number of
claims submitted, when during the Class Period a Class Member purchased his or her shares of
Cryo-Cell common stock, and whether those shares were held at the end of the Class Period or
sold during the Class Period, and if sold, when they were sold, an individual Class Member may
receive more or less than this average amount .
(M21 t 1919;8} -3-
3. Under the relevant securities laws, a claimant's recoverable damages are limite d
to the losses attributable to the alleged fraud . Losses which resulted from factors other than the
alleged fraud are not recoverable from the Gross Settlement Fund . For purposes of the
Settlement herein, a Class Member's distribution from the Net Settlement Fund will be governed
by the proposed Plan of Allocation described below at paragraphs 31 to 32, or such other Plan of
Allocation as may be approved by the Court .
III . Statement of Potential Outcome of Case
4. The parties disagreed on both liability and damages and do not agree on the
average amount of damages per share that would be recoverable if Plaintiffs were to have
prevailed on each claim alleged . The issues on which the parties disagree include 1) whether the
statements made or facts allegedly omitted were material or otherwise actionable under the
federal securities laws; 2) the appropriate economic model for determining the amount by which
Cryo-Cell common stock was allegedly artificially inflated (if at all) during the Class Period ; 3)
the amount by which Cryo-Cell common stock was allegedly artificially inflated (if at all) during
the Class Period ; 4) the effect of various market forces influencing the trading price of Cryo-Cell
common stock at various times during the Class Period; 5) the extent to which external factors,
such as general market and industry conditions, influenced the trading price of Cryo-Cell
common stock at various times during the Class Period ; 6) the extent to which the various
matters that Plaintiffs alleged were materially false or misleading influenced (if at all) the trading
price of Cryo-Cell common stock at various times during the Class Period ; and 7) the extent to
which the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced
(if at all) the trading price of Cryo-Cell common stock at various times during the Class Period-
(M2111919 ;81 -4-
5. Plaintiffs' Co-Lead Counsel considered that there was a substantial risk that
Plaintiffs and the Class might not have prevailed on all their claims and that there were risks that
the decline in the price of Cryo-Cell common stock could be attributed, in whole or in part, to
other factors . This risk was compounded by the risk that even if Plaintiffs succeeded in proving
liability and proving damages the judgment might not be collectible . Therefore, Plaintiffs could
have recovered nothing or substantially less than the amount of the Settlement.
6_ Defendants have denied, and continue to deny, each and every claim an d
contention alleged by Plaintiffs in this litigation . Defendants have expressly denied, and
continue to deny, all charges of wrongdoing or liability against them arising out of any of the
conduct, statements, acts or omissions alleged, or that could have been alleged, in the litigation .
Defendants also have denied, and continue to deny, among other things, the allegations that
Plaintiffs or the Class have suffered damage, that the price of Cryo-Cell common stock was
artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, or
that Plaintiffs or the Class were harmed by the conduct alleged in the litigation . Nonetheless,
Defendants have concluded that further conduct of this litigation would be protracted and
expensive, and that it is desirable that the litigation be fully and finally settled in the manner and
upon the terms and conditions set forth in this Stipulation. Defendants also have taken into
account the uncertainty and risks inherent in any litigation, especially in complex cases like this
litigation. Defendants have therefore determined that it is desirable and beneficial to them that
this litigation be settled in the manner and upon the terms and conditions set forth in this
Stipulation.
{142)t 1919;8 } -5-
tIV. Statement of Attorne s' Fees and Costs Sough
7. Plaintiffs' Counsel intend to apply for fees of up to thirty percent (30%) of th e
Gross Settlement Fund, and for reimbursement of expenses incurred in connection with the
prosecution of this Action in the approximate amount of $30,000. The requested fees and
expenses would amount to an average of $0.242 per damaged share in total for fees and
expenses . Plaintiffs' Co-Lead Counsel have expended considerable time and effort in the
prosecution of this litigation on a contingent fee basis, and have advanced the expenses of the
litigation, in the expectation that if they were successful in obtaining a recovery for the Class
they would be paid from such recovery. In this type of litigation it is customary for counsel to be
awarded a percentage of the common fund recovery as their attorneys' fees .
V . Further Information
8. Further information regarding the Action and this Notice may be obtained by
contacting Plaintiffs' Co-Lead Counsel . David J. George, Esq., Lerach, Coughlin, Stoia, Geller,
Rudman & Robbins LLP, 197 South Federal Highway, Suite 200, Boca Raton, Florida 33430,
Telephone 561/750-3000, and William B. Federman, Esq ., Federman & Sherwood, 120 N .
Robinson Avenue, Suite 2720, Oklahoma City, Oklahoma 73102, Telephone 4051235-1560 .
VI. Reasons for the Settlemen t
9. Plaintiffs' Co-Lead Counsel believe that the principal reason for th e Settlement i s
the benefit to be provided to the Class now. This benefit must be compared to the risk that no
recovery might be achieved after a contested trial and likely appeals, possibly years into the
future . The Settlement authorizes Cryo-Cell and the Individual Defendants' insurance carrier,
National Union Fire Insurance Company of Pittsburgh, Pa . ("National Union"), and the
Accounting Defendants' insurance carrier, Zurich American Insurance Company ("Zurich"), t o
(M2111919;8}
fund this Settlement on behalf of Cryo-Cell, the Individual Defendants and the Accounting
Defendants, but also provides for the release of Cryo-Cell, the Individual Defendants and the
Accounting Defendants from claims of the nature alleged in the Complaint herein .
NOTICE OF SE TTLEMENT FAIRNESS HEARIN G
10. NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civil
Procedure and an Order of the United States Dist rict Court for the Middle District of Florida,
Tampa Division (the "Court"} dated XO l!U 166 L. ('l 200Y, that a hearing will be held beforeeoor1rcenz II
the Honorable Elizabeth A . Kovachevich in the Sam M . Gibbons U.S . Courthouse, 801 North
Florida Avenue, Tampa, Florida 33602, at c : 00 .7 .m., on Fe.bry~nl .A ~ , 2005 (the
"Settlement Fairness Hearing") to determine whether a proposed settlement (the "Settlement") o f
the above -captioned action (the "Action") as set forth in the Stipulation and Agreement of
Settlement dated September 17, 2004 (the "Stipulation"), is fair , reasonable and adequate and to
consider the proposed Plan of Allocation for the Settlement proceeds and the application of
Plaintiffs ' Counsel for attorneys' fees and reimbursement of expenses .
It . The Court, by Preliminary Order In Connection With Settlement Proceedings ,
dated f iJyLM 8c,t M/0 2001, has certified a Plaintiff Class for purposes of this Settlement
consisting of: "all persons who purchased or otherwise acquired the common stock of C ryo-Cell
International, Inc . ("Cryo-Cell") during the period from March 16, 1999 through and including
June 27 , 2003." Excluded from the Class are Defendants in this Action, members of the
immediate families (parents, spouses , siblings, and children) of Mercedes Walton, Gerald F .
Maass, Jill M . Taynians , Edward Modzelewski , Frederick C.S. Wilhelm, Wanda D . Dearth,
Ronald Richard , Junior Winokur, Daniel D . Richard, Charles F. Nyberg and John V . Hargiss
(together the "Individual Defend ants"), any subsidiary or affiliate of Cryo-Cell, Weinick Sanders
Leventhal & Co., LLP. ("Weinick Sanders") and Mirsky Furst & Associates , P.A. (Mirsky
{M2111919;81 -7-
Furst" - collectively with Weinick Sanders, the "Accounting Defendants"), and the directors
and officers of Cryo-Cell International , Inc . and the Accounting Defendants or their subsidia ries
or affiliates , or any entity in which any excluded person has a controlling interest , and the legal
representatives , heirs, successors in interest or assigns ofany excluded person .
BACKGROUND OF THE LITIGATION
12. Cryo-Cell is the world 's largest umbilical cord stem cell banking firm, offering
high-quality cord blood preservation exclusively for the benefit of newborn babies and possibly
other members of their family . Incorporated in 1989 and based in Clearwater, Cryo-Cell
designed and developed devices for cryogenic storage and preservation of umbilical cord blood
stem cells. The Company now preserves more than 65,000 cord blood stem cell specimens .
13. Beginning on May 20, 2003, ten class actions alleging violations of federal
securities laws were filed in this Court and were subsequently consolidated under the caption
above. By Order dated February 17, 2004, the Court appointed the lead Plaintiffs and Co-Lead
Counsel . Plaintiffs filed an Amended Complaint (the "Complaint") alleging, among other
things, that Cryo-Cell, the Individual Defendants and the Accounting Defendants violated
Section 10(b) of the Securities Exchange Act of 1934, and Rule lOb-5 promulgated thereunder,
by disseminating false and misleading statements and/or concealing material adverse facts
regarding Cryo-Cell's business operations and financial condition between March 16, 1999 and
May 20, 2003. The Section 10(b) claims were brought on behalf of a putative Class consisting
of all persons who purchased or otherwise acquired Cryo-Cell's common stock during the Class
Period and were allegedly damaged thereby. The Complaint also alleged that the Individual
Defendants were liable as control persons under Section 20(a) of the Securities Exchange Act of
1934.
(M2 1 }19}9;8} -8-
14. Plaintiffs alleged that Defendants violated a number of generally accepted
accounting principles ("GAAP"). Specifica lly, the Complaint alleged that Cryo -Cell : (1)
improperly recognized revenue from storage fees , revenue sharing agreements ("RSAs"), area
licenses and enrollment fees; (2) failed to correct alleged errors or misstatements in its financial
statements; (3) failed to disclose or accrue for alleged contingent liabilities ; (4) failed to
recognize and disclose that its technology was defective ; (5) failed to properly disclose certain
litigation events including an adverse judgment ; (6) failed to book adequate reserves for
delinquent receivables ; and (7) filed false and misleading disclosure statements ;
15 . The Complaint also alleged that Cryo-Cell and the Individual Defendants
concealed problems with the Company's technology, particularly its computer-controlled ,
robotically operated cryogenic storage system , the "CCEL If . "
BACKGROUND TO THE SETTLEMENT
1 6 . The Defendants (as defined below) have denied all averments of wrongdoing o r
liability in the Action and all other accusations of wrongdoing or violations of law . The
Stipulation is not and shall not be construed or be deemed to be evidence or an admission or a
concession on the part of any of the Defendants of any fault or liability or damages whatsoever,
and Defendants do not concede any infirmity in the defenses which they have asserted or
intended to assert in the Action .
17. Prior to entering into the Stipulation, Plaintiffs' Co-Lead Counsel represent tha t
they conducted a pre-filing and post-filing investigation relating to the events and transactions
underlying Plaintiffs' claims including, inter alia, review and analysis of Cryo-Cell's SEC
financial filings, press releases and analysts' first call reports, consulting with accounting experts
and interviews with former employees. Subsequent to entering into the Settlement, Plaintiffs'
Co-Lead Counsel conducted a review and analysis, with the help of forensic accounting experts ,
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of Confirmatory Discovery on the merits including, inter alia, analysis of work papers relating to
Cryo-Cell produced by the Accounting Defendants . Plaintiffs' Co-Lead Counsel's decision to
recommend that the Lead Plaintiffs enter into this Settlement was made with knowledge of the
facts and circumstances underlying Plaintiffs' claims and the strengths and weaknesses of those
claims. In determining to settle the Action, they have evaluated the pre-trial investigation and
Confirmatory Discovery taken in the Action and taken into account the substantial expense and
length of time necessary to prosecute the Action through trial, post-trial motions, and likely
appeals, taking into consideration the significant uncertainties in predicting the outcome of this
complex litigation. Plaintiffs recognize the uncertainty and the risk of the outcome of any
litigation, especially complex litigation such as this, and the difficulties and risks inherent in the
trial of such an action. Plaintiffs' Co-Lead Counsel believe that the Settlement described herein
confers very substantial benefits upon the Class . Based upon their consideration of all of thes e
factors, Plaintiffs and their counsel have concluded that it is in the best interest of Plaintiffs an d
the Class to settle the Action on the terms described herein .
18. The Defendants, while continuing to deny all allegations of wrongdoing o r
liability whatsoever, desired to settle and terminate all existing or potential claims against them ,
without in any way acknowledging any fault or liability .
19, The amount of damages, if any, that Plaintiffs could prove was also a matter of
serious dispute, and the Settlement's use of a Recognized Claim formula for distributing the
Settlement proceeds does not constitute a finding, admission or concession that provable
damages could be measured by the Recognized Claim formula . No determination has been made
by the Court as to liability or the amount, if any, of damages suffered by the Class, nor on the
proper measure of any such damages . The determination of damages, like the determination of
(M2111919;8 I -1©-
liability, is a complicated and uncertain process, typically involving conflicting expert opinions .
During the course of the Action, Defendants, in addition to denying any liability, disputed that
Plaintiffs and the Class were damaged by any wrongful conduct on the part of Defendants . The
Settlement herein provides an immediate and substantial cash benefit and avoids the risks that
liability or damages might not have been proven at trial .
20. The Court has not determined the merits of the Plaintiffs' claims or the defense s
thereto. This Notice does not imply that there has been or would be any finding of violation o f
the law or that recovery could be had in any amount if the Action were not settled.
TERMS OF THE SETTLEMEN T
21 . The Settlement provides a total of Seven Million Dollars ($7,000,000) fo r
settlement of the claims of the Class :
(a) Subject to the terms and conditions of the Stipulation, Defendants Cryo-Cell and
the Individual Defendants will cause Cryo-Cell's liability insurance carrier, National Union Fir e
Insurance Company of Pittsburgh, Pa ., to pay into escrow $3,000,000 (the "National Union Cas h
Settlement Amount"), which will earn interest for the benefit of the Class .
(b) Subject to the terms and conditions of the Stipulation, the Accounting Defendant s
will cause their liability insurance carrier, Zurich American Insurance Company, to pay int o
escrow $4,000,000 (the "Zurich Cash Settlement Amount"), which will earn interest for th e
benefit of the Class.
22. Pursuant to the Settlement, Plaintiffs and other members of the Class on behalf o f
themselves, their heirs, executors, administrators, successors, and assigns shall release an d
forever discharge, and shall forever be enjoined from prosecuting, the Released Parties (defined
below) with respect to each and every Settled Claim (defined below) .
(M2111919;Bl -11-
23 . The "Defendants" include the following, each of whom will be released from al l
Settled Claims: Cryo-Cell, the Individual Defendants and the Accounting Defendants . In
addition, the Settlement will release all Class Members' Settled Claims against Defendants,
their past or present affiliates, subsidiaries, representatives, parents, predecessors, shareholders,
creditors, partners, principals, officers, directors, agents, employees, insurers, reinsurers,
professional advisors, attorneys, auditors, accountants and any person, firm, trust, corporation,
officer, director or other individual or entity in which any Defendant has a controlling interest or
which is related to or affiliated with any of the Defendants, and the legal representatives, heirs,
successors in interest or assigns of the Defendants, including but not limited to a trustee
appointed in a chapter 7 or 11 proceeding, a receiver, an assignee for the benefit of creditors, or
any similar successor other than securities broker dealers who were not named as parties in the
Amended Complaint (collectively, the "Released Parties") .
24. "Settled Claims" means any and all claims, demands, rights, causes of action o r
liabilities, of every nature and description whatsoever, whether based in law or equity, on
federal, state, local, statutory or common law, or any other law, rule or regulation, including both
known claims and Unknown Claims, that have been or could have been asserted in any forum by
Class Members, or any of them, or the successors or assigns of any of them, whether directly,
indirectly, derivatively, representatively or in any other capacity, against any of the Released
Parties, which arise out of, or relate in any way, directly or indirectly, to the allegations,
transactions, facts, events, matters, occurrences, acts, representations or omissions involved in,
set forth in, referred to, or that could have been asserted in this Securities Action, including
without limitation, claims for negligence, gross negligence, breach of duty of care, breach of
duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of
1M2111919;8) -12-
fiduciary duty, arising out of, based upon or related in any way to the purchase, acquisition, sale
or disposition of Cryo-Cell securities by any Class Member during the Class Period .
25. If the Settlement is approved by the Court, pursuant to the Order and Final
Judgment, Plaintiffs and members of the Class on behalf of themselves, their heirs, executors,
administrators, successors, and assigns, with respect to each and every Barred Claim, release and
forever discharge, and shall forever be enjoined from prosecuting, and shall covenant to refrain
from instituting, commencing or prosecuting, either directly, indirectly, derivatively,
representatively, or in any other capacity, all Barred Claims against any of the Released Parties .
"Barred Claims" means any and all claims, demands, rights, causes of action or liabilities, of
every nature and description whatsoever, whether based in law or equity, on federal, state, local,
statutory or common law, or any other law, rule or regulation, including both known claims and
Unknown Claims, that have been or could have been asserted in any forum by the Class
Members, or any of them, or the successors or assigns of any of them, whether directly,
indirectly, derivatively, representatively or in any other capacity, against any of the Released
Parties, which arise out of, or relate in any way, directly or indirectly, to, or could have been
asserted based upon, the allegations, transactions, facts, events, matters, occurrences, acts,
representations or omissions involved in, set forth in, referred to, or which relate directly or
indirectly to this Securities Action, including, without limitation, claims for negligence, gross
negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud,
negligent misrepresentation, and breach of fiduciary duty .
26. If the Settlement is approved by the Court, pursuant to the Order and Final
Judgment, to the full extent provided by Section 21D(f)(7) of the Securities Exchange Act of
1934, 15 U.S .C. 78u-4(f)(7), and the common law of the U .S. Court of Appeals for the Eleventh
(M2111919;8) -13-
Circuit, all claims, including, but not limited to, claims for contribution, indemnification or
equitable indemnification against any party or third person, including but not limited to, any
trustee appointed in a Chapter 7 or 11 bankruptcy proceeding, a receiver, an assignee for the
benefit of creditors, or any similar successor related, directly or indirectly, to the facts of this
action shall be barred; provided, however, that certain claims excluded from the definition of
Inter-Defendant Claims shall not be barred .
27. Pursuant to the Settlement and the Order and Final Judgment, the Defendant s
shall be deemed to have exchanged mutual releases of certain Inter-Defendant Claims as agains t
Inter-Defendant Released Parties .
28. The Stipulation provides that if, prior to the Settlement Hearing, Persons wh o
otherwise would be members of the Class have timely requested exclusion ("Requests for
Exclusion") from the Class in accordance with the provisions of the Notice Order and the notice
given pursuant thereto, and such persons in the aggregate purchased a number of shares of Cryo-
Cell common stock during the Class Period in an amount greater than the sum specified in the
Supplemental Agreement between the Settling Parties, Cryo-Cell shall have the option to
terminate the Stipulation, as to the performance of Cryo-Cell and the Individual Defendants
alone, and the Accounting Defendants shall have the option to terminate the Stipulation, as to
their performance alone, in accordance with the procedures set forth in the Supplemental
Agreement . The Supplemental Agreement will not be filed with the Court unless and until a
dispute among the Settling Parties concerning its interpretation or application arises . Copies of
all Requests for Exclusion received, together with copies of all written revocations of Requests
for Exclusion, shall be delivered to Defendants' counsel within three (3) days of receipt by
Plaintiffs' Co-Lead Counsel but in no event later than twenty (20) business days before th e
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Settlement Hearing. Unless otherwise ordered by the Court, in the event the Stipulation shall
terminate, or be canceled, or shall not become effective for any reason, within five (5) business
days after written notification of such event is sent by counsel for Cryo-Cell, counsel for the
Accounting Defendants, or Plaintiffs' Co-Lead Counsel to the Escrow Agents, the Settlement
Fund (including accrued interest), plus any amount then remaining in the Class Notice and
Administration Fund (including accrued interest), less expenses and any costs which have either
been disbursed, or are chargeable to the Class Notice and Administration Fund, shall be refunded
by the Escrow Agents to the parties that paid such funds within 15 business days of the
ineffectiveness or termination of the settlement. At the request of counsel for Cryo-Cell or the
Accounting Defendants, the Escrow Agents or their designee shall apply for any tax refund owed
to the Settlement Fund and pay the proceeds, after deduction of any fees or expenses incurred in
connection with such application(s) for refund .
29. The Settlement will become effective at such time as an Order entered by th e
Court approving the Settlement shall become final and not subject to appeal and other conditions
specified in the Stipulation are satisfied (the "Effective Date") .
30. The parties to the Settlement have entered into a Supplemental Agreement, whic h
gives Cryo -Cell the option to terminate the Settlement, as to the performance of Cryo-Cell and
the Individual Defendants alone, in the event that the aggregate number of shares of Cryo-Cell
common stock purchased during the Class Pe riod by Class Members who would otherwise be
entitled to participate as members of the Class exceeds a certain threshold . The Supplemental
Agreement gives the Accounting Defend ants the same option as to performance of the
Accounting Defendants alone . If only one of Cryo-Cell or the Accounting Defendants
terminates the Settlement pursuant to this Supplemental Agreement , then such termination shal l
[M21L1919.8} _I5_
have no impact on the Settlement obligations of Plaintiffs and the nonterminating Defendants .
Moreover, in such event, then the Settlement Consideration described in paragraph 4 of the
Stipulation of Settlement shall be reduced by the amount contributed by the terminating
defendant(s), and the Stipulation will be deemed modified to reflect the new settlement amount .
Thus, for example, if Cry-Cell opts to terminate the Settlement, then the Settlement amount
would be reduced by $3,000,000, the amount contributed by Cryo-Cell to the settlement, as
described in paragraph 21(a) hereof.
ALLOCATION OF SETTLEMENT PROCEEDS AMONG CLASS MEIVIEERS
31. The following Plan of Allocation is designed to fairly allocate the proceeds of th e
Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the "Net Settlement
Fund") to the member of the Class who submit acceptable Proofs of Claim ("Authorized
Claimants") . The Claims Administrator shall determine each Authorized Claimant's pro rata
share of the Net Settlement Fund based upon each Authorized Claimant's Recognized Claim .
This Plan of Allocation schedule reflects the declines in the stock price of Cryo-Cell
International, Inc . during the Class Period from March 15, 1999, to June 27, 2003, that were
found to be reasonably attributable to the misstatements alleged in the Consolidated Class Action
Complaint .
Rule 10b-5 Claim s
Calculation of Recognized Claims shall be as follows ;
A. For shares purchased on or between March 16, 1999, and February 2, 2003, th e
following claims for damages shall be allowed :
i. For shares sold prior to February 3, 2003, no damages shall be allowed ;
ii . For shares sold on February 3, 2003, allowed damages shall be 34.9% of
the purchase price less 12 .1 % of the selling price per share;
(M21 11919,81 -16-
iii. For shares sold on or between February 4 and April 15, 2003, allowed
damages shall be 34.9% of the purchase price less 31 .8% of the selling price per share;
iv. For shares sold on or between April 16 and April 22, 2003, allowed
damages shall be 34.9% of the purchase price less 23 .4% of the selling price per share ;
v. For shares sold on or between April 23 and May 20, 2003, allowed
damages shall be 34.9% of the purchase price less 13 .8% of the selling price per share ;
vi . For shares sold on or held after May 21, 2003, allowed damages shall be
34.9% of the purchase price per share ;
B. For shares purchased on February 3, 2003, the following claims for damages shall be
allowed:
i . For shares sold on or before May 20, 2003, no damages shall be allowed ;
ii . For shares sold on or held after May 21, 2003, allowed damages shall be
12.1% of the purchase price per share ;
C. For shares purchased on or between February 4 and April 15, 2003, the following
claims for damages shall be allowed :
i . For shares sold on or before April 15, 2003, no damages shall be allowed ;
ii . For shares sold on or between April 16 and April 22, 2003, allowed
damages shall be 31 .8% of the purchase price less 23 .4% of the sel ling price per share;
iii . For shares sold on or between April 23 and May 20, 2003, allowed
damages shall be 31 .8% of the purchase price less 13 .8% of the selling price per share ;
iv, For shares sold on or held after May 21, 2003, allowed damages shall be
31 .8% of the purchase price per share ;
{M2 LI919;8f -17-
D. For shares purchased on or between April 16 and April 22, 2003, the following claims
for damages shall be allowed:
i . For shares sold on or before April 22, 2003 , no damages shall be allowed ;
ii . For shares sold on or between April 23 and May 20, 2003, allowed
damages shall be 23.4% of the purchase price less 13 .8% of the selling price per share ;
iii . For shares sold on or held after May 21, 2003, allowed damages shall b e
23.4% of the purchase price per share ;
E. For shares purchased on or between April 23 and May 20, 2003, the following claim s
for damages shall be allowed :
i . For shares sold on or before May 20, 2003, no damages shall be allowed ;
ii . For shares sold on or held after May 21, 2003, allowed damages shall be
13.8% of the purchase price per share ;
F. For shares purchased on or between May 21 and June 27, 2003, the following claim s
for damages shall be allowed :
i. For shares sold on or before June 27, 2003, no damages shall be allowed ;
ii . For shares sold on or after June 30 , 2003, allowed damages shall be . 1 % of
the purchase price per share .
In addition to the above schedule, for Rule lOb-5 claims, the damages for share s
purchased during the Class Period shall be further limited (as provided for under the Private
Securities Litigation Reform Act of 1995) by. (i) The difference between the price paid and the
price received (out-of-pocket loss) if sold on or before June 27, 2003 ; (ii) The difference between
the price per share paid and the average closing price from June 30, 2003, and the date of sale i f
W 2111919M -18-
sold on or between June 30, 2003, and September 25, 2003, as provided for in Table 1 ;2 (iii) The
difference between the price per share paid and $0 .71 if the shares were sold after June 27, 2003 ,
or were held until the current date.
The date of purchase or sale is the "contract" or "trade" date as distinguished
from the "settlement" date.
Multiple dates of purchase and/or sale of shares shall be accounted for on th e
first in - first out method (FIFO Method), treating the first share purchased as the first
share sold . For Class Members who made multiple purchases or multiple sales during the
Class Period, the earliest subsequent sale shall be matched with the earliest purchase and
chronologically thereafter for purposes of the claim calculations .
The Court has reserved jurisdiction to allow, disallow or adjust the claim of an y
Class Member on equitable grounds .
Table[ : Average Price Per Share for PSLRA look-back loss limitatio n
6/30120037/1/20037/2120037/3/20037/7/2003 0.97/812003 0 .97/9/2003 0.97/1012003 0.97/11/2003 0 .97/1412003 0.97/15 12003 0.87/16/2003 0.87/17/2003 0.87/18/2003 0.87/21/2003 0 . 8
2 For example, if one purchased shares at a price of $ .95 per share during the Class Periodand sold those shares on July 18, 2003, then the claim to damages could not exceed $ .07 pershare, as calculated by $.95 less the average price of $ .88 (as shown in Table I) from the end ofthe Class Period to July 18, 2003 .
(M2111919;5) -19-
7122/2003 0.88712312003 0 .877/2412003 0. 8712512003 0 .847128/2003 0 . 87129/2003 0.8 17/30/2003 0.8 17/31 12003 0.808/112003 0 .7 P814/2003 0 .79815/2003 0 .798/612003 0 .7881712003 0 .788/812003 0 .788/1112003 0 .788112/2003 0 .7 88113/2003 0.788/14/2003 0.788/15/2003 0.778/1812003 0,7 78/19/2003 0.768/20/2003 0.768121/2003 0.75812212003 0 .748/2512003 0.748/26/2003 0 .738127/2003 0 .738/2812003 0.738129/2003 0.739!212003 0.739/3/2003 0.739/4/2003 0.739/5/2003 0 .739/8/2003 0.739/1012003 0.7 39/1112003 0.729/12/2003 0.7 29115/2003 0.7 29/16/2003 0 .7 29/17/2003 0.729/18/2003 . 0 .7 29/19/2003 0.7 2912212003 0.729/2312003 0.7 2912412003 0 .7 19/2512003 0 .71
(M2111919;8 -20-
32. Checks will be distributed to Authorized Claimants after all claims have been
processed and after the Court has finally approved the Settlement . If any funds remain in the Net
Settlement Fund by reason of uncashed checks or otherwise, then, after the Claims Administrator
has made reasonable and diligent efforts to have Class Members who are entitled to participate in
the distribution of the Net Settlement Fund cash their distribution checks, any balance remaining
in the Net Settlement Fund one (1) year after the initial distribution of such funds shall be
contributed to non-sectarian, not-for-profit, 501(c)(3) organization(s) designated by Plaintiffs'
Co-Lead Counsel.
THE RIGHTS OF CLASS MEMBER S
33 . The Court has preliminarily certified this Action to proceed as a class action . If
you purchased or otherwise acquired the common stock of Cryo-Cell during the period from
March 1 6, 1999 through and including June 27, 2003 and you are not excluded by the definition
of the Class and do not elect to exclude yourself, then you are a Class Member_ Class Members
have the following options pursuant to Rule 23 (c) (2) of the Federal Rules of Civil Procedure :
(a) If you wish to remain a member of the Class, you may share in the proceeds of th e
Settlement, provided that you submit an acceptable Proof of Claim and Release . Class Members
will be represented by the Lead Plaintiffs and the Co-Lead Counsel, unless you enter an
appearance through counsel of your own choice at your own expense . You are not required to
retain your own counsel, but if you choose to do so, such counsel must file an appearance on
your behalf on or before twenty (20) days prior to the Settlement Fairness Hearing, and must
serve copies of such appearance on the attorneys listed in paragraph 41 below.
(b) If you do not wish to remain a member of the Class, you may exclude yourself
from the Class by following the instructions in paragraph 39 below. Persons who exclude
tM2111919;8) -21-
themselves from the Class will NOT receive any share of the Settlement proceeds and will no t
be bound by the Settlement ,
(c) If you object to the Settlement or any of its terms, or to Plaintiffs' Counsel' s
application for fees and expenses, and if you do not exclude yourself from the Class, you ma y
present your objections by following the instructions in paragraph 41 below .
SUBMISSION AND PROCESSING OF PROOFS OF CLAIM AND RELEASE S
34, In order to be eligible to receive any distribution from the Net Settlement Fund ,
you must complete and sign the accompanying Proof of Claim and Release form and send it b y
first class mail postmarked on or befo re M O kC -1 ► $ , 2005 addressed as follows :
In re Cryo-Cell International, Inc . Securities Litigation Claims Administratorc/o RSM McGladreyP.O. Box 1327Blue Bell, PA 19422
35 . If you do not submit a proper Proof of Claim and Release form, you will not b e
entitled to any share of the Net Settlement Fund .
36. If you are a Class Member and you do not properly exclude yourself from the
Class, you will be bound by the Settlement and the Order and Final Judgment of the Court
dismissing this Action, even if you do not submit a Proof of Claim and Release . If you exclude
yourself from the Class, you will not be bound by the judgment but you will not be entitled to
any share of the Net Settlement Fund .
37. All Proofs of Claim and Releases must be submi tted by the date specified in thi s
Notice unless such period is extended by Order of the Court .
38 . Each Claimant shall be deemed to have submitted to the jurisdiction of the Unite d
States District Court for the Middle District of Florida, Tampa Division with respect to his, he r
or its Proof of Claim and Release .
I M2I 11919;81 -22-
EXCLUSION FROM THE CLAS S
39. Each Member of the Class shall be bound by all determinations and judgments i n
this Action concerning the Settlement, whether favorable or unfavorable, unless such person
shall mail, by first class mail, a written request for exclusion from the Class, postmarked no later
than twenty (20) days prior to the Settlement Fairness Hearing, addressed to Cryo-Cell
International, Inc ., Securities Litigation Exclusions, c/o RSM McGladrey, Claims Administrator,
P.O. Box 1327, Blue Bell, Pennsylvania, 19422. No person may exclude himself from the Class
after that date. In order to be valid, each such request for exclusion must set forth the name and
address of the person or entity requesting exclusion, must state that such person or entity
"requests exclusion from the Class in the In re Cryo-Cell International, Inc . Securities Litigation,
Case No . 8:03-CV-1011-T-17 EAJ" and must be signed by such person or entity. Persons and
entities requesting exclusion are requested to also provide the following information : their
telephone number, the date(s), price(s), and number(s) of shares of all purchases and sales of
Cryo-Cell common stock during the Class Period . The request for exclusion shall not be
effective unless the request for exclusion provides the required information and is made within
the time stated above, or the exclusion is otherwise accepted by the Court .
SETTLEMENT FAIRNESS HEARIN G
40. At the Settlement Fairness Hearing, the Court will determine whether to finall y
approve this Settlement and dismiss the Action and the claims of the Class Members . The Court
will also determine whether the Plan of Allocation for the Se tt lement proceeds is fair and
reasonable . The Se ttlement Fai rness Hearing may be adjourned from time to time by the Court
without further written notice to the Class . If you intend to attend the Settlement Fairness
Hearing, you should con firm the date and time with Plaintiffs ' Co-Lead Counsel . If the
(M 2 I 11919;87 -23-
Settlement is approved, the Court will also consider the application of Plaintiffs' Counsel fo r
attorneys' fees and reimbursement of expenses .
41. At the Settlement Fairness Hearing, any Class Member who has not properl y
submitted a request for exclusion from the Class may appear in person or by counsel and be
heard to the extent allowed by the Court in opposition to the fairness, reasonableness and
adequacy of the Settlement, the Plan of Allocation, or the application for an award of attorneys'
fees and reimbursement of expenses, provided, however, that in no event shall any person be
heard in opposition to the Settlement, the Plan of Allocation, or Plaintiffs' Counsel's application
for attorneys' fees and expenses and in no event shall any paper or brief submitted by any such
person be accepted or considered by the Court, unless, on or before twenty (20) days prior to the
Settlement Fairness Hearing, such person (a) files with the Clerk of the Court notice of such
person's intention to appear, showing proof of such person's membership in the Class, and
providing a statement that indicates the basis for such opposition, along with any documentation
in support of such objection, and (b) simultaneously serves copies of such notice, proof,
statement and documentation, together with copies of any other papers or briefs such person files
with the Court, in person or by mail upon Plaintiffs' Co-Lead Counsel :
David J. George, Esq .Lerach, Coughlin, Stoia , Geller, Rudman &Robbins LLP197 South Federal HighwaySuite 20 0Boca Raton, Florida 33430Telephone: 561/750-3000
William B. Federman, Esq .Federman & Sherwood120 N. Robinson AvenueSuite 2720Oklahoma City, Oklahoma 73102Telephone: 405/235-156 0
and upon Defendants' Counsel :
jM2l1 1 919:9} -24-
Stanley Wakshlag, Esq .Akerman Senterfitt P .A .One Southeast Third Avenue28th FloorMiami, FL 33131(305) 374-560 0
Joseph B . Donnelly, Esq .Broad and CasselAmSouth Building100 N. Tampa StreetSuite 3500Tampa, FL 33602813/225-3020
Tracy A. Nichols, Esq .Holland & Knight, LLP701 Brickell AvenueSuite 300 0Miami, FL 33131(305) 374-8500
Mark Bideau, Esq.Greenberg Traurig P .A .777 South Flagler DriveSuite 310 EWest Palm Beach, FL 334015611650-790 0
Joel M. Wolosky Esq .Bondy & Schloss LLP60 E. 42nd StreetNew York, NY 10165212/661-3535
Attendance at the hearing is not necessary. however, persons wishing to be heard orally in
opposition to the approval of the Settlement, the Plan of Allocation, and/or the request for
attorneys' fees are required to indicate in their written objection their intention to appear at the
hearing. Persons who intend to object to the Settlement, the Plan of Allocation, and/or counsel's
application for an award of attorneys' fees and reimbursement of expenses and desire to present
evidence at the Settlement Fairness Hearing must include in their written objections the identity
of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the
Settlement Fairness Hearing. Class Members do not need to appear at the hearing or take any
other action to indicate their approval .
1M21 l 1919.8} -25-
ATTORNEYS' FEES AND DISBURSEMENTS
42. At the Settlement Fairness Hearing or at such other time as the Court may direct,
Plaintiffs' Counsel intend to apply to the Court for an award of attorneys' fees from the Gross
Settlement Fund in an amount not greater than thirty percent (30%) of the Gross Settlement Fund
and for reimbursement of their expenses up to a maximum amount of $30,000, plus interest on
such expenses at the same net rate as earned by the Gross Settlement Fund . Plaintiffs' Counsel,
without further notice to the Class, may subsequently apply to the Court for fees and expenses
incurred in connection with administering and distributing the Settlement proceeds to the
members of the Class.
FURTHER INFORMATION
43. For a more detailed statement of the matters involved in this Action, reference is
made to the pleadings , to the Stipulation, to the Orders entered by the Court and to the other
papers filed in the Action, which may be inspected at the Office of the Clerk of the United States
District Court for the Middle Dist rict of Florida, 223 Sam M. Gibbons U.S. Courthouse, 801
North Florida Avenue , Tampa, Florida 33602, during regular business hours .
44. ALL INQUIRIES CONCERNING THIS NOTICE OR THE PROOF OF CLAIM
AND RELEASE FORM BY CLASS MEMBERS SHOULD BE MADE TO THE CLAIMS
ADMINISTRATOR IN WRITING AT THE ADDRESS INDICATED BELOW .
SPECIAL NOTICE TOSECURITIES BROKERS AND OTHER NOMINEE S
45. If you purchased or otherwise acquired the common stock of Cryo-Cell during the
period from March 1 6 , 1999 through and including June 27, 2003 for the beneficial interest of a
person or organization other than yourself, the Court has directed that, within seven (7) days of
your receipt of this Notice, you either (a) provide to the Claims Administrator the name and las t
{M2t11919;8} -26-
known address of each person or organization for whom or which you purchased such stock
during such time period or (b) request additional copies of this Notice and the Proof of Claim
and Release form, which will be provided to you free of charge, and within seven (7) days mail
the Notice and Proof of Claim and Release form directly to the beneficial owners of the
securities referred to herein . If you choose to follow alternative procedure (b), the Court has
directed that, upon such mailing, you send a statement to the Claims Administrator confirming
that the mailing was made as directed . You are entitled to reimbursement from the Gross
Settlement Fund of your reasonable expenses actually incurred in connection with the foregoing,
including reimbursement of postage expense and the cost of ascertaining the names and
addresses of beneficial owners. Those expenses will be paid upon request and submission of
appropriate supporting documentation.
46. All communications concerning the foregoing should be addressed to the Claim s
Administrator :
In re Cryo-Cell International, Inc . Securities Litigation Claims Administratorc/o RSM McGladreyP .O. Box 132 7Blue Bell , PA 1942 2
Tampa, Florid aDated: UU c ..l Iq 200'.
By Order of the CourtCLERK OF THE COURT
(M2111919;91 -27-