By the Final Judgment and Order of Dismissal with Prejudice signed by U.S. District Judge Beverly B. Martin and entered on November 9, 2005, the settlement as set forth in the Stipulation of Settlement is approved and the action is dismissed with prejudice. Further, according to the Order, the Plan of Allocation is approved, and Plaintiffs’ Co-Lead Counsel are awarded 30% of the Gross Settlement Fund in fees and $553,012.42 in reimbursement of expenses. The civil case is terminated.
As reported by the Company’s FORM 10-Q For the Quarterly Period Ended September 30, 2005, on July 21, 2005 the Company reached an agreement in principle to settle the securities class action lawsuit. The settlement will resolve all claims asserted against the Company and the individual defendants in this case. The terms of the settlement, which must be approved by the court following notice to the class, include a total settlement of $23.25 million, of which $19.5 million is to be paid in cash and $3.75 million in CryoLife common stock. The cash payment, which included approximately $12.0 million in insurance proceeds and approximately $7.5 million in Company funds, has been placed into an escrow account, in the fourth and third quarter, respectively, pending court approval and the settlement becoming final. The stock transfer of $3.75 million will likewise be completed if and when the settlement is approved by the court and becomes final. The Company and the individual defendants have denied any wrongdoing and liability whatsoever, and the settlement does not contain any admission of liability.
According to the same SEC filing, several putative class action lawsuits were filed in July through September 2002 against the Company and certain officers of the Company, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on a series of purportedly materially false and misleading statements to the market. The suits were consolidated, and a consolidated amended complaint filed, that principally alleges that the Company made misrepresentations and omissions relating to product safety and the Company did not comply with certain FDA regulations regarding the handling and processing of certain tissues and other product safety matters. The consolidated complaint sought certification of a class of purchasers between April 2, 2001 and August 14, 2002, compensatory damages, and other expenses of litigation. The Company and the other defendants filed a motion to dismiss the consolidated complaint on February 28, 2003, which motion the U.S. District Court for the Northern District of Georgia denied in part and granted in part on May 27, 2003. The discovery phase of the case commenced on July 16, 2003. On December 16, 2003 the Court certified a class of individuals and entities who purchased or otherwise acquired CryoLife stock from April 2, 2001 through August 14, 2002. On March 11, 2005 defendants moved for summary judgment on all of plaintiffs’ claims, and plaintiffs moved for partial summary judgment as to some of their claims against certain defendants. On June 17, 2005 the court denied plaintiffs’ motion for partial summary judgment and granted in part and denied in part defendants’ motion for summary judgment.
The original action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities.