NOTICE OF PENDENCY OF CLASS ACTION, HEARING ON PROPOSED SETTLEMENT AND ATTORNEYS' FEE PETITION AND RIGHT TO SHARE IN SETTLEMENT FUN D

Transcription

1 UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORID A TAMPA DIVISIO N CASE NO.8:03-CV 1011-T-17 EAJ JUDGE 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 COMMON STOCK OF CRYO-CELL INTERNATIONAL, INC. ("CRYO-CELL") DURING THE PERIOD FROM MARCH 16, 1999 THROUGH AND INCLUDING NNE 27, 2003 (THE "CLASS PERIOD"). 1 PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION. IF YOU ARE A CLASS MEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFITS PURSUANT TO THE PROPOSED SETTLE MENT DESCRIBED HEREIN. CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THE FORM ACCOMPANYING THIS NOTICE, POSTMARKED ON OR BEFORE i11f CH!', EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SUBMITTED POSTMARKED ON OR BEFORE F ebk P-y it, 200S SECURITIES BROKERS AND OTHER NOMINEES : PLEASE SEE INSTRUCTIONS AT PARAGRAPH 45 HEREIN. In the Complaint, the Class Period is defined as March 16, 1999, through May 20, At the insistence of the Defendants, the Class Period, for purposes of settlement, has been extended through June 27, As reflected in the plan of allocation referred to below, there is only a de minimus loss, if any, from May 20, 2003 through June 27, j M ;8) -2-

2 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 parties' 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 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- (M ;81-4-

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-

5 IV. Statement of Attorne s' Fees and Costs Soug ht 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 Informatio n 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/ , and William B. Federman, Esq., Federman & Sherwood, 120 N. Robinson Avenue, Suite 2720, Oklahoma City, Oklahoma 73102, Telephone 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 (M ;8}

6 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 XOl!U 166. L('l 200Y, that a hearing will be held before eoor1rcenz 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 Fẹbry~nl.A ~, 2005 (the "Settlement Fairness Hearing") to determine whether a proposed settlement (the "Settlement") of 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., LL P. ("Weinick Sanders") and Mirsky Furst & Associates, P.A. (Mirsky {M ;81-7-

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, 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 (M2 1 }19}9;8} -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 16. 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, {M2 t 11919;8} -9-

9 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 (M ;8 I -1 -

10 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). (M ;Bl -11-

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 1M ;8) -12-

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 (M ;8) -13-

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 (M ,11-14-

14 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_

15 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; (M ,81-16-

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-

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 b e 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 M -18-

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/ /1/2003 7/ /3/2003 7/7/ / /9/ / /11/ / / /16/ /17/ /18/ /21/ For example, if one purchased shares at a price of $.95 per share during the Class Period and sold those shares on July 18, 2003, then the claim to damages could not exceed $.07 per share, as calculated by $.95 less the average price of $.88 (as shown in Table I) from the end of the Class Period to July 18, (M ;5) -19-

19 7122/ / / / /30/ / / P 814/ / / / / / / /14/ /15/ / ,7 7 8/19/ /20/ / / /26/ / / / ! /3/ /4/ /5/ /8/ / / /12/ / /16/ /17/ /18/ /19/ / / (M ;8-20-

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 tm ;8) -21-

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 Administrator c/o RSM McGladrey P.O. Box 1327 Blue Bell, PA 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 th e 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-

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, 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 Settlement proceeds is fair and reasonable. The Settlement Fairness 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 ;87-23-

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 LLP 197 South Federal Highway Suite 20 0 Boca Raton, Florida Telephone: 561/ William B. Federman, Esq. Federman & Sherwood 120 N. Robinson Avenue Suite 2720 Oklahoma City, Oklahoma Telephone: 405/ and upon Defendants' Counsel : jm2l :9} -24-

24 Stanley Wakshlag, Esq. Akerman Senterfitt P.A. One Southeast Third Avenue 28th Floor Miami, FL (305) Tracy A. Nichols, Esq. Holland & Knight, LLP 701 Brickell Avenue Suite Miami, FL (305) Mark Bideau, Esq. Greenberg Traurig P.A. 777 South Flagler Drive Suite 310 E West Palm Beach, FL Joseph B. Donnelly, Esq. Broad and Cassel AmSouth Building 100 N. Tampa Street Suite 3500 Tampa, FL / Joel M. Wolosky Esq. Bondy & Schloss LLP 60 E. 42nd Street New York, NY / 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 } -25-

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 T O SECURITIES 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-

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. Administrator : 46. All communications concerning the foregoing should be addressed to the Claim s In re Cryo-Cell International, Inc. Securities Litigation Claims Administrator c/o RSM McGladrey P.O. Box Blue Bell, PA Tampa, Florid a Dated: UU c..l Iq 200'. By Order of the Court CLERK OF THE COURT (M ;91-27-