ATLANTA, March 30 /PRNewswire-FirstCall/ -- CryoLife,
Inc. (NYSE: CRY), an implantable biological medical device and
cardiovascular tissue processing company, announced today that it
filed an emergency motion for a preliminary injunction against
Medafor, Inc. in the United States District Court for the Northern
District of Georgia, Atlanta division. CryoLife contends that
Medafor is improperly attempting to terminate the exclusive
distribution agreement ("EDA") between the parties, and CryoLife
has requested that the Court enjoin Medafor from proceeding with
the termination.
CryoLife believes that Medafor's attempt to terminate the EDA is
wrongful for several reasons. Primarily, Medafor ignored the
fact that the parties contracted away any right to apply the
adequate assurances statute that Medafor is now invoking to attempt
to terminate the EDA. Even if the statute applied, CryoLife
believes Medafor failed to meet the statutory prerequisites for
termination, for numerous reasons, including those described
below.
Specifically, the statute is only available to a party with a
reasonable basis for insecurity regarding the other party's future
performance, and CryoLife's adherence to the contract has never
been in legitimate doubt. The statute requires that any
assurances demanded by a party with an insecurity be reasonable.
CryoLife believes that Medafor's requested assurances were
not reasonable and in fact were designed to be overreaching and
abusive. Perhaps most importantly, the statute demands that
the party invoking it do so in absolute good faith, and CryoLife
believes Medafor's invocation of the statute was made in bad faith,
as a pretextual scheme to get out of a contract that Medafor found
itself unable and unwilling to honor.
The statute is also not available to a party who itself is in
breach of its obligations. CryoLife is aware of numerous
breaches by Medafor of the EDA, including: promoting and
marketing product on its website for use in CryoLife's exclusive
Field in violation of the EDA; failing to prevent its Brazilian
distributor from marketing and promoting the product on its
website; failing to respond to notice letters of prohibited conduct
in 17 instances, along with failing to respond to many of the
allegations contained in the complaint filed against it by
CryoLife; failing to respond to CryoLife's notice letters regarding
Medafor's breaches of conduct in Spain; and refusing to protect the
intellectual property rights of Medafor's MPH technology in
accordance with the terms of the EDA.
Steven G. Anderson, CryoLife's
chairman, president and chief executive officer, commented,
"CryoLife has assiduously followed the terms of the EDA and has
repeatedly communicated to Medafor its intention to continue to
honor the terms of the EDA. We believe that Medafor's request
for assurances was not made in good faith and that it was simply a
pretext to terminate a contract that they cannot consistently
comply with, as evidenced by their repeated breaches.
Unfortunately, in attempting to repudiate the EDA, we believe
Medafor has put itself and its shareholders at great risk.
Should this gambit fail, Medafor has exposed itself to
significant damages in addition to the damages arising under the
complaint previously filed by CryoLife and the substantial
litigation costs this process will accrue."
In the event an injunction is not granted, however, CryoLife
will pursue its rights with respect to the EDA vigorously,
including claims, for among other things, breach of contract, fraud
and negligent misrepresentation and violation of the Georgia RICO
provisions, and CryoLife will consider all avenues open to it to
protect its interests and those of its shareholders and recover
appropriate compensation from Medafor for its reckless actions.
CryoLife believes that it currently has enough inventory, with
or without the fulfillment of the March 16,
2010 purchase order that was disputed by Medafor, to meet
its business needs through the end of May
2010. CryoLife is optimistic that the court will rule
on its motion for preliminary injunction prior to that time.
Shareholders may continue to visit www.cryolife.com/medaforoffer
for additional information about CryoLife and its relationship with
Medafor. Additional detail regarding the litigation between
CryoLife and Medafor is also available in CryoLife's filings with
the Securities and Exchange Commission.
About CryoLife, Inc.
Founded in 1984, CryoLife, Inc. is a leader in the processing
and distribution of implantable living human tissues for use in
cardiac and vascular surgeries throughout the U.S. and Canada. The Company's CryoValve® SG
pulmonary heart valve, processed using CryoLife's proprietary
SynerGraft® technology, has FDA 510(k) clearance for the
replacement of diseased, damaged, malformed, or malfunctioning
native or prosthetic pulmonary valves. The Company's
CryoPatch® SG pulmonary cardiac patch has FDA 510(k) clearance for
the repair or reconstruction of the right ventricular outflow tract
(RVOT), which is a surgery commonly performed in children with
congenital heart defects, such as Tetralogy of Fallot, Truncus
Arteriosus, and Pulmonary Atresia. CryoPatch SG is
distributed in three anatomic configurations: pulmonary
hemi-artery, pulmonary trunk, and pulmonary branch. The
Company's BioGlue® Surgical Adhesive is FDA approved as an adjunct
to sutures and staples for use in adult patients in open surgical
repair of large vessels. BioGlue is also CE marked in the
European Community and approved in Canada and Australia for use in soft tissue repair.
The Company's BioFoam™ Surgical Matrix is CE marked in the
European Community for use as an adjunct in the sealing of
abdominal parenchymal tissues (liver and spleen) when cessation of
bleeding by ligature or other conventional methods is ineffective
or impractical. BIOGLUE Aesthetic® Medical Adhesive is
CE marked in the European Community for periosteal fixation
following endoscopic browplasty (brow lift) in reconstructive
plastic surgery and is distributed by a third party for this
indication. CryoLife distributes HemoStase®, a hemostatic
agent, in much of the U.S. for use in cardiac and vascular surgery
and in many international markets for cardiac, vascular, and
general surgery, subject to certain exclusions.
Except for the historical information contained in this press
release, the statements made by CryoLife are forward-looking
statements that involve risks and uncertainties. All such
statements are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. These statements include
CryoLife's plans with respect to future litigation and pursuit of
its rights, CryoLife's belief that it currently has enough
inventory to meet its business needs through the end of
May 2010, and CryoLife's optimism
that the court will rule on its motion for preliminary injunction
prior to the end of May 2010. These statements are
subject to a number of risks that are outside CryoLife's control,
including the risk that future events and actions by other parties
may impact plans regarding any litigation with Medafor to enforce
our rights under the EDA, including actions taken by Medafor's
Board of Directors and management, the sufficiency of CryoLife's
inventory through May 2010 will be
impacted by future sales, and the timing of the court's ruling on
CryoLife's motion for preliminary injunction is subject to the
court's docket and the discretion of the
judge. CryoLife's business is also subject to a number
of risks and uncertainties, including those risk factors detailed
in our Securities and Exchange Commission filings, including our
Form 10-K filing for the year ended December
31, 2009. The Company does not undertake to
update its forward-looking statements.
For additional information about the company, visit CryoLife's
Web site: www.cryolife.com
Media
Contacts:
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D. Ashley
Lee
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Executive Vice
President, Chief Financial Officer and
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Chief Operating
Officer
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Phone:
770-419-3355
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Nina
Devlin
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Edelman
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Phone:
212-704-8145
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SOURCE CryoLife, Inc.