Xytronyx Inc. said Friday that it has approved an agreement inprinciple to settle a February 1992 class-action suit.

Shareholders had accused the San Diego company of notdisclosing in a timely manner the problems it was having withthe FDA regarding approval of its PerioGard Tissue Monitor, anon-invasive procedure used to detect periodontal tissuedisease. The company denied the allegations.

The settlement, subject to final approval, will include a cashpayment of $2.8 million and issuance to the plaintiff class five-year warrants with an exercise price of $22 per share, for anaggregate of 309,734 shares of the company's common stock(ASE:XYX). Xytronyx said the $2.8 million payment will becovered entirely by company insurance.

The FDA accepted the protocol on the monitor in the fall andasked for one more round of testing, said Paul Holm of H.L.Lanzet Inc., a financial public relations firm representingXytronyx. He said the final round of testing should start thismonth.

Xytronyx's stock closed unchanged on Friday at $6.38 a share.

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