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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
SERACARE, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Delaware 95-4343492
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1925 Century Park East, Suite 1970
Los Angeles, California 90067
- ---------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (310) 772-7777
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Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 Par Value
- -----------------------------
(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
SeraCare, Inc. (""SeraCare" or the "Company") was incorporated under the laws
of the State of Delaware in 1986 and changed its name from American Blood
Institute, Inc. to SeraCare, Inc. effective February 6, 1996. The Company
maintains its principal business and executive offices at 1925 Century Park
East, Suite 1970, Los Angeles, California 90967, telephone (310) 772-7777.
The business of the Company is conducted through its four wholly-owned
subsidiaries: AVRE, Inc., a Nevada corporation, Binary Associates, Inc., a
Colorado corporation, BHM, Inc., an Arkansas corporation, and SeraCare
Acquisitions, Inc., a Nevada corporation. SeraCare was initially engaged in
the business of whole blood collection and distribution on a "for profit"
basis. After significant and accelerating losses, the SeraCare Board of
Directors brought in a new management team in 1993 to do an in-depth analysis
of the business and to formulate and implement corrective measures. After
completing the analysis, the Board determined to discontinue the whole blood
operations and to change the focus of the business to the more profitable
plasma collection business. Accordingly, the Company designed a restructuring
plan, obtained financing and on October 4, 1993 acquired AVRE, Inc. and
Binary Associates, Inc. (which together owned and operated six plasma
collection centers) to form the basic platform for the future focus of the
Company. Before implementing the restructuring plan for the Company,
management met with both secured and unsecured creditors and obtained their
support and cooperation. However, one secured lender subsequently called a
default and attempted to foreclose on the six plasma collection centers. The
Company filed for protection under Chapter 11 of the Bankruptcy Code on
January 7, 1994 in order to prevent the foreclosure.
The Company emerged from Chapter 11 effective February 6, 1996 as a plasma
collection company with six plasma collection centers. On July 2, 1996, the
Company acquired the operating assets and licenses of Silver State Plasma
Center in Las Vegas, Nevada from Nations Biologics in an asset purchase. On
July 8, 1996 the Company acquired BHM Labs, Inc., which owns and operates a
plasma collection center in Ft. Smith, Arkansas. Effective September 1, 1996,
the Company completed the acquisition two initial stage plasma collection
centers in Clearfield, Utah and Raleigh, North Carolina. The Company has also
signed leases in preparation for starting new plasma centers in three other
locations.
The plasma centers are operating under the tradename "SeraCare," which is
registered with the United States Patent and Trademark Office.
COMPETITION
The Company competes for donors with pharmaceutical companies which collect
plasma for their own use, several other commercial plasma collection
companies, and non-profit organizations, such as the American Red Cross and
community blood banks, which solicit the donation of whole blood. A number of
these competitors have access to greater financial, marketing and other
resources than the Company. If the Company is unable to maintain and expand
its donor base, its business and future prospects will be adversely affected.
Most of the plasma which the Company sells to its customers is sold under
long-term contracts and relationships which once established continue to be
renewed. The plasma collected by the Company is generally used in the
manufacture of therapeutic products to treat certain diseases. Several
companies are attempting to develop and market products to treat these
diseases based upon technology which would lessen or eliminate the need for
human blood plasma. Such
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products, if successfully developed and marketed, could adversely affect the
demand for plasma. Products utilizing technology developed to date have not
yet proven as cost-effective or as marketable to healthcare providers as
products based on human blood plasma. However, there can be no assurances that
such technology will not ultimately become economically viable and cause a
severe adverse impact upon the Company and the plasma industry as a whole.
REGULATORY ISSUES
The plasma collection and derivative industry is one of the most heavily
regulated in the U.S. Federal, state and local regulations are designed to
protect the health of the donors as well as the integrity of the products.
The Food and Drug Administration (the "FDA") administers the federal
regulations across the country. Failure to comply with FDA regulations, or
state and local regulations, may result in the forced closure of a collection
center or monetary fines or both, depending upon the issues involved. A
number of blood banks and plasma centers in the U.S. have been closed because
of legal actions taken by the FDA. The Company is also subject to regulation
by Occupational Safety and Health Administration ("OSHA").
The American Blood Resources Association ("ABRA"), an industry organization,
has developed and adopted an industry-wide program to certify those plasma
centers meeting or exceeding standards which it determines are in the best
interest of the industry, donors and the public. Within the past five years,
ABRA has created a higher level of performance criteria and implemented this
certification process, which has upgraded the image of the U.S. plasma
collection industry. Examples of the requirements which are enforced by the
FDA, state authorities and ABRA include facilities upgrade, high operating
standards, strict donor screening for drugs and disease, verified addresses
for all donors, use of a national registry of deferred donors and controlled
viral reactive rates to insure they remain within prescribed limits. The
Quality Plasma Program ("QPP") is designed to eliminate the collection of
plasma from donors who are homeless, transient or drug addicted. In addition,
it requires all certified centers to maintain documented and approved
employee-training programs. All testing required by the center must be
performed in a QPP-approved laboratory. All eight of the Company's current
centers have been QPP-certified. In addition, the Company's startup centers
and initial stage centers have been designed and planned to QPP
specifications.
The Company's management closely monitors compliance with applicable
governmental regulations, ABRA standards imposed through QPP and the
Company's own quality assurance standards.
THE INDUSTRY AND THE MARKET
THE PRODUCT
Currently, the Company's primary product is "source plasma." Source plasma is
plasma collected from humans. Plasma is the liquid part of blood and is
collected through a procedure similar to giving blood. The clear plasma is
mechanically separated from the cellular elements of the blood (such as red
and white blood cells and platelets) through centrifugation or membrane
filtration at the time the donation is made. These cellular elements are then
returned to the donor as part of the same procedure. The process of
collecting plasma is known as PLASMAPHERESIS. Because blood cells are
returned, it is possible for individuals to donate plasma more frequently than
whole blood. Donations of plasma can be made up to twice per week or 104
times per year pursuant to FDA rules.
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PLASMA PRODUCTS FLOWCHART
[GRAPHIC]
PLASMA DERIVED PRODUCTS
Source plasma is sold to fractionators who process the plasma into two primary
groups of plasma products: INJECTABLE AND NON-INJECTABLE. These products are
used throughout the world to prevent illness and treat injuries.
During the fractionation process, the various protein components of plasma are
separated and purified so they can be infused into patients at concentrations
much higher than in the liquid source plasma from which they are derived. The
fractionators process the collected plasma through two sterilization processes
which are designed to kill any bacterial or viral occurrences. Because of the
commingling of plasma from various suppliers and the two sterilization
procedures included in the process, the fractionators bear substantially all
legal risks for the quality of plasma received by end users. SeraCare has
almost no legal risk because no plasma sold by SeraCare is sold to end users
as plasma.
INJECTABLE PLASMA PRODUCTS
SOURCE PLASMA is the base raw material used to manufacture many injectable
therapeutic products, the most important of which are:
NORMAL SERUM ALBUMIN AND PLASMA PROTEIN FRACTION, which are primarily used to
keep vessel walls from collapsing following major injury, as blood volume
expanders and as a protein replacement. They are used:
- to treat shock due to trauma or hemorrhage;
- to treat fluid loss due to severe burns;
- in cardiovascular surgery;
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- to treat liver and kidney diseases; and
- as a carrier for many other injectable solutions.
IMMUNE GLOBULINS, which are used to strengthen the immune system in order to
fight off common diseases such as:
- Suppressed immune systems in cases of organ transplants, HIV and
other immune deficiencies;
- Hepatitis B;
- Tetanus;
- Rabies, whooping cough, measles and polio; and
- Other immune related diseases.
ANTIHEMOPHILIC FACTORS, which are specific proteins found in plasma that are
an integral part of the blood clotting mechanism. Persons born with an
absence or a deficient amount of the protein suffer from hemophilia, types A,
B, or Von Willebrand's Disease.
RH IMMUNE GLOBULIN, which is a substance administered to prevent
incompatibilities between the blood of a fetus and mother. Its use has
prevented the deaths of thousands of infants.
NON-INJECTABLE PLASMA PRODUCTS
The secondary use of plasma is to manufacture certain diagnostic products which
are for the most part non- injectable. Some of the primary diagnostic products
are:
- BLOOD GROUPING AND TYPING REAGENTS which are used by blood banks
to match donor blood with the recipient.
- LABORATORY CONTROL REAGENTS which are used by laboratories to
assure the quality control of their tests.
- SPECIAL TEST KIT REAGENTS which are derived from the plasma of
donors known to have a specific disease and are used in the
laboratory as a positive control test.
SPECIALTY PLASMAS
Specialty Plasmas generally contain high concentrations of specific antibodies
and are used primarily to manufacture immune globulin therapeutic products
which bolster the immunity of patients to fight a particular infection or to
treat certain immune system disorders. Following advances in intravenous
therapy in the mid-1980s, use of specialty plasmas for therapeutic purposes
significantly increased. Among the current uses for specialty plasmas are the
production of products to prevent hepatitis, Rh incompatibility in newborns,
tetanus and rabies. Specialty plasmas are also widely used for diagnostic and
tissue culture purposes. Depending on the rarity of the antibody or medical
history of the donor, the pricing for specialty plasmas currently ranges from
$80 to $3,500 per liter. The average spot price (free market price) of source
plasma is currently approximately $76. Most specialty plasma is derived
serendipitously (not the result of stimulation) which poses no abnormal risk
to the plasma collector.
The Company currently collects and sells two specialty plasmas, Cytomegalovirus
Antibody Plasma (CMV) and Tetanus Antibody Plasma. The Company intends to place
increased emphasis
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on the collection of specialty plasmas by identifying potential specialty
plasma donors through screening and testing procedures and by developing more
FDA-licensed programs to inoculate potential donors.
THE PLASMA INDUSTRY
The blood resource industry can be divided into two industry segments. One is
the non-profit or voluntary sector which is commonly thought of as Red Cross
and independent non-profit blood centers. This "non-profit" sector is
primarily concerned with providing whole blood and components of whole blood
for transfusion in medical applications at hospitals. The other is the
commercial or "for-profit" segment such as plasma collection centers. This
"for-profit" commercial sector consists of plasma collection operations which
collect plasma from paid donors and sell the plasma to Fractionators, who
produce plasma derivative products or fractions that are used in therapeutics.
The following table shows certain plasma collection data for the years 1977
through 1993.
NATIONAL PLASMA CENTER COLLECTION DATA 1977 - 1993
YEAR NO. LICENSED TOTAL COLLECTIONS AVERAGE LITERS PER
CENTERS (MILLION OF LITERS) CENTER
- -----------------------------------------------------------------------
1977 255 4.0 15,686
1982 344 5.8 16,861
1987 407 6.9 16,953
1988 403 6.9 17,122
1989 426 7.1 16,667
1990 448 7.3 16,294
1991 443 7.5 16,930
1992 434 8.4 19,365
1993(1) 440 8.1 18,409
SOURCE: AMERICAN BLOOD RESOURCES ASSOCIATION
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(1) Decrease in volumes resulted from elimination of certain donors due to
tougher qualifications imposed by ABRA through its QPP certification
program.
Plasma is collected at centers owned by both foreign and U.S. fractionators
and by independent companies who sell to diagnostic companies and other
fractionators.
Plasma collection centers are found in most states throughout the United
States as presented in the following illustration:
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DISTRIBUTION OF PLASMA CENTERS BY STATE - 1993
[GRAPHIC]
SOURCE: AMERICAN BLOOD RESOURCES ASSOCIATION
The United States plays a leading role in the world's source plasma,
providing approximately 65% of the world's plasma needs. The United States
plasma industry has made a concerted effort through ABRA to increase its
global market share.
PLASMA MARKET
The source plasma industry has experienced a number of fluctuations in the
supply and demand cycles. The market factors driving the plasma industry have
included:
- The expanded use of immune globulins to prevent and treat disease.
- The worldwide plasma shortage.
- Extensive public concern over the safety of blood products.
- An increase in domestic and foreign regulatory control over the
collection and testing of plasma.
A worldwide shortage of plasma began in 1991, driven partially by the
increased need for plasma components to treat larger and older populations,
and partially by a diminished pool of donors that resulted from more
restrictive testing and screening requirements imposed by regulatory
authorities. In 1991, the FDA required mandatory screening for hepatitis C,
thereby disqualifying donations from a significant portion of the then
existing donor base. Another market factor has been increasing public concern
over HIV and other viruses which has lead to increased testing and tighter
scrutiny.
The Company has generally sold its plasma under contracts ranging from one to
three years which allow for annual pricing renegotiations. Pricing for product
deliveries is generally mutually agreed to prior to the beginning of the
contract year and fixed for that year. Consequently, the Company may be
adversely or beneficially affected if its costs of collecting and selling
plasma rise or fall during the year as a result of changes in government
regulation, donor fees or other factors.
FRACTIONATORS
Fractionation is the process of separating the raw source plasma into a variety
of derivative products (see "The Product" above). Prior to being fractionated,
source plasma is blended into batches of 7,500 to 10,000 liter units from many
different donor sources.
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The five leading fractionators in the United States are:
ALPHA THERAPEUTIC a subsidiary of The Green Cross Corp. of Japan
CORPORATION
CENTEON a subsidiary of Rhone-Poulenc-Rorer, a French
PHARMACEUTICALS government owned pharmaceutical conglomerate
MILES LABORATORIES a division of Germany's Bayer A.G.
HYLAND THERAPEUTICS a division of Baxter, Inc., an $8.1 billion revenue
U.S. company.
NORTH AMERICAN a public U.S. company with $160 million revenue -
BIOLOGICALS, INC. traded on NASDAQ
CURRENT OPERATIONS
CURRENT PLASMA CENTERS
The Company currently owns and operates eight plasma centers at the following
locations: Las Vegas, Nevada (2 centers); Phoenix, Arizona; Colorado Springs,
Colorado (2 centers); Pueblo, Colorado; Clarksville, Tennessee; and Ft.
Smith, Arkansas. Two initial stage centers in Clearfield, Utah and Raleigh,
North Carolina will be operational by November 15, 1996. The Company has also
negotiated leases in three additional locations for startup centers, one of
which will be operational by November 15, 1996. Four startup centers
(including the three for which leases have already been negotiated) are
expected to be operational by January 1997, bringing the total number of
operating centers to fourteen.
The Company collected approximately 105,000 liters of plasma in calendar year
1995, with the initial six centers. This represented an 11%, or approximately
10,000 liter, increase over 1994 and a 33% increase over 1993. The current
eight operational centers are collecting plasma at the rate of approximately
165,000 liters annually. Approximately 90% percent of this plasma is currently
sold under contracts with Alpha Therapeutic Corporation, a subsidiary of the
Green Cross Corporation of Japan. Alpha Therapeutic is one of the major
companies in the plasma collection, fractionation and product distribution
business in the United States. Approximately 10% of the Company's collected
plasma is currently sold as Hyperimmune plasma (CMV) to another domestic
customer.
DONORS
FDA standards restrict the frequency in which a donor may give plasma to twice
a week or 104 times per year. Most regular donors donate between 40 and 60
times per year.
The QPP certification program attempts to exclude drug or alcohol addicts or
homeless persons by requiring proof of permanent address as well as alcohol
and drug use testing.
MARKETING/DONOR RECRUITMENT
Effective recruitment, management and retention of donors are essential to the
Company's plasma business. The Company seeks to attract and retain its donor
base in the following ways:
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- by utilizing competitive financial incentives which the Company
offers for the donation of the plasma.
- by providing outstanding customer service to its donors.
- by implementing programs designed to attract donors through
education as to the uses of plasma.
- by encouraging regular participation in its donor programs.
- by providing incentives to encourage donors to return.
Repeat donors are important because of the lower cost associated with
obtaining their plasma and less risk that their plasma will not satisfy
regulatory and customer requirements. The Company's centers advertise for
donors through targeted mailings, flyers and newspapers. Radio and television
ads are also used when advantageous.
The Company's donor records are maintained with the assistance of donor
database systems at each center which allows the Company's personnel to track
the frequency of donor visits. When a donor has not visited a center in over
one month, the center sends a reminder card to the donor emphasizing the
importance of the donor's continued participation.
DONOR PROCESSING
On their first visit all new donors are given a physical examination by either
a licensed physician or physician substitute. The National Donor Deferral
Registry and the deferral lists of the Fractionators and other local plasma
centers are all checked to determine if the donor has ever had positive viral
test results or has ever been previously deferred or rejected as a donor. In
addition to the deferral list checks, each time the donor visits, the donor
is given the opportunity to defer himself confidentially and is asked a number
of screening questions which he must audibly answer. In addition, each time he
visits, the donor is tested for: blood pressure; temperature; pulse; weight;
hematocrit; total proteins; HIV; hepatitis B and C; and liver enzymes.
QUALITY AND OPERATIONAL CONTROLS
Through its QPP and internal operating procedures and policies, the Company
strives to maintain the highest level of quality control. Donor charts are
audited on a daily basis, and all equipment is regularly recalibrated. Routine
double and triple checks of the donor processing are performed at every level.
The quality control procedures are kept at a detailed level. The centers also
are routinely inspected on an unannounced basis for quality control by the
FDA, the state regulatory authorities, CLIA (Clinical Laboratories Improvement
Act) and the contracted fractionators.
TRAINING
The Company is focusing on two levels of training: (a) technical training of
employees; and (b) center management skills and development.
All employees are required to read and study detailed training materials and
are then given a written test covering that material. Results of the written
tests must be kept available for FDA inspection. Employees are also required
to demonstrate specific skills to an FDA-certified trainer. Each level of an
employee's training is tracked and documented and each employee is required to
be retested on all material every six months. All employees are "cross
trained" in all three of the center's functional areas, allowing for more
efficient scheduling. Ongoing or continuing education sessions are
periodically held to review new procedures, equipment and FDA requirements.
All training documentation is subject to FDA approval.
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It is the Company's philosophy to continually develop competent individuals
within the Company to move into management positions. Selected individuals are
sent to outside management development seminars in addition to the in-house
program of development. Consequently, all of the open manager positions during
the past three years have been filled with existing in-house personnel.
EMPLOYEES
The Company employed approximately 150 persons as of September 30, 1996.
Because many of the employees work on a part-time basis, total headcount
represents approximately 98 full time equivalents. The Company believes that
the relations between the Company's management and its employees are good,
although there can be no assurances that such relations will continue. The
inability of the Company to attract or retain qualified personnel could have a
material adverse effect on the Company.
ITEM 2. PROPERTIES
The Company currently occupies nine locations with corporate offices at 1925
Century Park East, Suite 1970, in Los Angeles and eight plasma centers in: Las
Vegas, Nevada (2 centers); Clarksville, Tennessee; Phoenix, Arizona; Colorado
Springs, Colorado (2 centers); Pueblo, Colorado; and Ft. Smith, Arkansas. In
September, 1996 the Company acquired leases in Clearfield, Utah and Raleigh,
North Carolina in connection with the acquisition of two initial stage
collection centers which the Company expects will be operational by November
15, 1996. In addition, the Company has signed leases in Pasco, Washington,
Toledo, Ohio, and Macon, Georgia in preparation for starting new centers in
those locations. All of the Company's leased property, comprising fourteen
locations and approximately 57,000 square feet, is leased from unaffiliated
parties under leases expiring through 2002. Most of these leases contain
renewal options which permit the Company to renew the leases for periods of
from two to five years at the then fair rental value. Two of the Company's
centers are leased on a month-to-month basis. The Company believes that in the
normal course of its business it will be able to renew or replace its existing
leases. The Company believes that the space it occupies is adequate for its
existing centers.
The Company's plasma collection centers range in size from approximately 2,950
to 5,500 square feet and generally are located in population centers of 80,000
to 1,000,000 people.
The Company also owns two parcels totaling approximately one acre of land in
Fort Worth, Texas which was obtained in the purchase of the original six
plasma centers. These parcels are currently listed for sale and are not being
considered for plasma collection center development.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The Company is headquartered in Los Angeles, California and operates with a
head office staff of five people.
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The following table sets forth certain information with respect to the current
directors and executive officers of the Company.
Name Age Position
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Barry D. Plost ................ 50 Chairman of the Board, President
and CEO
Jerry L. Burdick............... 51 Executive Vice President, Chief
Financial Officer, Secretary
and a Director
Brad Rabe...................... 36 Vice President and Chief Operating
Officer
Brian Olson.................... 56 Vice President, Operations
Sam Anderson................... 58 Director
Susan Preston.................. 41 Director
Ezzat Jallad................... 35 Director
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Barry D. Plost began serving as Chairman, President and Chief Executive
Officer of the Company on February 6, 1996. Prior to joining the Company, he
was a Management Consultant with David Barrett, Inc. for the period January
1995 until February 6, 1996. Mr. Plost was President and Chief Executive
Officer of Country Wide Transport Services, Inc. from February 1991 through
June 1994, and President and Chief Operating Officer of Freymiller Trucking,
Inc. from November 1979 through August 1991.
Jerry L. Burdick was appointed Executive Vice President, Chief Financial
Officer, Secretary and a Director effective December 1, 1995. He previously
served as a consultant to the Company from August 1993 to March 1995 and as
acting Chief Financial Officer beginning in March 1995 to February 1996. Mr.
Burdick previously operated his own consulting practice from March 1988
through August 1993. Mr. Burdick is a Certified Public Accountant in the State
of California. At the time the Company filed for protection under Chapter 11
of the Federal Bankruptcy Code, Mr. Burdick was a consultant to the Company.
Mr. Burdick has also participated in various other Chapter 11 restructurings,
mainly as a consultant.
Brad Rabe was appointed Vice President and Chief Operating Officer effective
September 1, 1996. Prior to joining the Company, Mr. Rabe spent sixteen
years with the Plasma Collection division of Bayer Corporation, most recently
as Operations Director.
Brian Olson has served as Vice President, Operations of the Company since
July 1992 and was a Director of the Company from February 1996 until October
1996. Prior to joining the Company, Mr. Olson held the position of Director
of Plasma Supply with Alpha Therapeutic Corporation from July 1987 through
June 1992. At the time the Company filed for protection under Chapter 11 of
the Federal Bankruptcy Code, Mr. Olson was serving as Vice President,
Operations.
Sam Anderson was elected a Director effective April 16, 1996. Mr. Anderson
is also a consultant to the Company in the areas of industry trends,
acquisitions and specialty plasma production. Since March 1991, Mr. Anderson
has served as a consultant to various companies in the plasma business in the
areas of pharmaceutical products, fractionation and specialty plasma. From
March 1990 to March 1991, Mr. Anderson served as President of Trancel, Inc.,
and prior to that was Chairman and President of Alpha Therapeutic Corporation
until he retired in February 1990.
Susan Preston was elected a Director effective April 16, 1996. Ms. Preston
has been a practicing attorney for Weiss, Jensen, Ellis & Howard in Seattle,
Washington since June 1994 and General Counsel for Source Scientific, Inc.
since August 1992. Previously, Ms. Preston was Vice President and General
Counsel for MicroProbe Corporation from August 1992 to February 1994 and
Regional Counsel for EMCON Northwest, Inc. from June 1991 to August 1992.
M. Ezzat Jallad was elected a Director effective October 28, 1996. Mr. Jallad
has been Chairman and President of Softpoint, Inc. since June 1995.
Previously, Mr. Jallad was Executive Vice President of SCIM Corporation from
April 1988 to May 1995.
The Board of Directors currently consists of five directors: Barry D. Plost,
Chairman, President and Chief Executive Officer; Jerry L. Burdick, Executive
Vice President, Chief Financial Officer and Secretary; Sam Anderson, outside
Director; Susan Preston, outside Director, and Ezzat Jallad, outside Director.
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ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth the cash compensation and other consideration to
be paid by the Company to its executive officers. Three year employment
agreements have been entered into with Barry D. Plost, Jerry L. Burdick and
Brian Olson. Sam Anderson, an outside Director, has entered into a three year
consulting agreement with the Company at $50,000 per year plus fully vested
options to purchase 30,000 shares of the Company's common stock at $1.50 per
share which expire in three years. Mr. Anderson also was granted fully vested
options to purchase 20,000 shares of the Company's common stock at $1.00 per
share, which expire in three years, in conjunction with a $100,000 bridge loan
Mr. Anderson made to the Company on July 2, 1996. Susan Preston has been granted
fully vested options to purchase 15,000 shares of the Company's common stock at
$1.50 per share which expire in three years.
<TABLE>
<CAPTION>
Current Paid Prior
Name and Principal Position Salary Year Options(8) Other
- --------------------------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Barry D. Plost, President,
Chairman and CEO 110,000 None 56,147(1) (6)(5)
150,000(2)
100,000(3)
130,000(4)
Jerry L. Burdick, Ex VP,
Secretary and CFO 125,000 None 42,110(1) (6)(5)
Brad Rabe, Vice President
and COO 100,000(7) None (6)(5)
Brian Olson, VP, Operations 90,000 85,000 28,073(1) (6)(5)
</TABLE>
(1) Options vest at the rate of 1/3 per year for three years, commencing with
February 6, 1997 and are contingent upon the Company achieving certain
projected operating results. The exercise price is the mid point between
$.74 and the thirty day trading average of the shares immediately prior to
each vesting date.
(2) Options at prices are 50,000 at $1.00, 50,000 at $2.00, and 50,000 $3.00 per
share, which vest in increments of 50,000 over three years, contingent upon
Company achieving certain performance criteria and which are exercisable for
five years from each vesting date.
(3) Fully vested options at $1.00 per share which expire at the end of five
years.
(4) Mr. Plost was granted fully vested three year options to purchase 130,000
shares of the Company's common stock at $1.00 per share in conjunction
with a $400,000 bridge loan Mr. Plost made to the Company on July 2, 1996
and a $50,000 bridge loan he made to the Company on July 17, 1996.
(5) The Company has established a Management Bonus Pool whereby ten percent
(10%) of earnings before taxes which are in excess of $920,549 in the year
ending February 29, 1997; $2,590,160 in the year ending February 29, 1998,
and $6,244,536 in the year ending February 29, 1999 will be allocated to
a bonus pool to be paid pro rata to all officers of the Company on the
basis of salaries.
(6) To the extent that quarterly earnings before taxes exceed $100,000, the
excess will be paid on a pro-rata basis to all officers up to an annual
maximum of $10,000 each.
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(7) Effective on September 1, 1996, the Company signed a contract with Mr. Rabe
through February 5, 1999 at $100,000 per year plus a success bonus of
$25,000 (which may be taken in the form of cash or 16,667 shares of the
Company's common stock). The success bonus is based upon certain criteria
agreed to by the Company and Mr. Rabe. For the period September 1, 1996
through December 31, 1996, Mr. Rabe shall be compensated through the
issuance of 22,224 common shares of the Company. Mr. Rabe's compensation
for the period January 1, 1997 through February 5, 1999 shall be in cash.
Mr. Rabe shall also participate in the Management Bonus Pool on the same
basis as other officers of the Company during the term of his agreement.
(8) As of August 31, 1996, the value of the Company's stock which had traded
on the OTC Bulletin Board was less than the option exercise price for
any such shares reflected herein.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS
COMMON SERIES A
INDIVIDUAL / GROUP SHARES % OPTIONS WARRANTS
- ------------------ ------- ------- -------- --------
(1) Barry D. Plost 169,284 5% 436,147 35,000
(2) Jerry L. Burdick - - 42,110
(3) Brad Rabe (assumes all criteria met) 338,891 10%
(4) All Officers and Directors 553,952 17% 571,330 70,000
Of the issued and outstanding shares as of September 30, 1996, no one person or
interest owns or controls more than 10%. If it is assumed that Mr. Brad Rabe
will be issued the maximum number of shares pursuant to the acquisition
agreement dated September 3, 1996, he will hold 10% of the Company's then
outstanding stock if there are no other issuance's.
Assuming the exercise of all warrants, options and the inclusion of shares
already held, Mr. Barry Plost would own 15% of the outstanding common stock of
the Company. No other person or interest would own or control more than 10%.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
BRIDGE LOANS TO THE COMPANY.
In order to close the acquisition of the Silver State Plasma Center in Las
Vegas, Nevada on July 2, 1996, the Board of Directors unanimously approved
$550,000 in bridge loans. The terms of the bridge loans included interest at
twelve percent and 150,000 three year warrants, each warrant to purchase one
share of the Company's common stock at $1.00. Of the total amount of the bridge
loans, $450,000 was advanced by Mr. Barry Plost, the Company's President and
Chief Executive Officer, and the remaining $100,000 was advanced by Mr. Samuel
Anderson, a member of the Company's Board of Directors. Of the amounts
advanced, $127,500 was converted to equity by Mr. Plost and $100,000 was
converted to equity by Mr. Anderson on September 4, 1996 as part of their
acquisition of units of Common Stock and Series A warrants to purchase common
stock in the private placement dated June 1, 1996. Mr. Anderson also invested
an additional $5,000 as part of the private placement.
ACQUISITION OF CLEARFIELD AND RALEIGH PLASMA CENTERS.
On September 3, 1996, the Company acquired from Mr. Brad Rabe all rights and
interests in leases, leasehold improvements, fixed assets and/or any other
personal property, licenses,
13
<PAGE>
certifications or rights attributable to both the Clearfield Center and the
Raleigh Center, including the rights to any FDA or QPP licenses and/or
certifications which attach or may attach to those locations, including the
right to file for such licenses and/or certifications if they have not already
been applied for. Mr. Rabe also agreed to complete the process of
establishing both startup locations as operational plasma collection centers
by opening plasma collection centers in both locations within a reasonable
period of time not to exceed 120 days.
BASE CONSIDERATION. As consideration to Mr. Rabe, the Company agreed to deliver
175,000 shares of Common Stock of the Company within fifteen days of the date
when both the Raleigh and Clearfield locations have processed their first
donors. The 175,000 shares of Common Stock may be increased or decreased
depending on certain performance based criteria.
ADDITIONAL CONSIDERATION. In addition to the Base Consideration, the Company and
Mr. Rabe agreed on certain operational performance criteria which will serve as
the basis for Additional Consideration of a maximum of 125,000 shares of common
stock of the Company if all performance criteria for the centers are met.
Accordingly, if Clearfield Center and Raleigh Center in total generate a net
profit before taxes of $310,000 for the measurement period of twelve months
ending on the last day of eighteenth month following the Closing Date, Mr. Rabe
shall receive as additional consideration 62,500 shares of Common Stock of the
Company. Further, if Clearfield Center and Raleigh Center in total generate a
net profit before taxes of $310,000 for the measurement period of twelve months
ending on the last day of thirtieth month following the Closing Date, Mr. Rabe
shall receive as additional consideration another 62,500 shares of Common Stock
of the Company.
ITEM 7. SECURITIES BEING OFFERED
NO SECURITIES ARE BEING OFFERED HEREWITH PURSUANT TO THE FILING OF THIS FORM
10SB.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
(A) MARKET INFORMATION:
The Company's Common Stock has been approved for quotation on The NASDAQ Stock
Market's Bulletin Board and is traded under the symbol "SERC". The Company
emerged from bankruptcy on February 6, 1996 and began trading on the Bulletin
Board in May 1996. The following table sets forth the range of bid prices for
the Common Stock during the periods indicated, and represents inter-dealer
prices, without retail mark-up, mark-down or commission to the broker-dealer,
and may not represent actual transactions. The information summarized in the
following table has been derived from the NASD's Monthly Statistical Report.
The Company's Common Stock was not traded on any market prior to May 1996.
For the period May 1, 1996 through September 30, 1996: High Low
------ ----
1 3/4 3/4
14
<PAGE>
(B) HOLDERS:
Approximate Number of
Record Holders (as
Title of Class of September 30, 1996)
- -------------- ----------------------
Common Stock, $.001 par value 250 (1)
(1) Included in the number of stockholders of record is one shareholder of
10,000 shares which are being held for the benefit of the Unsecured
Creditors pursuant to the Company's Plan of Reorganization. In addition,
certain of the Company's other shareholders hold shares under "street name"
and are not identified individually. Accordingly, the Company estimates
that it has a total of approximately 400 beneficial shareholders.
(C) DIVIDENDS:
The Company has never paid cash dividends on its Common Stock. According to the
terms and conditions of the Amended and Restated Loan Agreement dated February
5, 1996, between CVD Financial Corporation (referred to therein as "Lender") and
SeraCare, Inc., Avre Incorporated, and Binary Associates, Inc. (referred to
therein as "Borrowers"), Borrowers may not declare or pay dividends on account
of any stock of the Borrowers, except that SeraCare, Inc. may issue warrants,
options, stock, rights or any other form of equity security as a dividend. The
declaration and payment of dividends in the form of equity securities by the
Company's board of directors will depend, among other factors, on earnings as
well as the operating and financial condition of the Company. At the present
time, the Company does not expect to declare or issue any dividends within the
foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
(A) PENDING LEGAL MATTERS.
PREFERENCE LITIGATION:
In conjunction with the winding down of the Chapter 11 bankruptcy proceedings
associated with BK Case No. LA 94-11730-AA which was filed on January 7, 1996,
the Company has three preference actions pending against: NOW Medical Services
for $64,000.00; Arthur Anderson & Co. for $10,000.00; and Weingberg Spelton &
Sax for $18,000.00. In addition, the Company has entered into settlement
agreements with various other defendants which are pending approval by the
United States Bankruptcy Court Central District of California. According to
the terms of the Plan of Reorganization, total recoveries of preference claims
net of legal costs are to be split one-half to the Unsecured Creditors on a pro-
rata distribution basis and one-half to the Company. Preference proceedings are
administered under the direction of and are subject to approval by the Federal
Bankruptcy Court. Preference actions relate to cash distributions made within
ninety days of the filing of the bankruptcy petition. There can be no
assurances that the Company will prevail in the three pending actions.
OTHER LITIGATION ISSUES:
On January 24, 1996, the Company confirmed its Plan of Reorganization and
emerged from Chapter 11 Bankruptcy effective on February 6, 1996. The Company
is accordingly "Out of
15
<PAGE>
Bankruptcy", has implemented the Plan of Reorganization and has made initial
distributions to creditors in accordance with that Plan. However, until the
final preference action has been resolved, the Chapter 11 proceeding remains
open and will be closed at such time as the final action has been resolved.
The Company has no other pending litigation as of September 30, 1996 which is
material or involves environmental laws.
(B) PENDING GOVERNMENTAL AGENCY PROCEEDINGS.
The Company has no pending governmental agency proceeding as of September 30,
1996 which is material or involves environmental laws.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
(1) None
(2) On April 1, 1996, the Company retained the services of BDO Seidman, LLP to
perform an independent audit of the Company's financial statements as of
February 28, 1996 and 1995 and for the years then ended. The financial
statements of the Company were not audited in 1994 due to the pending status
of the Chapter 11 bankruptcy. The last audit of the Company was performed
by Arthur Anderson & Co. for the period ended October 31, 1993.
The Company did not consult with BDO Seidman, LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
Company's financial statements, or any matter that was either the subject of
a disagreement or a reportable event, at any time prior to the appointment
of such firm.
There were no disagreements with BDO Seidman, LLP during the course of the
current audits and there were no disagreements with Arthur Anderson & Co.
during the October 31, 1993 audit.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Securities sold within the past three years without registration of the
securities under the Securities Act.
Title of Securities - Common Stock, $.001 par value
(i) Effective February 6, 1996, 2,115,500 shares of the Company's Common
Stock were issued in conjunction with the funding of the Company's
Plan of Reorganization. Of those shares, an aggregate of 1,610,708
shares were issued in exchange for $1.2 million face value of Debtor
Notes and an aggregate of 504,792 shares were issued in satisfaction
of other creditor claims. Such shares were issued pursuant to Section
1145 of the United States Bankruptcy Code and may be resold pursuant
to Section 4(1) of the Securities Act of 1933, as amended ("1933 Act").
16
<PAGE>
(ii) Effective September 4, 1996, an aggregate of 565,000 shares of the
Company's Common Stock were issued in exchange for $847,500 in cash,
pursuant to a Private Placement Memorandum dated June 1, 1996, which
offered Units consisting of five thousand shares of the Company's
Common Stock and two thousand, five hundred Series A Warrants for
each minimum investment of $7,500.00. Such Units were offered to
"accredited investors" as that term is defined in the 1933 Act and
Rules 215 and 501(a) promulgated thereunder.
These shares are "restricted shares" as that term is defined in Rule
144 under the 1933 Act.
(iii) Effective October 23, 1996, an aggregate of 285,000 shares of the
Company's Common Stock were issued in exchange for $427,500 in cash,
pursuant to a Private Placement Memorandum dated June 1, 1996, which
offered Units consisting of five thousand shares of the Company's
Common Stock and two thousand, five hundred Series A Warrants for
each minimum investment of $7,500.00. Such Units were offered to
accredited investors as that term is defined in the 1933 Act and Rules
215 and 501(a) promulgated thereunder. These shares are "restricted
shares" as that term is defined in Rule 144 under the 1933 Act.
Title of Securities - Series A Warrant (Represents right to purchase one
share of the Company's Common Stock at an exercise price of $2.75,
exercisable immediately and terminating on the earlier of (1) six years
from issuance or (2) three years from the date of the initial effectiveness
of a Registration Statement covering the shares.
(i) Effective September 4, 1996, an aggregate of 282,500 Series A Warrants
were issued pursuant to a Private Placement Memorandum dated June 1,
1996, which offered Units consisting of five thousand shares of the
Company's Common Stock and two thousand, five hundred Series A
Warrants for each minimum investment of $7,500.00. Such Units were
offered to "accredited investors" as that term is defined in the
1933 Act and Rules 215 and 501(a) promulgated thereunder.
(ii) Effective October 23, 1996, an aggregate of 142,500 Series A Warrants
were issued pursuant to a Private Placement Memorandum dated June 1,
1996, which offered Units consisting of five thousand shares of the
Company's Common Stock and two thousand, five hundred Series A
Warrants for each minimum investment of $7,500.00.. Such Units were
offered to "accredited investors" as that term is defined in the
1933 Act and Rules 215 and 501(a) promulgated thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Messrs. Plost, Burdick, Rabe, and Olson are parties to employment contracts
with the Company which, among other terms and conditions, require that the
Company indemnify, defend and hold them harmless, to the maximum extent
permitted by law, from any and all claims, litigation or suits arising out of
the activities taken in performance of the duties hereunder, including all
reasonable expenses and professional fees that may relate thereto. In addition,
the Company agreed to seek appropriate directors and officers liability
insurance for errors and omissions of such type and in such amount as is
customary for similarly situated companies, if available at a reasonable cost.
The Company does not have directors and officers liability insurance for errors
and omissions at this time.
17
<PAGE>
PART F/S
The financial statements are presented as follows:
(a) Audited Annual Financial Statements as of February 28, 1996 and 1995 and
for the two years then ended.
(b) Unaudited Interim Financial Statements as of August 31, 1996 and for the
six months then ended.
18
<PAGE>
Part F/S (a)
SERACARE, INC. AND SUBSIDIARIES PAGE
CONSOLIDATED FINANCIAL STATEMENTS NUMBER
FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 ------
Report of Independent Auditors -BDO Seidman, LLP FS-1
Consolidated Balance Sheets -
as of February 29, 1996 and February 28, 1995 FS-2
Consolidated Statements of Operations -
February 6, 1996 through February 29, 1996
March 1, 1995 through February 5, 1996
Year Ended February 28, 1995 FS-3
Consolidated Statements of Shareholders' Equity (Deficiency) -
March 1, 1994 through February 29, 1996 FS-4
Consolidated Statements of Cash Flows -
February 6, 1996 through February 29, 1996
March 1, 1995 through February 5, 1996
Year Ended February 28, 1995 FS-5
Summary of Accounting Policies FS-6
Notes to Consolidated Financial Statements - FS-7
<PAGE>
SERACARE, INC.
AND SUBSIDIARIES
--------------------------------------------------------
--------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
FS-1
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 3
CONSOLIDATED FINANCIAL STATEMENTS
Balance sheets 4
Statements of operations 5
Statements of shareholders' equity (deficit) 6
Statements of cash flows 7-8
SUMMARY OF ACCOUNTING POLICIES 9-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12-23
FS-2
<PAGE>
IBDO [LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
SeraCare, Inc.
We have audited the accompanying consolidated balance sheet of SeraCare, Inc.
(Restructured Company) and subsidiaries as of February 29, 1996 and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for the period February 6, 1996 to February 29, 1996. We have also audited
the consolidated balance sheet of American Blood Institute, Inc. (Predecessor
Company) (Debtor-In-Possession) and subsidiaries as of February 28, 1995 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the period March 1, 1995 to February 5, 1996 and the year
ended February 28, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SeraCare, Inc.
(Restructured Company) and subsidiaries and American Blood Institute, Inc.
(Predecessor Company) and subsidiaries at February 29, 1996 and February 28,
1995 and the results of their operations and their cash flows for the periods
ended February 29, 1996 and February 5, 1996 and the year ended February 28,
1995, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Bankruptcy Court
confirmed the Company's Plan of Reorganization on January 24, 1996, and the
Company emerged from bankruptcy effective February 6, 1996. On February 6,
1996 the Company accounted for the reorganization and adopted "fresh start
accounting." As a result, the Company's February 29, 1996 financial
statements are not comparable to the February 28, 1995 financial statements,
since they present the financial position and results of operations of the
reorganized entity.
/s/ BDO SEIDMAN, LLP
Los Angeles, California
May 23, 1996
FS-3
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REORGANIZED PREDECESSOR
COMPANY COMPANY
FEBRUARY 29, FEBRUARY 28,
1996 1995
- --------------------------------------------------------------------------------
ASSETS (Notes 1 and 5)
CURRENT ASSETS
Cash and cash equivalents $580,476 $104,517
Accounts receivable, net of allowance for
doubtful accounts of $100,732 in 1995 199,862 178,891
Inventories (Note 3) 279,758 434,598
Prepaid expenses and other current assets 33,572 51,164
- --------------------------------------------------------------------------------
Total current assets 1,093,668 769,170
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, net (Note 4) 71,840 61,607
- --------------------------------------------------------------------------------
FDA LICENSES (Note 1) 900,000 -
DONOR BASE AND RECORDS (Note 1) 600,000 -
EXCESS OF COST OVER NET ASSETS ACQUIRED, less
accumulated amortization of $66,492 - 854,895
REORGANIZATION VALUE IN EXCESS OF AMOUNTS
ALLOCATED TO IDENTIFIABLE ASSETS, less
accumulated amortization of $2,374 (Note 1) 965,753 -
LAND AVAILABLE FOR SALE 25,000 51,285
OTHER ASSETS 17,640 26,459
- --------------------------------------------------------------------------------
$3,673,901 $1,763,416
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FS-4(a)
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REORGANIZED PREDECESSOR
COMPANY COMPANY
FEBRUARY 29, FEBRUARY 28,
1996 1995
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES NOT SUBJECT TO COMPROMISE
Accounts payable $ 723,951 $ 599,185
Accrued expenses 583,546 118,756
Current portion of long-term debt
(Notes 1 and 5) 328,571 -
- --------------------------------------------------------------------------------
Total current liabilities not subject to
compromise 1,636,068 717,941
- --------------------------------------------------------------------------------
CURRENT LIABILITIES SUBJECT TO COMPROMISE (Note 1)
Current portion of long-term debt - 1,386,236
Unsecured notes payable - 587,189
Accounts payable and accrued expenses -
pre-petition - 1,907,646
- --------------------------------------------------------------------------------
Total current liabilities subject to compromise - 3,881,071
- --------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt (Notes 1 and 5) 821,429 -
- --------------------------------------------------------------------------------
COMMITMENTS (Note 10)
STOCKHOLDERS' EQUITY (DEFICIT) (Notes 1, 6 and 7)
Series A preferred stock - 334,394
Common stock 2,115 5,731
Additional paid-in capital 1,210,671 2,583,349
Retained earnings (deficit) 3,618 (5,759,070)
- --------------------------------------------------------------------------------
Total stockholders' equity (deficit) 1,216,404 (2,835,596)
- --------------------------------------------------------------------------------
$3,673,901 $1,763,416
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
FS-4(b)
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REORGANIZED COMPANY PREDECESSOR COMPANY
------------------- -------------------------
FEBRUARY 6, MARCH 1,
1996 1995
THROUGH THROUGH YEAR ENDED
FEBRUARY 29, FEBRUARY 5, FEBRUARY 28,
1996 1996 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
NET SALES $510,148 $6,159,376 $5,433,331
COST OF SALES 446,253 5,397,095 4,833,823
- --------------------------------------------------------------------------------
GROSS PROFIT 63,895 762,281 599,508
GENERAL AND ADMINISTRATIVE EXPENSES 47,050 793,934 676,236
- --------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 16,845 (31,653) (76,728)
INTEREST EXPENSE 10,727 - -
OTHER EXPENSE - 30,408 -
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS BEFORE
REORGANIZATION ITEMS, DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEMS 6,118 (62,061) (76,728)
REORGANIZATION ITEM - PROFESSIONAL
FEES 2,500 491,877 163,981
- --------------------------------------------------------------------------------
INCOME (LOSS) BEFORE DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEMS 3,618 (553,938) (240,709)
LOSS FROM DISCONTINUED OPERATIONS
(Note 2) - - 130,255
- --------------------------------------------------------------------------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM 3,618 (553,938) (370,964)
EXTRAORDINARY NET GAIN FROM DEBT
DISCHARGE AND STEP-UP IN ASSETS
FROM REORGANIZATION (NOTE 1) - 3,389,534 -
- --------------------------------------------------------------------------------
NET INCOME (LOSS) $3,618 $2,835,596 $ (370,964)
- --------------------------------------------------------------------------------
EARNINGS PER SHARE BASED UPON
2,115,500 SHARES OUTSTANDING
AS OF FEBRUARY 29, 1996 .000 - -
- --------------------------------------------------------------------------------
</TABLE>
FS-5
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Common Stock
---------------------------------------------------
Preferred Stock Class B
----------------------- --------------------------
Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, March 1, 1994 43,918 $ 334,394 - $ - $4,350,912 $5,731
Net Loss - - - - - -
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, February 28, 1995 43,918 334,394 - - 4,350,912 5,731
Net loss for period March 1, 1995 to
February 5, 1996 before extinguishment)
of stockholder's equity - - - - - -
Extinguishment of stockholder's equity
in connection with bankruptcy (Note 1) (43,918) (334,394) - - (4,350,912) (5,731)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, February 5, 1996 - - - - - -
Common stock issued for:
Conversion of debt - - 115,275 115 - -
Services - - 389,518 389 - -
Private placement - - 1,610,707 1,611 - -
Net income for period February 6, 1996
to February 29, 1996 - - - - - -
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, February 29, 1996 - $ - 2,115,500 $2,115 - -
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Additional Retained
Paid-In Earnings
Capital (Deficit) Total
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, March 1, 1994 $2,583,349 $(5,388,106) $(2,464,632)
Net Loss (370,964) (370,964)
- ----------------------------------------------------------------------------------------
BALANCE, February 28, 1995 2,583,349 (5,759,070) (2,835,596)
Net loss for period March 1, 1995 to
February 5, 1996 before extinguishment)
of stockholder's equity (553,938) (553,938)
Extinguishment of stockholder's equity
in connection with bankruptcy (Note 1) (2,583,349) 6,313,008 3,389,534
- ----------------------------------------------------------------------------------------
BALANCE, February 5, 1996 - - -
Common stock issued for:
Conversion of debt 77,789 - 77,904
Services 171,393 - 171,782
Private placement 961,489 - 963,100
Net income for period February 6, 1996
to February 29, 1996 - 3,618 3,618
- ----------------------------------------------------------------------------------------
BALANCE, February 29, 1996 $1,210,671 $3,618 $1,216,404
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
FS-6
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH REORGANIZED COMPANY PREDECESSOR COMPANY
------------------- ------------------------
FEBRUARY 6, MARCH 1,
1996 1995
THROUGH THROUGH YEAR ENDED
FEBRUARY 29, FEBRUARY 5, FEBRUARY 28,
1996 1996 1995
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $3,618 $2,745,596 $(370,964)
Adjustments to reconcile net income
(loss) to cash provided by (used in)
operating activities:
Extraordinary gain from debt discharge
and step-up in assets from
reorganization
(Note 1) - (3,389,534) -
Depreciation and amortization 3,236 77,058 5,554
Write-down of land - 26,285 -
(Increase) decrease in assets
Accounts receivable 98,081 (119,052) 123,673
Inventories 58,532 96,308 (255,471)
Prepaid expenses and other current
assets 3,988 13,604 71,436
Other assets - 8,819 (12,541)
Increase (decrease) in liabilities
Accounts payable (272,269) 299,856 535,343
Accrued expenses (33,430) 538,824 (32,677)
- --------------------------------------------------------------------------------
Net cash provided by (used in) operating
activities (138,244) 297,764 64,353
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (2,096) (19,565) (48,159)
Proceeds from sale of furniture
and equipment - - 88,735
- --------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities (2,096) (19,565) 40,576
- --------------------------------------------------------------------------------
FS-7
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH ROWS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH REORGANIZED COMPANY PREDECESSOR COMPANY
------------------- -----------------------
FEBRUARY 6, MARCH 1,
1996 1995
THROUGH THROUGH YEAR ENDED
FEBRUARY 29, FEBRUARY 5, FEBRUARY 28,
1996 1996 1995
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in long-term debt - (625,000) (121,664)
Net proceeds from private placement - 963,100 -
- --------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities - 338,100 (121,664)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (140,340) 616,299 (16,735)
CASH AND CASH EQUIVALENTS,
beginning of period 720,816 104,517 121,252
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
end of period $580,476 $720,816 $ 104,517
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $ - $ - $ 22,500
Income taxes $ - $ - $ -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
FS-8
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ORGANIZATION
SeraCare, Inc. (formerly American Blood Institute, Inc.) (the "Company"), a
Delaware corporation, was formed on November 8, 1991. The business of the
Company is currently carried out through its two wholly-owned subsidiaries AVRE,
Inc., a Nevada corporation, and Binary Associates, Inc., a Colorado corporation.
BUSINESS OPERATIONS
The Company was initially engaged in the business of whole blood collection and
distribution. After significant and accelerating losses, it changed the focus of
the business from whole blood to plasma collection and distribution. On October
4, 1993, the Company acquired 100% of the outstanding common stock shares of
AVRE, Inc. and Binary Associates, Inc., which owned and operated six plasma
collection centers. On January 7, 1994, the Company and subsidiaries filed for
protection under Chapter 11 of the Bankruptcy Code. The restructuring plan
which was implemented encompassed the following actions: renegotiating all
plasma sales contracts to Fractionators; developing marketing strategies
including demographic studies and donor pricing analyses for each of its six
plasma centers; reorganizing the management structure of the Company by moving
the headquarters to Los Angeles, discontinuing regional manager positions and
changing three of the six center managers; obtaining Quality Plasma Program
("QPP") certification from the American Blood Resources Association for all six
centers; and establishing consistent strategies, policies and procedures in
order to compete in the emerging QPP plasma industry. The restructuring of the
six plasma operations is substantially complete. The Company emerged from
Chapter 11 effective February 6, 1996. The six plasma centers currently operate
under the tradename "SeraCare". The name "SeraCare" is registered with the
United States Patent and Trademark Office.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its two wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
INVENTORIES
Inventories are stated at the lower of cost which is determined on a first-in,
first-out basis, or market. Inventories consist of blood plasma collected from
donors and medical supplies.
FS-9
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
computed primarily using the straight-line method over the estimated useful
lives, which range from three to seven years.
INCOME TAXES
The Company utilizes FAS 109 "Accounting for Income Taxes" in accounting for
income taxes. It requires an asset and liability approach for financial
accounting and reporting of deferred income taxes. Generally, FAS 109 allows for
recognition of deferred tax assets in the current period for the future benefit
of net operating loss carryforwards and items for which expenses have been
recognized for financial statement purposes but will be deductible in future
periods. A valuation allowance is recognized, if on the weight of available
evidence it is more likely than not that some portion or all of the deferred tax
asset will not be realized.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE ASSETS
Under the principles of "fresh-start" reporting, the Company allocated total
reorganization value among identifiable tangible and intangible assets on the
basis of their estimated fair values. The remaining amount is classified as
reorganization value in excess of amounts allocable to identifiable assets and
is being amortized over twenty years.
FDA LICENSES
The reorganization value allocated to Food and Drug Administration ("FDA")
licenses represents the estimated value of a valid FDA license necessary to
operate a plasma donor center in the United States. An estimate value of
$150,000 per center has been allocated to the six centers owned by the Company.
The FDA license value is being amortized over forty years.
FS-10
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DONOR BASE AND RECORDS
The reorganization value allocated to donor base and records represents the
estimated value to acquire a plasma center donor base and records. An estimated
value of $100,000 per center has been allocated to the six centers owned by the
Company. The donor base and records is being amortized over twenty years.
EXCESS OF COST OVER NET ASSETS ACQUIRED
Prior to February 6, 1996, the excess cost over net assets acquired represented
the excess of amounts paid over the fair value of net assets acquired relating
to the acquisitions of AVRE, Inc. and Binary Associates, Inc., and was being
amortized over forty years. The unamortized balance was written off in
connection with the Restructuring.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF LONG-TERM DEBT
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities.
FS-11
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. REORGANIZATION AND BASIS OF REPORTING
During 1994 and 1995 the Company prepared and has completed a plan of
reorganization (the "Plan") pursuant to Chapter 11 of the U.S. Bankruptcy Code.
The Company filed the Plan with the U.S. Bankruptcy Court for the Central
District of California (the "Bankruptcy Court") on January 24, 1996 ("the
Petition Date"). The Plan was confirmed by the Bankruptcy Court and the Company
emerged from bankruptcy on February 6, 1996 (the "Effective Date"). Pursuant to
the provisions of the Plan, on the Effective Date:
(i) The Company obtained $1.2 million in Debtor Notes financing which
was fully subscribed on the Effective Date;
(ii) Unsecured Class 1 unsecured creditors were entitled to full
payment equal to the amount of the allowed claim;
(iii) Secured Class 2 amount due CVD Financial was satisfied in the
amount of $1,775,000 as follows: (a) a cash repayment of $625,000 on the
Effective Date (b) the balance of $1,150,000, interest at 14% payable
monthly, with principal payable quarterly at $82,142 over three and
one-half years;
(iv) Unsecured Class 3 allowed claims due Unsecured Creditors were
settled as follows: (a) $.10 cash for each dollar claim up to a maximum of
$200,000 in total, (b) a pro rata share of 10,000 shares of common stock of
the Reorganized Company, and (c) 50% of any net affirmative preference
payment recoveries received from debtors.
(v) Unsecured Class 4 allowed claims due Unsecured Note Holders were
settled through the issuance of 105,275 shares of common stock of the
reorganized Company;
(vi) Unsecured Class 5 and 6 allowed claims of the two wholly-owned
subsidiaries received $.80 for each claim dollar;
(vii) All preferred and common equity interests of the Company on the
Effective Date were deemed cancelled, annulled and terminated, and any such
holders of such interests received no distributions;
(viii) The Company retained full interest in the two wholly-owned
subsidiaries.
FS-12
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. REORGANIZATION AND BASIS OF REPORTING (Continued)
The financial statements as of and for the period ended February 29, 1996
reflect the Company's emergence from Chapter 11 and were prepared according to
the principles of fresh-start accounting contained in the provisions of American
Institute of Certified Public Accountants' Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). As a result of the implementation of "fresh-start" accounting, the
Company's financial statements as of and for the period ended February 29, 1996
are not comparable to the Company's financial statements of prior periods.
Therefore, financial statements for the "Reorganized Company" have been
separately identified from those of the "Predecessor Company".
Reorganization value approximates fair value of the entity before considering
liabilities and approximates the amount a buyer would pay for the assets of the
Company after the reorganization.
The total reorganization value assigned to the Company's assets was based on the
$1.2 million debtor note financing which was converted to common stock which
represented 76.2% of the total common stock shares issued pursuant to the
Company's Plan of Reorganization. These convertible debtor notes have been used
as the basis for determining the net worth of the Company at the Effective Date.
The excess of the reorganization value over the value of the identifiable assets
is reported as "Reorganization Value in Excess of Amount Allocable to
Identifiable Assets" and is being amortized over twenty years. Under the
principles of "fresh-start" accounting, the Company's total assets were recorded
at this assumed reorganization value, with the reorganization value allocated to
identifiable tangible and intangible assets on the basis of their estimated fair
value. In addition, the Company's accumulated deficit was eliminated.
FS-13
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. REORGANIZATION AND BASIS OF REPORTING (Continued)
The effect of the Restructuring and the implementation of "fresh-start"
accounting on the Company's balance sheet as of February 5, 1996 was as follows:
PRE-FRESH
START BALANCE FRESH-START
SHEET REORGANIZATION BALANCE SHEET
FEBRUARY 5, OF FAIR VALUE FEBRUARY 6,
1996 ADJUSTMENTS(A) 1996
- --------------------------------------------------------------------------------
Cash $322,716 $398,100 $720,816
Accounts receivable, net 297,943 - 297,943
Inventories 338,290 - 338,290
Prepaid expenses and other
current assets 37,560 - 37,560
Property, equipment and
improvements, net 70,606 - 70,606
FDA license agreements - 900,000 900,000
Donor base and records - 600,000 600,000
Excess of cost over net assets
acquired, net of accumulated
amortization 788,403 (788,403) -
Reorganization value in excess
of amounts allocated to
identifiable assets - 968,127 968,127
Land available for sale 25,000 - 25,000
Other assets 17,640 - 17,640
- --------------------------------------------------------------------------------
Total assets $1,898,158 $2,077,824 $3,975,982
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FS-14
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1. REORGANIZATION AND BASIS OF REPORTING (Continued)
PRE-FRESH
START BALANCE FRESH-START
SHEET REORGANIZATION BALANCE SHEET
FEBRUARY 5, OF FAIR VALUE FEBRUARY 6,
1996 ADJUSTMENTS(A) 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts payable and accrued
expenses pre-petition $ 1,761,071 $(1,761,071) $ -
Accounts payable 996,220 - 996,220
Accrued expenses 556,976 60,000 616,976
Short-term notes payable 587,189 (587,189) -
Long-term debt 1,386,236 (236,236) 1,150,000
Series A preferred stock 334,394 (334,394) -
Common stock - Class A 5,731 (3,616) 2,115
Paid-in capital 2,583,349 (1,372,678) 1,210,671
Accumulated deficit (6,313,008) 6,313,008 -
- -----------------------------------------------------------------------------------
Total liabilities and stockholders'
equity (deficit) $ 1,898,158 $2,077,824 $3,975,982
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(A) To record the transactions applicable to the restructuring as outlined in
the above footnote, eliminate the accumulated deficit balance and record the
adjustments to state assets and liabilities at fair value in accordance with SOP
90-7.
FS-15
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. DISCONTINUED OPERATIONS
In November, 1993 the Company's Board of Directors authorized a change in the
focus of the business from whole blood to the plasma collection and distribution
business. Subsequent to determining that the Company would discontinue the whole
blood business the Company incurred various operating and other costs associated
with the discontinuance of the whole blood business. Costs amounting to $130,255
have been recognized for the year ended February 28, 1995 as a result of the
discontinued business line. These discontinued operation costs represent the
amount in excess of the estimated cost to discontinue that line of business
which was accrued at February 28, 1994.
3. INVENTORIES
Inventories at February 29, 1996 and February 28, 1995 consisted of the
following:
FEBRUARY 29, FEBRUARY 28,
1996 1995
- --------------------------------------------------------------------------------
Raw donated plasma $279,758 $322,515
Softgoods supplies - 112,083
- --------------------------------------------------------------------------------
$279,758 $434,598
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Softgoods supplies represent non-perishable supplies and instruments. Effective
January 1, 1996, the Company entered into new sales agreements with a customer
whereby the customer provides the softgoods supplies and the cost of such
supplies is factored into the unit sales prices as stated in the agreement.
FS-16
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
REORGANIZED PREDECESSOR
COMPANY COMPANY
FEBRUARY 29, FEBRUARY 28,
1996 1995
- --------------------------------------------------------------------------------
Furniture and equipment $ 44,797 $435,203
Leasehold improvements 27,905 24,559
- --------------------------------------------------------------------------------
72,702 459,762
Less: accumulated depreciation and
amortization 862 398,155
- --------------------------------------------------------------------------------
Property and equipment, net $ 71,840 $ 61,607
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LONG-TERM DEBT
In connection with the Restructuring, the Company entered into a New Term Loan
Agreement (the "New Loan Agreement") with CVD Financial on February 5, 1996. The
Company's New Loan Agreement replaced a Comprehensive Loan Facility and Security
Agreement dated October 1, 1993. At February 29, 1996 the Company's New Loan
Agreement provides for an outstanding balance in the face amount of $1,150,000
under a Consolidated Note. The unpaid principal balance of the Consolidated Note
will be paid in quarterly installments of $82,143 with the first principal
payment being due May 1, 1996 and the final principal payment due at maturity on
August 1, 1999. The Consolidated Note bears interest at 14% per annum.
The New Loan Agreement, which is secured by a pledge of substantially all assets
of the Company, requires the Company to comply with various covenants. The
carrying amount of the loan approximates its fair value.
FS-17
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LONG-TERM DEBT (Continued)
Future minimum payments to be made, as of February 29, 1996, under the
aforementioned New Loan Agreement is as follows:
FISCAL YEAR ENDED AMOUNT
- --------------------------------------------------------------------------------
February 28, 1997 $ 328,571
February 28, 1998 328,571
February 28, 1999 328,571
February 29, 2000 164,287
- --------------------------------------------------------------------------------
1,150,000
Less: Current portion (328,571)
- --------------------------------------------------------------------------------
$ 821,429
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. CAPITAL STOCK
As discussed in Note 1, all preferred and common stock equity interests issued
prior to the Effective Date have been extinguished. The new authorized capital
stock of the company consists of 25,000,000 shares of Common Stock, par value
$.001 per share, and 25,000,000 shares of Preferred Stock, par value $.001 per
share.
Under the terms of a Private Placement Memorandum ("PPM") dated December 14,
1995, and as a result of the success of that offering, the Company received net
proceeds of $963,100 through the issuance of Convertible Debtor Notes. As of
February 29, 1996 the net proceeds had been received by the Company and 100% of
the Debtor Notes had been converted to shares of common stock totalling
1,610,708 outstanding shares. Additionally, the Company issued 200,023 shares of
common stock as finders fees and compensation for services provided by various
parties in connection with the PPM.
Unsecured Note Holders were issued 105,275 common stock shares as discussed in
Note 1. The Company is also obligated to issue 10,000 common stock shares to
other Unsecured Creditors as discussed in Note 1.
FS-18
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. CAPITAL STOCK (Continued)
Current and previous management were issued 189,495 shares of common stock as of
the Effective Date of the Restructuring.
All common stock share certificates issued as a result of the aforementioned
transactions were formally issued in certificate form subsequent to February 29,
1996 (with the exception of the 10,000 common stock shares not yet issued to
Unsecured Creditors). The financial statements have been prepared on the basis
that all such shares are deemed issued on the Effective Date of the
Restructuring as a result of the extinguishment of all previously issued equity
interests. The total issued common stock shares is deemed to be 2,115,500 as of
February 29, 1996.
7. STOCK OPTIONS
The Company has entered into various employment and consulting agreements with
officers and directors of the company. As part of the agreements the officers
and directors were granted stock options as follows:
The president and chief executive officer of the Company was granted the
option to purchase 100,000 shares of common stock of the Company for the
price of $1.00 per share, which was not below fair market value at that
date. These options become fully vested upon execution of the agreement in
February, 1996 and remain in effect until January, 2001.
Additionally the president and chief executive officer was granted the
following options, which, in addition to the vesting period (exercisable
for a period of five years from the vesting date), vest only if the Company
achieves certain projected operating results as defined in the agreement:
(1) Option to purchase 56,147 shares of common stock of the Company at
a mean price between $.74 and the weighted average, as defined in the
agreement. The options vest one-third each year over a three year
period beginning in January, 1997.
(2) Option to purchase 50,000 shares of common stock of the Company
for the price of $1.00 per share. These options become fully vested in
January, 1997.
(3) Option to purchase 50,000 shares of common stock of the Company
for the price of $2.00 per share. These options become fully vested in
January, 1998.
(4) Option to purchase 50,000 shares of common stock of the Company
for the price of $3.00 per share. These options become fully vested in
January, 1999.
FS-19
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. STOCK OPTIONS (Continued)
The Vice President of Finance and Vice President of Operations were granted
options to purchase 42,110 and 28,073 shares of common stock of the
Company, respectively. The option purchase price is a mean price between
$.74 and the weighted average, as defined in the agreement. The options
vest one-third each year over a three year period beginning in January,
1997 and vest only if the Company achieves certain projected operating
results as defined in the agreement.
In March, 1996 two directors were also granted options to purchase shares
of common stock of the Company. One received options to purchase 30,000
shares and the other received options to purchase 15,000 shares for the
price of $1.50 per share. These options became fully vested at the granting
date.
8. LEASES
The Company is currently leasing its corporate office under a noncancelable
lease agreement. The corporate office lease agreement, which expires in April,
1999, replaced a previous corporate office lease which was replaced in May, 1996
as a result of the Company negotiating the terms of the current lease.
The Company is also obligated under various lease agreements for six donor
centers operated by the two wholly-owned subsidiaries. One donor center lease is
a month to month agreement. The remaining five leases expire at various dates
ranging from April, 1996 to December, 2002.
Future minimum rental obligations under the aforementioned lease agreements are
as follows:
FEBRUARY 28, AMOUNT
- --------------------------------------------------------------------------------
1997 $197,114
1998 192,636
1999 183,576
2000 101,292
2001 61,582
Thereafter 42,210
- --------------------------------------------------------------------------------
$778,410
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rent expense amounted to $14,735, $159,890 and $166,467 for the periods ended
February 29, 1996, February 5, 1996 and February 28, 1995.
FS-20
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. INCOME TAXES
At February 29, 1996 the Company had a deferred tax asset in the amount of
$2,065,000 resulting primarily from net operating loss carryforwards. Due to
management's inability to conclude that it is more likely than not that the
deferred tax asset will be realized, a valuation allowance has been recorded for
the full amount.
At February 29, 1996, the Company estimates that approximately $5,900,000 of
Federal net operating loss carryforwards are available to potentially offset
future taxable income. These carryforwards will expire in various years
beginning in 2006 through 2011. As a result of the change in ownership
provisions of section 382 of the IRC, Federal tax rules will impose limitations
on the Company's ability to utilize its net operating loss carryforwards. Such
limitation will reduce the amount of these carryforwards that will be available
to offset future taxable income each year, starting with the year of
Restructuring. The dollar amount of these limitations is indeterminable at this
time.
If the Company's net operating loss carryforwards and other fresh start deferred
tax asset balances become realizable, the tax benefits will reduce
"Reorganization Value in Excess of Amount Allocable to Identifiable Assets". The
existing valuation allowance, if realized, would reduce this reorganization
value.
10. COMMITMENTS
The Company has entered into various employment and consulting agreements with
current and previous officers and directors of the Company. The following
further describes terms and obligations provided by the agreements entered into
by the Company with such officers and directors:
The Company is obligated to the president and chief executive officer to
pay an annual base salary of $75,000 for a three year period beginning in
February, 1996.
The Company is obligated to the vice president of finance to pay an annual
salary of $125,000 for a three year period beginning in February, 1996. The
salary is subject to quarterly adjustments with an annual increase of up to
$10,000 in the event the Company achieves quarterly pre-tax earnings in
excess of $100,000.
FS-21
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
10. COMMITMENTS (Continued)
The Company is obligated to the vice president of operations to pay an
annual salary of $90,000 for a three year period beginning in February,
1996. The salary is subject to quarterly adjustments with an annual
increase of up to $10,000 in the event the Company achieves quarterly
pre-tax earnings in excess of $100,000.
The employment agreements also provide for a management bonus which will
allocate on the basis of salaries, 10% of pre-tax earnings to management
personnel in the event the Company achieves certain minimum annual pre-tax
earnings, as defined in the agreements.
The Company is obligated to a director of the Company to pay an annual
consulting fee of $50,000 for a three year period beginning April, 1996.
The Company has entered into a termination agreement with the previous president
and chief executive officer. Under the terms of the agreement the Company is
obligated to pay the terminated officer $16,666 in two monthly installments of
$8,333 in February and March of 1996 and is obligated to pay $50,000 in twelve
installments of $4,167 beginning in February, 1996. This termination agreement
effectively cancels any previous employment agreements entered into between the
Company and the terminated officer.
11. CONCENTRATION OF CREDIT RISK, SIGNIFICANT CUSTOMERS AND SALES COMMITMENTS
The Company sells its only product, plasma, on credit primarily to fractionators
in the health care industry. The plasma provides specialty antibody products
that are used as the active ingredients in pharmaceutical products.
Plasma collection, storage, labeling and distribution activities are subject to
strict regulation and licensing by the U.S. Food and Drug Administration
("FDA"). The Company's facilities are subject to periodic inspection by the FDA.
Failure to comply or correct deficiencies with applicable laws or regulations
could subject the Company to enforcement action, including product seizures,
recalls, center or facility closure, license revocations and civil and criminal
penalties, any one or more could have a material adverse effect on the Company's
business.
FS-22
<PAGE>
SERACARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11. CONCENTRATION OF CREDIT RISK, SIGNIFICANT CUSTOMERS AND SALES COMMITMENTS
(Continued)
Laws and regulations with similar substantive and enforcement provisions are
also in effect in many of the states and municipalities where the Company does
business. Any change in existing federal, state or municipal laws or
regulations, or in the interpretation or enforcement thereof, or the
promulgation of any additional laws or regulations could have an adverse effect
on the Company's business.
The Company is required to obtain from each donor an informed consent regarding
the donation procedure. Failure of the Company to obtain an adequate consent
could have a material adverse effect on the Company.
Three customers accounted for 100% of the net sales for the periods ended
February 28, 1995, February 5, 1996 and February 29, 1996.
The Company is currently obligated to one significant customer under the terms
of six agreements relating to the current six donor centers whereby the Company
has committed to sell substantially all of the plasma collected from those
centers at various unit prices as specified in those agreements. The agreements
expire at various dates through December 31, 1997 and may be terminated if the
donor centers fail to comply with various FDA, QPP and customer initiated
procedures.
12. SUBSEQUENT EVENTS
The Company has completed and issued a private placement memorandum dated June
1, 1996. The Company is offering $1,500,000 of security interests through the
offering of 1,000,000 shares of common stock along with warrants redeemable for
500,000 shares of common stock at a purchase price of $2.75 per share. The
offering period will begin June 30, 1996 and extend through August 31, 1996. The
outcome of this offering is not determinable at this time.
The Company has issued letters of intent to purchase three plasma collection
centers.
FS-23
<PAGE>
Part F/S (b)
PAGE
NUMBER
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996
(UNAUDITED)
Consolidated Statement of Operations - IS-2
For the Six Months Ended August 31, 1996
Consolidated Balance Sheet - IS-3
as of August 31, 1996
Consolidated Statement of Cash Flow - IS-4
For the Six Months Ended August 31, 1996
Footnotes to Consolidated Financial Statements IS-5
<PAGE>
SERACARE, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996
(Unaudited)
IS-1
<PAGE>
SeraCare, Inc.
Consolidated Statement of Income
For the six months ended 8-31-96
(In whole dollars)
Amount
----------
Revenue $2,778,295
Direct Costs and Expenses:
Donor fees 1,422,163
Salaries and related 789,478
Testing and softgoods 190,455
Rent 94,310
Other direct costs (41,365)
----------
Total Direct Costs and Expenses $2,455,041
----------
Gross Profit From Operations 323,254
Indirect Administrative Expenses 292,276
Interest Expense 91,144
Amortization of Intangibles 45,731
Other (Income) and Expenses (126,722)
----------
Net Profit Before Taxes on Income $ 20,825
Taxes on Income 0
----------
Net Income (loss) $ 20,825
----------
----------
Earnings Per Share based upon 2,115,500
shares outstanding $0.010
----------
----------
Prepared without audit.
IS-2
<PAGE>
SeraCare, Inc.
Consolidated Balance Sheet
As of August 31, 1996
(In whole dollars)
<TABLE>
<CAPTION>
8-31-96 2-29-96
---------- ----------
<S> <C> <C>
Cash $ 36,231 $ 580,476
Accounts Receivable 157,958 199,862
Inventory 639,641 279,758
Prepaid Expenses 48,163 33,572
---------- ----------
Total Current Assets $ 881,993 $1,093,668
---------- ----------
Property & Equipment- Net 358,031 71,840
FDA Licenses 1,196,875 900,000
Donor Base and Records 795,834 600,000
Fresh Start Goodwill 952,910 965,753
Cost in Excess of Book Value Acquired 647,420 0
Land Available for Sale 25,000 25,000
Other Assets 124,016 17,640
---------- ----------
Total Assets $4,982,079 $3,673,901
---------- ----------
---------- ----------
Accounts Payable $ 766,881 $ 723,951
Accrued Liabilities 326,093 583,546
Customer Prepayments on inventory 304,118 0
Current Portion of long-term debt 421,028 328,571
Notes Payable 550,000 0
---------- ----------
Total Current Liabilities $2,368,120 $1,636,068
---------- ----------
Long-term Debt $ 857,285 $ 821,429
Preferred Stock 519,444 0
Common Stock 2,115 2,115
Paid-in Capital 1,210,671 1,210,671
Retained Earnings 24,444 3,618
---------- ----------
Total Liabilities & Capital $4,982,079 $3,673,901
---------- ----------
---------- ----------
</TABLE>
Prepared without audit.
IS-3
<PAGE>
SeraCare, Inc.
Funds Flow Statement
For the Six Months Ended 8-31-96
(In whole dollars)
Amount
-----------
Net income after taxes $ 20,825
Add: Amortization 45,731
Depreciation 16,651
-----------
Cash Flow From Operations $ 83,207
-----------
Decr (Incr) in assets:
Accounts Receivable $ 41,904
Inventory (331,085)
Prepaid expenses (14,531)
Other assets (106,376)
Incr (Decr) in liabilities:
Accounts payable 23,471
Accrued liabilities (266,847)
Prepayments on Inventory 304,118
-----------
Net Cash Flow used in Operating Activities $ (266,139)
Cash flow from investing activities:
Fixed assets acquired $ (288,378)
Cost in excess of book value of
assets acquired (407,901)
Other Intangibles (250,000)
Cash acquired in Non-cash acquisition
(Note 5) 19,860
-----------
Net Cash Flow used in investing activities $ (926,419)
-----------
Cash flow from financing activities:
Payments on redemption of preferred stock $ (30,000)
Note payable - Officers and Directors 550,000
Increase in current portion of
Long term Debt 92,457
Increase in Long Term Debt 35,856
-----------
Net Cash Flow from financing activities $ 648,313
-----------
Net decrease in cash $ (544,245)
Beginning cash balance 580,476
-----------
Ending Cash Balance $ 36,231
-----------
-----------
Prepared without audit.
IS-4
<PAGE>
SERACARE, INC.
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996
1. IN THE OPINION OF MANAGEMENT, THE CONSOLIDATED STATEMENTS OF INCOME,
FUNDS FLOW STATEMENT AND BALANCE SHEET PRESENTED HEREIN INCLUDE ALL
ADJUSTMENTS NECESSARY FOR A FAIR STATEMENT OF THE RESULTS FOR THE
INTERIM PERIOD. ALL SUCH ADJUSTMENTS ARE OF A NORMAL AND RECURRING
TYPE EXCEPT FOR THE RECORDING OF THE ACQUISITION OF BHM LABS, INC.
ON JULY 7, 1996 AND THE ACQUISITION OF THE ASSETS OF SILVER STATE
PLASMA PRODUCTS ON JULY 2, 1996. THE RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED AUGUST 31, 1996, ARE NOT NECESSARILY INDICATIVE OF THE
RESULTS TO BE EXPECTED FOR THE YEAR ENDING FEBRUARY 28, 1997.
2. ACQUISITIONS:
SILVER STATE PLASMA CENTER -- On July 2, 1996, the Company acquired the
operating assets and licenses of Silver State Plasma Center in Las Vegas,
Nevada from Silver State Plasma Products, Inc. for $500,000 in cash and a
$300,000 three year promissory note with interest at eight percent.
BHM LABS, INC. -- On July 7, 1996 the Company acquired BHM Labs, Inc.,
which owns and operates a plasma collection center in Ft. Smith, Arkansas
in exchange 3,600 shares of the Company's Series A Preferred Stock in a
non-cash transaction.
CLEARFIELD, UTAH AND RALEIGH, NORTH CAROLINA PLASMA CENTERS -- On
September 3, 1996, the Company acquired from Mr. Brad Rabe all rights and
interests attributable to both the Clearfield Center and the Raleigh
Center. As Base Consideration to Mr. Rabe, the Company agreed to deliver
175,000 shares of Common Stock of the Company within fifteen days of the
date when both the Raleigh and Clearfield locations have processed their
first donors. The 175,000 shares of Common Stock may be increased or
decreased depending on certain performance based criteria. In addition to
the Base Consideration, the Company and Mr. Rabe agreed on certain
operational performance criteria which will serve as the basis for the
Additional Consideration of a maximum of 125,000 shares of common stock
of the Company if all performance criteria for the centers are met.
3. PRIVATE PLACEMENT. (a) Effective September 4, 1996, an aggregate of
565,000 shares of the Company's Common Stock and an aggregate of 282,500
Series A Warrants (Represents right to purchase one share of the
Company's Common Stock at an exercise price of $2.75) were issued in
exchange for $847,500 in cash and (b) Effective October 23, 1996, an
aggregate of 285,000 shares of the Company's Common Stock and an
aggregate of 142,500 Series A Warrants were issued in exchange for
$427,500 in cash. Such securities were issued pursuant to a Private
Placement Memorandum dated June 1, 1996, which offered Units consisting
of five thousand shares of the Company's Common Stock and two thousand,
five hundred Series A Warrants for each minimum investment of $7,500.00.
Such Units were offered to "accredited investors" as that term is defined
in the 1933 Act and Rules 215 and 501(a) promulgated thereunder. These
shares are "restricted shares" as that term is defined in Rule 144 under
the 1933 Act.
IS-5
<PAGE>
4. LOANS:
CVD FINANCIAL CORPORATION. Effective February 5, 1996 and in conjunction
with the Plan of Reorganization approved by the Bankruptcy Court,
SeraCare agreed to an Amended and Restated Loan Agreement with CVD
Financial Corporation. This loan is secured by all the assets of
SeraCare, Inc. and its two wholly-owned subsidiaries, AVRE, Inc. and
Binary Associates, Inc. The principal amount of the loan on the effective
date was $1,150,000 with interest at fourteen percent (14%) per annum
payable monthly and principal payable quarterly. The first installment of
interest was due May 1, 1996 and the final installment is due August 1,
1999. Of the amounts due under this loan, $328,572 are due within one
year and $657,142 is long term.
BRIDGE LOANS. In order to close the acquisition of the Silver State
Plasma Center in Las Vegas, Nevada on July 2, 1996, the Board of
Directors unanimously approved $550,000 in bridge loans. The Bridge Loans
are secured by all assets of SeraCare's consolidated operations which are
not pledged to CVD Financial and by a second position behind CVD
Financial on those assets which secure the CVD Financial loan. The terms
of the bridge loans included interest at twelve percent and 150,000 three
year warrants, each warrant to purchase one share of the Company's common
stock at $1.00. Of the total amount of the bridge loans, $450,000 was
advanced by Mr. Barry Plost, the Company's President and Chief Executive
Officer, and the remaining $100,000 was advanced by Mr. Samuel Anderson,
a member of the Company's Board of Directors. Of the amounts advanced,
$127,500 was converted to equity by Mr. Plost and $100,000 was converted
to equity by Mr. Anderson on September 4, 1996 as part of their
acquisition of units of Common Stock and Series A warrants to purchase
common stock in the private placement dated June 1, 1996. Mr. Anderson
also invested an additional $5,000 as part of the private placement. The
balance of the amounts due Mr. Barry Plost are committed to be repaid
from the proceeds of the private placement.
SILVER STATE PLASMA PRODUCTS, INC. On July 2, 1996, the Company acquired
the operating assets and licenses of Silver State Plasma Center in Las
Vegas, Nevada from Silver State Plasma Products, Inc. for $500,000 in
cash and a $300,000 promissory note. Such note is secured by the Silver
State Plasma Center assets acquired, is a three year promissory note,
interest accrues at eight percent and fully amortized payments are due
monthly. Of this amount, $92,456 is due within twelve months and $200,143
is long term.
5. SUPPLEMENTAL DISCLOSURES ON NON-CASH INVESTING AND FINANCING ACTIVITIES.
BHM LABS, INC. -- On July 8, 1996 the Company acquired BHM Labs, Inc.,
which owns and operates a plasma collection center in Ft. Smith, Arkansas
in exchange 3,600 shares of the Company's Series A Preferred Stock in a
non-cash transaction. In conjunction with such acquisition, the net book
value of assets acquired totaled $34,884. See Exhibit 6.12 attached
hereto for a complete description of the transaction.
IS-6
<PAGE>
PART III
Item. I Exhibits
INDEX OF DOCUMENTS FILED AS PART OF THIS REGISTRATION:
Exhibit
Number Description of Document
- ------- -----------------------
2.1 Restated Articles of Incorporation filed on February 6, 1996.
2.2 By-laws of American Blood Institute, Inc (now known as SeraCare, Inc.)
dated June 10, 1992.
3.1 Certificate of Designation of Series A Preferred Stock filed on July 10,
1996.
6.1 Employment Agreement dated February 5, 1996 between the Company and
Barry D. Plost
6.2 Employment Agreement dated November 14, 1995 between the Company and
Jerry L. Burdick
6.3 Employment Agreement dated November 14, 1995 between the Company and
Brian Olson
6.4 Employment Agreement dated September 3, 1996 between the Company and
Brad Rabe
6.5 Consulting Agreement dated July 2, 1996 between the Company and Samuel
Anderson
6.6 Bridge Note Agreement dated July 2, 1996 between the Company and Barry
D. Plost
6.7 Bridge Note Agreement dated July 17, 1996 between the Company and
Barry D. Plost
6.8 Bridge Note Agreement dated July 2, 1996 between the Company and
Samuel Anderson.
6.9 Asset Purchase Agreement dated September 3, 1996 between the Company
and Brad Rabe
6.10 Asset Exchange Agreement dated July 2, 1996 between the Company and
Silver State Plasma Products, Inc.
6.10(a) Note payable dated July 2, 1996 between the Company and Silver
State Plasma Products, Inc.
6.11 Amended and Restated Loan Agreement between the Company and CVD
Financial Corporation.
6.11(a) Note payable dated February 6, 1996 between the Company and CVD
Financial Corporation
<PAGE>
6.12 Contract for Exchange of Corporate Stock date July 9, 1996 between the
Company and Mr. Burt H. McGhee
6.13 Series A Warrant Agreement dated September 4, 1996.
6.14 Series A Warrant Agreement dated October 23, 1996.
6.15 Registration Rights Agreement dated September 4, 1996.
6.16 Registration Rights Agreement dated October 23, 1996.
6.17 Dealer Warrant Agreement dated September 4, 1996.
6.18 Dealer Registration Rights dated Agreement September 4, 1996.
6.19 Motion for Order Confirming Third Amended Joint Plan of Reorganization
of American Blood Institute, Inc., AVRE, Inc. and Binary Associates,
Inc. dated January 24, 1996.
6.19(a) Order Confirming Third Amended Joint Plan of Reorganization of
American Blood Institute, Inc., AVRE, Inc. and Binary Associates, Inc.
dated and filed January 24, 1996.
10.1 Subsidiaries of Registrant
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
SERACARE, INC.
--------------
(Registrant)
Date: November 19, 1996 By: /s/
-------------------------------------
Barry D. Plost
President and Chief Executive Officer
<PAGE>
Exhibit 2.1
RESTATED
CERTIFICATE OF INCORPORATION
American Blood Institute, Inc. (the "Corporation"), a corporation
organized and existing under the laws of the State of Delaware, does hereby
certify:
1. The name of the Corporation is American Blood Institute, Inc. The
Corporation was originally incorporated under the same name, and the original
Certificate of Incorporation of the Corporation was filed with the Secretary
of State of the State of Delaware on October 1, 1991.
2. The Corporation is subject, pursuant to Chapter 11 of the United
States Bankruptcy Code, to the jurisdiction of the United States Bankruptcy
Court, in a proceeding entitled "In Re American Blood Institute, Inc., a
Delaware corporation, Debtor," Chapter 11 Case No. LA 94-11730-AM.
3. That pursuant to an Order of the Bankruptcy Court, dated January 24,
1996, confirming the Corporation's Third Amended Joint Plan of Reorganization,
AND PURSUANT TO SECTION 303(a) OF THE DELAWARE GENERAL CORPORATION LAW, this
Restated Certificate of Incorporation has been approved, and restates,
integrates and further amends the provisions of the Certificate of
Incorporation of the Corporation, and the undersigned officers of the
Corporation have been authorized to execute this Restated Certificate of
Incorporation and to cause it to be filed with the Secretary of State of
Delaware.
4. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
FIRST: The name of the corporation is SeraCare, Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Law").
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Fifty
<PAGE>
Million, Twenty-Five Million of which shares are of a class designated
"Common Stock" having a par value of $.001 per share and Twenty-Five Million of
which shares are of a class designated "Preferred Stock" having a par value of
$.001 per share. As of the date hereof, there are no shares of Preferred Stock
issued or outstanding. The Corporation shall not issue non-voting equity
securities.
FIFTH: The limitations and relative rights of the Common Stock are as
follows:
5.1 VOTING RIGHTS. Except as otherwise required by law or expressly
provided herein, each share of Common Stock shall entitle the holder thereof to
one vote on each matter submitted to a vote of the stockholders of the
Corporation.
5.2 DIVIDEND RIGHTS. Subject to provisions of law and of this
Certificate of Incorporation, the holders of Common stock shall be entitled to
receive dividends at such times and in such amounts as may be determined by the
Board of Directors of the Corporation.
5.3 LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(sometimes referred to herein as a liquidation), after payment or provision
for payment of the debts and other liabilities of the Corporation and the
preferential amounts to which holders of any outstanding Preferred Stock now or
hereafter authorized shall be entitled upon liquidation, the holders of
Common Stock shall be entitled to share ratably on a per share basis, together
and on an equal basis with the holders of Preferred Stock, in the remaining
assets of the Corporation.
SIXTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and qualifications, limitations or restrictions thereof.
6.1 SPECIFIC AUTHORITY. The authority of the Board with respect to
each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date
2
<PAGE>
or dates, and the relative rights of priority, if any, of the payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and if so, the terms and amount
of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
corporation, and the relative rights of priority, if any, of payment of shares
of that series;
(h) Any other relative rights, preferences and limitations
of that series.
6.2 DIVIDEND RIGHTS. Dividends on outstanding shares of Preferred
Stock shall be paid or declared and set apart for payment before any dividends
shall be paid or declared and set apart for payment on the shares of Common
Stock with respect to the same dividend period.
6.3 LIQUIDATION RIGHTS. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the assets
available for distribution to holders of shares of Preferred Stock of all series
shall be insufficient to pay such holders the full preferential amount to which
they are entitled, then such assets shall be distributed ratably among the
shares of all series of Preferred Stock in accordance with the respective
preferential amounts (including unpaid cumulative dividends, if any) payable
with respect thereto.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute and unless otherwise provided herein, the Board of Directors is, by
action of the Board of Directors, expressly authorized to make, alter or
repeal the by-laws of the Corporation.
3
<PAGE>
EIGHTH: Meetings of stockholders may be held within or outside of
the State of Delaware, as the by-laws of the Corporation may provide. The books
of the Corporation may be kept outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors of the
Corporation or in the by-laws of the Corporation. Election of directors need
not be by written ballot unless the by-laws of the Corporation so provide.
NINTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of his fiduciary
duty as a director; provided, however, that this provision shall not eliminate
or limit the liability of a director (1) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (2) for any acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (3) under Section 174 of the General Corporation Law of the State
of Delaware, or (4) for any transaction from which the director derived an
improper personal benefit.
TENTH: The Corporation shall indemnify, in accordance with and to the
full extent now or hereafter permitted by law, any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, an action
by or in the right of the Corporation), by reason of his acting as a director
or officer of the Corporation (and the Corporation, in the discretion of the
Board of Directors, may so indemnify a person by reason of the fact that he
is or was an employee of the Corporation or is or was serving at the request
of the Corporation in any other capacity for or on behalf of the Corporation)
against any liability or expense actually and reasonably incurred by such
person in respect thereof. Such indemnification is not exclusive of any
other right to indemnification provided by law or otherwise. Expenses
incurred by an officer or director in defending a civil or criminal action,
suit or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit, or proceeding upon receipt of an
undertaking by or on behalf of such officer or director to repay such amount
if it shall ultimately be determined that such officer or director is not
entitled to be indemnified. The right to indemnification and advancement of
expenses on the condition specified herein conferred by this Article shall
be deemed to be a contract between the Corporation and each person referred
to herein.
ELEVENTH: No amendment to or repeal of Article NINTH OR TENTH of this
Certificate of Incorporation shall apply to or have any effect on the rights of
any individual referred to in Article NINTH OR TENTH for or with respect
to acts or omissions of such individual occurring prior to such amendment
or repeal.
4
<PAGE>
TWELFTH: The Certificate of Incorporation of the Corporation, as herein
amended, shall constitute a restatement of and shall supersede the Certificate
of Incorporation of the Corporation, as previously amended.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its President and its Secretary, hereunto duly
authorized, this 5th day of February, 1996.
AMERICAN BLOOD INSTITUTE,INC.
By: /s/ Barry D. Plost
--------------------------
Barry D. Plost, President
ATTEST:
/s/ Jerry L. Burdick
- ---------------------------
Jerry L. Burdick, Secretary
5
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"AMERICAN BLOOD INSTITUTE, INC.", CHANGING ITS NAME FROM "AMERICAN BLOOD
INSTITUTE, INC." TO "SERACARE, INC.", FILED IN THIS OFFICE ON THE SIXTH DAY OF
FEBRUARY, A.D. 1996, AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[STATE SEAL]
/s/ Edward J. Freel
----------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 7816934
2275058 8100
DATE: 02-06-96
960034753
<PAGE>
(Department of Corporations Use Only) Department of Corporations File No.,
Fee Paid $ 25.00 if any
---------------------------- -------------------------------
Receipt No. L061692-17 (Insert File Number(s) of Previous
--------------------- Filings Before the Department, if any)
FEE: $25.00 $35.00 $50.00 $150.00 $300.00
(Circle the appropriate amount of fee.
See Corp. Code Section 25608 (c))
COMMISSIONER OF CORPORATIONS
STATE OF CALIFORNIA
NOTICE OF TRANSACTION PURSUANT TO CORPORATIONS CODE SECTION 25102(f)
A. Check one: Transaction under (xx) Section 25102(f) ( ) Rule 260.103.
1. Name of Issuer: American Blood Institute, Inc.
-----------------------------------------------------------
2. Address of Issuer: 11500 Olympic Blvd., Ste. 150, Los Angeles, CA 90064
--------------------------------------------------------
Street City State Zip
Mailing Address: 11500 Olympic Blvd., Ste. 150, Los Angeles, CA 90064
--------------------------------------------------------
Street City State Zip
3. Area Code and Telephone Number: (310) 477-1010
-------------------------------------------
4. Issuer's state (or other jurisdiction) of incorporation or organization:
Delaware
- --------------------------------------------------------------------------------
5. Title of class or classes of securities sold in transaction:
Common Stock
- --------------------------------------------------------------------------------
6. The value of the securities sold or proposal to be sold in the transaction,
determined in accordance with the Corp. Code Sec. 25608(g) in connection with
the fee required upon filing this notice, is (fee based on amount shown in line
(iii) under "Total Offering"):
*Stock issued to issuer's employee
as compensation so consideration unknown but
issued stock's fair market value is no
greater than $7,500
California Total Offering
---------- --------------
(a)(i) in money $ -0- $ -0-
--------- ------------
(ii) in consideration other than money $ 7,500* $ 7,500*
--------- ------------
(iii) Total of (i) and (ii) $ 7,500 $ 7,500
--------- ------------
(b) ( ) Change in rights, preferences, privileges or restrictions of or
on outstanding securities. ($25.00 rec.) (Sec. Rule 260.103.)
7. Type of filing under Securities Act of 1933, if applicable:
N/A
- --------------------------------------------------------------------------------
8. Date of Notice: June 10, 1992 American Blood Institute, Inc.
------------------------------
Issuer
/s/ Joseph J. Stone
(xx) Check if issuer already has a ------------------------------
consent to service of process Authorized Signature on behalf
of issuer
Joseph J. Stone
------------------------------
Print name and title of
signatory
Name, Address and Phone number of contact person:
Joseph J. Stone, American Blood Institute, Inc., 11500 Olympic Blvd.,
- --------------------------------------------------------------------------------
Ste. 150, Los Angeles, CA 90064 (310) 477-1010
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Instruction: Each Issuer (other than a California corporation) filing a notice
under Section 25102(f) most like a consent to service of process (Form 260.165),
unless it already has a consent to service on file with the Commissioner.
<PAGE>
By-Laws
Of
American Blood Institute, Inc.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1.1 The corporation shall maintain a registered office in the
State of Delaware as required by law. The corporation may also have such other
offices, either within or without the State of Delaware, as the business of the
corporation may require.
ARTICLE II
STOCKHOLDERS
Section 2.1 ANNUAL MEETING. An annual meeting of the stockholders
shall be held commencing in 1992 on the first Monday of October of each year, if
not a legal holiday, and if a legal holiday, then on the next succeeding
business day, for the election of directors and for the transaction of such
other business as may come before the meeting.
Section 2.2 SPECIAL MEETINGS. Special meetings of the stockholders
may be called by the President, the board of directors, or by a request in
writing from the holders of not less than 51% of the issued and outstanding
voting stock of the corporation. Within ten days after the receipt of such a
written request, the President or another officer designated by the President
must send a notice of meeting in accordance with section 2.4 hereof.
Section 2.3 PLACE OF MEETING. The board of directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the board of
directors. If a special meeting be called otherwise than by the board of
directors, the place of meeting must be in the county of Cook, State of
Illinois.
Section 2.4 NOTICE OF MEETING. Written notice stating the place,
date and hour of the meeting, the place where the stockholder list may be
examined prior to the meeting, if different from the place of the meeting, and,
in
<PAGE>
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given in person or sent by mail or overnight express service
not less than ten nor more than sixty days before the date of the meeting, or in
the case of a merger or consolidation of the corporation requiring stockholder
approval or a sale, lease or exchange of all or substantially all of the
corporation's assets, not less than twenty nor more than sixty days before the
date of meeting, to each stockholder of record entitled to vote at such meeting.
If mailed, notice shall be deemed given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the corporation. If notice is given by overnight express
service, such notice shall be deemed given one day after delivery to such
express service. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than thirty days, or unless, after adjournment, a new
record date is fixed for the adjourned meeting, in either of which cases notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. Notice need not be given to any stockholder who submits
a written waiver of notice signed by such stockholder either before or after any
meeting. Attendance by a stockholder at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting need be specified in any waiver of
notice of such meeting.
Section 2.5 FIXING OF RECORD DATE. (a) In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any
2
<PAGE>
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by the Delaware General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the board of directors and prior action by
the board of directors is required by the Delaware General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the board of directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
Section 2.6 VOTING LISTS. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the
3
<PAGE>
meeting, arranged in alphabetical order, and showing the address of each
stockholder and number of shares registered in his name, which list, for a
period of ten days prior to such meeting, shall be kept on file either at a
place within the city where the meeting is to be held and which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held, and shall be open to the examination of any
stockholder, for any purpose germane to the meeting, at any time during ordinary
business hours. Such list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.7 STOCK LEDGER. The stock ledger shall be the only evidence
as to who are the stockholders entitled to examine the stock ledger or the books
of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 2.8 QUORUM. A majority of the outstanding shares of voting
stock of the corporation, represented in person or by proxy, shall constitute a
quorum at any meeting of stockholders; provided, however, that if less than a
majority of the outstanding shares of voting stock are represented at said
meeting, a majority of the shares of voting stock so represented may adjourn the
meeting. If a quorum is present, the affirmative vote of a majority of the
shares of voting stock represented at the meeting shall be the act of the
stockholders in all matters other than the election of directors, who shall be
elected by a plurality of the votes of the shares present in person or by proxy
and entitled to vote on the election of directors, unless the vote of a greater
number or voting by classes is required by the Delaware General Corporation Law,
the certificate of incorporation or these by-laws. At any adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the original meeting. Requirements of notice at any
adjourned meeting are governed by Section 2.4 hereof. Withdrawal of stockholders
from any meeting shall not cause failure of a duly constituted quorum at that
meeting.
Section 2.9 PROXIES. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period. Every proxy must be signed
by the stockholder or his attorney-in-fact. A duly executed proxy shall be
irrevocable if it states that it is irrevocable, and if, and only as long as, it
is coupled with an interest sufficient in law to support
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an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
Section 2.10 VOTING OF STOCK. Subject to the provisions of the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of the voting stock held by
such stockholder.
Section 2.11 VOTING OF STOCK BY CERTAIN HOLDERS. Persons holding stock
in a fiduciary capacity shall be entitled to vote the shares so held. Persons
whose stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee or his proxy may represent such
stock and vote thereon. Shares of its own stock belonging to the corporation or
to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the corporation, shall neither be entitled to vote nor counted for quorum
purposes, but shares of its stock held by the corporation in a fiduciary
capacity may be voted by it and counted for quorum purposes.
Section 2.12 CONSENT OF STOCKHOLDERS. (a) Unless otherwise provided
in the certificate of incorporation, any action required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
corporation by delivery to its principal place of business, or to an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the corporation's
registered office in Delaware shall be by hand or by certified or registered
mail, return receipt requested.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this section to the
corporation, written consents signed by a sufficient
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number of holders to take such action are delivered to the corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office in Delaware shall be by hand or by certified or
registered mail, return receipt requested.
(c) Prompt notice of the taking of any corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented thereto in writing.
Section 2.13 VOTING BY BALLOT. Voting in any election of directors
may, if permitted by the certificate of incorporation, be by voice vote, and
voting on any other question shall be by voice vote unless, in each case, the
presiding officer shall order or any stockholder shall demand that voting be by
ballot.
Section 2.14 INSPECTORS. The board of directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election to act at
the meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, or upon the request of any
stockholder shall, appoint one or more inspectors. In case any person who may
be appointed as an inspector fails to appear or act, the vacancy may be filled
by appointment made by the directors in advance of the meeting or at the meeting
by the person presiding thereat. Each inspector, if any, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability. The inspectors, if any, shall determine the number
of shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found by him or
them.
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ARTICLE III
DIRECTORS
Section 3.1 GENERAL POWERS. The business of the corporation shall be
managed by or under the direction of its board of directors, except as otherwise
provided in the certificate of incorporation.
Section 3.2 NUMBER AND QUALIFICATIONS. The number of directors of the
corporation shall be one (1) or such other number as may be determined from time
to time by the board of directors of the corporation at a duly held meeting
thereof. Directors need not be stockholders of the corporation, citizens of the
United States or residents of the State of Delaware.
Section 3.3 ELECTION AND TERM. The board of directors shall be
elected at the annual meeting of the stockholders of the corporation and shall
hold office until their successors are elected and qualified or until their
earlier death, resignation or removal. Any director may resign at any time upon
written notice to the corporation. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the next
annual meeting of stockholders and until their successors are elected and
qualified or until their earlier death, resignation or removal. In the interim
between annual meetings of stockholders or of special meetings of stockholders
called for the election of directors and/or for the removal of one or more
directors and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the board of directors, including vacancies
resulting from the removal of directors, may be filled by the vote of a majority
of the remaining directors then in office, although less than a quorum, or by
the sole remaining director.
Section 3.4 REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately
after, and at the same place as, the annual meeting of stockholders. Meetings
of the board of directors may be held either within or without the State of
Delaware. The board of directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other notice than such
resolution.
Section 3.5 SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the President or any director.
The person or persons calling such special meeting of the board of directors
shall fix a place, either within or without the State of Delaware, as the
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place for holding such special meeting of the board of directors.
Section 3.6 NOTICE. Notice of any special meeting stating the time
and place of such meeting shall be given at least three days previous thereto by
written notice delivered personally or sent by mail or overnight express service
to each director at his business address. Such notice shall be deemed to be
delivered when deposited in the United States mail or given to such overnight
express service so addressed, with postage thereon prepaid. Notice need not be
given to any director who submits a written waiver of notice signed by him
either before or after any meeting. The attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of directors need be specified
in the notice or waiver of such meeting.
Section 3.7 QUORUM. A majority of the number of directors fixed by or
determined in accordance with these by-laws (or of the members of any committee
in the case of a meeting of a committee of the board of directors) shall
constitute a quorum for the transaction of business at any meeting of the board
of directors or of such committee, provided, however, that if less than a
majority of such number of directors are present at said meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice. Interested directors may be counted in determining the presence of a
quorum at a meeting of the board of directors or of a committee thereof.
Section 3.8 MANNER OF ACTING. The vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors or of a committee of the board, as the case may be.
Section 3.9 ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting if all the members of the board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 3.10 COMPENSATION, The board of directors shall have
authority to establish reasonable compensation of all
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directors for services to the corporation as directors, officers or otherwise.
Section 3.11 LIABILITY FOR UNLAWFUL PAYMENT OF DIVIDEND. In case of
any willful or negligent violation of the provisions of sections 160 or 173 of
the Delaware General Corporation Law regarding the payment of dividends, any
director who may have been absent when the same was done, or who may have
dissented from the act or resolution by which the same was done, may exonerate
himself from such liability by causing his dissent to be entered on the books
containing the minutes of the proceedings of the directors at the time the same
was done, or immediately after he has notice of the same.
Section 3.12 TELEPHONE MEETINGS. Members of the board of directors or
of any committee thereof may participate in a meeting of the board by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at the meeting.
Section 3.13 REMOVAL. Any director or the entire board of directors
may be removed with or without cause by the holders of a majority of the shares
then entitled to vote at an election of directors.
Section 3.14 COMMITTEES. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. Any
such committee, to the extent provided in the resolution of the board of
directors, shall have and may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation,
to the extent permitted under the Delaware General Corporation Law.
ARTICLE IV
OFFICERS
Section 4.1 NUMBER. The officers of the corporation shall be a
President, a Treasurer, a Secretary, and such Vice Presidents, Assistant
Treasurers, Assistant Secretaries or other officers as may be elected by the
board of directors. Any two or more offices may be held by the same person.
Section 4.2 ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at the first
meeting of the board of
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directors held after each annual meeting of stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as convenient. New offices may be created and filled at any meeting
of the board of directors. Each officer shall hold office until his successor
is elected and has qualified or until his earlier death, resignation or removal.
Any officer may resign at any time upon written notice to the corporation.
Election of an officer shall not of itself create contract rights.
Section 4.3 REMOVAL. Any officer elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4.4 VACANCIES. A vacancy in any office occurring because of
death, resignation, removal or otherwise, may be filled by the board of
directors.
Section 4.5 THE PRESIDENT. The President shall be the chief executive
officer of the corporation and, subject only to the board of directors, shall
have general authority over, and general management and control of, the
property, business and affairs of the corporation. The President shall preside
at all meetings of the stockholders and of the board of directors. The
President shall have authority to vote all shares of stock of any other
corporation standing in the name of the corporation, at any meeting of the
stockholders of such other corporation or by written consent of the stockholders
of such other corporation, and may, on behalf of the corporation, waive any
notice of the calling of any such meeting, and may give a written proxy in the
name of the corporation to vote any or all shares of stock of such other
corporation owned by the corporation at any such meeting. The President shall
perform such other duties as may be prescribed by the board of directors from
time to time.
Section 4.6 THE VICE PRESIDENTS. Each of the Vice Presidents, if any,
shall report to the President or such other officer as may be determined by the
board of directors. Each Vice President shall have such duties and
responsibilities as from time to time may be assigned to him by the President or
the board of directors.
Section 4.7 THE TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation from any
source
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whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these by-laws; (b) in general, perform all
the duties incident to the office of the treasurer and such other duties as may
from time to time be assigned to him by the President or the board of directors.
In the absence of the Treasurer, or in the event of his incapacity or refusal to
act, or at the direction of the Treasurer, any Assistant Treasurer may perform
the duties of the Treasurer.
Section 4.8 THE SECRETARY. The Secretary shall: (a) record all the
proceedings of the meetings of the stockholders and board of directors in one or
more books kept for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all certificates for shares of
stock prior to the issuance thereof and to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these by-laws; (d) keep a register of the post office
address of each stockholder which shall be furnished to the Secretary by such
stockholder; (e) have general charge of the stock transfer books of the
corporation and (f) in general, perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the President or the board of directors. In the absence of the Secretary, or in
the event of his incapacity or refusal to act, or at the direction of the
Secretary, any Assistant Secretary may perform the duties of Secretary.
ARTICLE V
CONTRACTS, LOANS
CHECKS AND DEPOSITS
Section 5.1 CONTRACTS. Except as otherwise determined by the board of
directors or provided in these by-laws, all deeds and mortgages made by the
corporation and all other written contracts and agreements to which the
corporation shall be a party shall be executed in its name by the President or
any Vice President.
Section 5.2 LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
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Section 5.3 CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
Section 5.4 DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
ARTICLE VI
CERTIFICATES FOR SHARES OF
STOCK AND THEIR TRANSFER
Section 6.1 CERTIFICATES FOR SHARES OP STOCK. Certificates
representing shares of stock of the corporation shall be in such form as may be
determined by the board of directors. Such certificates shall be signed by the
President or any Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary. If any such certificate is manually
countersigned by a transfer agent other than the corporation or its employee,
any other signature on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue. The name of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the books of the corporation. All certificates surrendered
to the corporation for transfer shall be cancelled and no new certificates shall
be issued until the former certificate for a like number of shares shall have
been surrendered and cancelled, except that in case of a lost, destroyed or
mutilated certificate, a new certificate may be issued therefor upon such terms,
indemnity and surety to the corporation as the board of directors may prescribe.
Section 6.2 TRANSFER OF SHARES OF STOCK. Transfers of shares of stock
of the corporation shall be made on the books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary
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of the corporation, and on surrender for cancellation of the certificate for
such shares. The person in whose name shares of stock stand on the books of the
corporation shall be deemed the owner thereof for all purposes as regards the
corporation.
Section 6.3 TRANSFER AGENTS AND REGISTRARS. The board of directors
may appoint one or more transfer agents or assistant transfer agents and one or
more registrars of transfers, and may require all certificates for shares of
stock of the corporation to bear the signature of a transfer agent or assistant
transfer agent and a registrar of transfers. The board of directors may at any
time terminate the appointment of any transfer agent or any assistant transfer
agent or any registrar of transfers.
ARTICLE VII
INDEMNIFICATION
Section 7.1 DIRECTORS AND OFFICERS. (a) The corporation shall
indemnify any person who was or is a party or is threatened to be made party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or officer of the
corporation, or is or was serving at the request of the
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corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery of the State of Delaware or such other court shall deem proper.
(c) To the extent that any person referred to in paragraphs (a) and
(b) of this Section 7.1 has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to therein or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraphs (a) and (b) of this section
7.1 (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b) of this
section 7.1. Such determination shall be made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding or (ii) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
provided in this section 7.1.
(f) The indemnification and advancement of expenses provided by or
granted pursuant to this section 7.1 shall not
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be deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office.
(g) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this section 7.1.
(h) For purposes of this section 7.1, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this section.
(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(j) Unless otherwise determined by the board of directors, references
in this section to "the corporation" shall not include in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or
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is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this section
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
Section 7.2 EMPLOYEES AND AGENTS. The board of directors may, by
resolution, extend the indemnification provisions of the foregoing section 7.1
to any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was an employee or agent of the corporation, or is or was
serving at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
ARTICLE VIII
FISCAL YEAR
Section 8.1 The fiscal year of the corporation shall end on December
31 or on such other date as the board of directors may from time to time
determine by resolution.
ARTICLE IX
DIVIDENDS
Section 9.1 The board of directors may from time to time declare, and
the corporation may pay, dividends on its outstanding shares of stock in the
manner and upon the terms and conditions provided by law and its certificate of
incorporation.
ARTICLE X
SEAL
Section 10.1 The corporate seal of the corporation shall be in the
form of a circle and shall have the name of the corporation and the words
"Corporate Seal, Delaware" written therein or inscribed thereon.
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ARTICLE XI
WAIVER OF NOTICE
Section 11.1 Whenever any notice whatever is required to be given
under any provision of these by-laws or of the certificate of incorporation or
of the Delaware General Corporation Law, a written waiver thereof, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transactions of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders or directors or of a committee of
the board of directors need be specified in any written waiver of notice,
ARTICLE XII
AMENDMENTS
Section 12.1 These by-laws may be altered, amended or repealed and new
by-laws may be adopted at any meeting of the board of directors of the
corporation by a majority of the whole board of directors then in office, or by
the stockholders.
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Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF SERIES A PREFERRED STOCK
OF
SERACARE, INC.
-----------------------------------------
Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware
-----------------------------------------
I, the undersigned, Barry D. Plost, being the President of SeraCare,
Inc., a Delaware corporation (the "Corporation"), hereby certify pursuant to
Section 151(g) of the General Corporation Law of the State of Delaware that:
1. The name of the Corporation is SeraCare, Inc.
2. The Certificate of Incorporation of the Corporation was filed
with the Secretary of State on October 1, 1991.
3. Pursuant to authority thereby vested in the Board of Directors
by Article Sixth of the Corporation's Restated Certificate of Incorporation,
the Board of Directors adopted the following resolutions on July 9, 1996
establishing a series of up to 3,600 shares of Preferred Stock of the
Corporation to be known as Series A Preferred Stock:
"RESOLVED, that pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware and Article Sixth of the
Corporation's Restated Certificate of Incorporation, there is hereby
established a series of the Corporation's Preferred Stock having the
following terms and designations:
(i) The distinctive serial designation of this series shall be
"Series A Preferred Stock" (hereinafter called "Series A"). Each share of
Series A shall be identical in all respects with the other shares of Series A.
(ii) The number of shares in Series A shall initially be 3,600 which
number may from time to time be increased or decreased (but not below the number
then outstanding) by the Board of Directors. Shares of Series A redeemed or
purchased by the Corporation shall be canceled and shall revert to authorized
but unissued Preferred Stock undesignated as to series.
(iii) The holders of the Series A shall be entitled to receive
dividends, payable monthly, at the rate of eight percent (8%) of the Redemption
Price (as defined below) per share per annum, payable in preference to all other
shareholders. Such dividends shall be cumulative, and no dividend shall be paid
on the shares of any other class unless the current dividend, and
<PAGE>
all arrears of dividends, if any, on the shares of the Series A shall have been
paid, or provision shall have been made for the payment thereof. The holders of
shares of Series A shall at no time have any other right to further dividends of
any kind.
(iv) Subject to adjustment as set forth below, the Corporation shall
redeem the outstanding shares of the Series A at a price per share (the
"Redemption Price") equal to (a) Five Hundred Fifty Thousand and No/100
($550,000), less an amount which equals the difference between the cash, bank
accounts (to the extent that checks or drafts have not been written) and
accounts receivable (the "Assigned Assets") delivered or assigned under the
Contract for Exchange of Corporate Stock (the "Agreement"), dated July 9, 1996
(the "Assumed Indebtedness"), DIVIDED BY (b) 3,600, and rounded up to the next
$0.01. The Corporation shall redeem 100 shares per month (in pro rata portions
from each holder of Series A according to the respective number of shares of
Series A held by such holder), beginning on the closing date under the
Agreement. On or promptly following any redemption date, each holder of shares
of Series A redeemed shall surrender the certificate evidencing such shares to
the Corporation. If after the closing under the Agreement, the assignee fails
to pay an Assumed Indebtedness or the Corporation learns of any indebtedness or
other liability which was not disclosed prior to the closing, the Redemption
Price shall be reduced by an amount equal to (x) the amount of money the
Corporation is required to pay to satisfy said assumed indebtedness or
undisclosed liability, DIVIDED BY (y) 3,600, and rounded up to the next $0.01.
In such event, a new amortization schedule shall be prepared and the balance of
the aggregate Redemption Price as reduced shall be paid upon redemption of the
remaining outstanding Series A shares.
(v) Except as required by law, the holders of the Series A shall not
be entitled to vote on matters presented to the holders of the junior stock or
of any other Series or class of Preferred Stock which is entitled to vote by its
designations.
(vi) The shares of the Series A shall not have any relative,
participating, optional or other special rights and powers other than as set
forth herein."
2
<PAGE>
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, the undersigned,
being the President and Secretary of the Corporation, do hereby execute this
Certificate of Designation, here declaring that this is their free act and
deed and that the facts stated herein are true and accordingly have hereunto
set their hands as of this 9th day of July, 1996.
SERACARE, INC.
By: /s/ Barry Plost
------------------------------------------
Barry D. Plost, Chairman of
the Board, President and Chief
Executive Officer
ATTEST:
/s/ Jerry L. Burdick
- ---------------------------
Jerry L. Burdick
Secretary
3
<PAGE>
STATE OF DELAWARE PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "SERACARE, INC.", FILED IN THIS OFFICE ON THE TENTH DAY OF JULY,
A.D. 1996, AT 2 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[STATE SEAL]
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
2275058 8100 8021075
DATE:
960201132 07-10-96
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") dated February 5, 1996, is
entered into by and between American Blood Institute, Inc., a Delaware
corporation, AKA SeraCare (the "Company") and Barry Plost (the "Employee").
l. EMPLOYMENT AND EFFECTIVENESS. The Company hereby employs the
Employee, and the Employee accepts employment, as of the date first set forth
above (the "Commencement Date"), under the terms and conditions of this
Agreement.
2. TERM. The employment of the Employee pursuant to this Agreement
shall begin as of the Commencement Date and shall continue to and through the
date which is the third anniversary of the Commencement Date (the "Employment
Term"), unless terminated earlier as provided herein.
3. POSITION AND DUTIES. The Employee shall be employed as Chairman
of the Board, President, and Chief Executive Officer and shall have the duties,
responsibilities and authority as may from time to time be assigned by the
Company's Board of Directors that are consistent with and normally associated
with such positions. The Employee shall devote sufficient amounts of his
business time, effort and energies exclusively to the business of the Company to
fulfill the duties of his office. Employee shall not be employed by or act in
any capacity on behalf of any company which competes with the Company's plasma
collection business and shall not serve as an active principal or director or
officer or employee of any other company or entity without the prior written
consent of the Board of Directors, except that the Employee may serve as a
director or officer of any trade association, civic, educational or charitable
organization without such consent. The Employee shall also serve without
additional compensation as an officer and director of the Company and any of its
subsidiaries, if so elected or appointed, but if not so elected or appointed the
compensation hereunder shall in no way be affected. The Employee shall devote
his or her best efforts to advancing the interests of the Company.
4. COMPENSATION AND BENEFITS.
(a) During the Employment Term, the Company shall pay the Employee a
base salary at the annual rate of seventy-five thousand dollars ($75,000) (the
"Base Salary"), payable in accordance with the normal payroll practices
established by the Company. The Employee shall be entitled to such increases
in the Base Salary as may be determined from time to time by the Company's
Board of Directors or pursuant to its delegation. If the Base Salary is
increased during the
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<PAGE>
Employment Term, the new salary shall thereafter constitute the "Base Salary"
for purposes of this Agreement.
(b) In addition to Base Salary, the Employee shall be entitled to the
following stock option grants:
(i) Options to purchase 56,147 shares of common stock of the Company
for a calculated price which is the mean average between $.74 and the weighted
average of the closing bid price for the Company's common stock for the thirty
trading days prior to the vesting date. The vesting date shall be an
anniversary date of January 24 and, contingent upon the Company achieving the
performance criteria set forth in section (v) below, the options will vest one-
third each year beginning on January 24, 1997 and shall remain excercisable by
Employee for a period of five (5) years from the vesting date.
(ii) Options to purchase 50,000 shares of common stock of the
Company for the price of $1.00 per share which shall vest on the one year
anniversary of the date of this Agreement in 1997, contingent upon the Company
achieving the performance criteria set forth in section (v) below, and shall
remain excercisable by Employee for a period of five (5) years from the vesting
date.
(iii) Options to purchase 50,000 shares of common stock of the
Company for the price of $2.00 per share which shall vest on the second year
anniversary of the date of this Agreement in 1998, contingent upon the Company
achieving the performance criteria set forth in section (v) below, and shall
remain excercisable by Employee for a period of five (5) years from the vesting
date.
(iv) Options to purchase 50,000 shares of common stock of the
Company for the price of $3.00 per share which shall vest on the third year
anniversary of the date of this Agreement in 1999, contingent upon the Company
achieving the performance criteria set forth in section (v) below, and shall
remain excercisable by Employee for a period of five (5) years from the vesting
date.
(v) The options granted in sections (i), (ii), (iii), and (iv) above
shall vest only if Employee is an employee of the Company on the date the
options are to vest and then only if the Company has achieved the projected
operating results as reflected in the Five Year Post Emergence Forecast, a copy
of which is attached hereto. However, if the Company fails to obtain the outside
funding for the acquisition centers in a timely fashion, then the calculation of
the performance criteria will be made utilizing the projected results of the
base six centers for the year (which includes corporate overhead) plus a pro-
rata calculation of the projected operating results of the
2
<PAGE>
acquisition centers for the year based upon the percentage of the outside
secondary financing actually received by the Company compared to the projected
financing. For example, if the projections contemplate the acquisition of 12
centers during year one utilizing outside financing of $2,400,000 ($200,000 per
center) and only $1,200,000 or 504 is actually funded, then the performance
target for the option vesting will equal 100% of the projected operating results
from the six centers ($365,556), plus 50% of the one year projected operating
results of the projected acquisition centers ($50% x $450,198 = $225,099), or a
total of $590,655. If any of the options do not vest on the vesting date, such
option rights shall terminate immediately and be of no further effect.
(vi) Options to purchase 100,000 shares of common stock in the
Company for the price of $1.00 per share, such options to vest upon the
execution of this Agreement and remain in effect for a period of 5 years from
such date.
(vii) If the Company is sold, merged into, or consolidated with
another entity, or the Company is substantially reorganized by a 50% or more
change in ownership (exclusive of the conversion of Debtors Notes), and either
Employee s position, duties, or compensation is reduced, then all options
granted under this Agreement shall become immediately vested and exercisable.
(c) The Employee shall be eligible to participate in other employee
benefit plans maintained by the Company during the Employment Term, and to
receive all fringe benefits, for which his or her status and level of employment
qualify in accordance with the Company's usual policies and arrangements and the
terms of such plans, policies and arrangements. Such benefits and plans may
include vacation pay, medical insurance programs and retirement programs.
(d) The Company will pay to or on behalf of Employee, the costs, up to a
maximum of $10,000 per year, of Employee's Blue Cross/ Blue Shield medical
insurance coverage and a term life insurance policy in the face amount of
$500,000.
5. TERMINATION. This Agreement shall terminate upon the earlier of
the following:
(a) The date provided under the provisions of Section 2 hereof.
(b) Upon the determination by the Board of Directors that good cause
exists to justify the termination of the Employee for gross misconduct. For
purposes of this Agreement, "gross misconduct" shall be defined as theft,
3
<PAGE>
dishonesty, alcohol or drug abuse, unethical business conduct, gross negligence,
commission of an illegal act detrimental to the Company or its reputation,
fraud, or a material breach of this Agreement by Employee. Upon any termination
under this subsection (b) Employee shall be paid an amount equal to thirty days
of his base salary, and no other compensation or benefits other than the receipt
of his vested options.
(c) At the Company's option, upon the occurrence of a physical or mental
condition which prevents the Employee from performing the duties for which he or
she is responsible for a period of 120 consecutive days or 180 days in total
during the term of this Agreement,
(d) Upon the determination by the Board of Directors that Employee has
engaged in acts detrimental to the Company, including without limitation
insubordination, failure to comply with instructions, and actions or
associations which materially and adversely affect the Company's reputation,
business, stock price, or ability to raise capital, and Employee has failed to
cease or correct such actions within ten (10) days of his receipt of written
notice from the Board of Directors. In the event of a termination under this
subsection (d) Employee shall be entitled to severance pay equal to his base
salary amount for the lesser of twelve months or the remaining term of this
Agreement and his vested options, and no other compensation or benefits.
(e) Upon Employee's death, voluntarily ceasing to perform his duties,
other than by reason of a disability under subsection (d), or agreement to
terminate this Agreement.
Except as specified above, all rights to compensation and options which have not
vested under this Agreement shall cease upon the termination of this Agreement.
6. COVENANTS.
(a) The Employee shall not, during the term of the employment or at
any time thereafter, directly or indirectly, publish or disclose to any person,
firm, corporation or other entity, whether or not a competitor of the Company,
or use other than on behalf of the Company any confidential information
concerning the assets, business or affairs of the Company unless required by a
court of law or governing governmental authority pursuant to a specific right to
know. Confidential information includes, without limitation, any trade secrets,
sources of supply, costs, pricing practices, customer lists, financial data,
employee information, strategic plans, or organizational data.
4
<PAGE>
(b) The Employee shall not during the Employment Term and for a
period of two (2) years thereafter, engage in or be interested in (as owner,
partner, shareholder, employee, director, officer, agent, consultant or
otherwise, except as a less than 1% shareholder of a publicly listed company)
with or without compensation, any business which is competitive with the
business being conducted by the Company at any time during the Employee's
employment, including any business which owns or operates a blood collection
center within 50 miles of any of the Company's collection centers. The Employee
shall not during this time period, directly or indirectly, solicit or contact
any employee of the Company, with the view to induce or encourage such employee
to leave the employ of the Company for the purpose of being hired by the
Employee, an employer affiliated with the Employee or any competitor of the
Company.
(c) Employee agrees that all files, records, documents and items
relating to the Company's business, whether prepared by Employee or others, are
the property of the Company and, upon termination of this Agreement or
Employee's employment, Employee shall promptly return to the Company any and all
such documents and any other property of the Company which is in the custody or
control of Employee.
(d) Employee agrees that during the term of this Agreement and
afterwards, Employee shall not, in any way or by any means, disrupt, damage,
disparage, impair or interfere with the Company's business or its reputation.
(e) The Employee acknowledges that the provisions of this Section 5
are reasonable and necessary for the protection of the Company and that the
Company will be irrevocable damaged if such covenants are not specifically
enforced. Accordingly, the Employee agrees that, in addition to any other
relief or remedies available to the Company in the form of actual or punitive
damages, the Company shall be entitled to seek and obtain injunctive relief from
a court of competent jurisdiction for the purposes of restraining the Employee
from any actual or threatened breach of such covenants.
7. INDEMNIFICATION. The Company shall indemnify, defend and hold
the Employee harmless, to the maximum extent permitted by law, from any and all
claims, litigation or suits arising out of the activities of the Employee
reasonable taken in the performance of the duties hereunder, including all
reasonable expenses and professional fees that may relate thereto. In addition,
the Company agrees to seek appropriate directors and officers liability
insurance for errors and omissions of such type and in such amount as is
customary for similarly situated companies, if available at a reasonable cost.
5
<PAGE>
8. ARBITRATION. Any controversy or dispute between the Company and
Employee involving the construction, application or breach of any of the terms,
provisions or conditions of this Agreement shall be resolved by binding
arbitration in accordance with the agreement of the parties or, if no agreement
is reached, by the rules of the American Arbitration Association then in effect
(the "AAA Rules"). Such arbitration shall take place in Los Angeles, California
and shall be conducted by three arbitrators selected from a panel of arbitrators
experienced in such disputes as provided by the AAA, with one arbitrator
selected by each party and the third arbitrator selected by the other two
arbitrators within the time limits established by the AAA Rules. The cost of
such arbitration, including the associated attorneys' fees, arbitrator fees,
filing fees, AAA fees, and other costs shall be borne by the losing party.
9. EMPLOYEE'S REMEDIES. In the event the Company terminates
Employee's employment other than pursuant to the provisions of Section 5 of this
Agreement, the Employee's complete and exclusive remedy shall be the payment in
cash, within 30 days of the termination, of the unpaid balance of the full
compensation which would be due under the full term of this Agreement, including
base salary and options, and the continuation of Employee's then current medical
and insurance benefits for a period of twelve months from the date of the
termination.
10. GENERAL TERMS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
agreements made and to be performed in that State.
(b) NOTICE. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when delivered personally, or
one day after being sent by commercial overnight carrier, or three business days
after mailing by U. S. registered mail, return receipt requested, to the parties
at the following addresses or at such other address as a party may specify by
notice to the other.
If to the Employee: Barry Plost
10430 Wilshire Blvd., Suite 1103
Los Angeles, CA 90024
If to the Company: American Blood Institute, Inc.
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
6
<PAGE>
with a copy to: Furman Usher, Inc.
1901 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067
(c) ENTIRE AGREEMENT: AMENDMENT. This Agreement shall supersede all
existing agreements, whether written or oral, between the Employee and the
Company relating to the terms of the Employee's employment with the Company. It
may not be amended except by a written agreement signed by both parties.
(d) WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver thereof
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(e) ASSIGNMENT. Subject to the limitation below, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by the Employee, and shall be assignable by the Company only
to any corporation or other entity resulting from the reorganization, merger or
consolidation of the Company with any other corporation or entity or any
corporation or entity to or with which the Company's business or substantially
all of its assets may be sold, exchanged or transferred, and it must be so
assigned by the Company to, and accepted as binding upon it by, such other
entity in connection with any such reorganization, merger, consolidation, sale,
exchange or transfer.
(f) HEADINGS. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
(g) WITHHOLDING. Employee authorizes Company to withhold and/or deduct
from his compensation (including, without limitation, salary and wages),
deductions to recover any amounts loaned by the Company to Employee or paid on
Employee's behalf which, under the terms of said loan or payment, must be repaid
to the Company including loans of money and the value of Company property taken
but not returned by Employee.
(h) SEVERABILITY. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, the remaining provisions shall continue
in full force and effect and, to the extent required, shall be modified to
preserve the validity and intent of this Agreement.
(i) ATTORNEYS' FEES; In the event of any litigation or arbitration between
or among the parties
7
<PAGE>
hereto arising from or relating to this Agreement, the prevailing party shall be
entitled to recover its costs, including reasonable attorneys' fees, incurred in
connection with such litigation or arbitration. Any judgment shall include an
provision which shall entitle the judgment creditor to recover its costs,
including reasonable attorneys' fees, incurred to enforce the judgment.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
American Blood Institute, Inc.
By: /s/ JERRY BURDICK
---------------------------------
Jerry Burdick
Title: Executive Vice President
Employee
/s/ BARRY PLOST
---------------------------------
Barry Plost
8
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is intended to be the
operative agreement by and between American Blood Institute, Inc., AVRE, Inc.,
and Binary Associates, Inc. AKA SeraCare (referred to collectively herein
as the "Corporation") and Jerry L. Burdick ("Burdick"). This Agreement
is conditional upon confirmation of a Plan of Reorganization for the
Corporation and approval of such Plan of Reorganization by the Federal
Bankruptcy Court. The effective date of this Agreement shall be the
Effective Date of the Plan of Reorganization.
l. EMPLOYMENT AS VICE PRESIDENT OF FINANCE. The
Corporation hereby agrees to retain Burdick and Burdick hereby agrees to be
employed as Vice President of Finance for the Plasma Operations to be acquired
by the Corporation via the Plan of Reorganization regarding American Blood
Institute, Inc., AVRE, Inc. and Binary Associates, Inc. In such capacities,
Burdick shall perform all of the normal duties and responsibilities of a Vice
President of Finance. In the performance of his duties and responsibilities,
Burdick shall at all times be under the direction of the President and the
Board of Directors of the Corporation. Burdick shall perform his duties and
responsibilities in accordance with all reasonable rules, regulations and
policies adopted by the Board of Directors of the Corporation.
2. INDEMNIFICATION ; INSURANCE AGREEMENT The Corporation warrants
and assures Burdick that the Charter of the Corporation contains a
provision which provides for indemnification of officers by the corporation to
the maximum extent permissible under the laws of the jurisdiction in which
the Corporation is incorporated. Further, the Corporation agrees to either or
both of the following: (A) Enter into an Indemnification Agreement provided
that such Indemnification Agreement shall be modified if necessary to conform
with the laws of the jurisdiction in which the Corporation is incorporated;
(B) Obtain and maintain in full force and effect at Corporation's sole
expense, such director's and officer's liability insurance for errors and
omissions of such type and in such amount as is customary for similarly
situated companies, if available at reasonable cost.
3. EXTENT OF SERVICES. Burdick agrees to devote all of his time and
efforts on behalf of the business of the Corporation. Without limiting
the foregoing, during the term of this Agreement, Burdick shall make written
request to the Board of Directors and must obtain written approval from such
Board if Burdick wishes to devote any of his time to any other business
effort, whether or not such business effort is in direct competition with the
Corporation.
4. COMPENSATION. On the effective date of this contract, Burdick
shall be paid at the rate of $125,000 per year payable bi-weekly. There
shall be a quarterly salary adjustment whereby any pre-tax earnings over
$100,000 per quarter shall be paid to the officers of the Reorganized
Debtor (SeraCare) up to a maximum annual amount of $25,000 to Alfred J. Moran,
Jr. and $10,000 each for Jerry L. Burdick and Brian Olson. The
distribution of the quarterly salary adjustment shall be on a pro rata basis.
<PAGE>
5. PERFORMANCE BONUS. There shall also be a Management Bonus
Pool which will allocate ten percent (10%) of pre-tax earnings which are in
excess of $920,549 in year one following the Effective Date of the
Reorganization Plan, $2,590,160 in year two, $4,384,187 in year three,
$6,244,536 in year four, and $8,166,626 in year five to a bonus pool to be paid
pro rata to management on the basis of salaries. Burdick shall be a participant
in this Management Bonus Pool during the term of this agreement.
6. FRINGE BENEFITS. Burdick shall receive four (4) weeks paid
vacation per year during the course of this Agreement. Burdick will also
receive company paid: sick pay, group health insurance, dental care, vision
care, disability insurance, life insurance and such other benefits in the
amounts and as may be provided in the ordinary course to the Corporation's
other senior executives.
7. STOCK AND WARRANT GRANT. Burdock shall be granted 63,165
shares of common stock of SeraCare (SeraCare is herein defined as AVRE, Inc.,
Binary Associates, Inc., American Blood Institute, Inc. and any post emergence
replacement or successor corporation or entity into which the Plasma Operations
of Avre, Inc. and Binary Associates, Inc. are transferred, placed, controlled,
merged or which are acquired by) and stock options to purchase 42,110 shares
of common stock in SeraCare for a calculated price which is the mean average
between $.74 and the weighted average of the closing bid price for the
Company's stock for the thirty trading days prior to the vesting date. The
vesting date is defined as the anniversary date of the Effective date of the
Reorganization Plan for SeraCare. The options will vest at the rate of one-
third per year and are contingent upon the company achieving the
projected operating results reflected in the Confidential Memorandum
attached herewith except that if the indicated funding is not provided in
timely fashion for the acquisition of the indicated centers reflected in that
Confidential Memorandum, then a calculation will be made utilizing the
projected results of the base six centers (which includes corporate
overhead) plus a pro rated calculation of the projected operating results
of the acquisition centers based upon the percentage of the secondary
financing actually received by SeraCare. For example, the projections
contemplate the acquisition of twelve centers during year one. Accordingly,
at the rate of $200,000 per center this acquisition program would require
$2,400,000. If $1,200,000 or 50% is actually funded, then a
calculation will be made utilizing 100% of the year one operating results
projected for the base six centers ($365,556) plus 50% of the year one
projected operating results for the acquisition centers (50% X $450,198 =
$225,099) with the summation of the two being ($365,556 + $225,099 = $590,655).
Accordingly, $590,655 will be the objective criteria for vesting of one
third of the options if $1,200,000 of secondary financing is actually
received by SeraCare in year one. If SeraCare is sold, merged,
consolidated with another company or reorganized to the extent that there
is a 50% or more change in ownership, the options will become immediately
vested and exercisable.
8. TERM. This Agreement is conditional upon confirmation of the
Plan of Reorganization for American Blood Institute, Inc., AVRE, Inc. and
Binary Associates, Inc. and approval by the Federal Bankruptcy Court. The
term shall be for the three year period beginning on the "Effective
Date" of the Confirmed Plan of Reorganization and ending thirty six
months after the "Effective Date" unless this Agreement is terminated at an
earlier date per Section 9.
<PAGE>
9. TERMINATION.
A. FOR "CAUSE". The Corporation may terminate this Agreement
upon thirty days notice for cause. "Cause" is defined for the purpose of this
agreement as: death; dishonesty; theft; conviction of a felony; alcohol or drug
abuse; unethical business conduct; and a material breach of this Agreement
by Burdick. If Burdick is terminated for "Cause" as herein defined, Burdick
shall receive thirty days notice with pay, and no other compensation other than
the receipt of any options which have already vested.
B. FOR "ACTIONS DEEMED NOT IN THE BEST INTERESTS". The
Corporation may also terminate this Agreement if Burdick fails for any reason,
within ten days after receipt by Burdick of written notice thereof from the
Board of Directors, to correct, disassociate, cease or otherwise alter any
actions, associations, insubordination, failure to comply with instructions,
failure or other action or omission to act which, in the opinion of the
Board of Directors, materially affects or may materially affect the
Corporation's business operations. "Actions Deemed Not in the Best
Interests" shall also include the association by Burdick with
individuals, companies, organizations or activities which the Board of
Directors has a reasonable basis for believing does or could have a material
negative affect on the Corporations operations, it's market price per share, or
the Corporation's ability to raise additional capital. If Burdick is
terminated for "Actions Deemed Not in the Best Interests" as herein defined,
Burdick shall receive twelve months severance pay and no other compensation
other than the receipt of any options which have already vested as of the
termination date.
C. OTHER EVENTS. Other events which will result in the
termination of this contract are:
1. The date on which Burdick agrees to terminate this
Agreement.
2. The disability of Burdick. Disability herein is defined
as being unable to perform the duties hereunder due to
a physical and/or mental condition or impairment for
one hundred eighty (180) consecutive days during the
term of this Agreement or 120 consecutive days in any
365 day period during the term.
3. The date on which Burdick voluntarily ceases to perform
his duties hereunder, other than by reason of a physical or
mental condition prior to the time that a disability occurs.
In the event that the Corporation shall be sold, merged, devolved,
consolidated or materially reorganized (within the term of this Agreement
and Burdick's position is eliminated, the Company will pay to Burdick within
Thirty (30) days of such event the balance of the compensation which would
be due to complete the term of this agreement. In addition, all then
unvested stock options shall become immediately vested and exercisable.
<PAGE>
Any unilateral termination of Burdick by the Corporation other than for
"Cause", "Actions Deemed Not in the Best Interests", or the reasons
indicated in 9.(C)(1) through 9.(C)(3) above shall be considered a
material breach of this agreement, the pre-agreed remedy for which is the
payment in cash within thirty (30) days of such termination, the full
compensation which would be due to complete the three year term of this
agreement, including any and all compensation, warrants, options or bonus
compensation, plus the continuation of benefits for a period of twelve
months. If terminated for "Actions Deemed Not in the Best Interests", the
Corporation must show that it has a reasonable basis for believing that the
actions or associations are or could be materially detrimental to the
Corporation.
10. NO SOLICITATION OF EMPLOYEES. During the period of
this Agreement and for two (2) full years following termination of this
Agreement, Burdick shall not, for any reason either directly or indirectly,
solicit for employment or employ for any other entity any employee of the
Corporation.
11. AGREEMENT NOT TO COMPETE. During the period of this
Agreement and for two (2) full years following termination of this Agreement
(a total of five years), Burdick shall not, for any reason either directly or
indirectly, compete with SeraCare either directly through owning and
operating a plasma center, or by being a significant investor, officer
or key employee of any company which competes with the Corporation. On a
geographic basis, compete is defined to mean being in the plasma collection
business within a fifty mile radius of an existing SeraCare collection center.
12. WITHHOLDING. Burdick authorizes the Corporation to
withhold and/or deduct from his compensation (including, without
limitation, salary and wages), deductions to recover any amounts loaned
by the Corporation to Burdick or paid on Burdick's behalf which, under the
terms of said loan or payment, must be repaid to the Corporation including,
without limitation, loans of money and the value of any of the Corporations
property taken but not returned by Burdick. Corporation shall also have the
expressed right to deduct all sums required for federal, state or local
income, Social Security or other taxes now applicable or that may be enacted in
the future.
13. NOTICE. Any notice provided to be given pursuant to
this Agreement shall be in writing and shall be deemed duly given three
days after deposited in the mail, certified mail, return receipt requested, to
the party to receive such notice at the address specified below:
The Corporation: American Blood Institute, Inc.
DBA - SeraCare
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
For Burdick: Jerry L. Burdick
1106 First Street
Hermosa Beach, California 90254
14. GOVERNING LAW. The validity of this Agreement interpretation and
the and performance of all of its terms shall be controlled exclusively by the
substantive law of California, including California law concerning the
interpretation and performance of contracts.
<PAGE>
15. ENFORCEABILITY. Any provision of this Agreement which is
invalid, illegal, or unenforceable shall be ineffective only to the extent of
such invalidity, illegality, or unenforceability, without affecting in any way
the remaining provisions hereof or rendering the remaining provisions hereof
invalid, illegal, or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement by the other party shall not be deemed a waiver of that or any
other term, covenant, or condition, nor shall any waiver or relinquishment of
any right or power at any one time or times be deemed a waiver or
relinquishment of that right or power for all or any other times.
17. ARBITRATION. Any controversy between the Corporation and
Burdick involving the construction, application or breach of any of the
terms, provisions, or conditions of this Agreement shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association then in effect (the AAA Rules). Such arbitration shall take
place in Los Angeles, California and shall be conducted by three arbitrators,
one of which shall be selected by each party, and the third of which shall be
selected by the two arbitrators within the time limits established in the AAA
Rules. The decision of the arbitrators may be enforced in any court having
jurisdiction over the party against which enforcement is sought or its assets.
The cost of such arbitration including the associated attorney fees, arbitrator
fees, filing fees, AAA fees and other legal costs shall be borne by the
losing party.
18. TRADE SECRETS, CONFIDENTIAL, AND PROPRIETARY
INFORMATION.
A. Burdick and Corporation acknowledge and agree that during
the term of this Agreement and in the course of the discharge of his duties
hereunder, Burdick shall have access to and become acquainted with
information owned by the Corporation concerning its operation, which
information derives independent economic value from not being generally known
to the public or competitors, and which includes, without limitation: (1)
manufacturing processes, research, and engineering, (2) marketing data and
techniques, (3) trademarks, tradenames, and servicemarks, (4) customer and
client bases and lists, and (5) financial and personnel information.
Said information constitutes Employer's trade secret, confidential and
proprietary information.
B. Burdick agrees that he shall not at any time (during the
period of this agreement or any future time) disclose any such trade secret,
confidential, or proprietary information, directly or indirectly, to any
other person or use it in any way other than as required in the ordinary
course of his employment under this agreement.
C. Burdick further agrees that all files, records,
documents, equipment, and similar items relating to the Corporation's business
(including, without limitation, items containing trade secret,
confidential or proprietary information), whether prepared by Burdick or
others, including all originals and copies, are and shall be returned to the
Corporation upon Burdick's termination.
<PAGE>
D. Burdick further agrees that during the period of his
employment by the Corporation and after termination thereof, he will not
disrupt, damage, disparage, impair, or interfere with the Corporation's
business or its reputation, whether by way of interfering with or
soliciting its employees, disrupting its relationships with or
soliciting clients or customers, agents, representatives, or vendors,
aiding competitors, or by way of any other conduct.
19. NON-ASSIGNABILITY. Burdick may not assign any of his rights or
responsibilities under this Agreement.
20. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Burdick by the Corporation and contains all of
the covenants and agreements between the parties with respect to that
employment in any manner whatsoever. Each party to this Agreement
acknowledges that no representation, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or
binding on either party.
21. MODIFICATIONS. Any modification of this Agreement shall be
effective only if it is in writing and signed by both parties to this Agreement.
22. LEGAL ACTION. In the event of any litigation or
arbitration between or among the parties hereto respecting or arising out of
this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorney's fees incurred after a judgement has been
rendered by a court of competent jurisdiction. Any judgement shall include an
attorneys' fees clause which shall entitle the judgement creditor to recover
attorneys' fees incurred to enforce a judgement hereon, which attorneys' fees
shall be an element of post-judgement costs; the parties agree that this
attorneys' fee provision shall not merge into any judgement.
IN WITNESS WHEREOF, the parties hereto, effective as of November
14, 1995 do hereby authorize and acknowledge that this Agreement be the
effective agreement between the parties. It is understood that this
Agreement will be filed as an amendment to the Reorganization Plan for the
Corporation and will become effective on the Effective Date of such Plan of
Reorganization.
Accepted By: /s/ Kenneth R. Levine
----------------------------
Kenneth R. Levine
First Equity Capital Securities, Inc.
Placement Agent
/s/ Jerry L. Burdick /s/ Alfred J. Moran, Jr.
- ---------------------- -------------------------------------
Jerry L. Burdick Alfred J. Moran, Jr.
An individual President & Chairman
American Blood Institute, Inc.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is intended to be the
operative agreement by and between American Blood Institute, Inc., AVRE, Inc.,
and Binary Associates, Inc. AKA SeraCare (referred to collectively herein
as the "Corporation") and Brian Olson ("Olson"). This Agreement is
conditional upon confirmation of a Plan of Reorganization for the
Corporation and approval of such Plan of Reorganization by the Federal
Bankruptcy Court. The effective date of this Agreement shall be the
Effective Date of the Plan of Reorganization.
1. EMPLOYMENT AS VICE PRESIDENT OF OPERATIONS. The
Corporation hereby agrees to retain Olson and Olson hereby agrees to be
employed as Vice President of Operations for the Plasma Operations to be
acquired by the Corporation via the Plan of Reorganization regarding
American Blood Institute, Inc., AVRE, Inc. and Binary Associates, Inc.
In such capacities, Olson shall perform all of the normal duties and
responsibilities of a Vice President of Operations. In the performance of
his duties and responsibilities, Olson shall at all times be under the
direction of the President and the Board of Directors of the Corporation.
Olson shall perform his duties and responsibilities in accordance with
all reasonable rules, regulations and policies adopted by the Board of
Directors of the Corporation.
2. INDEMNIFICATION; INSURANCE AGREEMENT The Corporation
warrants and assures Olson that the Charter of the Corporation contains
a provision which provides for indemnification of officers by the corporation
to the maximum extent permissible under the laws of the jurisdiction in
which the Corporation is incorporated. Further, the Corporation agrees to
either or both of the following: (A) Enter into an Indemnification Agreement
provided that such Indemnification Agreement shall be modified if necessary
to conform with the laws of the jurisdiction in which the Corporation is
incorporated; (B) Obtain and maintain in full force and effect at
Corporation's sole expense, such director's and officer's liability
insurance for errors and omissions of such type and in such amount as
is customary for similarly situated companies, if available at reasonable
cost.
3. EXTENT OF SERVICES. Olson agrees to devote all of his time
and efforts on behalf of the business of the Corporation. Without
limiting the foregoing, during the term of this Agreement, Olson shall
make written request to the Board of Directors and must obtain written
approval from such Board if Olson wishes to devote any of his time to any
other business effort, whether or not such business effort is in direct
competition with the Corporation.
4. COMPENSATION. On the effective date of this contract, Olson
shall be paid at the rate of $90,000 per year payable bi-weekly. There shall
be a quarterly salary adjustment whereby any pre-tax earnings over
$100,000 per quarter shall be paid to the officers of the Reorganized
Debtor (SeraCare) up to a maximum annual amount of $25,000 to Alfred J.
Moran, Jr. and $10,000 each for Jerry L. Burdick and Brian Olson. The
distribution of the quarterly salary adjustment shall be on a pro rata basis.
<PAGE>
5. PERFORMANCE BONUS. There shall also be a Management Bonus
Pool which will allocate ten percent (10%) of pre-tax earnings which are in
excess of $920,549 in year one following the Effective Date of the
Reorganization Plan, $2,590,160 in year two, $4,384,187 in year three,
$6,244,536 in year four, and $8,166,626 in year five to a bonus pool to be
paid pro rata to management on the basis of salaries. Olson shall be a
participant in this Management Bonus Pool during the term of this agreement.
6. FRINGE BENEFITS. Olson shall receive four (4) weeks paid
vacation per year during the course of this Agreement. Olson will also
receive company paid: sick pay, group health insurance, dental care,
vision care, disability insurance, life insurance and such other benefits
in the amounts and as may be provided in the ordinary course to the
Corporation's other senior executives.
7. STOCK AND WARRANT GRANT. Olson shall be granted 42,110 shares
of common stock of SeraCare (SeraCare is herein defined as AVRE, Inc.,
Binary Associates, Inc., American Blood Institute, Inc. and any post
emergence replacement or successor corporation or entity into which the
Plasma Operations of Avre, Inc. and Binary Associates, Inc. are transferred,
placed, controlled, merged or which are acquired by) and stock options to
purchase 28,073 shares of common stock in SeraCare for a calculated price
which is the mean average between $.74 and the weighted average of the
closing bid price for the Company's stock for the thirty trading days
prior to the vesting date. The vesting date is defined as the anniversary
date of the Effective date of the Reorganization Plan for SeraCare. The
options will vest at the rate of one-third per year and are contingent
upon the company achieving the projected operating results reflected
in the Confidential Memorandum attached herewith except that if the
indicated funding is not provided in timely fashion for the acquisition of
the indicated centers reflected in that Confidential Memorandum, then a
calculation will be made utilizing the projected results of the base six
centers (which includes corporate overhead) plus a pro rated calculation
of the projected operating results of the acquisition centers based upon
the percentage of the secondary financing actually received by SeraCare.
For example, the projections contemplate the acquisition of twelve centers
during year one. Accordingly, at the rate of $200,000 per center this
acquisition program would require $2,400,000. If $1,200,000 or 50% is
actually funded, then a calculation will be made utilizing 100% of the
year one operating results projected for the base six centers ($365,556)
plus 50% of the year one projected operating results for the acquisition
centers (50% X $450,198 = $225,099) with the summation of the two being
($365,556 + $225,099 = $590,655). Accordingly, $590,655 will be the
objective criteria for vesting of one third of the options if $1,200,000
of secondary financing is actually received by SeraCare in year one. If
SeraCare is sold, merged, consolidated with another company or
reorganized to the extent that there is a 50% or more change in
ownership, the options will become immediately vested and exercisable.
8. TERM. This Agreement is conditional upon confirmation of the
Plan of Reorganization for American Blood Institute, Inc., AVRE, Inc. and
Binary Associates, Inc. and approval by the Federal Bankruptcy Court.
The term shall be for the three year period beginning on the
"Effective Date" of the Confirmed Plan of Reorganization and ending
thirty six months after the "Effective Date" unless this Agreement is
terminated at an earlier date per Section 9.
<PAGE>
9. TERMINATION.
A. FOR "CAUSE". The Corporation may terminate this
Agreement upon thirty days notice for cause. "Cause" is defined for the
purpose of this agreement as: death; dishonesty; theft; conviction of a
felony; alcohol or drug abuse; unethical business conduct; and a material
breach of this Agreement by Olson. If Olson is terminated for "Cause" as
herein defined, Olson shall receive thirty days notice with pay, and no
other compensation other than the receipt of any options which have already
vested.
B. FOR "ACTIONS DEEMED NOT IN THE BEST INTERESTS". The
Corporation may also terminate this Agreement if Olson fails for any reason,
within ten days after receipt by Olson of written notice thereof from the
Board of Directors, to correct, disassociate, cease or otherwise alter any
actions, associations, insubordination, failure to comply with instructions,
failure or other action or omission to act which, in the opinion of the
Board of Directors, materially affects or may materially affect the
Corporation's business operations. "Actions Deemed Not in the Best
Interests" shall also include the association by Olson with
individuals, companies, organizations or activities which the Board of
Directors has a reasonable basis for believing does or could have a
material negative affect on the Corporations operations, it's market price per
share, or the Corporation's ability to raise additional capital. If Olson
is terminated for "Actions Deemed Not in the Best Interests" as herein
defined, Olson shall receive twelve months severance pay and no other
compensation other than the receipt of any options which have already vested
as of the termination date.
C. OTHER EVENTS. Other events which will result in the
termination of this contract are:
1. The date on which Olson agrees to terminate this
Agreement.
2. The disability of Olson. Disability herein is defined
as being unable to perform the duties hereunder due to a
physical and/or mental condition or impairment for one
hundred eighty (180) consecutive days during the term of
this Agreement or 120 consecutive days in any 365 day
period during the term.
3. The date on which Olson voluntarily ceases to perform
his duties hereunder, other than by reason of a physical or
mental condition prior to the time that a disability occurs.
In the event that the Corporation shall be sold, merged, devolved,
consolidated or materially reorganized (within the term of this
Agreement and Olson's position is eliminated, the Company will pay to Olson
within Thirty (30) days of such event the balance of the compensation
which would be due to complete the term of this agreement. In
addition, all then unvested stock options shall become immediately vested and
exercisable.
<PAGE>
Any unilateral termination of Olson by the Corporation other than for
"Cause", "Actions Deemed Not in the Best Interests", or the reasons
indicated in 9.(C)(1) through 9.(C)(3) above shall be considered a material
breach of this agreement, the pre-agreed remedy for which is the payment in
cash within thirty (30) days of such termination, the full compensation which
would be due to complete the three year term of this agreement, including
any and all compensation, warrants, options or bonus compensation, plus the
continuation of benefits for a period of twelve months. If terminated for
"Actions Deemed Not in the Best Interests", the Corporation must show
that it has a reasonable basis for believing that the actions or
associations are or could be materially detrimental to the Corporation.
10. NO SOLICITATION OF EMPLOYEES. During the period of
this Agreement and for two (2) full years following termination of this
Agreement, Olson shall not, for any reason either directly or indirectly,
solicit for employment or employ for any other entity any employee of the
Corporation.
11. AGREEMENT NOT TO COMPETE. During the period of this
Agreement and for two (2) full years following termination of this Agreement
(a total of five years), Olson shall not, for any reason either directly or
indirectly, compete with SeraCare either directly through owning and
operating a plasma center, or by being a significant investor, officer
or key employee of any company which competes with the Corporation. On a
geographic basis, compete is defined to mean being in the plasma collection
business within a fifty mile radius of an existing SeraCare collection center.
12. WITHHOLDING. Olson authorizes the Corporation
to withhold and/or deduct from his compensation (including, without
limitation, salary and wages), deductions to recover any amounts loaned
by the Corporation to Olson or paid on Olson's behalf which, under the
terms of said loan or payment, must be repaid to the Corporation
including, without limitation, loans of money and the value of any of the
Corporations property taken but not returned by Olson. Corporation shall
also have the expressed right to deduct all sums required for federal, state
or local income, Social Security or other taxes now applicable or that may be
enacted in the future.
13. NOTICE. Any notice provided to be given pursuant
to this Agreement shall be in writing and shall be deemed duly given
three days after deposited in the mail, certified mail, return receipt
requested, to the party to receive such notice at the address
specified below:
The Corporation: American Blood Institute, Inc.
DBA - SeraCare
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
For Olson: Brian Olson
3249 Brookridge Road
Duarte, California 91010
14. GOVERNING LAW. The validity of this Agreement and the
interpretation and performance of all of its terms shall be controlled
exclusively by the substantive law of California, including California law
concerning the interpretation and performance of contracts.
<PAGE>
15. ENFORCEABILITY. Any provision of this Agreement which is
invalid, illegal, or unenforceable shall be ineffective only to the extent of
such invalidity, illegality, or unenforceability, without affecting in any
way the remaining provisions hereof or rendering the remaining provisions
hereof invalid, illegal, or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement by the other party shall not be deemed a waiver of that or any
other term, covenant, or condition, nor shall any waiver or relinquishment of
any right or power at any one time or times be deemed a waiver or
relinquishment of that right or power for all or any other times.
17. ARBITRATION. Any controversy between the Corporation and
Olson involving the construction, application or breach of any of the terms,
provisions, or conditions of this Agreement shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association then in effect (the AAA Rules). Such arbitration shall
take place in Los Angeles, California and shall be conducted by three
arbitrators, one of which shall be selected by each party, and the third of
which shall be selected by the two arbitrators within the time limits
established in the AAA Rules. The decision of the arbitrators may be
enforced in any court having jurisdiction over the party against which
enforcement is sought or its assets. The cost of such arbitration including
the associated attorney fees, arbitrator fees, filing fees, AAA fees and
other legal costs shall be borne by the losing party.
18. TRADE SECRETS. CONFIDENTIAL, AND PROPRIETARY
INFORMATION.
A. Olson and Corporation acknowledge and agree that during
the term of this Agreement and in the course of the discharge of his
duties hereunder, Olson shall have access to and become acquainted with
information owned by the Corporation concerning its operation, which
information derives independent economic value from not being generally
known to the public or competitors, and which includes, without
limitation: (1) manufacturing processes, research, and engineering, (2)
marketing data and techniques, (3) trademarks, tradenames, and servicemarks,
(4) customer and client bases and lists, and (5) financial and personnel
information. Said information constitutes Employer's trade secret,
confidential and proprietary information.
B. Olson agrees that he shall not at any time (during the
period of this agreement or any future time) disclose any such trade
secret, confidential, or proprietary information, directly or indirectly, to
any other person or use it in any way other than as required in the
ordinary course of his employment under this agreement.
C. Olson further agrees that all files, records,
documents, equipment, and similar items relating to the Corporation's
business (including, without limitation, items containing trade secret,
confidential or proprietary information), whether prepared by Olson or
others, including all originals and copies, are and shall be returned to the
Corporation upon Olson's termination.
<PAGE>
D. Olson further agrees that during the period of his
employment by the Corporation and after termination thereof, he will not
disrupt, damage, disparage, impair, or interfere with the
Corporation's business or its reputation, whether by way of
interfering with or soliciting its employees, disrupting its
relationships with or soliciting clients or customers, agents,
representatives, or vendors, aiding competitors, or by way of any other
conduct.
19. NON-ASSIGNABILITY. Olson may not assign any of his rights
or responsibilities under this Agreement.
20. ENTIRE AGREEMENT. This Amended Agreement supersedes any and
all other agreements, either oral or in writing, between the parties hereto
with respect to the employment of Olson by the Corporation and contains
all of the covenants and agreements between the parties with respect to that
employment in any manner whatsoever. Each party to this Agreement
acknowledges that no representation, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or
binding on either party.
21. MODIFICATIONS. Any modification of this Agreement shall
be effective only if it is in writing and signed by both parties to this
Agreement.
22. LEGAL ACTION. In the event of any litigation or
arbitration between or among the parties hereto respecting or arising out of
this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorney's fees incurred after a judgement has been
rendered by a court of competent jurisdiction. Any judgement shall include an
attorneys' fees clause which shall entitle the judgement creditor to recover
attorneys' fees incurred to enforce a judgement hereon, which attorneys'
fees shall be an element of post-judgement costs; the parties agree
that this attorneys' fee provision shall not merge into any judgement.
IN WITNESS WHEREOF, the parties hereto, effective as of
November 14, 1995 do hereby authorize and acknowledge that this
Agreement be the effective agreement between the parties. It is
understood that this Agreement will be filed as an amendment to the
Reorganization Plan for the Corporation and will become effective on the
Effective Date of such Plan of Reorganization.
Accepted By: /s/ KENNETH R. LEVINE
--------------------------------
Kenneth R. Levine
First Equity Capital Securities, Inc.
Placement Agent
/s/ BRIAN L. OLSON /s/ ALFRED J. MORAN, JR.
- ------------------- ----------------------------
Brian L. Olson Alfred J. Moran, Jr.
An individual President & Chairman
American Blood Institute, Inc.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 3rd
day of September 1996 by and between SeraCare, Inc. (referred herein as the
"Corporation") and Brad Rabe ("Rabe").
1. EMPLOYMENT AS AN EXECUTIVE OF THE CORPORATION . The Corporation hereby agrees
to retain Rabe and Rabe hereby agrees to be employed as an Executive of the
Corporation. In the performance of his duties and responsibilities, Rabe shall
at all times be under the direction of the President of the Corporation. Rabe
shall perform his duties and responsibilities in accordance with all reasonable
rules, regulations and policies of the Corporation. It is further agreed that
Rabe's office and primary place of business shall be in Clearfield, Utah for the
duration of this Agreement.
2. EXTENT OF SERVICES. Rabe agrees to devote all of his efforts on behalf of the
business of the Corporation. Without limiting the foregoing, during the term of
this Agreement, Rabe shall not, directly or indirectly, either as an employee,
consultant, stockholder or in any other capacity, engage or participate in any
business that is in competition in any manner with the Corporation. At such time
as Rabe is appointed as Chief Operating Officer by the Corporation, the
President of the Corporation will use his best efforts to get Rabe elected to
the Board of Directors of the Corporation.
3. INDEMNIFICATION; INSURANCE AGREEMENT. The Corporation warrants and assures
Rabe that the Charter of the Corporation contains a provision which provides for
indemnification of officers by the Corporation to the maximum extent permissible
under the laws of the jurisdiction in which the Corporation is incorporated.
Further, the Corporation agrees to either or both of the following:
A. Enter into an Indemnification Agreement provided that such Indemnification
Agreement shall be modified if necessary to conform with the laws of the
jurisdiction in which the Corporation is incorporated.
B. Obtain and maintain in full force and effect at Corporation's sole expense,
such director's and officer's liability insurance for errors and omissions of
such type and in such amount as is customary for similarly situated
companies, if available at reasonable cost.
4. NO COMPETING AFFILIATIONS. During the term of this agreement, Rabe will not
serve as a consultant, employee or other paid assistant or in any like role
or capacity with any other competing or potentially competing company with
like operations, business strategies, or objectives. In addition, for a
period of one year after termination of this agreement Rabe may work within
the industry but shall not engage in any employment or activities which are
or could reasonably be expected to have an adverse affect upon the operations
of the Corporation.
5. COMPENSATION. Beginning with the pay period beginning on September 1, 1996,
Rabe shall be compensated at the rate of $100,000 per year. During the period
beginning
<PAGE>
September 1, 1996 through December 31, 1996, Rabe shall be compensated through
the issuance of Common Shares of the Corporation. The number of shares to be
issued shall be determined by dividing the compensation due Rabe by $1.50. All
shares to be issued pursuant to this provision shall be issued at one time after
December 31, 1996, but not later than February 28, 1997. Rabe's compensation for
the period January 1, 1997 through February 5, 1999 shall be in accordance with
the normal payroll procedures and cycle of the Corporation.
6. NABI BONUS. As additional compensation, Rabe shall receive $25,000 in cash,
or at Rabe's option 16,667 shares of common stock, (but not both) which North
American Biologicals, Inc. ("NABI") Bonus ( the "NABI Bonus") shall be
payable upon the signing of a multi-year contract between NABI and SeraCare,
Inc. for the purchase of Source Plasma for all SeraCare, Inc. startup
operations at a price of at least $50.00 per liter.
7. PERFORMANCE BONUS. Rabe shall also share in the Management Bonus Pool on the
same basis as other executives of the Corporation during the term of this
agreement.
8. FRINGE BENEFITS. Rabe shall receive four (4) weeks paid vacation per year
during the course of this Agreement. Rabe will also receive company paid:
sick pay, group health insurance, dental care, vision care, disability
insurance, life insurance and such other benefits in the amounts and as may
be provided in the ordinary course to the Corporation's other executives.
9. TERM. This Agreement shall be for the period beginning on September 1, 1996
and ending on February 5, 1999.
10. TERMINATION.
10.1 TERMINATION FOR CAUSE. The Corporation may terminate this Agreement
immediately and without notice for cause. "Cause" for the purpose of this
agreement shall include, but not be limited to: death; dishonesty; theft;
conviction of a felony; alcohol or drug abuse; unethical business conduct; and a
material breach of this Agreement by Rabe. "Cause" shall also include the
failure of Rabe for any reason, within ten days after receipt by Rabe of written
notice thereof from the President and Board of Directors, to cease or otherwise
alter any insubordination, failure to comply with instructions, or other action
or omission to act which, in the sole opinion of the President, materially
affects or may materially affect the Corporations' business operations. Other
events which will result in the termination of this Agreement are:
A. The date on which Rabe agrees to terminate this Agreement.
B. The disability of Rabe. Disability herein is defined as being unable to
perform the duties hereunder due to a physical and/or mental condition or
impairment for ninety (90) consecutive days during the term of this
Agreement or 60 consecutive days in any 365 day period during the term.
2
<PAGE>
C. The date on which Rabe voluntarily ceases to perform his duties hereunder,
other than by reason of a physical or mental condition prior to the time
that a disability occurs.
If this agreement is terminated for "Cause" as herein defined, Rabe shall not be
entitled to any termination or severance specific to this agreement. This will
have no affect on his entitlement to Additional Consideration as defined in that
certain Asset Purchase Agreement attached hereto as Exhibit A.
10.2 TERMINATION FOR WITHOUT CAUSE. If this Agreement is terminated by the
Corporation for any reason other than "Cause" as herein defined, Rabe shall
be entitled to receive the balance of the amount due under this Agreement.
Such payments shall be payable in accordance with the normal payroll cycle
over the remaining term of this Agreement.
In addition, if the Agreement is terminated Without Cause, Rabe shall receive
125,000 shares of stock less any Additional Consideration shares already
received in connection with that certain Asset Purchase Agreement (Attached
hereto as Exhibit A), in complete and final settlement of any and all claims
Rabe may have against the Corporation in connection with such Asset Purchase
Agreement. As a condition to receiving such shares, Rabe shall provide the
Corporation with a written "1542 Release" releasing the Corporation of any
further obligation under that certain Asset Purchase Agreement and this
Employment Agreement other than paying out the cash payments indicated in this
section 10.2.
11. NO SOLICITATION OF EMPLOYEES. During the period of this Agreement and for
two (2) full years following termination of this Agreement, Rabe shall not, for
any reason either directly or indirectly, solicit for employment or employ for
any other entity any employee of the Corporation.
12. WITHHOLDING. Rabe authorizes the Corporation to withhold and/or deduct from
his compensation (including, without limitation, salary and wages), deductions
to recover any amounts loaned by the Corporation to Rabe or paid on Rabe's
behalf which, under the terms of said loan or payment, must be repaid to the
Corporation including, without limitation, loans of money and the value of any
of the Corporations property taken but not returned by Rabe. Corporation shall
also have the expressed right to deduct all sums required for federal, state or
local income, Social Security or other taxes now applicable or that may be
enacted in the future.
13. NOTICE. Any notice provided to be given pursuant to this Agreement shall be
in writing and shall be deemed duly given three days after deposited in the
mail, certified mail, return receipt requested, to the party to receive such
notice at the address specified below:
The Corporation: SeraCare, Inc.
1925 Century Park East, Suite 1970
Los Angeles, CA 90067
3
<PAGE>
For Rabe: Brad Rabe
1896 East 1900 North
Layton, Utah 84040
14. GOVERNING LAW. The validity of this Agreement and the interpretation and
performance of all of its terms shall be controlled exclusively by the
substantive law of California, including California law concerning the
interpretation and performance of contracts.
15. ENFORCEABILITY. Any provision of this Agreement which is invalid, illegal,
or unenforceable shall be ineffective only to the extent of such invalidity,
illegality, or unenforceability, without affecting in any way the remaining
provisions hereof or rendering the remaining provisions hereof invalid, illegal,
or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon strict compliance
with any of the terms, covenants or conditions of this Agreement by the other
party shall not be deemed a waiver of that or any other term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
17. TRADE SECRETS, CONFIDENTIAL. AND PROPRIETARY INFORMATION.
A. Rabe and Corporation acknowledge and agree that during the term of this
Agreement and in the course of the discharge of his duties hereunder,
Rabe shall have access to and become acquainted with information owned
by the Corporation concerning its operation, which information derives
independent economic value from not being generally known to the public
or competitors, and which includes, without limitation: (1)
manufacturing processes, research, and engineering, (2) marketing data
and techniques, (3) trademarks, tradenames, and servicemarks, (4)
customer and client bases and lists, and (5) financial and personnel
information. Said information constitutes Employer's trade secret,
confidential and proprietary information.
B. Rabe agrees that he shall not at any time (during the period of this
agreement or any future time) disclose any such trade secret,
confidential, or proprietary information, directly or indirectly, to any
other person or use it in any way other than as required in the ordinary
course of his employment under this agreement.
C. Rabe further agrees that all files, records, documents, equipment, and
similar items relating to the Corporation's business (including, without
limitation, items containing trade secret, confidential or proprietary
information), whether prepared by Rabe or others, including all
originals and copies, are and shall be returned to the Corporation upon
Rabe's termination.
4
<PAGE>
D. Rabe further agrees that during the period of his employment by the
Corporation and after termination thereof, he will not disrupt, damage,
disparage, impair, or interfere with the Corporation's business or its
reputation, whether by way of interfering with or soliciting its
employees, disrupting its relationships with or soliciting clients or
customers, agents, representatives, or vendors, aiding competitors, or
by way of any other conduct.
18. NON-ASSIGNABILITY. Rabe may not assign any of his rights or responsibilities
under this Agreement.
19. ENTIRE AGREEMENT. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Rabe by the Corporation and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding on either party.
20. MODIFICATIONS. Any modification of this Agreement shall be effective only if
it is in writing and signed by both parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto do hereby authorize and
acknowledge that this Agreement be the effective agreement between the parties.
SeraCare, Inc.: Brad Rabe:
By: /s/ BARRY D. PLOST /s/ BRAD RABE
------------------------- ----------------------------
Barry D. Plost Brad Rabe
President and CEO An individual
5
<PAGE>
[LOGO] SeraCare
AGREEMENT
This agreement is intended to clarify and establish the relationship between the
Mr. Sam Anderson ("Consultant") and SeraCare, Inc. (the "Company").
I. RECITALS
A. Whereas the Company wishes to retain the services of Consultant to assist
the Company in: acquiring existing plasma collection centers; identifying
appropriate locations for the startup of new plasma collection centers, and; to
assist the Company's entry into the Hyperimmune plasma business by providing
contacts, information, assisting the Company in developing an appropriate
business plan and strategy, assisting in contract negotiations and providing
operational issues guidance.
B. Whereas the Consultant wishes to assist the Company in: acquiring
existing plasma collection centers; identifying appropriate locations for the
startup of new plasma collection centers, and; to assist the Company's entry
into the Hyperimmune plasma business by providing contacts, information,
assisting the Company in developing an appropriate business plan and strategy,
assisting in contract negotiations and providing operational issues guidance.
C. Whereas the Consultant has also agreed to accept the position of Director
of the Company.
II. COMPENSATION
A. For his consulting services, Consultant shall receive an annual
consulting fee of $50,000.00 payable at the rate of $4,166.67 per month.
Consultant shall also be reimbursed for expenses incurred in connection
with his efforts on behalf of the Company, providing however that all
such costs shall be approved in advance by the Company.
B. For accepting the position of Director of the Company, Consultant shall
receive three year options to purchase 30,000 shares of the Company's
common stock at $1.50 per share.
III. OTHER TERMS
TERM. The term of this agreement is three years beginning April 16, 1996 through
April 15, 1999.
NO COMPETING AFFILIATIONS. During the term of this agreement and for a period of
one year after termination of this agreement, he will not serve as a consultant,
employee or other paid assistant or in any like role or capacity with any other
competing or potentially competing company with like operations, business
strategies, or objectives except for UNIVAX, the relationship with which has
been fully disclosed to the Company as of the effective date of this agreement.
<PAGE>
[LOGO] SeraCare
TERMINATION. This agreement may be terminated by the Company with sixty days
written notice under the any of the following conditions:
A. Consultant for any reason becomes unavailable to the Company for more than
thirty days; or
B. Consultant refuses or does not participate with the Company in its efforts
to: acquire existing plasma collection centers; select new locations to
startup new plasma collection centers, and; enter into the Hyperimmune
plasma business.
C. Consultant violates the No Competing Affiliations provisions of this
agreement.
NOTICES. Any notices, or any other communications required hereunder shall be in
writing and shall be deemed to have been given, if mailed, certified or express,
postage prepaid, on the date posted or if personally delivered when actually
delivered.
CHOICE OF LAW. The parties to this agreement hereby agree that this agreement
has been executed and delivered in the state of California and shall be
construed, enforced and governed by the laws of California.
ENTIRE AGREEMENT. This agreement supersedes all prior oral and written
agreements of the parties pertaining to the subject matter hereof.
NO WAIVER. No waiver of any of the provisions of this agreement shall be
deemed or shall constitute a waiver of any other provisions hereof, nor shall
such a waiver constitute a continuing waiver. If any provision or provisions
of this agreement are determined to be unenforceable, the remaining
provisions shall stand and be interpreted within the laws of the state of
California.
AMENDMENT OR MODIFICATION. This agreement can only be modified or amended by
mutual written agreement by all parties to this agreement.
SUCCESSORS AND ASSIGNS. All terms and provisions of this agreement shall be
binding upon and shall inure to the benefit of the parties hereto and to
their respective successors, assigns and heirs.
AGREED AND EXECUTED.
CONSULTANT:
By: /s/ Sam Anderson July 2, 96
--------------------------------- --------------
Sam Anderson Date
COMPANY:
By: /s/ Barry D. Plost 7/2/96
--------------------------------- --------------
Barry D. Plost Date
President
<PAGE>
PROMISSORY NOTE
DATED AS JULY 2, 1996
FOR VALUE RECEIVED, the undersigned SeraCare, Inc., a Delaware corporation
("Maker"), promises to pay to Barry Plost ("Holder") or his order, on the 5th
Day following the receipt of funds by the Maker from the Private Placement dated
June 1, 1996 the (the "Maturity Date"), the principal amount of Four Hundred
Thousand Dollars ($400,000.00), the (the "Principal").
Maker shall accrue simple interest (computed on the basis of the 365 day
year and the actual number of days lapsed) on the unpaid principal amount hereof
from the date hereof until the date on which this Promissory Note ("Note") is
paid in full at a per annum rate equal to Twelve (12%) percent per annum.
Interest shall be payable on the Maturity Date. A minimum of 30 days interest
will be paid.
The Maker agrees to repay any outstanding principal and accrued interest
out of the first dollars received from the proceeds of the first closing of the
Private Offering Dated June 1, 1996 or any such other private or public offering
of the Maker's equity securities as long as there remains any amount of
principal and/or interest due under this Note.
In addition to the Principal and interest payable hereunder, Maker shall
deliver to Holder, as soon as possible after Maker has received the proceeds of
this Note, Eighty Thousand (80,000) three year warrants to purchase Maker's
Common Stock. Each warrant shall entitle Barry Plost or his designee to purchase
one share of the Maker's Common Stock par value $.001 for $1.00 at any time
during the three years following the issuance date.
With regard to the assets of AVRE, Inc. and Binary Associates, Inc. and the
common stock in those companies held by the Maker, this Note shall be
subordinated and subject in right to the prior payment in full of the Senior
Indebtedness as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
With regard to the acquired assets of Silver State Plasma Products, Inc.
for which the proceeds of this Note are to be used, this Note shall not be
subordinated to any other obligation including the indebtedness of CVD Financial
Corporation as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
All payments received by the Holder shall be applied first to the payment
of all accrued interest and penalties, and then on account of the unpaid balance
of Principal.
The Holder of this Note may declare all indebtedness evidenced by this Note
to be immediately due and payable upon the happening of any of the following:
(1) nonpayment, when due, of Principal of, or interest on, the indebtedness
evidenced by this Note if not
<PAGE>
cured within five (5) business days after notice; (2) default by the Maker in
the payment or performance of any obligation, term or condition of any agreement
between the Maker and the Holder provided such non-monetary default is not cured
within thirty (30) business days after notice; (3) the filing by or against the
Maker of a request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, relief as a debtor or other
relief under the bankruptcy, insolvency or similar laws of the United States or
any state or territory thereof or any foreign jurisdiction, nor or hereafter in
effect; (4) the making by the Maker, of any general assignment for the benefit
of creditors; or (5) the appointment of a receiver or trustee for the Maker or
for any assets of the Maker, including, without limitation, the appointment of
or taking possession by a "custodian", as defined in the Federal Bankruptcy Code
(6) if there is a sale or merger of or by the Maker which results in a more than
fifty percent (50%) change in the ownership of the Maker, this Note shall become
immediately due and payable.
No modification or waiver of any provision of this Note or any documents or
instruments executed simultaneously herewith shall be effective unless it shall
be in writing and signed by both the Holder and the Maker, and any such
modification or waiver shall apply only in the specific instance for which
given.
The term "Holder" as used herein shall be deemed to include the Holder and
his successor(s), endorsee(s) and assign(s).
The undersigned hereby waives presentment, demand for payment, protest,
notice of protest and notice of non payment hereof.
No failure by the Holder to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Holder of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right or remedy.
The rights and remedies of the Holder as herein specified are cumulative and not
exclusive of any other rights or remedies which the Holder may otherwise have.
This Note shall be governed by the internal laws of the State of California
without regard to principles of conflicts of laws. Maker agrees that the State
and Federal Courts which sit in the State of California, Los Angeles County,
shall have exclusive jurisdiction of all controversies and disputes arising
hereunder. The undersigned agrees to pay all costs and expenses incurred by the
Holder in (a) the negotiation of and preparation of this Note, all drafts
thereof and all ancillary documents, and (b) enforcing this Note, including,
without limitation, reasonable attorneys' fees and legal expenses.
Barry D. Plost SERACARE, INC.
/s/ BARRY D. PLOST By /s/ JERRY L. BURDICK
- ------------------------- --------------------------------
Barry D. Plost Jerry L. Burdick, Executive V.P.
An individual
<PAGE>
PROMISSORY NOTE
DATED AS JULY 17, 1996
FOR VALUE RECEIVED, the undersigned SeraCare, Inc., a Delaware corporation
("Maker"), promises to pay to Barry Plost ("Holder") or his order, on the 5th
Day following the receipt of funds by the Maker from the Private Placement dated
June 1, 1996 the (the "Maturity Date"), the principal amount of Fifty Thousand
Dollars ($50,000.00), the (the "Principal").
Maker shall accrue simple interest (computed on the basis of the 365 day
year and the actual number of days lapsed) on the unpaid principal amount hereof
from the date hereof until the date on which this Promissory Note ("Note") is
paid in full at a per annum rate equal to Twelve (12%) percent per annum.
Interest shall be payable on the Maturity Date. A minimum of 30 days interest
will be paid.
The Maker agrees to repay any outstanding principal and accrued interest
out of the first dollars received from the proceeds of the first closing of the
Private Offering Dated June 1, 1996 or any such other private or public offering
of the Maker's equity securities as long as there remains any amount of
principal and/or interest due under this Note.
In addition to the Principal and interest payable hereunder, Maker shall
deliver to Holder, as soon as possible after Maker has received the proceeds of
this Note, Fifty Thousand (50,000) three year warrants to purchase Maker's
Common Stock. Each warrant shall entitle Barry Plost or his designee to purchase
one share of the Maker's Common Stock par value $.001 for $1.00 at any time
during the three years following the issuance date.
With regard to the assets of AVRE, Inc. and Binary Associates, Inc. and the
common stock in those companies held by the Maker, this Note shall be
subordinated and subject in right to the prior payment in full of the Senior
Indebtedness as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
With regard to the acquired assets of Silver State Plasma Products, Inc.
for which the proceeds of this Note are to be used, this Note shall not be
subordinated to any other obligation including the indebtedness of CVD Financial
Corporation as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
All payments received by the Holder shall be applied first to the payment
of all accrued interest and penalties, and then on account of the unpaid balance
of Principal.
The Holder of this Note may declare all indebtedness evidenced by this Note
to be immediately due and payable upon the happening of any of the following:
(1) nonpayment, when due, of Principal of, or interest on, the indebtedness
evidenced by this Note if not
<PAGE>
cured within five (5) business days after notice; (2) default by the Maker in
the payment or performance of any obligation, term or condition of any agreement
between the Maker and the Holder provided such non-monetary default is not cured
within thirty (30) business days after notice; (3) the filing by or against the
Maker of a request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, relief as a debtor or other
relief under the bankruptcy, insolvency or similar laws of the United Stated or
any state or territory thereof or any foreign jurisdiction, nor or hereafter in
effect; (4) the making by the Maker, of any general assignment for the benefit
of creditors; or (5) the appointment of a receiver or trustee for the Maker or
for any assets of the Maker, including, without limitation, the appointment of
or taking possession by a "custodian", as defined in the Federal Bankruptcy Code
(6) if there is a sale or merger of or by the Maker which results in a more than
fifty percent (50%) change in the ownership of the Maker, this Note shall
become immediately due and payable.
No modification or waiver of any provision of this Note or any documents or
instruments executed simultaneously herewith shall be effective unless it shall
be in writing and signed by both the Holder and the Maker, and any such
modification or waiver shall apply only in the specific instance for which
given.
The term "Holder" as used herein shall be deemed to include the Holder and
his successor(s), endorsee(s) and assign(s).
The undersigned hereby waives presentment, demand for payment, protest,
notice of protest and notice of non payment hereof.
No failure by the Holder to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Holder of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right or remedy.
The rights and remedies of the Holder as herein specified are cumulative and not
exclusive of any other rights or remedies which the Holder nay otherwise have.
This Note shall be governed by the internal laws of the State of California
without regard to principles of conflicts of laws. Maker agrees that the State
and Federal Courts which sit in the State of California, Los Angeles County,
shall have exclusive jurisdiction of all controversies and disputes arising
hereunder. The undersigned agrees to pay all costs and expenses incurred by the
Holder in (a) the negotiation of and preparation of this Note, all drafts
thereof and all ancillary documents, and (b) enforcing this Note, including,
without limitation, reasonable attorneys' fees and legal expenses.
Barry D. Plost SERACARE, INC.
/s/ Barry D. Plost By /s/ Jerry L. Burdick
- ---------------------------- -------------------------------
Barry D. Plost Jerry L. Burdick, Executive V.P
An individual
<PAGE>
PROMISSORY NOTE
DATED AS JULY 2, 1996
FOR VALUE RECEIVED, the undersigned SeraCare, Inc., a Delaware corporation
("Maker"), promises to pay to Sam Anderson ("Holder") or his order, on the 5th
Day following the receipt of funds by the Maker from the Private Placement dated
June 1, 1996 the (the "Maturity Date"), the principal amount of Four Hundred
Thousand Dollars ($100,000.00), the (the "Principal").
Maker shall accrue simple interest (computed on the basis of the 365 day
year and the actual number of days lapsed) on the unpaid principal amount hereof
from the date hereof until the date on which this Promissory Note ("Note") is
paid in full at a per annum rate equal to Twelve (12%) percent per annum.
Interest shall be payable on the Maturity Date. A minimum of 30 days interest
will be paid.
The Maker agrees to repay any outstanding principal and accrued interest
out of the first dollars received from the proceeds of the first closing of the
Private Offering Dated June 1, 1996 or any such other private or public offering
of the Maker's equity securities as long as there remains any amount of
principal and/or interest due under this Note.
In addition to the Principal and interest payable hereunder, Maker shall
deliver to Holder, as soon as possible after Maker has received the proceeds of
this Note, Twenty Thousand (20,000) three year warrants to purchase Maker's
Common Stock. Each warrant shall entitle Sam Anderson or his designee to
purchase one share of the Maker's Common Stock par value $.001 for $1.00 at any
time during the three years following the issuance date.
With regard to the assets of AVRE, Inc. and Binary Associates, Inc. and the
common stock in those companies held by the Maker, this Note shall be
subordinated and subject in right to the prior payment in full of the Senior
Indebtedness as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
With regard to the acquired assets of Silver State Plasma Products, Inc.
for which the proceeds of this Note are to be used, this Note shall not be
subordinated to any other obligation including the indebtedness of CVD Financial
Corporation as defined in the Loan and Security Agreement among Maker, and CVD
Financial Corporation.
All payments received by the Holder shall be applied first to the payment
of all accrued interest and penalties, and then on account of the unpaid balance
of Principal.
The Holder of this Note may declare all indebtedness evidenced by this Note
to be immediately due and payable upon the happening of any of the following:
(1) nonpayment, when due, of Principal of, or interest on, the indebtedness
evidenced by this Note if not
<PAGE>
cured within five (5) business days after notice; (2) default by the Maker in
the payment or performance of any obligation, term or condition of any agreement
between the Maker and the Holder provided such non-monetary default is not cured
within thirty (30) business days after notice; (3) the filing by or against the
Maker of a request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, relief as a debtor or other
relief under the bankruptcy, insolvency or similar laws of the United States or
any state or territory thereof or any foreign jurisdiction, nor or hereafter in
effect; (4) the making by the Maker, of any general assignment for the benefit
of creditors; or (5) the appointment of a receiver or trustee for the Maker or
for any assets of the Maker, including, without limitation, the appointment of
or taking possession by a "custodian", as defined in the Federal Bankruptcy Code
(6) if there is a sale or merger of or by the Maker which results in a more than
fifty percent (50%) change in the ownership of the Maker, this Note shall become
immediately due and payable.
No modification or waiver of any provision of this Note or any documents or
instruments executed simultaneously herewith shall be effective unless it shall
be in writing and signed by both the Holder and the Maker, and any such
modification or waiver shall apply only in the specific instance for which
given.
The term "Holder" as used herein shall be deemed to include the Holder and
his successor(s), endorsee(s) and assign(s).
The undersigned hereby waives presentment, demand for payment, protest,
notice of protest and notice of non payment hereof.
No failure by the Holder to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Holder of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right or remedy.
The rights and remedies of the Holder as herein specified are cumulative and not
exclusive of any other rights or remedies which the Holder may otherwise have.
This Note shall be governed by the internal laws of the State of California
without regard to principles of conflicts of laws. Maker agrees that the State
and Federal Courts which sit in the State of California, Los Angeles County,
shall have exclusive jurisdiction of all controversies and disputes arising
hereunder. The undersigned agrees to pay all costs and expenses incurred by the
Holder in (a) the negotiation of and preparation of this Note, all drafts
thereof and all ancillary documents, and (b) enforcing this Note, including,
without limitation, reasonable attorneys' fees and legal expenses.
Sam Anderson SERACARE, INC.
/s/ Sam Anderson By /s/ Jerry L. Burdick
- ------------------------ ------------------------------
Sam Anderson Jerry L. Burdick, Executive V.P.
An individual
<PAGE>
EXHIBIT 6.9
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SERACARE, INC.
AND
MR. BRAD RABE
<PAGE>
This Asset Purchase Agreement ("Agreement") is made and entered into this
3rd day of September, 1996 by and between SeraCare, Inc., a Delaware Corporation
with its principal place of business at 1925 Century Park East, Suite 1970, Los
Angeles, CA. 90067 ("Purchaser") and Mr. Brad Rabe, an individual ("Seller").
RECITALS:
WHEREAS, Purchaser wishes to acquire from Seller and the Seller wishes to
sell to Purchaser, upon the terms and subject to the conditions set forth
herein, the Transferred Assets (defined below) including the seller's startup
blood plasma donor centers located in (i) Clearfield, Utah (the "Clearfield
Center") and (ii) Raleigh, North Carolina (the "Raleigh Center"); and
WHEREAS, Purchaser and Seller have made and entered into that certain
Employment Agreement dated September 3, 1996, a copy of which is attached as
Exhibit A.
AGREEMENTS
Seller agrees to sell to Purchaser all rights and interests in leases,
leasehold improvements, fixed assets and/or any other personal property
attributable of both the Clearfield Center and the Raleigh Center currently
under lease to Seller
ASSETS TO BE ACQUIRED. On the Closing Date, as defined herein, Seller shall
assign, transfer, convey and deliver to Purchaser an assignment of the leases,
leasehold improvements, plus ownership in any and all other rights or assets
attributable to those locations, including the rights to any FDA or QPP licenses
and/or certifications which attach or may attach to those locations, including
the right to file for such licenses and/or certifications if they have not
already been applied for (herein referred to as "Transferred Assets").
Seller also agrees to complete the process of establishing both startup
locations as operational plasma collection centers by opening the doors as a
plasma collection center in both locations within a reasonable period of time
not to exceed 120 days from the Closing Date.
In the event that Seller (aka Rabe) voluntarily ceases to be an employee of
Purchaser during the first twelve months after the Closing Date, Seller as a
part of this Agreement agrees to be in charge of the management and operation of
both the Raleigh Center and the Clearfield Center until the last day of the
twelfth month after the Closing Date.
2
<PAGE>
ASSUMPTION OF CERTAIN LIABILITIES. Purchaser hereby assumes and agrees to
perform and discharge all liabilities and continuing obligations of the Seller
specific to the Clearfield Center and Raleigh Center and disclosed herein as
follows:
a. the real estate leases specific to the Clearfield Center and the Raleigh
Center as listed on Schedule 2 attached hereto under the heading Leases; and
b. all other contracts, agreements policies, licenses, permits and
certifications in effect on the Closing Date and which are listed on
Schedule 2 attached hereto under the heading "Other Contracts and
Obligations".
c. Other than those liabilities and obligations listed on Schedule 2, Purchaser
assumes no responsibility for any other obligation.
CONSIDERATION
BASE CONSIDERATION. As consideration to Seller, Purchaser agrees to deliver
175,000 shares of common stock of the Purchaser within fifteen days of the "Open
For Business Date" (herein defined as the date that both the Raleigh Center and
Clearfield Center have processed their first donor). Both parties agree that the
175,000 shares of common stock are predicated upon a calculated Base Value of
$262,500 ($1.50 X 175,000) and an estimated investment by the purchaser of
$135,000 in total for both centers to render them ready to open for business.
Both parties further hereby agree that to the extent that the amount of
investment by the Purchaser exceeds $135,000, a corresponding reduction will be
made in the number of shares to be issued to Seller and to the extent that the
investment required of Purchaser is less than $135,000, a corresponding increase
will be made in the number of shares to be issued to Seller. By way of example,
if the actual investment by Purchaser totals $157,500, the Base Value would be
adjusted to $240,000 and the total number of shares of common stock to be issued
to Seller on the "Open For Business Date" would be 160,000. If the actual
investment by Purchaser totals 112,500, the Base Value would be adjusted to
$285,000 and the total number of shares to be issued would be 190,000.
ADDITIONAL CONSIDERATION. In addition to the Base Consideration, Seller and
Purchaser hereby agree on certain performance criteria which will serve as the
basis for Additional Consideration of a maximum of 125,000 shares of common
stock of Purchaser if all performance criteria as hereinafter defined are met.
Accordingly, if Clearfield Center and Raleigh Center in total generate a net
profit before taxes of $310,000 for the measurement period of twelve months
ending on the last day of eighteenth month following the Closing Date, Seller
shall receive as additional consideration 62,500 shares of common stock of
Purchaser. Further, if Clearfield Center and Raleigh Center in total generate a
net profit before taxes of $310,000 for the measurement period of twelve months
ending on the last day of thirtieth month following the Closing Date, Seller
shall receive as additional consideration another
3
<PAGE>
62,500 shares of common stock of Purchaser. The maximum Additional
Consideration to be delivered by Purchaser to Seller under this Agreement is
125,000 shares of common stock of Purchaser if the Clearfield Center and the
Raleigh Center generate a net profit before taxes of $310,000 or more for
each of the two twelve month periods.
In the event that the Employment Agreement between Seller (referred to as
Rabe in the Employment Agreement attached herewith as Exhibit A) and
Purchaser (referred to as the Corporation in the Employment Agreement
attached herewith as Exhibit A) is terminated for cause and the performance
criteria referred to above are met, Seller shall be entitled to receive the
Additional Consideration referred to above.
CONDITIONS PRECEDENT TO CLOSING
BY SELLER. Seller shall fulfill all of the following before Purchaser is
obligated to close:
a. have provided Purchaser with copies of all documents listed on
Schedule 2.
b. have provided Purchaser with Lease Assignments signed by the appropriate
landlord for all leases listed on Schedule 2 in a form reasonably
satisfactory to Purchaser.
c. have delivered all consents, approvals and assignments required in
connection with the completion of the transaction contemplated by this
Agreement in form and content reasonably satisfactory to the Purchaser.
BY PURCHASER. Purchaser shall fulfill all of the following before Seller is
obligated to close:
a. have provided Seller with a copy of a Board of Directors resolution
authorizing the transaction contemplated by this agreement.
b. have provided Seller with a Draft letter instructing the Purchaser's
transfer agent to issue Common Stock of SeraCare, Inc. to the Seller in
satisfaction of the Base Consideration.
c. have delivered all consents, approvals and assignments required in
connection with the completion of the transaction contemplated by this
Agreement in form and content reasonably satisfactory to the Seller.
d. Seller shall have been provided an opportunity to review Purchasers
Books and Records.
4
<PAGE>
REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to the Purchaser as follows (with the
understanding that the Purchaser is relying materially on each such
representation and warranty in entering into and executing this Agreement):
A. OWNERSHIP IN THE LEASES, RIGHTS AND INTERESTS BEING ACQUIRED BY THE
PURCHASER FREE AND CLEAR OF ALL ENCUMBRANCES. Seller hereby represents
and warrants that he has good title, valid rights and ownership free and
clear of all encumbrances to the Transferred Assets with every authority
to transfer, assign and sell such interest, right or ownership to the
Purchaser as contemplated by this Agreement.
B. DUE AUTHORIZATION. The Seller has full power and authority as an
individual to enter into and perform his obligations under this
Agreement and each agreement, instrument and document to be executed by
the Seller in accordance herewith.
C. ALL LIABILITIES AND OBLIGATIONS HAVE BEEN LISTED ON SCHEDULE 2.
Seller hereby represents and warrants that all leases, contracts or
other obligations to be assumed by the Purchaser have been listed on
Schedule 2 and that Seller knows of no other leases, contracts or other
obligations relating to the Centers. Seller understands that any leases,
finders fees, commissions, contracts or other obligations not listed on
Schedule 2 will not be assumed by Purchaser.
D. COMPLIANCE WITH LAWS: ENVIRONMENTAL MATTERS. Seller hereby represents
and warrants that conduct of Seller has not violated any laws, the
non-compliance with which could have a material adverse effect on the
Purchaser or the operation of the Clearfield Center and/or Raleigh
Center (collectively referred to herein as the "Centers") as plasma
collection centers. The Seller has complied in all material respects
with all judicial and governmental requirements relating to any federal,
state or local environmental laws, regulations or ordinances, the
non-compliance with which would have a material adverse effect on the
Purchaser or the operation of the Centers.
E. LEGAL PROCEEDINGS. Seller hereby represents and warrants that there
is no Order or Action pending, or, to the best knowledge of the Seller,
threatened, against or affecting Seller or the Transferred Assets that
individually or when aggregated with one or more other Orders or Actions
has or could reasonably be expected to have a material adverse effect on
the Centers or on the Seller's ability to perform its obligations under
the terms of this Agreement.
F. NO BROKERS OR FINDERS. Seller hereby represents and warrants that no
agent, broker, finder, or investment or commercial banker, or other
Person or firm engaged by or acting on behalf of Seller or any of
Sellers relatives or affiliates in connection with the negotiation,
execution or performance of the transaction contemplated by this
Agreement, is or will be entitled to any brokerage or finder's or
similar fee or
5
<PAGE>
other commission as a result of this Agreement or the transaction
contemplated hereby.
G. INDEMNIFICATION OF PURCHASER. Seller hereby agrees to indemnify and
hold harmless the Purchaser, affiliates of the Purchaser, and any
officer, director, employee and consultant of the Purchaser
(collectively, the "Indemnified Parties") from and against any and all
damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs and expenses which any of the Indemnified Parties may
sustain, or to which any of the Indemnified Parties may be subjected,
arising out of any breach or default by the Seller, excluding actions or
omissions of the Purchaser, of or under any of the representations,
warranties, covenants, agreements or other provisions of this Agreement
or any agreement or document executed in connection herewith.
H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect thereof, all covenants,
agreements, indemnities, representations and warranties made hereunder
or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the execution of this Agreement for a period of
thirty six months following the date hereof.
I. NO MATERIAL ADVERSE CHANGE. Between the date of the signing of this
Agreement and September 1, 1996, Seller has no knowledge of any
circumstance, change in business conditions, or other event which may
occur or continue to occur which could reasonably expected to have a
material adverse effect on the Centers. During that period, Seller will
continue to direct the activities of the Centers in a prudent business
manner.
OTHER
CLOSING DATE. The closing date of the transactions contemplated by this
Agreement shall take place at a time, date and place agreed upon by the
parties on or before September 3, 1996 (the "Closing" or "Closing Date").
CONFIDENTIALITY. The parties agree the material terms of this Agreement shall
remain absolutely confidential. In the event any party or any officer,
director, shareholder or representative of either party to this agreement is
required to disclose the existence or terms of this Agreement by subpoena,
discovery or legal process, then such party shall utilize its best efforts to
notify the opposing parties prior to any disclosure so as to provide the
opposing parties with an opportunity to intervene for the purpose of
protecting its interests in non-disclosure.
JOINT DRAFTING. Both Seller and Purchaser have jointly participated in the
negotiations and drafting of this Agreement. In the event of a question of
intent or interpretation arises, this Agreement shall be construed as having
been drafted by both parties.
6
<PAGE>
ATTORNEY'S FEES. In the event of any dispute arising out of or related to
this Agreement, the prevailing party shall be entitled to recover, in
addition to any other damages afforded by law, all reasonable attorney's fees
incurred in the prosecution and defense of such and action.
APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
ENTIRE AGREEMENT. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
transaction contemplated by this Agreement. Each party to this Agreement
acknowledges that no representation, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or
binding on either party.
MODIFICATIONS. Any modification of this Agreement shall be effective only if
it is in writing and signed by both parties to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first written above.
SELLER: PURCHASER:
By: /s/ Brad Rabe By: /s/ Barry D. Plost
-------------------------- ----------------------------
Brad Rabe, an Individual Barry D. Plost
President and CEO
SeraCare, Inc.
7
<PAGE>
ASSET EXCHANGE AGREEMENT
dated as of
July 2, 1996
between
Silver State Plasma Products, Inc.
and
SeraCare, Inc.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
Recitals
ARTICLE 1
EXCHANGE OF ASSETS . . . . . . . . . . 1
1.1 Transfer of Nevada Assets . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Personal Property. . . . . . . . . . . . . . . . . . . . 2
1.1.2 Leasehold Interests. . . . . . . . . . . . . . . . . . . 2
1.1.3 Prepayments. . . . . . . . . . . . . . . . . . . . . . . 2
1.1.4 Intellectual Property. . . . . . . . . . . . . . . . . . 2
1.1.5 Donor Base . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.6 Books and Records. . . . . . . . . . . . . . . . . . . . 2
1.1.7 Assigned Contracts . . . . . . . . . . . . . . . . . . . 2
1.1.8 Permits. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Assets Not Transferred. . . . . . . . . . . . . . . . . . . . . . 2
1.2.1 Refund Claims. . . . . . . . . . . . . . . . . . . . . . 3
1.2.2 Certain Third Party Claims . . . . . . . . . . . . . . . 3
1.2.3 Unrelated and Corporate Assets . . . . . . . . . . . . . 3
1.2.4 Accounts Receivable. . . . . . . . . . . . . . . . . . . 3
1.2.5 Cash and Cash Equivalents. . . . . . . . . . . . . . . . 3
1.2.6 Inventory. . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Transfer of APS Assets. . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2
CLOSING/PURCHASE PRICE/
ASSUMPTION OF LIABILITIES. . . . . . . . . 3
2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Purchase Price and Adjustment . . . . . . . . . . . . . . . . . . 4
2.2.1 Purchase Price and Noncompetition
Payment. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.2 Post-Closing Adjustment to Purchase
Price. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Payment to Silver State on Closing Date . . . . . . . . . . . . . 4
2.4 Instruments of Conveyance and Transfer. . . . . . . . . . . . . . 4
2.5 Assumption of Certain Liabilities . . . . . . . . . . . . . . . . 5
2.6 Non-Assumption of Liabilities . . . . . . . . . . . . . . . . . . 5
2.7 Tax Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Sales and Use Tax . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SILVER STATE . . . . 6
3.1 Organization, Corporate Power and Authority . . . . . . . . . . . 6
3.2 Authorization of Agreements . . . . . . . . . . . . . . . . . . . 6
3.3 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . 6
i
<PAGE>
3.4 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 6
3.5 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Financial Statements; Changes . . . . . . . . . . . . . . . . . . 7
3.7 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Assigned Contracts. . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Condition of Property . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Use of Real Property. . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Dividends and Other Distributions . . . . . . . . . . . . . . . . 8
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 9
3.15 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 9
3.17 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SERACARE . . . . . 10
4.1 Organization, Corporate Power and Authority . . . . . . . . . . . 10
4.2 Authorization of Agreement. . . . . . . . . . . . . . . . . . . . 10
4.3 Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 11
4.6 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 5
ADDITIONAL CONTINUING COVENANTS. . . . . . . . 11
5.1 Nondisclosure of Proprietary Data . . . . . . . . . . . . . . . . 11
5.2 Tax Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Silver State's Covenant Not to Compete. . . . . . . . . . . . . . 12
5.3.1 Restrictions . . . . . . . . . . . . . . . . . . . . . . 12
5.3.2 Special Remedies and Enforcement . . . . . . . . . . . . 12
5.3.3 Severability . . . . . . . . . . . . . . . . . . . . . . 12
5.3.4 Responsible Head to FDA. . . . . . . . . . . . . . . . . 13
ARTICLE 6
INDEMNIFICATION. . . . . . . . . . . . 13
6.1 Obligations of Silver State . . . . . . . . . . . . . . . . . . . 13
6.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Notice by Silver State. . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 7
GENERAL. . . . . . . . . . . . . . 15
7.1 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Schedules; Exhibits; Integration. . . . . . . . . . . . . . . . . 15
7.3 Best Efforts; Further Assurances. . . . . . . . . . . . . . . . . 15
7.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.5 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.8 Publicity and Reports . . . . . . . . . . . . . . . . . . . . . . 16
ii
<PAGE>
7.9 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 16
7.10 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . 16
7.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.12 Expenses and Attorneys Fees . . . . . . . . . . . . . . . . . . . 17
7.13 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.14 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . 17
7.15 Bulk Transfer Laws. . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8
DEFINITIONS. . . . . . . . . . . . . 18
iii
<PAGE>
Exhibits
EXHIBIT A Form of Promissory Note
EXHIBIT B Assignment and Assumption Agreement
EXHIBIT C Silver State Bill of Sale
EXHIBIT D SeraCare Bill of Sale
Schedules
iv
<PAGE>
ASSET EXCHANGE AGREEMENT
This Asset Exchange Agreement is entered into as of July 2, 1996,
between SeraCare, Inc., a Delaware corporation ("SeraCare"), and Silver State
Plasma Products, Inc., a Nevada corporation ("Silver State"). Capitalized terms
used herein without definition are defined in Article 11.
R E C I T A L S
WHEREAS, Silver State owns certain assets more particularly described
in this Agreement, including a real property lease and personal property, used
by it in the Business; and
WHEREAS, SeraCare recently purchased certain assets (the "APS ASSETS")
from America Plasma Services, L.P., a Texas limited partnership ("AMERICA
PLASMA"), pursuant to that certain Asset Purchase Agreement; and
WHEREAS, Silver State desires to transfer the Nevada Assets in
exchange for, and SeraCare desires to acquire the Nevada Assets in exchange for,
the APS Assets, and SeraCare is willing to assume certain liabilities relating
to the Nevada Assets, and Silver State is willing to assume the liabilities of
the APS Assets, all on the terms and conditions described herein.
A G R E E M E N T
In consideration of the mutual promises contained herein and intending
to be legally bound, the parties agree as follows:
ARTICLE 1
EXCHANGE OF ASSETS
1.1 TRANSFER OF NEVADA ASSETS. Subject to the terms and conditions of
this Agreement, on the Closing Date, Silver State will transfer, assign and
deliver to SeraCare, and SeraCare will acquire from Silver State, all of Silver
State's right, title and interest in and to all of Silver State's assets, rights
and properties, of every kind or nature, which are used in or are related to the
Business or are necessary for the operation of the Business as presently
conducted, except the Excluded Assets (the "NEVADA ASSETS"). The Nevada Assets
include, but are not limited to, the following:
<PAGE>
1.1.1 PERSONAL PROPERTY. All tangible personal
property, including, but not limited to, fixtures, vehicles,
machinery and equipment, furniture, tools, supplies, signs, spare
parts and inventory, a list of which as of the date hereof is set
forth in Schedule 1.1.1;
1.1.2 LEASEHOLD INTERESTS. The leasehold interest
in the real property located at 680 North Las Vegas Blvd., Las
Vegas, Nevada, including all leasehold improvements to the leased
premises (the "LEASEHOLD INTERESTS");
1.1.3 PREPAYMENTS. All prepaid items, deferred
charges, credits, reserves and deposits paid by Silver State,
including lease deposits, rent, telephone and utilities, a list of
which as of the date hereof is set forth on the Financial
Statements referenced in Section 3.6(a) hereof;
1.1.4 INTELLECTUAL PROPERTY. All trademarks and
trade names, service marks and all unregistered intellectual
property, all trade secrets, confidential information and
know-how, together with the goodwill and the business appurtenant
thereto (collectively, the "INTELLECTUAL PROPERTY");
1.1.5 DONOR BASE. All of Silver State's data
relating to its donor base;
1.1.6 BOOKS AND RECORDS. All books and records and
all files, documents, papers and agreements (including, but not
limited to, those contained in computerized storage media)
pertaining to the Nevada Assets, the Assumed Liabilities or
otherwise to the Business;
1.1.7 ASSIGNED CONTRACTS. All rights of Silver
State under that certain Contract of Lease, dated as of November
10, 1995, by and between Silver State and Alexander & Thelma
Coblentz Trust, and the Plasma Contract, dated as of July 11,
1995, by and between Silver State and Alpha Therapeutic
Corporation (the "ASSIGNED CONTRACTS"); and
1.1.8 PERMITS. All transferable Permits and
equivalent documents, including Silver State's FDA license, QPP
certification and local business licenses relating to the Business.
1.2 ASSETS NOT TRANSFERRED. The following assets, rights and properties
of Silver State are specifically
<PAGE>
excluded from the Nevada Assets and shall be retained by Silver State (the
"EXCLUDED ASSETS"):
1.2.1 REFUND CLAIMS. Rights to or claims for
refunds of taxes and other governmental charges for periods ending
on or prior to the Closing Date and the benefit of net operating
loss carry-forwards or other tax credits of Silver State;
1.2.2 CERTAIN THIRD PARTY CLAIMS. Any rights of
indemnification, contribution or reimbursement that may exist
under the Assigned Contracts in respect of liabilities or
obligations retained by Silver State;
1.2.3 UNRELATED AND CORPORATE ASSETS. Assets used
by Silver State or its Affiliates exclusively in other businesses
of Silver State or its Affiliates, all nontransferable Permits and
assets relating to Silver State's corporate functions (including,
but not limited to, the corporate charter, taxpayer and other
identification numbers, income tax records, seals, minute books
and stock transfer books);
1.2.4 ACCOUNTS RECEIVABLE. All accounts receivable
of the Business as of the Closing Date;
1.2.5 CASH AND CASH EQUIVALENTS. All cash on hand
and cash equivalents; and
1.2.6 INVENTORY. All plasma inventory.
1.3 TRANSFER OF APS ASSETS. Subject to the terms and conditions of this
Agreement, on the Closing Date, SeraCare will transfer, assign and deliver to
Silver State, and Silver State will acquire from SeraCare, all of SeraCare's
right, title and interest in and to the APS Assets, including, without
limitation, that certain Asset Purchase Agreement of even date herewith by and
between SeraCare and American Plasma.
ARTICLE 2
CLOSING/PURCHASE PRICE/
ASSUMPTION OF LIABILITIES
2.1 THE CLOSING.
The Closing will take place at American Plasma Services, L.P., 719
Sawdust Road, Suite 205, Spring, Texas 77380 at 1:00 p.m. on July 2, 1996.
<PAGE>
2.2 PURCHASE PRICE AND ADJUSTMENT.
2.2.1 PURCHASE PRICE AND NONCOMPETITION PAYMENT. Subject to the
terms and conditions of this Agreement, SeraCare agrees to acquire the Nevada
Assets from Silver State, to assume the Assumed Liabilities and to deliver at
the Closing (i) the APS Assets; (ii) $110,000 in cash (the "CASH AMOUNT"); and
(iii) a promissory note in the principal amount of $300,000 in the form attached
hereto as Exhibit A. Such note will be secured by the collateral transferred
herein by the Security Agreement attached hereto as Exhibit E. The Cash Amount
shall be subject to adjustment under Section 2.2.2. SeraCare and Silver State
agree that $50,000 of the cash consideration shall be attributable to Silver
State's covenant not to compete set forth in Section 5.7 (the "NONCOMPETITION
PAYMENT").
2.2.2 POST-CLOSING ADJUSTMENT TO PURCHASE PRICE. The Purchase
Price shall be subject to adjustment after the Closing in order to prorate as of
the Closing Date as follows: (i) the Purchase Price shall be reduced by the
amount of accrued salaries and wages (including taxes, vacation and sick pay),
base and percentage rents and telephone and utility charges attributable to the
Business as of the Closing Date; and (ii) the Purchase Price shall be increased
by the amount of prepaid items such as rent, telephone and utilities included in
the Nevada Assets and attributable the operation of the Business prior to the
Closing. Within 60 days of the Closing, SeraCare shall provide to Silver State
an accounting of the foregoing prorations. In the event of a net increase in
the Purchase Price, SeraCare shall pay Silver State such increase within 30 days
after delivery of the accounting. In the event of a net decrease in the
Purchase Price, SeraCare shall be entitled to offset the next monthly payment(s)
under the Promissory Note in the amount of such decrease.
2.3 PAYMENT TO SILVER STATE ON CLOSING DATE. On the Closing Date,
SeraCare shall pay the Cash Amount to Silver State by check.
2.4 INSTRUMENTS OF CONVEYANCE AND TRANSFER.
2.4.1 On the Closing Date, Silver State shall execute and deliver
or cause to be delivered to SeraCare (a) the Silver State Bill of Sale (the form
of which is attached hereto as Exhibit C), (b) the Assignment and Assumption
Agreement, (c) assignments and estoppel agreements in form and substance
reasonably satisfactory to SeraCare with respect to the Leasehold Interests, and
(d) such other documents as may be reasonably requested by SeraCare in order to
carry out the Transactions.
<PAGE>
2.4.2 On the Closing Date, SeraCare shall execute and deliver such
documents as may be reasonably requested by Silver State in order to carry out
the assignment of the APS Assets as provided in Section 1.3., including the
SeraCare Bill of Sale (the form of which is attached hereto as Exhibit D).
2.5 ASSUMPTION OF CERTAIN LIABILITIES. On the Closing Date, SeraCare
shall execute and deliver to Silver State the Assignment and Assumption
Agreement, pursuant to which, subject to Section 2.6, SeraCare shall assume and
agree to pay, perform and discharge when due, (i) all obligations of Silver
State arising after the Closing Date under the terms of the Assigned Contracts,
except any liability or obligation arising thereunder as a result of a breach of
any such Assigned Contract prior to the Closing Date, and (ii) accrued salaries
and wages (including taxes, vacation and sick pay), base and percentage rents
and telephone and utility charges attributable to the Business as of the Closing
Date (collectively, the "ASSUMED LIABILITIES").
2.6 NON-ASSUMPTION OF LIABILITIES. SeraCare is not assuming, and shall
not be deemed to have assumed any liability or obligation of Silver State or any
Affiliate of Silver State, of any kind or nature, whether absolute, contingent,
accrued or otherwise, known or unknown, and whether arising before or after the
Closing Date which is not set forth in Section 2.5, including, but not limited
to: (i) liabilities for Taxes with respect to any period or portion thereof
ending on or prior to the Closing Date; or (ii) liabilities (including but not
limited to any liabilities resulting from unfunded contributions under any
employee benefit plan subject to ERISA) for any pension, profit-sharing or
welfare benefit plans or arrangement, oral or written, maintained by Silver
State or its Affiliates.
2.7 TAX ALLOCATION. SeraCare and Silver State shall allocate the Purchase
Price to broad categories constituting components of the Assets in accordance
with the basis of allocation set forth in Schedule 2.7. Each party will report
the Transactions in accordance with the agreed upon allocation, except to the
extent that modifications are necessary to reflect changes in the Nevada Assets
and Assumed Liabilities between the date hereof and the Closing Date, for all
federal, state, local and other tax purposes, but such allocation shall not
constrain reporting for other purposes.
2.8 SALES AND USE TAX. SeraCare and Silver State shall cooperate in
preparing and filing use and sales tax returns relating to, and SeraCare shall
pay any and all sales, transfer or use tax due with regard to, the Transactions.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SILVER STATE
Except as otherwise indicated on the schedules attached hereto, Silver
State represents, warrants and agrees:
3.1 ORGANIZATION, CORPORATE POWER AND AUTHORITY. Silver State is a
corporation duly organized, validly existing and in good standing under the laws
of the state in which it is incorporated and is duly qualified to do business as
a foreign corporation in the jurisdictions in which Silver State conducts the
Business, except where the failure so to qualify will not have a material
adverse effect on the Nevada Assets or the Business. Silver State has all
requisite corporate power and authority to own, operate and lease the Nevada
Assets, to conduct the Business, to execute and deliver the Transaction
Documents and to perform its obligations thereunder.
3.2 AUTHORIZATION OF AGREEMENTS. The execution, delivery and performance
by Silver State of the Transaction Documents, and the consummation by it of the
Transactions, have been duly authorized by all necessary corporate action by
Silver State. This Agreement has been, and each other Transaction Document will
be at the Closing, duly executed and delivered by Silver State and constitutes,
or will, when delivered, constitute, the legal, valid and binding obligations of
Silver State, enforceable against Silver State in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
3.3 EFFECT OF AGREEMENT. The execution, delivery and performance by
Silver State of the Transaction Documents, and the consummation by it of the
Transactions, will not violate the charter documents or bylaws of Silver State
or any Law to which Silver State is subject, or any judgment, award or decree or
any material indenture, material agreement or other material instrument to which
Silver State is a party, or by which Silver State or the Nevada Assets are
bound, or conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any Encumbrance of any
nature whatsoever upon any of the Nevada Assets, except consents that may be
required for assignment of certain of the Assigned Contracts.
3.4 GOVERNMENTAL APPROVALS. Except as set forth in Schedule 3.4, no
Approval or Order or action of or filing
<PAGE>
with any Governmental Entity is required to be obtained by Silver State for the
execution and delivery by Silver State of the Transaction Documents or the
consummation by it of the Transactions.
3.5 PERMITS. Schedule 3.5 sets forth each Permit (and applications
therefore) obtained by Silver State in connection with the conduct of the
Business together with the name of the Governmental Entity issuing such Permit.
Such Permits are valid and in full force and effect. Except as set forth in
Schedule 3.5, all such Permits are freely transferable by Silver State, and upon
Closing SeraCare will have all right, title and interest of the holder thereof.
All Permits necessary in connection with the operation of the Business as
presently conducted have been obtained. No suspension, cancellation or
termination of any Permits required by any Governmental Entity to permit the
Business to be conducted is threatened or imminent.
3.6 FINANCIAL STATEMENTS; CHANGES.
(a) UNAUDITED FINANCIAL STATEMENTS. Silver State has delivered
to SeraCare balance sheets for Silver State at March 31, 1995 and 1996, and
the related statements of operations and cash flows and changes in
stockholder's equity for the periods then ended. All such interim financial
statements have been prepared in conformity with GAAP applied on a consistent
basis except for changes, if any, required by GAAP and disclosed therein
(except for the absence of notes and normal recurring year-end adjustments).
The statements of operations and cash flows present fairly the results of
operations and cash flows of Silver State for the respective periods covered,
and the balance sheets present fairly the financial condition of Silver State
as of their respective dates.
(b) NO MATERIAL ADVERSE CHANGES. Since March 31, 1996, whether
or not in the ordinary course of business, there has not been, occurred or
arisen any change in or event affecting Silver State or the Business that has
had or may reasonably be expected to have a material adverse effect on Silver
State or the Business.
3.7 TAX MATTERS. Silver State has timely filed (or, where permitted or
required, its direct or indirect parents have timely filed) all Tax Returns
required of it and has paid all Taxes, including personal property Taxes, due
for all periods or portions of periods ending on or before the Closing Date
(except as provided in the following sentence). Adequate provision has been made
in the books and records of Silver State, and to the extent required by GAAP in
the Financial Statements for all Taxes whether or not due and payable and
whether or not disputed to the extent not paid.
<PAGE>
The information set forth in the Tax Returns provided to SeraCare, including for
the year ended December 31, 1995, is true and correct in all material respects.
3.8 ASSIGNED CONTRACTS. Each Assigned Contract is valid and subsisting;
Silver State has duly performed all its obligations thereunder to the extent
that such obligations to perform have accrued; and no breach or default, alleged
breach or default, or event which would (with the passage of time, notice or
both) constitute a breach or default thereunder by Silver State, or, to the best
knowledge of Silver State, any other party or obligor with respect thereto, has
occurred or as a result of the Transactions will occur.
3.9 CONDITION OF PROPERTY. Silver State has good and marketable title to
or other right to use, free of Encumbrances, all of the Nevada Assets, except
for (a) liens for Taxes not yet due, and (b) imperfections in title, if any, not
material in amount, and which, individually or in the aggregate, do not
interfere with the conduct of the Business or the use of the Nevada Assets.
3.10 USE OF REAL PROPERTY. All Leasehold Interests are used and operated
in compliance and conformity with all applicable leases, except to the extent
that the failure so to conform would not materially adversely affect the
Business. Silver State has not received notice of any violation of any
applicable zoning or building regulation or ordinance relating to the Leasehold
Interests and, to the knowledge of Silver State, there is no such violation.
3.11 LEGAL PROCEEDINGS. There is no Order or Action pending, or, to the
best knowledge of Silver State, threatened, against or affecting Silver State or
the Nevada Assets that individually or when aggregated with one or more other
Orders or Actions has or would reasonably be expected to have a material adverse
effect on the Business or on Silver State's ability to perform its obligations
under the Transaction Documents.
3.12 DIVIDENDS AND OTHER DISTRIBUTIONS. There has been no dividend or
other distribution of assets or securities whether consisting of money, property
or any other thing of value, declared, issued or paid by Silver State subsequent
to March 31, 1996.
3.13 INSURANCE. Silver State is, and at all times during the past two
years has been, insured with reputable insurers against all risks normally
insured against by companies engaged in similar businesses. All insurance
policies and bonds are in full force and effect. Schedule 3.13 lists all
insurance policies and bonds that
<PAGE>
are material to the Business. Silver State is not in default under any such
policy or bond and has received no notice of cancellation of any such policy or
bond.
3.14 COMPLIANCE WITH LAW. Silver State is organized and has conducted the
Business in accordance with applicable Laws in all material respects. The
forms, procedures and practices of Silver State are in compliance with all such
Laws, to the extent applicable, in all material respects.
3.15 EMPLOYEE BENEFITS.
(a) Silver State and its ERISA affiliates are in full compliance
with the applicable provisions of ERISA and all other Laws applicable with
respect to all employee benefit plans, agreements and arrangements and to all
group health plans of any ERISA affiliate.
(b) Silver State has (i) no stock bonus, pension or
profit-sharing plan within the meaning of Section 401(a) of the Code, (ii) no
plans subject to Title IV of ERISA and (iii) has never contributed to or had
an obligation to contribute to any multiemployer plan (within the meaning of
Section 3(37) of ERISA).
3.16 ENVIRONMENTAL MATTERS. Schedule 3.16 sets forth (i) a description of
all investigations, inquiries or other proceedings now pending or, to Silver
State's knowledge, threatened by any Governmental Entity with respect to the
Real Property, or otherwise to the Business, or against Silver State in
connection with the actual or alleged failure to comply with any requirement of
any Law relating to air or water quality, waste management, Hazardous
Substances, or the protection of health or the environment; (ii) a list of all
waste disposal, treatment and storage sites used in the Business, including the
address of each such site, a description of the waste disposed of, treated or
stored at each such site; (iii) a list containing the name and address of each
Person engaged in the handling, transportation or disposal of waste materials in
connection with the Business, a description of such waste. Silver State has
maintained all documents and records and made all filings required by applicable
Law, relating to air or water quality, waste management, Hazardous Substances,
or the protection of health or the environment. The air and water emission,
discharge and waste disposal practices used by Silver State fully comply with,
and have at all times fully complied with, all applicable Laws in all material
respects. None of the Nevada Assets is contaminated with any Hazardous
Substance.
<PAGE>
3.17 NO BROKERS OR FINDERS.
No agent, broker, finder, or investment or commercial banker, or
other Person or firm engaged by or acting on behalf of Silver State or any of
its Affiliates in connection with the negotiation, execution or performance of
the Transaction Documents, is or will be entitled to any brokerage or finder's
or similar fee or other commission as a result of this Agreement or the
Transactions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SERACARE
SeraCare represents, warrants and agrees as follows:
4.1 ORGANIZATION, CORPORATE POWER AND AUTHORITY. SeraCare is a corporation
duly organized, validly existing and in good standing under the laws of the
state in which it is incorporated and is duly qualified to do business as a
foreign corporation in the jurisdictions in which SeraCare conducts its
business, except where the failure so to qualify will not have a material
adverse effect on SeraCare's ability to perform its obligations under the
Transaction Documents. SeraCare has all requisite corporate power and authority
to acquire, own, lease and operate the Nevada Assets, to conduct the Business
after the Closing, to execute and deliver the Transaction Documents to which it
is a party and to perform its obligations thereunder.
4.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
by SeraCare of the Transaction Documents to which it is a party, and the
consummation by it of the Transactions, have been duly authorized by all
necessary corporate action by SeraCare. This Agreement has been, and each other
Transaction Document to which SeraCare is a party will be at the Closing, duly
executed and delivered by SeraCare and constitute, or will, when delivered,
constitute, the legal, valid and binding obligations of SeraCare, enforceable
against SeraCare in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws and equitable principles relating to or limiting creditors' rights
generally.
4.3 EFFECT OF AGREEMENT. The execution, delivery and performance by
SeraCare of the Transaction Documents to which it is a party, and the
consummation by it of the Transactions, will not violate the charter documents
or bylaws of SeraCare or any Law to which SeraCare is subject, or any judgment,
award or decree or any material indenture, material agreement or other material
instrument to which
<PAGE>
SeraCare is a party, or by which SeraCare or its properties or assets are bound,
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any Encumbrance of any
nature whatsoever upon any of the properties or assets of SeraCare, except to
the extent the effect thereof will not be materially adverse to SeraCare's
ability to fulfill its obligations under the Transaction Documents to which it
is a party.
4.4 GOVERNMENTAL APPROVALS. No Approval or Order or action of or filing
with any Governmental Entity is required to be obtained by SeraCare for the
execution and delivery by SeraCare of the Transaction Documents to which it is a
party or the consummation by it of the Transactions.
4.5 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
SeraCare or its Affiliates in connection with the negotiation, execution or
performance of the Transaction Documents, is or will be entitled to any broker's
or finder's or similar fees or other commissions as a result of this Agreement
or such transactions.
4.6 LEGAL PROCEEDINGS. There is no Order or Action pending or to the best
knowledge of SeraCare, threatened against or affecting SeraCare that
individually or when aggregated with one or more other Orders or Actions has or
might reasonably be expected to have a material adverse effect on 's ability to
perform its obligations under the Transaction Documents.
ARTICLE 5
ADDITIONAL CONTINUING COVENANTS
5.1 NONDISCLOSURE OF PROPRIETARY DATA. After the Closing, neither Silver
State nor any of its representatives or Affiliates shall, at any time, make use
of, divulge or otherwise disclose, directly or indirectly, any trade secret or
other proprietary data (including, but not limited to, any customer list, record
or financial information concerning the Business. In addition, neither Silver
State nor any of its representatives or Affiliates shall make use of, divulge or
otherwise disclose, directly or indirectly, to Persons other than SeraCare, any
confidential information concerning the Business.
5.2 TAX COOPERATION. After the Closing, Silver State and SeraCare shall,
and shall cause their respective Affiliates to, cooperate fully in the
preparation of all Tax Returns and shall provide, or cause to be provided to
each
<PAGE>
other any records and other information requested by such parties in connection
therewith as well as access to, and the cooperation of, their respective
accountants. Silver State and SeraCare shall, and shall cause their respective
Affiliates to, cooperate fully in connection with any Tax investigation, audit
or other proceeding.
5.3 SILVER STATE'S COVENANT NOT TO COMPETE.
5.3.1 RESTRICTIONS. In consideration of the Noncompetition
Payment, Silver State agrees for a period of five years after the Closing
Date, Silver State shall not, directly or indirectly, within a 50 mile
radius of Las Vegas, Nevada, compete with, assist any Person in competing
with or acquire an interest in any Person competing with, any product
presently manufactured and distributed by Silver State, whether as an
owner, shareholder, joint venturer, partner, officer, employee, consultant,
agent or otherwise. Nothing contained in this Section 5.3 shall prohibit
Silver State or its Affiliates from holding and making investments in
securities of any corporation or limited partnership whose securities are
traded in a generally recognized market, provided, Silver State's or such
Affiliate's equity interest therein does not exceed five percent (5%) of
the outstanding shares or interests in such corporation or partnership.
5.3.2 SPECIAL REMEDIES AND ENFORCEMENT. Silver State and SeraCare
agree that a breach by Silver State of any of the covenants set forth in
this Section 5.3 could cause irreparable harm to SeraCare, that SeraCare's
remedies at law in the event of such breach would be inadequate, and that,
accordingly, in the event of such breach, a restraining order or injunction
or both may be issued against Silver State, in addition to any other rights
and remedies that are available to . In connection with any such action or
proceeding for injunctive relief, Silver State hereby waives the claim or
defense that a remedy at law alone is adequate and agrees, to the maximum
extent permitted by Law, to have each provision of this Section 5.3
specifically enforced against Silver State and consents to the entry of
injunctive relief against Silver State enforcing or restraining any breach
or threatened breach of this Section 5.3.
5.3.3 SEVERABILITY. If this Section 5.3 is more restrictive than
permitted by the Laws of any jurisdiction in which SeraCare seeks
enforcement hereof, this Section 5.3 shall be limited to the extent
required to permit enforcement under such Laws. In particular, the parties
intend that the covenants
<PAGE>
contained in Section 5.3.1 shall be construed as a series of separate
covenants, one for each county and city in which the Business has been
carried on and in which SeraCare conducts a similar business after the
Closing Date. Except for geographic coverage, each such separate covenant
shall be deemed identical in terms. If, in any proceeding, a court or
arbitrator shall refuse to enforce any of the separate covenants, then such
unenforceable covenant shall be deemed eliminated from this Section 5.3 for
the purpose of those proceedings to the extent necessary to permit the
remaining separate covenants to be enforced. If the provisions of this
Section 5.3 shall ever be deemed to exceed the duration or geographic
limitations or scope permitted by applicable law, then such
provisions shall be reformed to the maximum time or geographic limitations
in scope, as the case may be, permitted by applicable Law.
5.3.4 RESPONSIBLE HEAD TO FDA. Silver State shall provide without
charge to SeraCare the services of the acting "responsible head" to the FDA
for a maximum of 90 days or until a new "responsible head" is designated
for the Business. SeraCare agrees to indemnify Silver State for the
services of the "responsible head" according to the provisions of Article 6
below.
ARTICLE 6
INDEMNIFICATION
6.1 OBLIGATIONS OF SILVER STATE.
Silver State agrees to indemnify and hold harmless SeraCare and its
directors, officers, employees, affiliates, agents and assigns from and against
any and all Losses, directly or indirectly, as a result of, or based upon or
arising from:
(a) any breach of any representation, warranty or covenant of
Silver State made in this Agreement; or
(b) any liability or obligation of, or claims against, Silver
State or the Business other than the Assumed Liabilities.
6.2 PROCEDURE.
(a) NOTICE. Any party seeking indemnification with respect to
any Loss shall give notice to the party required to provide indemnity
hereunder (the "Indemnifying Party").
<PAGE>
(b) DEFENSE. If any claim, demand or liability is asserted by any
third party against any Indemnified Party, the Indemnifying Party shall, upon
the written request of the Indemnified Party, defend any actions or
proceedings brought against the Indemnified Party in respect of matters
embraced by the indemnity with counsel satisfactory to the Indemnified Party.
If, after a request to defend any action or proceeding, the Indemnifying
Party neglects to defend the Indemnified Party, a recovery against the latter
suffered by it in good faith, is conclusive in its favor against the
Indemnifying Party, provided however that, if the Indemnifying Party has not
received reasonable notice of the action or proceeding against the
Indemnified Party, or is not allowed to control its defense, judgment against
the Indemnified Party is only presumptive evidence against the Indemnifying
Party. Each party hereto, to the extent that it is or becomes an
Indemnifying Party, hereby stipulates that a judgment against the Indemnified
Party shall be conclusive upon the Indemnifying Party. The parties shall
cooperate in the defense of all third party claims which may give rise to
Indemnifiable Claims hereunder. In connection with the defense of any claim,
each party shall make available to the party controlling such defense, any
books, records or other documents within its control that are necessary or
appropriate for such defense.
(c) ADJUSTMENTS FOR INSURANCE PROCEEDS. The amount of any Loss
entitling a party to indemnification under this Article 6 shall be reduced by
the amount of any insurance proceeds recovered by the Indemnified Party for
such Loss, net of all costs and expenses incurred in collecting such
insurance proceeds (including, without limitation, reasonable attorneys'
fees). Nothing in this Section 6.2 shall be deemed to obligate any person to
maintain any insurance or to pursue any claim against any insurer or third
party.
6.3 NOTICE BY SILVER STATE. Silver State agrees to notify SeraCare of any
liabilities, claims or misrepresentations, breaches or other matters covered by
this Article 6 upon discovery or receipt of notice thereof (other than from ),
whether before or after Closing.
6.4 OFFSET. The principal amount of the Promissory Note shall be reduced
in the amount of any expenses, liabilities or obligations relating to the pre-
Closing operations of the Business that are paid by SeraCare after the Closing
only by agreement of Silver State or by the amount of any indemnification
payment required by Silver State under Section 6.2(b).
<PAGE>
ARTICLE 7
GENERAL
7.1 AMENDMENTS; WAIVERS. This Agreement and any schedule or exhibit
attached hereto may be amended only by agreement in writing of all parties. No
waiver of any provision nor consent to any exception to the terms of this
Agreement shall be effective unless in writing and signed by the party to be
bound and then only to the specific purpose, extent and instance so provided.
7.2 SCHEDULES; EXHIBITS; INTEGRATION. Each schedule and exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement, although schedules need not be attached to each copy
of this Agreement. This Agreement, together with such schedules and exhibits,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements and understandings of the
parties in connection therewith, including, but not limited to, the letter of
intent dated April 3, 1996, between SeraCare and Silver State.
7.3 BEST EFFORTS; FURTHER ASSURANCES. Each party shall execute and
deliver both before and after the Closing such further certificates, agreements
and other documents and take such other actions as the other party may
reasonably request to consummate or implement the transactions contemplated
hereby or to evidence such events or matters.
7.4 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of California without regard to conflicts of law doctrines except to the
extent that certain matters are preempted by federal law or are governed by the
law of the jurisdiction of incorporation of the respective parties.
7.5 NO ASSIGNMENT. Neither this Agreement nor any rights or obligations
under it are assignable except that SeraCare may assign its rights hereunder to
any post-Closing purchaser of a substantial part of the Nevada Assets.
7.6 HEADINGS. The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
7.7 COUNTERPARTS. This Agreement and any amendment hereto or any other
agreement (or document) delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All of
<PAGE>
such counterparts shall constitute one and the same agreement (or other
document) and shall become effective (unless otherwise provided therein) when
one or more counterparts have been signed by each party and delivered to the
other party.
7.8 PUBLICITY AND REPORTS. Silver State and SeraCare shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
party shall issue any press release, publicity statement or other public notice
relating to this Agreement, or the transactions contemplated by this Agreement,
without obtaining the prior consent of the other party except to the extent that
a particular action is required by applicable Law.
7.9 REMEDIES CUMULATIVE. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available. In addition, Article 6 shall not be deemed to preclude or
otherwise limit in any way the exercise of any other rights or pursuit of other
remedies for the breach of this Agreement or with respect to any
misrepresentation.
7.10 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
to the benefit of each party, and nothing in this Agreement, express or implied,
is intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third Person to (or to
confer any right of subrogation or action over against) any party to this
Agreement.
7.11 NOTICES.
Any notice or other communication hereunder must be given in
writing and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism or (c) mailed by certified or registered mail,
postage prepaid, receipt requested as follows:
IF TO SERACARE, ADDRESSED TO:
SeraCare, Inc.
1925 Century Park East, Suite 1970
Los Angeles, California 90067
Facsimile: (310) 772-7770
Attention: Mr. Barry Plost
<PAGE>
WITH A COPY TO:
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Facsimile: (714) 669-6994
Attention: David A. Krinsky, Esq.
IF TO SILVER STATE, ADDRESSED TO:
Silver State Plasma Products, Inc.
105 Chapel Drive
Lafayette, Louisiana 70593-0120
Facsimile: (318) 981-6248
Attention: Mr. Rodney L. Savoy
WITH A COPY TO:
Barry J. Heinen
202 General Gardner Avenue
Lafayette, Louisiana 70501
Facsimile: (318) 232-4884
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 7.11 and an appropriate answerback is received, (ii) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when actually delivered at such address.
7.12 EXPENSES AND ATTORNEYS FEES. Silver State and SeraCare shall each pay
their own expenses incident to the negotiation, preparation and performance of
this Agreement and the transactions contemplated hereby, including but not
limited to the fees, expenses and disbursements of their respective accountants
and counsel. In the event of any Action for the breach of this Agreement or
misrepresentation by any party, the prevailing party shall be entitled to
reasonable attorney's fees, costs and expenses incurred such Action.
7.13 SURVIVAL. The representations and warranties and agreements contained
in or made pursuant to this Agreement shall survive the Closing.
7.14 SPECIFIC PERFORMANCE. Silver State and SeraCare each acknowledge
that, in view of the uniqueness of the Business and the transactions
contemplated by this
<PAGE>
Agreement, each party would not have an adequate remedy at law for money damages
in the event that this Agreement has not been performed in accordance with its
terms, and therefore agrees that the other party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
7.15 BULK TRANSFER LAWS. Silver State and SeraCare hereby waive compliance
with any applicable bulk transfer laws, including, but not limited to, the bulk
transfer provisions of the Uniform Commercial Code of any state, or any similar
statute, with respect to the transactions contemplated hereby. Silver State
agrees to indemnify, defend and hold harmless SeraCare from any and all Losses
resulting from the assertion of claims made against the Nevada Assets sold
hereunder or against SeraCare by creditors of Silver State under any bulk sales
law with respect to liabilities and obligations of Silver State not assumed by
SeraCare hereunder, such indemnity to be in accordance with Article 6 hereof.
ARTICLE 8
DEFINITIONS
As used in this Agreement and the Exhibits and Schedules delivered
pursuant to this Agreement, the following definitions shall apply.
"Action" means any action, complaint, petition, investigation, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person.
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Assignment and Assumption Agreement" means an Assumption Agreement
substantially in the form of Exhibit B hereto.
"Business" means the Silver State's plasma collection business
conducted at 680 North Las Vegas Blvd.,
<PAGE>
Las Vegas, Nevada, and shall be deemed to include any of the following
incidents of such business: income, cash flow, operations, condition (financial
or other), assets/properties, anticipated revenues/income, prospects,
liabilities, personnel/management.
"Cash Amount" has the meaning set forth in Section 2.2.1.
"Closing" means the consummation of the Transactions.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrance" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the related regulations and published interpretations.
"Financial Statements" means the financial statements referred to in
Section 3.6(a).
"GAAP" means generally accepted accounting principles in the United
States, as in effect from time to time.
"Governmental Entity" means any government or any agency, district,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Hazardous Substance" means (but shall not be limited to) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Laws as "hazardous substances," "hazardous materials," "hazardous
wastes" or "toxic substances," or any other formulation intended to define, list
or classify substances by reason of deleterious properties such as ignitibility,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive toxicity
or "EP toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude oil,
natural gas or geothermal energy.
<PAGE>
"Indemnifiable Claim" means any Loss for or against which any party
is entitled to indemnification under this Agreement; "INDEMNIFIED PARTY"
means the party entitled to indemnity hereunder; and "INDEMNIFYING PARTY"
means the party obligated to provide indemnification hereunder.
"Law" means any constitutional provision, statute or other law,
rule, regulation, or interpretation of any Governmental Entity and any Order.
"Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid
in settlement, that may be imposed on or otherwise incurred or suffered by
the specified person.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Tax" means any foreign, federal, state, county or local income,
sales, use, excise, franchise, ad valorem, real and personal property,
transfer, gross receipt, stamp, premium, profits, customs, duties, windfall
profits, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding taxes, fees, assessments or
charges of any kind whatever imposed by any Governmental Entity, any interest
and penalties (civil or criminal), additions to tax, payments in lieu of
taxes or additional amounts related thereto or to the nonpayment thereof, and
any Loss in connection with the determination, settlement or litigation of
any Tax liability.
"Tax Return" means a declaration, statement, report, return or
other document or information required to be filed or supplied with respect
to Taxes.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreement and the Bill of Sale.
<PAGE>
"Transactions" means the transactions contemplated by the Transaction
Documents.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and
year first above written.
SERACARE, INC.
By: /s/ Barry Plost
--------------------------------
Name:
Title:
SILVER STATE PLASMA PRODUCTS, INC.
By: /s/ Rodney L. Savoy
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
PROMISSORY NOTE
July, 1996 $300,000.00
For value received, the undersigned promises to pay to the order of
SILVER STATE PLASMA PRODUCTS, INC. c/o Nations Biologics, 105 Chapel Drive,
Lafayette, Louisiana, 70506, the principal sum of THREE HUNDRED THOUSAND AND
NO/100 ($300,000.00) DOLLARS, with interest at the rate of eight (8%) percent
per annum from July 2, 1996, payable in thirty-six (36) equal consecutive
monthly installments of $9,400.91 each; the first payment date being August 2,
1996 and thereafter on the 2nd day of each month.
Should it become necessary at maturity or on default, to place this
note in the hands of an attorney at law for collection, adjustment, compromise
or suit, the maker binds and obligates itself to pay all costs of collection,
including reasonable attorneys' fees.
Should any installment payment due on this note not be paid when due
and, if notwithstanding written notice to the maker of such default, more than
ten (10) days pass after such written notice without the maker having remedied
such default by making the installment payment(s) due, then the holder or
holders of this note shall have the option to accelerate all payments and to
demand payment in full of the balance due on this promissory note.
SERACARE
By: _________________________________
A-1
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and pursuant to the Asset Purchase Agreement
dated as of July 2, 1996 (the "Agreement") between SeraCare, Inc., a Delaware
corporation ("SeraCare"), and Silver State Plasma Products, Inc., a Nevada
corporation ("Silver State"), and intending to be legally bound hereby,
Silver State hereby assigns and SeraCare hereby assumes and agrees to perform
the obligations of Silver State (i) arising after the date hereof under that
certain Contract of Lease, dated as of November 10, 1995, by and between
Silver State and Alexander & Thelma Coblentz Trust and the Plasma Contract,
dated as of July 11, 1995, by and between Silver State and Alpha Therapeutic
Corporation, and (ii) accrued salaries and wages (including taxes, vacation
and sick pay), base and percentage rents and telephone and utility charges
attributable to the Business as of the Closing Date (collectively, the
"Assumed Liabilities").
The Assumed Liabilities do not include, and SeraCare does not
hereby assume, agree to pay or otherwise perform any other liabilities or
obligations of Silver State.
This Assignment and Assumption Agreement shall be binding upon and
inure to the benefit of SeraCare and Silver State and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Assumption Agreement to be executed as of this 2nd day of July, 1996.
SILVER STATE PLASMA PRODUCTS, INC.
By:___________________________________
Name:
Title:
SERACARE, INC.
By:___________________________________
Name:
Title:
B-1
<PAGE>
EXHIBIT C
SILVER STATE BILL OF SALE
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and pursuant to the Asset Exchange Agreement, dated
as of July 2, 1996 (the ("Agreement"), between SeraCare, Inc., a Delaware
corporation ("SeraCare"), and Silver State Plasma Products, Inc., a Nevada
corporation ("Silver State"), and intending to be legally bound hereby,
Silver State hereby unconditionally and irrevocably sells, conveys, grants,
assigns and transfers to SeraCare and its successors and assigns all of
Silver State's legal, beneficial, and other right, title, and interest in and
to the business and assets, properties, rights, interests, privileges, claims
and contracts of every kind and nature, tangible and intangible, listed or
described as "Nevada Assets" in Section 1.1 of the Agreement, which is
incorporated herein by this reference.
The Nevada Assets do not include, and Silver State does not hereby sell,
convey, grant, assign or transfer to SeraCare any of Silver State's legal,
beneficial, and other right, title or interest in or to, the assets,
properties, rights, interests, privileges, claims and contracts of any kind
and nature, tangible or intangible listed or described as "Excluded Assets"
in Section 1.2 of the Agreement, which is incorporated herein by this
reference.
Silver State, for itself and its respective successors and assigns, hereby
covenants and agrees that, without further consideration, at any time and from
time to time after the date hereof, it will execute and deliver to SeraCare such
further instruments of sale, conveyance, assignment, and transfer, and take such
other action, all upon the reasonable request of SeraCare, in order to more
effectively sell, convey, grant, assign, transfer, and deliver all or any
portion of the Nevada Assets to SeraCare, and to assure and confirm to any other
person the ownership of the Nevada Assets by SeraCare, and to permit SeraCare to
exercise any of the franchises, rights, licenses, or privileges intended to be
sold conveyed, assigned, transferred, and delivered by Silver State to SeraCare
by this Silver State Bill of Sale.
This Silver State Bill of Sale shall be binding upon and inure to the
benefit of SeraCare and Silver State and their respective successors and
assigns.
C-1
<PAGE>
IN WITNESS WHEREOF, Silver State has caused this Silver State Bill
of Sale to be executed as of this 2nd day of July, 1996.
SILVER STATE PLASMA PRODUCTS, INC.
By:___________________________________
Name:
Title:
C-2
<PAGE>
EXHIBIT D
SERACARE BILL OF SALE
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and pursuant to the Asset Exchange Agreement,
dated as of July 2, 1996 (the ("Agreement"), between SeraCare, Inc., a Delaware
corporation ("SeraCare"), and Silver State Plasma Products, Inc., a Nevada
corporation ("Silver State"), and intending to be legally bound hereby, SeraCare
hereby unconditionally and irrevocably sells, conveys, grants, assigns and
transfers to Silver State and its successors and assigns all of SeraCare's
legal, beneficial, and other right, title, and interest in and to the business
and assets, properties, rights, interests, privileges, claims and contracts of
every kind and nature, tangible and intangible, described as "APS Assets" in
Section 1.3 of the Agreement, which is incorporated herein by this reference.
This SeraCare Bill of Sale shall be binding upon and inure to the
benefit of SeraCare and Silver State and their respective successors and
assigns.
IN WITNESS WHEREOF, SeraCare has caused this SeraCare Bill of Sale to
be executed as of this 2nd day of July, 1996.
SERACARE, INC.
By:___________________________________
Name:
Title:
D-1
<PAGE>
EXHIBIT 6.10(a)
PROMISSORY NOTE
July 2, 1996 $300,000.00
For value received, the undersigned promises to pay to the order of
SILVER STATE PLASMA PRODUCTS, INC. c/o Nations Biologics, 105 Chapel Drive,
Lafayette, Louisiana, 70506, the principal sum of THREE HUNDRED THOUSAND AND
NO/100 ($300,000.00) DOLLARS, with interest at the rate of eight (8%) percent
per annum from July 2, 1996, payable in thirty-six (36) equal consecutive
monthly installments of $9,400.91 each; the first payment date being
August 2, 1996 and thereafter on the 2nd day of each month.
Should it become necessary at maturity or on default, to place this
note in the hands of an attorney at law for collection, adjustment,
compromise or suit, the maker binds and obligates itself to pay all costs of
collection, including reasonable attorneys' fees.
Should any installment payment due on this note not be paid when
due and, if notwithstanding written notice to the maker of such default, more
than ten (10) days pass after such written notice without the maker having
remedied such default by making the installment payment(s) due, then the
holder or holders of this note shall have the option to accelerate all
payments and to demand payment in full of the balance due on this promissory
note.
SERACARE
By: /s/ Barry Plost
--------------------------------
<PAGE>
EXHIBIT 6.11
AMENDED AND RESTATED
LOAN AGREEMENT
between
CVD FINANCIAL CORPORATION
A Delaware Corporation
("Lender")
and
SERACARE, INC., also known as American Blood Institute, Inc.
a Delaware corporation
AVRE, INCORPORATED
a Nevada corporation
BINARY ASSOCIATES, INC.
a Colorado corporation
February 5, 1996
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. Definition of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 1934 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Accounts, Chattel Paper, Contracts, Equipment, Fixtures, General
Intangibles, Goods, Instruments and Inventory. . . . . . . . . 2
1.4 Affiliate(s) . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Bankruptcy Plan. . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . 2
1.8 Blood Business . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Borrowers. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Business Day(s). . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Compliance Certificate . . . . . . . . . . . . . . . . . . . . 5
1.13 Consolidated Loan. . . . . . . . . . . . . . . . . . . . . . . 5
1.14 Consolidated Note. . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Effective Date of Bankruptcy Plan. . . . . . . . . . . . . . . 5
1.17 Environmental Law(s) . . . . . . . . . . . . . . . . . . . . . 5
1.18 Event(s) of Default. . . . . . . . . . . . . . . . . . . . . . 6
1.19 Existing Facility. . . . . . . . . . . . . . . . . . . . . . . 6
1.20 Financing Statement(s) . . . . . . . . . . . . . . . . . . . . 6
1.21 GAAP.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.22 Gross Revenue. . . . . . . . . . . . . . . . . . . . . . . . . 6
1.23 Hazardous Substance(s) . . . . . . . . . . . . . . . . . . . . 6
1.24 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.25 Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.26 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . 7
1.27 Negative Pledge Agreement. . . . . . . . . . . . . . . . . . . 7
1.28 Note Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.29 Original Loan Agreement. . . . . . . . . . . . . . . . . . . . 7
1.30 Original Revolving Loan. . . . . . . . . . . . . . . . . . . . 7
1.31 Original Term Loan . . . . . . . . . . . . . . . . . . . . . . 7
1.32 Stock Pledge Agreement . . . . . . . . . . . . . . . . . . . . 7
1.33 Security Agreements. . . . . . . . . . . . . . . . . . . . . . 8
1.34 Settlement Agreement . . . . . . . . . . . . . . . . . . . . . 8
1.35 Vacant Parcels . . . . . . . . . . . . . . . . . . . . . . . . 8
1.36 Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
2. Amount and Terms of Consolidated Loan. . . . . . . . . . . . . . . . 8
2.1 Consolidated Loan . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.1 Consolidated Loan Amount. . . . . . . . . . . . . . . . . 9
2.1.2 Interest. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.3 Amortization. . . . . . . . . . . . . . . . . . . . . . . 9
2.1.4 Late Charge; Default Interest . . . . . . . . . . . . . . 9
2.1.5 Maturity. . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.1 Security Interest . . . . . . . . . . . . . . . . . . . 10
2.2.2 Recourse. . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.3 Conversion Guaranty . . . . . . . . . . . . . . . . . . 10
2.3 No Readvances . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Effective Date of this Agreement . . . . . . . . . . . . . . . . . 10
3.1 Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Bankruptcy Plan Approved and Effective. . . . . . . . . . . . 11
3.4 Bankruptcy Plan Payment . . . . . . . . . . . . . . . . . . . 11
3.5 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Compliance Documents. . . . . . . . . . . . . . . . . . . . . 11
4. Continuing Obligations of Borrowers. . . . . . . . . . . . . . . . 11
4.1 Performance of Obligations. . . . . . . . . . . . . . . . . . 11
4.2 Notice of Change. . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Financial Information . . . . . . . . . . . . . . . . . . . . 12
4.4.1 Financial Statements. . . . . . . . . . . . . . . . . . 12
4.4.2 Tax Returns . . . . . . . . . . . . . . . . . . . . . . 13
4.4.3 Compliance Certificates . . . . . . . . . . . . . . . . 13
4.4.4 Accounts Receivable and Payable Aging . . . . . . . . . 13
4.4.5 Public Reports. . . . . . . . . . . . . . . . . . . . . 13
4.5 Other Information . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7 Liens.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Contingent Liabilities. . . . . . . . . . . . . . . . . . . . 15
4.9 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Corporate Actions . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Limitations on Loans, Investments and Advances. . . . . . . . 19
4.12 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . 19
ii
<PAGE>
4.13 Additional Documents. . . . . . . . . . . . . . . . . . . . . 19
4.14 Ordinary Operations . . . . . . . . . . . . . . . . . . . . . 19
4.15 Maintenance of Property . . . . . . . . . . . . . . . . . . . 20
4.16 Debts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.17 Bankruptcy; Advance Waiver. . . . . . . . . . . . . . . . . . 20
5. Representations; Warranties. . . . . . . . . . . . . . . . . . . . 21
5.1 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Financial Information . . . . . . . . . . . . . . . . . . . . 21
5.5 Validity, Enforceability and Perfection . . . . . . . . . . . 21
5.6 Status of Borrowers . . . . . . . . . . . . . . . . . . . . . 22
5.7 Compliance With Laws. . . . . . . . . . . . . . . . . . . . . 22
5.8 Environmental Liability . . . . . . . . . . . . . . . . . . . 22
5.9 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Additional Representations, Warranties and Covenants. . . . . 22
(a) Accounts Receivable Information . . . . . . . . . . . . 23
(b) Affiliates; Investments . . . . . . . . . . . . . . . . 23
(c) AVRE and Binary Shares. . . . . . . . . . . . . . . . . 23
5.11 Additional Matters. . . . . . . . . . . . . . . . . . . . . . 24
6. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . 24
7. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Nonpayment. . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Breach of Agreement . . . . . . . . . . . . . . . . . . . . . 25
7.3 Lien Filings. . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Casualty Loss . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 Representations and Warranties. . . . . . . . . . . . . . . . 25
7.6 Insolvency; Bankruptcy. . . . . . . . . . . . . . . . . . . . 26
7.7 Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.8 Other Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.9 Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . 26
7.10 Impairment of Existing Facility from Affiliate's Operations . 26
7.11 Corporate Existence . . . . . . . . . . . . . . . . . . . . . 26
7.12 Repudiation . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.13 Certain Proceedings . . . . . . . . . . . . . . . . . . . . . 27
7.14 Challenge to Enforcement. . . . . . . . . . . . . . . . . . . 27
8. Remedies. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
iii
<PAGE>
8.1 Acceleration of Maturity. . . . . . . . . . . . . . . . . . . 27
8.2 Selective Enforcement . . . . . . . . . . . . . . . . . . . . 28
8.3 Performance by Lender . . . . . . . . . . . . . . . . . . . . 28
8.4 Waiver of Default . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . 28
8.6 Waiver of Marshalling of Assets . . . . . . . . . . . . . . . 29
9. No Further Modification. . . . . . . . . . . . . . . . . . . . . . 29
10. Release of Lender. . . . . . . . . . . . . . . . . . . . . . . . . 29
11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 30
11.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . 31
11.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Integration; Sole Agreement . . . . . . . . . . . . . . . . . 32
11.9 Jury Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 32
iv
<PAGE>
SCHEDULES
A Form of Consolidated Promissory Note
B Form of Security Agreements of SI, AVRE
and Binary
C Form of Stock Pledge Agreement
D Form of Compliance Certificate
E Form of Negative Pledge Agreement
F List of Affiliates
G List of Insurance
H List of Leases
I List of Existing Facilities
J List of Pending Litigation
v
<PAGE>
AMENDED RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made
effective the 5th day of February, 1996, between CVD Financial Corporation, a
Delaware corporation ("Lender"); Seracare, Inc., a Delaware corporation formerly
known as "American Blood Institute, Inc." ("SI"); AVRE, Incorporated, a Nevada
corporation ("AVRE"); and Binary Associates, Inc., a Colorado corporation
("Binary"). SI, AVRE and Binary are referred to herein collectively as the
"Borrowers."
WITNESSETH
A. SI is a party to that certain Comprehensive Loan Facility and
Security Agreement, dated October 1, 1993 (the "Original Loan Agreement"), under
which Lender made a revolving loan to SI in the amount of $1,500,000 (the
"Original Revolving Loan") and a term loan in the amount of $1,000,000 (the
"Original Term Loan") to the Borrower, represented by an Original Revolving Loan
Note in the principal amount of $1,500,000, dated October 1, 1993 (the
"Original Revolving Note") and an Original Term Loan Note in the principal
amount of $1,000,000, dated October 1, 1993 (the "Original Term Note"). On
October 5, 1993, AVRE and Binary ratified the Original Loan Agreement, Original
Revolving Note and Original Term Note and agreed to repay all sums due
thereunder and provided Lender with security therefor as reflected in that
certain Agreement to be Bound by Comprehensive Loan Facility and Security
Agreement, dated October 5, 1993.
B. On January 7, 1994, SI filed a voluntary petition under chapter
11 of title 11 of the United States Code (Case No. LA 94-11730-AA). Binary and
AVRE also filed voluntary chapter 11 petitions on January 7, 1994, as Case Nos.
LA 94-11736-AA and LA 94-11738-AA, respectively. The foregoing cases are
presently pending in United States Bankruptcy Court for the Central District of
California (the "Bankruptcy Court"), under joint administration, and are
referred to herein collectively as the "Bankruptcy Proceedings."
C. The parties hereto have entered into a Settlement Agreement,
dated January 8, 1996 in connection with the Bankruptcy Proceedings (the
"Settlement Agreement"), pursuant to which Lender and Borrowers have agreed to
amend and restate the Original Revolving Loan and Original Term Loan as provided
herein, subject only to the terms and conditions hereof and of the Settlement
Agreement and of the Bankruptcy Plan (as defined below).
D. It is the intention of the Borrowers and Lender (as defined
below) that their obligations, rights and remedies be governed by this
Agreement, the
-1-
<PAGE>
Settlement Agreement and the Bankruptcy Plan, without reference to the Original
Loan Agreement, Original Revolving Loan and Original Term Loan (as defined
below).
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITION OF TERMS. As used in this Agreement, the following terms
will have the meanings hereafter indicated:
1.1 1933 ACT. The Securities Act of 1933, as amended, and the rules
and regulations of the Securities Exchange Commission promulgated thereunder.
1.2 1934 ACT. The Securities Act of 1934, as amended, and the rules
and regulations of the Securities Exchange Commission promulgated thereunder.
1.3 ACCOUNTS, CHATTEL PAPER, CONTRACTS, EQUIPMENT, FIXTURES, GENERAL
INTANGIBLES, GOODS, INSTRUMENTS AND INVENTORY. Accounts, Chattel Paper,
Contracts, Equipment, Fixtures, General Intangibles, Goods, Instruments, and
Inventory shall have the same respective meanings as are given to those terms in
the Uniform Commercial Code as presently adopted and in effect in the State of
California. To the extent not included within the meanings provided in said
Code, the terms "Goods" and "Inventory" shall further include, without
limitation, blood and blood products.
1.4 AFFILIATE(S). All subsidiaries, partnerships, joint ventures and
other entities not previously identified as a Borrower in which any Borrower
holds (either now or in the future) an ownership interest or the right to
exercise management or operational control, and all such persons or entities
which control or which are under common control with such Borrower, a complete
list of which is included in Schedule "F" hereto.
1.5 AGREEMENT. This Loan Agreement including Schedules "A" through
"J" inclusive, which are attached as a part hereof made in connection with
Borrowers' Bankruptcy Plan and all extensions, renewals and modifications
hereof.
1.6 BANKRUPTCY PLAN. THE THIRD AMENDED JOINT PLAN OF REORGANIZATION
OF AMERICAN BLOOD INSTITUTE. INC.. AVRE. INC.. AND BINARY ASSOCIATES. INC.
modified as contemplated by the Settlement Agreement, and confirmed in the
Bankruptcy Proceedings by order entered on January 24, 1996.
1.7 BANKRUPTCY PROCEEDINGS. The bankruptcy proceedings of the
Borrowers described in Recital B to this Agreement.
1.8 BLOOD BUSINESS. The operation of any office or facility
collecting or providing blood or plasma collection, processing or sales or
related services.
-2-
<PAGE>
1.9 BORROWERS. SI, AVRE and Binary.
1.10 BUSINESS DAY(S). Any day which is not a Saturday, Sunday or a
holiday on which California banking institutions are authorized by law to close.
1.11 COLLATERAL. The property of a kind described herein and all other
property which is the subject of a mortgage, deed of trust, lien, security
interest or other encumbrance now held by the Lender or hereafter granted by the
Borrowers or their Affiliates to the Lender to secure payment of the Original
Revolving Loan and/or the Original Term Loan and/or the Consolidated Loan or any
other obligations of the Borrowers to the Lender and all increases, replacements
and substitutions therefor, additions and accessions thereto and proceeds and
products thereof, including without implied limitation all property described in
the Security Agreements. Without limiting the foregoing, Collateral includes
with respect to each Borrower:
1.11.1 All now owned and hereafter acquired right, title and
interest of such Borrower in, to and in respect of all Accounts; interests in
Goods represented by Accounts; rights in returned, reclaimed or repossessed
Goods and rights as an unpaid vendor of Goods; Contracts; contract rights;
Chattel Paper; General Intangibles (including, but not limited to, tax and duty
refunds, registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, causes of action and other claims, and existing and future
leasehold interests in equipment, real estate and fixtures; documents;
Instruments; letters of credit, bankers' acceptances or guaranties, cash monies,
deposits, securities, bank accounts, deposit accounts, credits and other
property now or hereafter held in any capacity by Lender or at any other
depository or other institution; agreements or property securing or relating to
any of the items referred to above;
1.11.2 All now owned and hereafter acquired right, title and
interest of such Borrower in, to and in respect of Goods, including, but not
limited to: All Inventory, wherever located, whether now owned, or hereafter
acquired, of whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Borrower's business; and all names or marks affixed to or to be affixed thereto
for purposes of selling the same by the seller, manufacturer, lessor or licensor
thereof;
1.11.3 All Equipment and Fixtures, wherever located, whether now
owned or hereafter acquired by such Borrower, including, without limitation, all
machinery, equipment, motor vehicles, furniture and fixtures, and any and all
additions, substitutions, replacements (including spare parts), and accessions
and accessories thereof and thereto;
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1.11.4 All medical products, including without limitation blood
and blood products of such Borrower, wherever located, whether now owned or
hereafter acquired, of whatever kind, nature or description;
1.11.5 All now owned or hereafter acquired right, title and
interest of such Borrower in, to and in respect of any real or other personal
property in or upon which Lender has or may hereafter have a security interest,
lien or right of setoff;
1.11.6 All present and future books and records of such Borrower
relating to any of the above including, without limitation, all computer
programs, printed output and computer readable data in the possession or control
of the Borrower, any computer service bureau or other third party;
1.11.7 All of the issued and outstanding shares of stock of AVRE
and Binary;
1.11.8 The Vacant Parcels;
1.11.9 All products and proceeds of the foregoing in whatever form
and wherever located, including, without limitation, all insurance proceeds and
all claims against third parties for loss or destruction of or damage to any of
the foregoing; and
1.11.10 The Collateral shall not include the stock, warrants,
options, rights or other form of equity security of wholly-owned Affiliates of
SI or any assets of such Affiliates (including investments of SI which are
permitted by this Agreement) unless specifically pledged hereafter, any and all
claims of Borrowers under 11 U.S.C. Sections 362 and 544-553, inclusive, in the
Bankruptcy Proceedings and the funds received from the Debtor Notes required by
the Bankruptcy Plan.
1.11.11 THIRD PARTY OR LEGAL RESTRICTIONS ON PLEDGE OF COLLATERAL.
Lender acknowledges that certain kinds of property of a character which could be
encompassed in the definition of Collateral may not be subject to pledge or
encumbrance because of statute, regulation, other restriction or the requirement
of consent of persons not parties to the Loan Documents. With respect to such
property, Borrowers will use their reasonable diligence and cooperation with
Lender to secure permission to grant security interests in or liens against such
property or a waiver of the regulation, law or statute or attornment agreement
in a form satisfactory to Lender. In the event Borrowers are able to do so, such
property shall constitute Collateral. If Borrowers are unable to do so,
Borrowers shall notify Lender in accordance with paragraph 11.2 hereof.
1.12 COMPLIANCE CERTIFICATE. The document in substantially the form
which appears as Schedule "D" to be executed by the Borrowers and delivered to
the
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Lender upon the execution of this Agreement and on a monthly basis to confirm
the Borrowers' compliance with the terms of the Loan Documents, signed by the
Chief Executive Officer, President or Chief Financial Officer of each Borrower.
1.13 CONSOLIDATED LOAN. The extension of credit having an outstanding
principal amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000)
made by the Lender to the Borrowers pursuant to the terms of this Agreement,
which amends and restates, modifies and entirely controls the prior terms of the
Original Loan Agreement, Original Revolving Loan and the Original Term Loan, and
all extensions, renewals, increases, consolidations and modifications thereof
prior to this Agreement. Provided, however, that after the Effective Date of
this Agreement, all of Borrowers' obligations to Lender and Lender's rights and
remedies vis-a-vis Borrowers shall be governed without reference to the Original
Loan Agreement, Original Revolving Loan and Original Term Loan such that neither
Borrowers nor Lender will be responsible for any obligation or be subject to any
remedy not expressly stated in the Settlement Agreement, the Bankruptcy Plan or
the Loan Documents.
1.14 CONSOLIDATED NOTE. The amended and restated instrument to be
executed by the Borrowers and delivered to the Lender to evidence the amount of
the Consolidated Loan subject to the provisions of paragraph 1.13 in the form
and containing the terms which appear as Schedule "A" and all extensions,
renewals and modifications thereof.
1.15 DEFAULT. The occurrence of any one or more of the Events of
Default and the determination by the Lender that the Lender will exercise the
remedies available to the Lender by reason thereof.
1.16 EFFECTIVE DATE OF BANKRUPTCY PLAN. The first business day: (a)
that is at least ten (10) days after the date the confirmation order was entered
by the Bankruptcy Court, as specified in paragraph 1.6 of this Agreement; and
(b) on which no stay of such order is in effect but in no event after March 1,
1996.
1.17 ENVIRONMENTAL LAW(S). Any federal, state, local or foreign law,
statute, ordinance, code, rule, regulation, order or decree now or hereafter in
effect pertaining to health, air pollution, water pollution, noise control,
waste transportation or disposal, Hazardous Substances, industrial hygiene or
the environment, including without implied limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Sections
9601, the Resource Conservation and Recovery Act of 1976, as amended by the
Hazardous and Solid Waste Amendment Act of 1984, 42 U.S.C. Sections 6901 ET SEQ.
the Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., the Clean Water Act of 1977,
33 U.S.C. Sections 1251, et SEQ., the Toxic Substances Control Act, 15 U.S.C.
Sections 2501, ET SEQ., the Hazardous Materials Transportation Act, 49 U.S.C.
Sections 1801, ET
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SEQ., the National Environmental Policy Act, 42 U.S.C. Sections 4321, ET SEQ.,
and the Rivers and Harbors Act of 1899, as amended, 33 U.S.C. Sections 401, ET
SEQ.
1.18 EVENT(S) OF DEFAULT. The occurrence of an event specified in
paragraph 7 of this Agreement.
1.19 EXISTING FACILITY. Any and all existing facilities of AVRE and
Binary listed on Schedule "I" hereto conducting Blood Business as of the date
hereof and shall also include facilities of AVRE, Binary or Affiliate in which
Lender hereafter acquires a Collateral interest, at which time the Borrowers
shall promptly update and provide Schedule "I" to Lender.
1.20 FINANCING STATEMENT(S). Forms UCC-1 to be executed from time to
time by the Borrowers at the request of the Lender to enable the Lender to
perfect security interests covering the Collateral and all extensions, renewals
and modifications thereof, provided, however, that the Financing Statements
shall only perfect security interests in Collateral identified in paragraphs
1.11.1, ET SEQ., or hereafter granted.
1.21 GAAP. The generally accepted accounting principles adopted by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants from time to time. All accounting terms used in this
Agreement will, unless otherwise specifically provided herein, have the meaning
customarily given such terms in accordance with GAAP and, unless otherwise
specifically provided herein, all financial computations hereunder will be
computed in accordance with GAAP consistently applied.
1.22 GROSS REVENUE. Gross Revenue shall have the meaning customarily
given such term in accordance with GAAP.
1.23 HAZARDOUS SUBSTANCE(S). Those substances included within the
definition of "hazardous substances," "hazardous materials," "toxic substances"
or "solid waste" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of
1987, as amended, the Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801 ET SEQ. and in the regulations promulgated thereunder; those substances
listed in the United States Department of Transportation Table (49 CFR 172.101,
as amended) or by the Environmental Protection Agency (or any successor agency)
as hazardous substances (40 CFR Part 302, as amended); those substances
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, as amended, or listed pursuant to the Clean Water Act; such other
substances, materials and wastes which are or become regulated under applicable
federal, state, local or foreign law, statute, ordinance or regulation now or
hereafter enacted which are classified as hazardous or toxic; any material,
waste or substance which is a petroleum product, asbestos, polychlorinated
biphenyl, flammable material, explosive or radioactive material.
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1.24 LEASES. The facility leases of Borrowers described on Schedule "H"
hereto respecting the business of the Existing Facilities and all subsequent
renewals, extensions or new leases of Borrowers other than office leases.
1.25 LENDER. CVD Financial Corporation, a Delaware corporation, its
past, present or future participating lenders, and successors and assigns of
each of them.
1.26 LOAN DOCUMENTS. This Agreement, Stock Pledge Agreement, the
Security Agreements, the Financing Statements, the Consolidated Note, Negative
Pledge Agreements, and all instruments issued pursuant thereto, all other
instruments delivered by the Borrowers or the Affiliates to the Lender to be
issued concurrently with the execution of this Agreement or subsequent thereto
in connection with the Consolidated Loan and all extensions, renewals and
modifications thereof.
1.27 NEGATIVE PLEDGE AGREEMENT. That instrument in substantially the
form attached hereto as Schedule "E" to be delivered to Lender by each Affiliate
of Borrowers in accordance with the provisions of paragraph 4.11 hereof.
1.28 NOTE RATE. Fourteen percent (14%) per annum.
1.29 ORIGINAL LOAN AGREEMENT. The Comprehensive Loan Facility and
Security Agreement between SI and Lender, dated October 1, 1993.
1.30 ORIGINAL REVOLVING LOAN. The extension of credit with a maximum
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000)
described in subsection 2.1 of the Original Loan Agreement made by Lender to the
Borrowers as consolidated, amended and restated hereby, and hereafter included
within and entirely controlled by the terms of the Consolidated Loan.
1.31 ORIGINAL TERM LOAN. The extension of credit in the original
principal amount of One Million Dollars ($1,000,000) described in subsection 2.1
of the Original Loan Agreement made by Lender to the Borrowers, as consolidated,
amended and restated hereby, and hereafter included within and entirely
controlled by the terms of the Consolidated Loan provided that Borrowers'
obligations to Lender and Lender's rights and remedies under the Original Term
Loan shall be subject to the limitations set forth in paragraph 1.13.
1.32 STOCK PLEDGE AGREEMENT. The instrument to be executed by SI
granting to Lender a security interest in all shares of AVRE and Binary, whether
previously issued or issued hereafter, in substantially the form and containing
substantially the terms which appear as Schedule "C" and all extensions,
renewals and modifications thereof, which Stock Pledge Agreement amends and
restates the Pledge Agreement of SI, dated October 1, 1993, delivered to Lender
under the Original Loan
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Agreement (the "Pledge Agreement") subject to the proviso that the rights,
remedies and obligations of Lender vis-a-vis Borrowers shall be limited to those
expressly stated in the Stock Pledge Agreement or applicable law.
1.33 SECURITY AGREEMENTS. The security agreements, mortgages, deeds of
trust and other instruments to be executed by the Borrowers concurrently or in
connection herewith or as may be thereafter reasonably requested by Lender in
form and content as other Security Agreements and as are consistent with
Lender's rights under the Loan Agreement and delivered to the Lender, and which
shall also secure payment of the Consolidated Loan and all other obligations
under the Loan Documents and hereafter owing from the Borrowers to the Lender,
including such instruments which grant to the Lender security interests covering
the Collateral, in substantially the form and containing the terms which appear
as Schedule "B," and all extensions, renewals and modifications thereof, which
Security Agreements amend and restate and modify the security provisions of the
Original Loan Agreement such that the Borrowers' obligations to Lender shall be
governed by the terms of the Security Agreements and not by the original Loan
Agreement but which continue the prior perfection of such security provisions of
the Original Loan Agreement from the original dates of perfection only to the
extent and for the Collateral identified in paragraphs 1.11.1, ET SEQ., or
hereafter granted.
1.34 SETTLEMENT AGREEMENT. The Settlement Agreement between Lender and
the Borrowers described in Recital C to this Agreement.
1.35 VACANT PARCELS. That certain undeveloped real estate owned by
Binary and located at 1200 Grainger Street, Fort Worth, Texas, and 1201 Hemphill
Street, Fort Worth, Texas, and respectively identified as PIDN 47840-C-31-20 and
PIDN 47840-C-1-30 and more fully described as that certain real estate situated
in Tarrant County, State of Texas, to wit: All of Lots Thirty-One (31), Thirty-
Two (32), One (1) and Two (2), Block C, WRAY ADDITION, Fort Worth, Tarrant
County, Texas.
1.36 WARRANTS. The Stock Purchase Warrant, dated October 1, 1993,
executed by SI and delivered to Lender under which Lender was granted the right
to purchase 225,000 shares of Common Stock of SI, subject to adjustment as
provided therein.
2. AMOUNT AND TERMS OF CONSOLIDATED LOAN. Subject to the realization of
the Effective Date of the Bankruptcy Plan, the Lender agrees to the following
terms:
2.1 CONSOLIDATED LOAN. The Consolidated Loan, inclusive of all sums due
in connection with the Original Loan Agreement, Original Revolving Loan and
Original Term Loan, will be repayable on the following terms:
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2.1.1 CONSOLIDATED LOAN AMOUNT. The Consolidated Loan will be
evidenced by the Consolidated Note in the face amount of One Million One Hundred
Fifty Thousand Dollars ($1,150,000). Lender acknowledges the receipt from
Borrowers, concurrent with the execution hereof, of the sum of $625,000 which
has been first applied to all the outstanding amounts due under the Original
Revolving Note then to amounts due under the Original Loan Agreement. CVD
asserts that the amount remaining due and owing under the Original Term Note,
after payment of the $625,000 by Borrowers, exceeds the amount of $1,150,000,
but the obligations thereunder as well as all obligations under the Original
Loan Agreement and Original Revolving Loan shall be reduced by compromise,
renewal, extension and modification and be represented by the Consolidated Note.
Except for the amounts represented by the Consolidated Note, from and after the
Effective Date of this Agreement, all other sums due and owing under the
Original Loan Agreement, Original Term Note and Original Revolving Note are
deemed to be amended and restated in full, modified and entirely controlled by
the terms of the Loan Documents, whether consisting of principal, interest,
default interest, late charges, costs of collection, attorneys' fees or other
sums. The Warrants, and the rights of Lender thereunder, are canceled. Upon the
Effective Date of this Agreement, and after receipt by Lender of $625,000, the
total amount due to Lender by Borrowers shall be the principal sum of One
Million One Hundred Fifty Thousand Dollars ($1,150,000).
2.1.2 INTEREST. The Consolidated Note will bear interest on the
unpaid principal balance accrued from the Effective Date of this Agreement at
the Note Rate calculated on the basis of the actual days elapsed based on a per
diem charge computed over a year composed of three hundred sixty (360) days.
Interest under the Consolidated Note, accrued through the last day of each
month, will be paid on the first day of the succeeding calendar month.
2.1.3 AMORTIZATION. The unpaid principal balance of the
Consolidated Note will be paid in consecutive quarterly installments of
$82,142.86 payable on May 1, August 1, November 1 and February 1 of each year
during the term of this Note, the first principal payment being due May 1, 1996.
The final principal installment will be due at maturity on August 1, 1999.
2.1.4 LATE CHARGE; DEFAULT INTEREST. If any payment of principal
or interest is paid more than ten (10) days after when due, the Borrowers will
pay Lender a late charge equal to five percent (5%) of the late payment. In
addition, after an Event of Default, default interest may be charged at a rate
of 2.0% per annum in excess of the Note Rate.
2.1.5 MATURITY. Absent Default, the entire unpaid balance of
principal and accrued but unpaid interest owing on the Consolidated Note will be
due and payable August 1, 1999.
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2.1.6 PREPAYMENTS. The Borrowers will have the right at any time
and from time to time to prepay all or any portion of the unpaid principal
balance of the Consolidated Note without penalty. Such payment may be
accomplished by, among other things, a sale of the Collateral permitted by
paragraph 4.10(c) or which is a part of a single transaction that pays Lender in
full the then outstanding principal, interest and other charges Lender may
lawfully assess against Borrowers and which payment occurs upon the consummation
of the sale. All prepayments may be applied to any or all obligations or
principal due under the Consolidated Note in the discretion of the Lender.
2.2 COLLATERAL. Payment of the Consolidated Note and performance of all
of the Borrowers' obligations under the Loan Documents will be secured by the
following Collateral of the Borrowers:
2.2.1 SECURITY INTEREST. A first priority security interest
(subject only to statutory liens incurred in the ordinary course of business
which have a higher priority under applicable law) covering all of the
Collateral identified in paragraph 1.11.1, ET SEQ., including without implied
limitation, the Collateral described in the Security Agreements and Stock Pledge
Agreement or hereafter granted.
2.2.2 RECOURSE. The unlimited liability of the Borrowers.
2.2.3 CONVERSION GUARANTY. The prepetition guaranty of Conversion
Industries Inc. ("Conversion") of the Original Term Note given to Lender under
the Original Loan Agreement and which CVD asserts was called before Conversion
filed a chapter 11 bankruptcy case in which bankruptcy case no plan of
reorganization has been confirmed or distribution to creditors has been made as
of the execution hereof.
2.3 NO READVANCES. The Consolidated Loan shall not be a revolving
credit and Borrowers shall not be entitled to redraw upon or to obtain
readvances of any principal advanced to Borrowers by the Lender and repaid to
the Lender hereunder. As of the date hereof the Consolidated Loan has been fully
advanced.
3. EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall be effective
only upon the following conditions precedent, unless waived by Lender:
3.1 LOAN DOCUMENTS. The Loan Agreement and documents reflected in
Schedule A through E, UCC-1 Financing Statements for each Existing Facility and
in California, Stock Assignments Separate from Stock Certificates and if
prepared by Lender before the Effective Date of the Bankruptcy Plan, a Security
Agreement and Deed of Trust covering the Vacant Parcels shall have been duly
executed, acknowledged (where appropriate) and unconditionally delivered by the
Effective Date of the
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Bankruptcy Plan, but in no event after February 28, 1996, to the Lender by the
Borrowers, all in form and substance reasonably satisfactory to the Lender.
3.2 INSURANCE. The Lender shall have received copies of certificates or
policies of casualty and public liability insurance currently insuring the
Collateral issued in amounts, by companies and against such risks as are
presently existing, naming the Lender as an additional insured or the Lender as
loss payee, and including such ordinary and customary notice provisions to
Lender as such a loss payee. A list of all such insurance presently in effect is
set forth at Schedule "G" hereto. The Borrowers must continue to provide
adequate insurance in accordance with paragraph 4.6 hereof.
3.3 BANKRUPTCY PLAN APPROVED AND EFFECTIVE. The Bankruptcy Court
shall have approved the Loan Documents pursuant to the Order confirming the
Bankruptcy Plan and the Effective Date of the Bankruptcy Plan shall have
occurred.
3.4 BANKRUPTCY PLAN PAYMENT. The Lender shall receive concurrently upon
the execution of this Agreement the payment of the $625,000 required by the
Bankruptcy Plan.
3.5 NO DEFAULT. The representations and warranties set forth in
paragraph 5 of this Agreement shall be true and correct as of the execution of
this Agreement in all material respects, and there shall not have occurred and
be continuing any Event of Default.
3.6 AUTHORITY. The Lender shall have received certified copies of
corporate resolutions and other documents reasonably required to authorize the
execution, delivery and performance of the Loan Documents, all in form and
substance reasonably satisfactory to the Lender.
3.7 COMPLIANCE DOCUMENTS. Borrower shall provide Lender with a
Compliance Certificate concurrently with the execution of this Agreement.
4. CONTINUING OBLIGATIONS OF BORROWERS. Upon the Effective Date of this
Agreement, the Borrowers shall have the continuing obligation to perform and
comply with the following:
4.1 PERFORMANCE OF OBLIGATIONS. The Borrowers agree to pay and perform
all of the Borrower's obligations under the Loan Documents
4.2 NOTICE OF CHANGE. The Borrowers agree to give prompt written notice
to the Lender of:
4.2.1 The occurrence of any Event of Default of which they become
aware;
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4.2.2 All litigation involving the Borrowers or the Collateral, in
which the amount claimed exceeds Twenty-Five Thousand Dollars ($25,000) in a
single action or in the aggregate of all actions;
4.2.3 Their knowledge of the acquisition by any person of five
percent (5%) or more of any class of equity securities of any Borrower, or the
filing by any person of any form or schedule under Section 13 of the 1934 Act,
or any amendment or supplement to any such filing, or the filing by any person
of any Form 3 or 4 Report under the 1934 Act or the regulations of the
Securities Exchange Commission thereunder; and
4.2.4 Any matter which has resulted in, or is likely to result in,
a material change in the business of a material adverse change in the financial
condition of Borrowers or the value of the Collateral.
4.2.5 The change of any name or location of any Borrower or in the
location of any Collateral (other than the sales of materials, supplies and
products in the ordinary course of business), to be given prior to any such
change.
4.3 RECORDS. The Borrowers agree to maintain full and accurate
accounts and records of the Borrowers' and the Affiliates' operations in the
usual, regular and ordinary manner according to GAAP. The Lender and the
Lender's designated representatives will have the right to examine and copy the
records and accounts of the Borrowers relating to the Collateral, to discuss the
business activities and finances of the Borrowers and the Affiliates and to be
informed of the same by the Borrowers monthly and at such other times and
intervals as the Lender might reasonably request.
4.4 FINANCIAL INFORMATION. The Borrowers agree to furnish or cause to
be furnished to the Lender the following information:
4.4.1 FINANCIAL STATEMENTS. The Borrowers will deliver to the
Lender the following financial statements:
(a) As soon as available, but no later than ninety (90)
days after the end of each fiscal year of the Borrowers, annual consolidated
financial statements of SI, AVRE, Binary and SI's Affiliates, together with
unconsolidated financial statements of each of AVRE and Binary, the consolidated
statements to be certified and to have been prepared in accordance with GAAP by
the unqualified opinion of the Borrowers' independent certified public
accountants;
(b) As soon as available and in any event within ten (10) days
of receipt, copies of all audit or recommendation letters provided to the
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management of the Borrowers by the Borrowers' independent accountants and copies
of any responses made thereto.
(c) Within thirty (30) days after the end of each month,
unaudited consolidated financial statements of SI and the Affiliates, and
unconsolidated statements of each of AVRE and Binary, including, without
limitation, a balance sheet and statement of operations and production volumes
by facility, in such form which is usually and customarily prepared by Borrowers
and all reporting is to commence from the Effective Date of the Bankruptcy Plan.
(d) Within thirty (30) days after the end of each month,
reports in such form and details as the Lender might reasonably request
including, without limitation, details of any acquisition or disposition of
property, excluding purchase and sales of materials, supplies, products and
inventory in the ordinary course of business, by each of the Borrowers, having
an aggregate value in excess of Ten Thousand Dollars ($10,000) and all reporting
is to commence from the Effective Date of the Bankruptcy Plan.
(e) The financial reports described in (c) above will be
certified by the Chief Executive Officer, President or Chief Financial Officer
of each Borrower to have been prepared in accordance with GAAP.
4.4.2 TAX RETURNS. The Borrowers will, as soon as practicable and
in any event, within fifteen (15) days of filing its tax returns with the
Internal Revenue Service, deliver or cause to be delivered to Lender the
Internal Revenue Service tax returns of the Borrowers for such fiscal year.
4.4.3 COMPLIANCE CERTIFICATES. On the first day of each month
after the Effective Date of this Agreement, the Borrowers will deliver a
Compliance Certificate to the Lender.
4.4.4 ACCOUNTS RECEIVABLE AND PAYABLE AGING. Each of the Borrowers
will, as soon as practicable and in any event within thirty (30) days after the
end of each month commencing at the end of the first calendar month which
includes at least 15 days after the Effective Date of this Agreement, deliver or
cause to be delivered to Lender monthly accounts receivable aging reports and
aged accounts payable reports, aging such accounts in thirty (30) day increments
in form and substance such as is customarily prepared by the Borrowers.
4.4.5 PUBLIC REPORTS. The Borrowers shall timely file as required
by law or regulation, and promptly make available to the Lender, not later than
five (5) business days following the filing thereof, complete copies of all
registration statements, financial statements, reports, proxy statements and
other documents filed with the SEC under the 1934 Act or the 1933 Act including,
without implied limitation, all reports
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filed or Forms 10-K, 10-Q and 8-K. In addition, the Borrowers shall provide the
Lender with a copy of all press reports or news releases or similar
communications within five (5) business days of issuance or publication.
4.5 OTHER INFORMATION. The Borrowers agree to furnish to the Lender
such other financial statements and information concerning the business
activities of the Borrowers as may be reasonably requested by Lender to
interpret or clarify the financial information required from the Borrowers;
provided, however, that Borrowers shall have a reasonable time to respond.
4.6 INSURANCE. The Borrowers will keep its business and properties
insured at all times by insurance companies against the risks for which
provision for such insurance is no less adequate than as set forth on Schedule
"G" attached hereto (including, without limitation, insurance for fire and other
hazards, and insurance against liability on account of damage to person or
property and insurance under all applicable workman's compensation laws), and to
the same extent thereto and carry such other types and amounts of insurance as
are usually carried by persons engaged in the same or a similar business
similarly situated and, upon request, deliver to the Lender evidence of such
insurance. Lender has been named the sole loss payee other than Borrowers under
all insurance policies in effect as of the date hereof.
4.7 LIENS. The Borrowers will not create, assume or suffer to exist
any trust deed, mortgage, pledge, security interest, encumbrance or other lien
(including the lien of an attachment, judgment or execution) securing a charge
or obligation affecting the Collateral which one or more of the Borrowers own,
excepting only:
(a) Liens for governmental charges (i) which are not delinquent
(ii) the validity of which is being contested by the Borrowers in good faith by
diligent prosecution of appropriate proceedings or (iii) which shall be paid in
accordance with the Bankruptcy Plan as soon as practicable after the Effective
Date thereof;
(b) Liens created by the Loan Documents;
(c) Liens, the validity of which is being contested by the
Borrowers in good faith by diligent prosecution of appropriate proceedings,
provided that title insurance or other indemnity arrangements reasonably
satisfactory to the Lender have stayed the effect of such liens;
(d) Statutory liens in the aggregate not exceeding $75,000
outstanding at any given time.
4.8 CONTINGENT LIABILITIES. The Borrowers will not assume, guarantee,
endorse or otherwise become contingently liable for the obligation of any other
person, firm or corporation, except by the endorsement of negotiable instruments
for deposit
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or collection or other similar transactions in the ordinary course of the
Borrowers' business, except for SI's guaranty of wholly-owned Affiliate's debts
or any uninsured tort liability arising from the ordinary course of Borrowers'
business.
4.9 REORGANIZATION. AVRE and Binary will not liquidate, dissolve,
enter into any consolidation or merger, or amend their Articles of Incorporation
(except as required by the Bankruptcy Plan), or change in any material manner
the rights of the holders of their capital stock or the general character of
their businesses. SI must remain the direct and ultimate parent entity of AVRE
and Binary. Prior to the shares of SI trading on any of the following national
stock exchanges (New York Stock Exchange, American Stock Exchange, NASDAQ
National Market System, Toronto Stock Exchange, NASDAQ Small Cap or American
Stock Exchange Emerging Market), if SI is the subject of any merger,
acquisition, stock purchase, reverse takeover, consolidation or other
transaction or reorganization which results in an entity becoming the parent of
or holding, directly or indirectly, an equity interest of over thirty percent
(30%) in SI prior to full payment of all obligations to Lender under the Loan
Documents, then such parent or entity (in addition to SI) must become a Borrower
and assume the Consolidated Loan within thirty (30) days and fulfil all of SI's
obligations under the Loan Documents. It is the Borrowers' intent for SI to
issue shares to be traded on a recognized securities exchange. SI will not
liquidate, dissolve or materially change the general character of its business.
Notwithstanding the foregoing, SI may establish and invest in Affiliates which
are wholly-owned subsidiaries of SI consistent with the provisions of this
Agreement and, specifically, the limitations of paragraphs 4.10 and 4.11 hereof
so long as no Event of Default shall have occurred and be continuing.
4.10 CORPORATE ACTIONS. The Borrowers will not:
(a) Declare or pay dividends on account of any stock of the
Borrowers, except that SI may issue warrants, options, stock, rights or any
other form of equity security as a dividend;
(b) Permit AVRE or Binary to directly or indirectly, make or
commit to make investments of any kind or capital expenditures or expenditures
for the lease or rental of real or personal property during any fiscal year
which shall exceed in the aggregate Two Hundred Thousand Dollars ($200,000),
except for new acquisitions of centers or startup Facilities conducting Blood
Business which becomes part of Lender's Collateral, and Borrowers execute and
deliver all reasonable Security Agreements in substantially similar form to the
Loan Documents to grant the Lender a perfected first priority lien and security
interest therein;
(c) Without Lender's prior consent, the Borrowers will not
sell, transfer, liquidate, assign or otherwise dispose of the Collateral or any
interest therein, except as to (i) sales of Inventory in the ordinary course of
business; (ii) one or more
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sales of assets outside the ordinary course of business in any fiscal year
having an aggregate book value of Seventy-Five Thousand Dollars ($75,000) or
less; or (iii) a sale of an Existing Facility provided that the following
conditions are met: (a) Lender must receive the purchase price less costs of
sale (the "Net Sale Proceeds"); (b) all cash proceeds of sale due on sale
closing after deducting costs of sale ("Cash Sale Proceeds") are paid to Lender
at closing; (c) the sale will provide Lender with at least Two Hundred Thousand
Dollars ($200,000) in Cash Sale Proceeds OR Borrowers will pay to Lender the
difference between Two Hundred Thousand Dollars ($200,000) and the Cash Sale
Proceeds concurrently with the closing of the sale; (d) Borrowers disclose all
relations with and provide information concerning the identity of the proposed
purchaser to the extent reasonably satisfactory to Lender so that Lender can
verify that the proposed purchaser is in no way related to or affiliated with
one or more of the Borrowers; (e) the purchaser must be a bona fide third party
and cannot be an Affiliate or affiliated with an officer, director or
shareholder of any Borrower or Affiliate; and (f) before a Borrower may sell an
Existing Facility or accept a binding offer, letter of intent or agreement to do
so, the Borrower will notify Lender of all terms of sale and provide all
documents then existing reflecting the binding offer, letter of intent and
agreement, and unconditionally offer to sell the Existing Facility to Lender in
writing on the same material terms as the proposed sale to the third party
except any terms which would preclude Lender from accepting because it would
place Lender at a competitive disadvantage with respect to the exercise of the
rights of first refusal. Lender shall have thirty (30) days after receiving the
offer, letter of intent or preliminary agreement concerning the proposed sale to
the third party, during which Lender and its agents will be given full access to
conduct any due diligence concerning the proposed sale and the purchaser and to
notify Borrowers that Lender unequivocally accepts and will purchase the
Existing Facility for the same purchase price, method of purchase price payment
(subject to Lender's credit bit rights as set forth below) and material terms as
the third party, except any terms which would preclude Lender from accepting
because it would place Lender at a competitive disadvantage with respect to its
first refusal rights. After the earlier of Lender's notice of non-acceptance or
expiration of Lender's option period, Borrowers are free to complete the
transaction presented to the Lender, on the conditions set forth below in this
paragraph 4.10(c), free and clear of Lender's liens and security interests for a
period of ninety (90) days.
So long as Borrowers' obligations to Lender exceed the
proposed sale price of the Existing Facility to the third party, Lender may
purchase the Existing Facility and satisfy the proposed sale price by credit
bidding a sufficient amount of Borrowers' then outstanding obligations to Lender
against the sale price. Lender's credit bid will be deemed to have been made no
later than the time period scheduled for the closing of the proposed sale to the
third party.
With respect to a proposed sale of an Existing Facility to a
third party calling for a partial payment of the purchase price upon the closing
and deferred payments thereafter, Lender shall credit bid such amounts of
Borrowers' then
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outstanding obligations to Lender in such amounts and such times as the proposed
third party purchaser is required to pay under the proposed sale or sooner in
Lender's discretion. In the event of such a sale of an Existing Facility, the
Borrower must take back a negotiable purchase money promissory note ("Purchase
Money Note") secured by a first priority security interest in such Existing
Facility and, if previously pledged to Lender, Lender's lien on the Leasehold.
At the sale closing, the selling Borrower must assign as Collateral such
Purchase Money Note and security documents and deliver them to Lender or Lender
shall not be required to release its liens and security interests against the
Existing Facility. In the event of a reasonable request by Borrower to retake
possession of the Purchase Money Note for purposes of collection, Lender shall
deliver it to Borrower and Borrower will take all necessary steps to continue
Lender's perfected security interest in such Collateral. Unless there is an
Event of Default, Borrower can undertake reasonable steps to enforce the
Purchase Money Note and deliver collections of the Purchase Money Note to
Lender. If the Cash Sale Proceeds were less than $200,000 on closing, Borrower
shall pay Lender the difference between $200,000 and the Cash Sale Proceeds at
closing. Borrowers shall remit the full amount of each payment under the
Purchase Money Note to Lender within ten (10) days of receipt until Lender has
received a total amount equal to the Net Sale Proceeds. Thereafter, Borrower may
recoup their prior payments to Lender at closing from the subsequent collections
of the Purchase Money Note.
In the event the sale of the Existing Facility to the third
party is in an amount in excess of all of Borrowers' then outstanding
obligations to Lender, Lender may credit bid the remaining obligations of
Borrowers to Lender and pay the remaining portion of the purchase price in cash
in a manner consistent with the other provisions of this Paragraph, except that
Lender's obligations to pay cash shall not arise until all of Borrowers' then
outstanding obligations to Lender have first been satisfied in full.
(d) Permit AVRE or Binary to transfer, sell, liquidate, assign
or otherwise dispose of any license or permit to conduct a Blood Business
without Lender's prior approval, except as permitted hereby;
(e) Have outstanding accounts receivable (except as permitted
by subparagraph 1) of this paragraph 4.10), loans or other advances owing to any
Borrower by any Affiliate, shareholders, directors, officers, consultants or
employees of any Borrower or any Affiliate;
(f) Permit any ownership interest in AVRE, Binary or a
subsidiary of AVRE or Binary or other Affiliate to be owned or held, in whole or
in part, by any other person or entity other than SI or, as applicable, AVRE or
Binary;
(g) Permit payment by AVRE or Binary, of any salary, bonus,
compensation, expense sharing, tax reimbursement, management fee, overhead
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allocation (including office rent expenses), or other payment of any kind
whatsoever to SI (except payments for obligations owed to Lender), any
Affiliate, any shareholder, director, officer, consultant or employee of SI or
any Affiliate except for payments by AVRE or Binary for management or overhead
fees which shall not exceed (i) $70,000 per month, and (ii) $840,000 in any
calendar year. It is understood that for such fees AVRE and Binary will be
provided such general and administrative services of at least the scope and
quality as are being currently provided so that neither AVRE nor Binary will
incur any other general or administrative expenses or any other expenses for
such services.
(h) Except as approved in writing by Lender, which approval
may be withheld for any reason, invest in or permit the operation by any
Affiliate of any Blood Business other than a Blood Business conducted at
facilities operated by an Affiliate, directly or indirectly, which is a wholly-
owned subsidiary of SI other than AVRE or Binary.
(i) Permit any Affiliate to conduct Blood Business within ten
(10) miles of an Existing Facility, except under the following conditions:
(1) Lender shall be first notified that the Affiliate is
engaging in the Blood Business;
(2) The Borrowers provide the Lender with the historical
operating information for such Existing Facility, including production volume,
gross revenue and operating income for each of the previous twelve (12) months.
(3) The Affiliate shall have first executed a Negative
Pledge Agreement;
(4) At Lender's request, such Affiliate adheres to the
same reporting requirements of AVRE and Binary as set forth in paragraphs 4.3
through 4.5 of this Agreement; and
(5) The Affiliate first certifies to Lender in writing
that it will not violate the unfair trade practice laws of the State where is it
located.
(j) Permit any Existing Facility to substantially curtail its
Blood Business operation or close an Existing Facility unless Borrowers first
pay Lender Two Hundred Thousand Dollars ($200,000) prior to or contemporaneously
with Borrowers' decision to substantially curtail the operations of or close the
Existing Facility which may be applied by Lender in its discretion as permitted
by the Loan Documents.;
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(k) Knowingly permit any Affiliate to offer Blood Business or
other products and services on terms, including without limitation, price and
quality, that would place the services and products provided by the Existing
Facilities at a competitive or economic disadvantage with those offered at the
facilities of such Affiliate;
(l) Permit SI or any Affiliate to engage in purchases, sales or
other transactions with AVRE or Binary other than in the ordinary course of
business on economic terms no less favorable than those available from third
parties which are not Affiliates;
(m) To violate any of the terms or conditions of or fail to
perform any of Borrowers' obligations under the Settlement Agreement or the
Bankruptcy Plan;
4.11 LIMITATIONS ON LOANS. INVESTMENTS AND ADVANCES. The Borrowers will
not, directly or indirectly, make or have outstanding any loan or advance to or
an equity or other investment in, or acquire all or a substantial part of the
assets or properties of, or own or acquire stock or debt instruments except for
(i) government securities, or (ii) certificates of deposit, money market
accounts, deposit account balance of any kind or instruments which are fully
insured by either an agency of the United States of America or through a state
chartered financial institution, or other securities of, any entity or person,
except that SI, but not AVRE or Binary, may invest in wholly-owned Affiliates
conducting business in accordance with the provisions of paragraph 4.10 hereof,
and which execute and deliver to Lender a Negative Pledge Agreement in
substantially the form set forth on Schedule "E" hereto concurrent with its
receipt of any investment from SI.
4.12 OTHER AGREEMENTS. The Borrowers will not enter into any agreement
or do any act which might limit or restrict the Borrowers' ability to comply
with the terms of the Loan Documents or the ability of any Affiliate to comply
with the Negative Pledge Agreement.
4.13 ADDITIONAL DOCUMENTS. The Borrowers agree to execute and deliver
any documents, including Security Agreements, which are necessary in the
reasonable judgment of the Lender to obtain, maintain and perfect the mortgage
liens and security interests intended to be created by the Loan Documents and to
enable the Lender to comply with any federal or state law otherwise applicable
to the Lender.
4.14 ORDINARY OPERATIONS. The Borrowers shall use all reasonable
efforts to operate their business in the usual, regular and ordinary course so
as to maintain the goodwill it now enjoys, and to use all reasonable efforts to
preserve and maintain its present business organization, keep available the
service of its present employees, and preserve its relationship with suppliers,
customers and other having business dealings
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with it; provided that this paragraph will not limit management's ability to
hire and fire employees.
4.15 MAINTENANCE OF PROPERTY. The Borrowers shall maintain all of their
properties in customary repair, order and condition, reasonable wear in use and
damage by fire or unavoidable casualty excepted. In the event Borrowers enter
into a new Lease, or modify or extend any existing Lease, Borrowers shall use
reasonable diligence and cooperate with the Lender to obtain Landlord's approval
to a pledge of Borrowers' interest in such Lease, and an attornment agreement
recognizing Lender's rights. Copies of all of the Leases listed on Schedule "H"
hereto have been delivered to Lender, which leases constitute the only
facilities leased by the Borrowers as of the date hereof. The Borrowers own no
facilities or other real property, except the Vacant Parcels.
4.16 DEBTS. Neither AVRE nor Binary shall directly or indirectly, incur
any indebtedness of any kind, except (i) obligations to the Lender arising under
the Loan Documents; (ii) taxes, surcharges or fees incurred and paid in the
ordinary course of business; (iii) any obligations of AVRE or Binary required to
be paid pursuant to any law or regulation; (iv) obligations related to the
conduct of the Blood Business operations, except neither AVRE nor Binary will be
permitted to borrow any money; (v) subject to the limitation of paragraph
4.10(g), obligations for professional persons and/or consultants deemed
necessary by management of the Borrowers. Neither AVRE nor Binary shall create,
assume or suffer to exist any trust deed, mortgage, pledge, security interest,
encumbrance or other lien except as permitted under paragraph 4.7.
4.17 BANKRUPTCY; ADVANCE WAIVER. In the event any Borrower (or any
transferee or successor of any Borrower) files a bankruptcy proceeding or
attempts to reopen or modify the Plan to affect the treatment of Lender
postconfirmation, or has commenced against it any involuntary bankruptcy
proceeding which is not dismissed within thirty (30) days, at any time after
execution of this Agreement and before the earlier of: (i) a period of two (2)
years; or (ii) seventy-five percent (75%) of the principal indebtedness owing to
Lender under the Consolidated Note has been repaid, and subjects all or any part
of the Collateral to the jurisdiction of the United States Bankruptcy Courts, as
a substantial consideration for Lender's consent to the terms of the Settlement
Agreement, the Bankruptcy Plan and acceptance of the Loan Documents, Lender
shall be entitled to immediate and unconditional relief from the automatic stay
(11 U.S.C. Section 362) in order to pursue all legal and equitable remedies
hereunder, including any foreclosure proceeding against the Collateral and any
other security for the Consolidated Note or other Loan Documents, and the filing
of such proceeding shall be deemed consent to such relief by all Borrowers or
the owner of the Collateral. Lender and Borrowers expressly acknowledge and
agree that this provision neither directly nor indirectly waives, prohibits or
limits the right or ability of Borrowers (or any transferee or successor of
Borrowers) to file any bankruptcy proceeding.
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5. `REPRESENTATIONS; WARRANTIES. The Borrowers jointly and severally
represent and warrant to the Lender as follows:
5.1 OWNERSHIP. The Borrowers are the sole owners of the Collateral
free from all claims, liens, security interests, encumbrances and title
retention devices, except possible liens on the Vacant Parcels. The Borrowers
will defend title to the Collateral against all claims and demands of any person
which are adverse to the Lender as long as the Consolidated Loan has not been
paid in full.
5.2 LITIGATION. To the best of Borrowers' knowledge, other than the
Bankruptcy Proceeding, there is no action, suit, proceeding or investigation
pending or threatened against the Borrowers or the Collateral (except as listed
in Schedule "J"). In addition, Borrowers are not aware of litigation which might
materially and adversely affect the Borrowers or the Collateral or result in any
substantial liability not adequately covered by insurance or impair the ability
of Borrower to carry on Borrowers' business as the same is conducted as of the
date hereof.
5.3 NO DEFAULT. Execution and delivery by the Borrowers of, and the
performance by the Borrowers, of its obligations under this Agreement and each
of the Loan Documents have been authorized by all necessary action and do not
and to the best of Borrowers' knowledge will not: (a) violate or conflict with
any provision of any contract, lease or other agreement or document to which any
Borrower is a party or by which any of its assets or the Collateral are bound;
(b) result in or require the creation of any lien, claim, charge or other right
of others of any kind on or with respect to any property now or hereafter owned
or leased by any Borrower other than the liens granted to the Lender; or (c)
violate any provision of any law or regulation presently in effect.
5.4 FINANCIAL INFORMATION. The financial information to be delivered
to the Lender relating to the Borrowers and the Collateral is correct, complete
and fairly represents the financial condition and the results of operations of
the Borrowers and the value of the Collateral as of the dates of such financial
information and there has occurred no material adverse change in such financial
information.
5.5 VALIDITY. ENFORCEABILITY AND PERFECTION. As already approved by
the Bankruptcy Court's confirmation Order in the Bankruptcy Proceedings, (i) the
Loan Documents constitute the legal, valid and binding obligations of the
Borrowers enforceable against the Borrowers in accordance with their respective
terms; (ii) the Lender has good, valid and perfected first priority security
interests in the Collateral described in the Security Agreements (with the
possible exception of the Vacant Parcels), subject to paragraph 1.11.11 and the
provisions of paragraph 4.7(a), (c) and (d) of this Agreement; and (iii) Lender
has a good, valid and perfected first priority security interest in and to the
shares of AVRE and Binary pledged to Lender under the Stock Pledge Agreement. To
the best of Borrower's knowledge after appropriate
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inquiry, the grant of such security interests to Lender shall not violate the
rights of any third party.
5.6 STATUS OF BORROWERS. Each of Borrowers: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation; (b) has all requisite authority to conduct its business and
own and lease its properties, including the Collateral; and (c) is qualified to
do business in every jurisdiction in which the nature of such Borrower's
business requires such qualification The individuals executing the Loan
Documents on behalf of the Borrowers have the power and authority to execute,
deliver and perform Borrowers' obligations under the Loan Documents.
5.7 COMPLIANCE WITH LAWS. No Borrower is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended. The Borrowers are in compliance in all material decrees which are
applicable to the Borrowers or the Collateral including, without implied
limitation, all state and federal securities laws, the Employee Retirement
Income Security Act of 1974, as amended, the Fair Labor Standards Act,
Regulations of 1974, as amended, the Fair Labor Standards Act, Regulations G, T,
U and X of the Board of Governors of the Federal Reserve System and all
environmental, health and safety laws.
5.8 ENVIRONMENTAL LIABILITY. No Borrower is in violation of any
Environmental Law or subject to any claims for remediation of Hazardous
Substances with respect to any property owned or occupied by Borrower. Before
acquiring or entering any new lease or purchase of property, Borrowers shall
make reasonable inquiry into compliance with all Environmental Laws and any
claims for remediation of Hazardous Substances with respect to any new property
to be owned or occupied by any Borrower.
5.9 DISCLOSURE. No representation or warranty made by the Borrowers in
the Loan Documents contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein not misleading.
There is no fact known to the Borrowers which has or might reasonably be
anticipated to have a material adverse effect on the business, assets, financial
condition or operations of the Borrowers or the value of the Collateral which
has not been disclosed to the Lender in writing.
5.10 ADDITIONAL REPRESENTATIONS. WARRANTIES AND COVENANTS. The
Borrowers further jointly and severally represent, warrant, covenant and agree
as follows:
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(a) ACCOUNTS RECEIVABLE INFORMATION. In addition to the account
receivables aging report delivered each month to Lender under the terms of
paragraph 4.4.4 hereof, at Lender's request, the Borrowers will provide
supplementary information sufficient to show the customer names, addresses,
phone and fax numbers for each account debtor of the Borrowers, together with
the name of the principal contact of the Borrowers at such customer.
(b) AFFILIATES; INVESTMENTS. Schedule "F" hereto contains a
complete list of all corporations, joint ventures, partnerships, or other
entities in which any Borrower has any equity interest or interest as a lender,
all of which shall be deemed Affiliates hereunder. Borrowers shall promptly
notify Lender in the event that future actions cause Schedule "F" to become
inaccurate or incomplete, and shall promptly thereafter provide Lender with an
updated, accurate Schedule "F."
(c) AVRE AND BINARY SHARES.
(i) Except as set forth in the 1933 Act, there are no
restrictions upon the transfer of any of the shares of AVRE and Binary owned by
SI (the "Shares"), and SI has the right to pledge and grant a security interest
in or otherwise transfer the Shares free of any encumbrances or rights of third
parties and all Shares shall be held as Collateral as defined under the Stock
Pledge Agreement;
(ii) All of the Shares are and shall remain free from all
liens, claims, encumbrances, and purchase money or other security interests
subject to the provisions of paragraphs 4.7(a), (c) and (d) of this Agreement.
SI shall not, without Lender's prior written consent, sell, transfer or
otherwise dispose of any or all of the Shares;
(iii) The Stock Pledge Agreement, and the delivery to Lender of the Shares,
creates a valid and perfected security interest in the Shares and as a result of
the entry of an order described in paragraph 3.3 above, all actions necessary or
desirable to such perfection have been duly taken;
(iv) Except as set forth in the 1933 Act or applicable
state securities laws, and as a result of the entry of an order described in
paragraph 3.3 above, no authorization or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required either
(A) for the perfection of or exercise by Lender of its rights and remedies under
the Stock Pledge Agreement (except as may have been taken by or at the direction
of Lender or as may be required in connection with a disposition of Shares by
laws affecting the offering and sale of securities generally), or (B) for the
exercise by Lender of the voting or other rights provided for in the Stock
Pledge Agreement or the remedies in respect of the Shares pursuant to the Stock
Pledge Agreement;
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(v) The Shares represent 100% all of the issued and
outstanding shares of capital stock of AVRE and Binary;
(vi) No person holds no options, warrants or other rights
to acquire capital stock of AVRE or Binary; and
(vii) All of the Shares have been duly and validly issued,
and they are fully paid and nonassessable.
5.11 ADDITIONAL MATTERS. Each of the Borrowers and Lender represents
and warrants that they (a) have been advised by legal counsel of the their
choice in the transactions contemplated by the Agreement; (b) are fully aware
and clearly understands all of the terms and provisions contained in this
Agreement; (c) have voluntarily, with full acknowledge and without coercion or
duress of any kind, entered into this Agreement; (e) on their own initiative
have made proposals to the Lender, the terms of which are reflected by this
Agreement; and (f) have received actual and adequate consideration to enter into
this Agreement, to become obligated hereby and to grant the security interests
granted under the Loan Documents to the Lender.
6. ENVIRONMENTAL COMPLIANCE. The Borrowers agree that they will not use,
generate manufacture, produce, store, release, discharge or dispose of any
Hazardous Substance or knowingly allow any other person to do so in violation of
any Environmental Law. The Borrowers agree to give prompt written notice to the
Lender of: (a) any proceeding or inquiry by any federal, state, local or foreign
governmental authority with respect to any violation of Environmental Law by the
Borrowers or any Affiliate; (b) all claims made or threatened by any third party
against the Borrowers or any Affiliate relating to any loss or injury resulting
from any Hazardous Substance; and (c) the discovery by the Borrowers or any
Affiliate of any occurrence or condition that could reasonably cause the
Borrowers or any Affiliate to be subject to any restrictions on the ownership,
occupancy, transferability or use of any property of the Borrowers under any
Environmental Law. With respect to any act or conduct occurring after the date
of this Agreement and any new leases or purchases of property by the Borrower,
the Borrowers agree to protect, indemnify and hold harmless the Lender, its
directors, officers, employees, agents, successors and assigns against all loss,
damage, cost, expense or liability (including reasonable attorneys' fees and
costs) directly or indirectly arising out of or attributable to the use,
generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence of a Hazardous Substance by the Borrowers or any
Affiliate, including without implied limitation: (i) all foreseeable
consequential damages; and (ii) the costs of any required or necessary repair,
cleanup or detoxification and the preparation and implementation of any closure,
remedial or other required plan. The foregoing indemnity agreement will survive
the payment of the Loan and the release or other termination of the Loan
Documents. In the event that any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature is
reasonably necessary or desirable
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under any applicable Environmental Law or required by any governmental or
nongovernmental entity or person because of, or in connection with, the current
or future presence, suspected presence, release or suspected release of a
Hazardous Substance on or into the air, soil, groundwater, surface water or soil
vapor by the Borrowers or any Affiliate, the Borrowers agree within thirty (30)
days after written demand for performance thereof by the Lender (or such shorter
period of time as might be required under any applicable Environmental Law) to
commence, or cause to be commenced, and thereafter diligently prosecute or cause
to be prosecuted to completion, all such remedial work except as to any property
of an Affiliate not subject to a lien or security interest in favor of Lender.
At Lender's option, remedial work will be performed by one or more contractors
approved by the Lender under the supervision of a consulting engineer approved
by the Lender. All costs and expenses of such remedial work will be paid by the
Borrowers including, without implied limitation, the charges of such
contractor(s) and consulting engineer(s), and the Lender's reasonable attorneys'
fees and costs incurred in connection with monitoring or review of such remedial
work.
7. EVENTS OF DEFAULT. The Lender may terminate all obligations of the
Lender hereunder and may exercise the remedies held by the Lender under the Loan
Documents if any of the following events occur and are not remedied by the
Borrowers or waived in writing by the Lender.
7.1 NONPAYMENT. The nonpayment, within ten (10) days of the date when
due, of any installment of interest or principal owing under the Consolidated
Note or of any other amount payable to the Lender under the terms of the Loan
Documents.
7.2 BREACH OF AGREEMENT. The failure by the Borrowers to perform or
observe any representation, warranty or agreement contained in any of the Loan
Documents, including defaults described in paragraph 7.3 through 7.14, including
without implied limitation any provision of paragraphs 3, 4, 5 and 6 hereof,
which shall continue for a period of twenty (20) days after the Borrowers become
aware thereof, except that any obligations related to the payment of money or
maintenance of insurance shall have no grace period except as otherwise
expressly provided in paragraph 7.1 hereof.
7.3 LIEN FILINGS. The existence for a period of sixty (60) days of any
lien other than liens created by the Loan Documents or permitted hereunder, or
liens being diligently contested by Borrowers, covering all or any portion of
the Collateral.
7.4 CASUALTY LOSS. Substantial damage, destruction or taking of all or
any portion of the Collateral which is an uninsured risk.
7.5 REPRESENTATIONS AND WARRANTIES. Any representation, statement,
certificate, schedule or report made or furnished to the Lender by or on behalf
of the
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Borrowers proves to be false or erroneous in any material respect at the time of
the making thereof or any representation or warranty contained in the Loan
Documents ceases to be complied with in any material respect.
7.6 INSOLVENCY: BANKRUPTCY. The insolvency of any Borrower, or the
institution of bankruptcy, reorganization, liquidation, receivership or
conservatorship proceeding by or against any Borrower. For the purposes of this
paragraph, insolvency shall mean (i) an inability to pay debts as the same
become due as to any of the Borrowers or (ii) the existence of liabilities in
excess of assets (using book value,, but including goodwill), as to SI on a
consolidated basis including the obligation to Lender hereunder as a liability
or as to either AVRE or Binary on an unconsolidated basis without including the
obligation to Lender hereunder as a liability).
7.7 JUDGMENT. Entry by any court of a final uninsured money judgment
in excess of $50,000 against any Borrower unless the Borrower timely appeals and
posts a bond therefor or an attachment of the Collateral or any part thereof
which is not discharged or stayed to the satisfaction of the Lender.
7.8 OTHER DEBT. The default in payment or acceleration of the maturity
of any indebtedness of any Borrower owing in excess of $50,000.
7.9 ADVERSE CHANGE. The occurrence of a material adverse change in the
financial condition of any Borrower or the value of the Collateral, except as
permitted in paragraphs 4.10(c) and (j).
7.10 IMPAIRMENT OF EXISTING FACILITY FROM AFFILIATE'S OPERATIONS. If
any Existing Facility is being operated within ten (10) miles of an Affiliate's
Blood Business facility, it shall be an Event of Default if:
(a) Volume of Plasma in any period of three consecutive months
at such Existing Facility falls twenty-five percent (25%) below the level
produced in the same months of the year before the Affiliate started operation
in the vicinity;
(b) Gross Revenues in any period of three consecutive months at
such Existing Facility falls twenty-five percent (25%) below the level produced
in the same months of the year before the Affiliate started operation in the
vicinity;
Unless Lender has previously been granted, or is granted within ten (10) days
after written demand to Borrowers and Affiliate (i) a first priority security
interest and lien in the Affiliate's new center, or (ii) additional or
replacement collateral for such Existing Facility, each in form and substance
satisfactory to the Lender.
7.11 CORPORATE EXISTENCE. Any act or omission (formal or informal) of
the Borrowers or their officers, directors or shareholders leading to, or
resulting in, the
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<PAGE>
termination, invalidation (partial or total), revocation, suspension,
interruption or unenforceability of their corporate existences, rights,
licenses, franchises or permits, or the transfer or disposition (whether by
sale, lease or otherwise) to any person of all or a substantial part of their
property, provided that such revocation, suspension or interruption is not cured
within sixty (60) days.
7.12 REPUDIATION. The repudiation by any Borrower of any obligations
under this Agreement or any other Loan Document or the assertion of any claim or
liability against the Lender by any Borrower.
7.13 CERTAIN PROCEEDINGS. The indictment of any Borrower under any
criminal statute or the commencement of any civil or criminal proceedings
against any Borrower pursuant to the penalties and remedies sought or available
include the forfeiture of property having a value in excess of $150,000 or the
cessation of the ability of any Borrower to conduct the normal course of its
business.
7.14 CHALLENGE TO ENFORCEMENT. If any material provision of this
Agreement or any Loan Document shall at any time for any reason cease to be
valid and binding or fully enforceable against any party thereto (other than
Lender) or shall be contested by any party (other than Lender) unless (i) the
provision relates to the validity or perfection of a security interest in
Collateral which is impaired by virtue of a third party's interest in the
Collateral (excluding a third party to whom one or more Borrowers is in
contractual privity or to whom such Borrower is a direct obligor); (ii) such
provision relates to Collateral and results from either a disposition of
Collateral authorized by this Agreement or the impairment, loss or forfeiture of
Collateral is covered by an insurance policy under which Lender is the sole Loss
Payee other than Borrowers; (iii) the provision relates to an impairment of
Lender's security interest in Collateral and the impairment is authorized by
this Agreement; (iv) such enforceability is due to a provision of law which
Borrowers may not waive; or (v) such remedy or right to which Lender may not be
entitled by applicable law, in which case the Lender shall be afforded rights
and remedies to the fullest extent of the law.
8. REMEDIES. On the occurrence of an Event of Default, in addition to any
other rights and remedies which the Lender might hold under the terms of any one
or more of the Loan Documents, the Lender will have the following remedies to
the full extent permitted by law:
8.1 ACCELERATION OF MATURITY. The Lender may, at the Lender's option,
terminate any or all obligations of the Lender hereunder and/or declare the
Consolidated Note and all other amounts owing by the Borrowers to the Lender to
be immediately due and payable, demand performance of all other obligations of
the Borrowers under the Loan Documents and proceed to selectively and
successively enforce any one or more of the Lender's rights under the Loan
Documents.
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<PAGE>
8.2 SELECTIVE ENFORCEMENT. In the event the Lender elects to
selectively and successively enforce the Lender's rights under any one or more
of the Loan Documents, such action will not be deemed a waiver or discharge of
any other right, lien or encumbrance securing payment of the Consolidated Note.
Lender may proceed against the Borrowers or any guarantor selectively and
without any requirement to proceed against all of them or against any of them in
any particular order.
8.3 PERFORMANCE BY LENDER. In the event the Borrowers fail to cure or
cause to be cured any Event of Default within the time periods provided herein,
the Lender will at any time thereafter have the right, but not the obligation,
to cause the Event of Default to be cured on the Borrowers' behalf and to pay
any secured or unsecured claim (whether prior to or subordinate to the claims of
the Lender) affecting the Collateral or lease payments in such manner and at
such times as the Lender determines to be appropriate under the circumstances.
The Borrowers hereby authorize the Lender to increase the indebtedness owing by
the Borrowers to the Lender by the cost of curing any Event of Default or
satisfying any claim against the Borrowers or the Collateral and agrees that the
Loan Documents will evidence and secure payment of such costs whether or not the
total funds advanced by the Lender exceed the face amount of the Loan Documents.
8.4 WAIVER OF DEFAULT. The Lender may, by an instrument in writing
signed by the Lender, waive any Event of Default which has occurred and any of
the consequences of such Event of Default and, in such event, the Lender, the
Borrowers will be restored to their respective former positions, rights and
obligations hereunder. Any Event of Default so waived will, for the purposes of
the Loan Documents, be deemed to have been cured and not to be continuing, but
no such waiver will extend to any subsequent or other Event of Default or impair
any consequences of such subsequent or other Event of Default. No waiver of any
Event of Default by the Lender will be implied from the failure or delay by the
Lender to take any action in respect of the Event of Default. No express waiver
of any condition precedent or Event of Default will affect any other Event of
Default or extend any period of time for performance other than as specified in
such express waiver. One or more waivers of any Event of Default will not be
deemed a waiver of any subsequent failure by the Borrowers to perform the same
provision or any other provision. The consent to or approval of any act or
request by the Lender will not be deemed to waive or render unnecessary the
consent to or approval of any subsequent similar act or request. The partial
exercise of any right or remedy under the Loan Documents will not preclude any
other or further exercise thereof or the exercise of any other right or remedy.
No course of dealing between the Borrowers and the Lender will be deemed to
amend the terms of the Loan Documents or to preclude the Lender from exercising
the rights and remedies therein contained notwithstanding such course of
dealing.
8.5 CUMULATIVE REMEDIES. The rights and remedies of the Lender
provided by the Loan Documents are cumulative and no right or remedy will be
exclu-
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<PAGE>
sive of any other or of any other right or remedy which the Lender might
otherwise have by virtue of the occurrence of an Event of Default and the
exercise of any right or remedy by the Lender will not impair the Lender's
standing to exercise any other right or remedy.
8.6 WAIVER OF MARSHALLING OF ASSETS. The Borrowers, jointly and
severally, for themselves and all who may claim through or under them, hereby
expressly waive and release all rights to have the Collateral, or any part
thereof, or any of their other properties, marshalled on any foreclosure, sale
or other enforcement of remedies, and the Lender or any court in which the
foreclosure of liens or security interests in the Collateral are sought, shall
have the right to sell the Collateral as an entirety in a single parcel.
9. NO FURTHER MODIFICATION. No provision hereof can be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
against whom the enforcement of the change, waiver, discharge or termination is
sought. It is understood that the Lender is under no obligation to extend the
term of any credit extended under this Agreement or any other Loan Document and
any such further modifications or extensions will be made in the Lender's sole
and absolute discretion. Any such modifications or extensions will be evidenced
by the acceptance by Lender of a written agreement having terms acceptable to
the Lender. Each of the Borrowers acknowledge that all of the terms and all of
the obligations of Lender with respect to any credit of any kind extended to the
Borrowers is fully contained in this Agreement and any other Loan Documents and
that no other understanding, written or oral, has been entered into in
connection herewith.
10. RELEASE OF LENDER. As additional consideration for the undertaking to
execute and deliver this Agreement, the Borrowers hereby each release and
forever discharge the Lender, the Lender's agents, servants, employees,
officers, directors, attorneys, and shareholders, as well as the respective
successors and assigns of any and all thereof (collectively, the "Released
Lender Parties") from all damage, loss, claims, demands, liabilities,
obligations, actions and causes of action whatsoever which the Borrowers, or any
of them, might now have or claim to have against the Lender, whether presently
known or unknown, and of every nature and extent whatsoever, on account of or in
any way concerning, arising out of or founded on the Original Loan Agreement, or
any document described therein or delivered in connection therewith, or any
other dealings between Borrowers and Lender, and including without implied
limitation, all such loss or damage of any kind heretofore sustained that might
arise as a consequence from the dealings between the parties.
To the extent applicable, the Borrowers each waive the provisions of
Section 1542 of the California Civil Code which provides as follows:
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<PAGE>
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR"
________ _______ ________
SI AVRE BINARY
11. MISCELLANEOUS. It is further agreed as follows:
11.1 TIME. Time is the essence of each provision of this Agreement.
11.2 NOTICE. Any notice, demand or communication required or permitted
to be given by any provision of this Agreement will be in writing and will be
deemed to have been given when delivered personally, to the party designated to
receive such notice, or on the date following the day sent by overnight courier,
or on the third (3rd) business day after the same is sent by certified mail,
postage and charges prepaid, directed to the following addresses or to such
other or additional addresses as any party might designate by written notice to
the other party:
To the Borrowers: SeraCare, Inc.
AVRE, Inc.
Binary Associates, Inc.
1875 Century Park East, Suite 2130
Los Angeles, California 90067
Attention: Barry Plost, President
and Chief Executive Officer
To the Lender: CVD Financial Corporation
400 Burrard Street, Suite 1250
Vancouver, British Columbia V6C 3A6
CANADA
Attention: Roy Zanatta
11.3 SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit
of and bind the respective successors and permitted assigns of the Borrowers and
Lender.
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<PAGE>
11.4 ATTORNEYS' FEES. If any legal action or proceeding is brought by
any party in order to enforce a provision of this Agreement or any Loan
Document, the unsuccessful party in such action or proceeding, whether or not
such action or proceeding is prosecuted to final judgment, shall pay all of the
attorneys' fees and costs incurred by the prevailing party. If any Borrower
shall become the subject of any bankruptcy or insolvency proceeding, the
Borrowers shall pay to the Lender on demand all attorneys' fees, costs and
expenses which the Lender may incur (i) to obtain relief from or otherwise in
connection with any bankruptcy or insolvency proceeding which delays or
otherwise impairs the Lender's exercise of any right or remedy under this
Agreement, or any of the Loan Documents, or (ii) to obtain adequate protection
or assurance for any of the Lender's rights or collateral.
11.5 PARTIAL INVALIDITY. If any provision of this Agreement is
determined by a court having jurisdiction to be illegal, invalid or
unenforceable under any present or future law, the remainder of this Agreement
will not be affected thereby. It is the intention of the parties that if any
provision is so held to be illegal, invalid or unenforceable, there will be
added in lieu thereof a provision as similar in terms to such provision as is
possible that is legal, valid and enforceable.
11.6 HEADINGS. The headings used in this Agreement are for ease in
reference and are not intended to affect the interpretation of this Agreement in
any way.
11.7 APPLICABLE LAW. The lending transaction contemplated by this
Agreement and the Loan Documents has been negotiated, consummated and is to be
performed in the State of California. This Agreement and the other Loan
Documents described herein shall be governed by, and construed and enforced in
accordance with the substantive law of the State of California to the fullest
extent permitted by law, including choice of laws. The parties hereto recognize
that the laws of other states may govern, among other things issues of
perfection and foreclosure. Any action or proceeding arising in connection with
this Agreement and the Loan Documents shall be brought in a federal or state
court within Los Angeles County, California, and the Borrowers hereby consent to
the jurisdiction of any federal or state court within the State of California
and located in State of California and located in Los Angeles County,
California. The Borrowers and Lender irrevocably and unconditionally submit to
the jurisdiction (both subject matter and personal) of each such court and
irrevocably and unconditionally waive (a) any objection that they might now or
hereafter have to the venue in any such court; and (b) any claim that any action
or proceeding brought in any such court has been brought in an inconvenient
forum. Notwithstanding the foregoing, the Lender may, in its sole and absolute
discretion, initiate proceedings in the courts of any other jurisdiction in
which any Borrower may be found or in which its assets may be located.
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<PAGE>
11.8 INTEGRATION; SOLE AGREEMENT. The parties expressly acknowledge and
agree that, with regard to the subject matter of this Agreement and the
transactions contemplated herein (i) there are no oral agreements between the
parties; and (ii) this Agreement, the Bankruptcy Plan, the Loan Documents and
Settlement Agreement as defined herein (a) embody the final, complete and entire
agreement between the parties, (b) supersede all prior and contemporaneous
negotiations, offers, proposals, agreements, loan commitments, term sheets,
promises, acts, conduct, course of dealing, representations, statements,
assurances and understandings, whether oral or written, and (c) may not be
varied or contradicted by evidence of such prior contemporaneous matter or by
evidence of any subsequent oral agreement of the parties. In the extent there is
any inconsistency or any conflicts between the terms of the Loan Documents and
the Bankruptcy Plan, the provisions of the Loan Documents shall control the
parties rights hereunder.
11.9 JURY WAIVER. THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS DESCRIBED HEREIN OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH, OR (2) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND THE PARTIES BY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS TEN EVIDENCE OF THE
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<PAGE>
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
LENDER: CVD FINANCIAL CORPORATION,
a Delaware corporation
By: /s/ Roy Zanatta
-----------------------------
Its: VP & Sec
----------------------------
By:
-----------------------------
Its:
----------------------------
BORROWERS: SERACARE, INC., a Delaware corporation
formerly known as AMERICANBLOOD
INVESTMENT, INC. aDelaware
corporation
By: /s/ Barry Plost
-----------------------------
Its: President
----------------------------
By: /s/ Jerry L Burdick
-----------------------------
Its: Secretary
----------------------------
AVRE, INCORPORATED,
a Nevada Corporation
By: /s/ Barry Plost
-----------------------------
Its: President
----------------------------
By: /s/ Jerry L. Burdick
-----------------------------
Its: Secretary
----------------------------
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<PAGE>
BINARY ASSOCIATES, INC.,
a Colorado corporation
By: /s/ Barry Plost
-----------------------------
Its: President
----------------------------
By: /s/ Jerry L. Burdick
-----------------------------
Its: Secretary
----------------------------
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<PAGE>
EXHIBIT 6.11(a)
AMENDED AND RESTATED
PROMISSORY NOTE
$1,150,000.00 Los Angeles, California
February 5, 1996
FOR VALUE RECEIVED, SERACARE, INC., a Delaware corporation formerly
named American Blood Institute, Inc. ("SI"), AVRE, INCORPORATED, a Nevada
corporation ("AVRE"), and BINARY ASSOCIATES, INC., a Colorado corporation
("Binary"), promise to pay to the order of CVD FINANCIAL CORPORATION, a
Delaware corporation, its successors and assigns (the "Lender") at 2121
Avenue of the Stars, 22nd Floor, Los Angeles, California 90067, or at such
other place as might be designated in writing by the Lender, the principal
sum of One Million One Hundred Fifty Thousand Dollars ($1,150,000.00), or so
much thereof as remains unpaid, together with interest thereon at a rate
equal to the Note Rate (as hereafter defined). SI, AVRE and Binary are
referred to herein collectively as the "Borrowers." The "Note Rate" shall be
equal to fourteen percent (14%) per annum. Interest will be calculated on the
basis of the actual days elapsed based on a per diem charge computed over a
year composed of three hundred sixty (360) days.
Principal and interest will be paid as follows: Interest on the
unpaid principal balance hereunder accrued from the date hereof through the
last day of each month, will be paid on the first day of each succeeding
calendar month, commencing on March 1, 1996. The unpaid principal balance
will be paid in consecutive quarterly installments of Eighty Two Thousand One
Hundred Forty Two Dollars and 86/100 ($82,142.86) payable on May 1, August 1,
November 1 and February 1 of each year during the term hereof with the first
principal payment being due May 1, 1996. The final installment of principal
and all accrued but unpaid interest will be due and payable at maturity on
August 1, 1999.
The Borrowers will have the right at any time and from time to time
to prepay all or any portion of the unpaid principal balance of this Note
without penalty.
This Note is issued by the Borrowers and accepted by the Lender
pursuant to a certain Amended and Restated Loan Agreement (the "Loan
Agreement") between the Borrowers and the Lender dated February 5, 1996 and
evidences the Consolidated Loan to be made pursuant to the Loan Agreement.
The Borrowers agree that if, and as often as, this Note is placed
in the hands of an attorney for collection or to defend or enforce any of the
Lender's rights under this Note, the Loan Documents (as defined in the Loan
Agreement) or otherwise relating to the indebtedness hereby evidenced, the
Borrowers will pay the Lender's reasonable attorneys'
<PAGE>
fees, all court costs and all other expenses incurred by the Lender in
connection therewith. The Lender may collect a late charge equal to five
percent (5%) of each payment which is not received by the Lender within ten
(10) days after the due date of such payment. Such late charge represents the
estimate of reasonable compensation for the loss which will be sustained by
the Lender arising from the Borrowers' failure to make timely payments and
may be collected without prejudice to the rights of the Lender to collect any
other amounts arising from the Borrowers' default in payment or to accelerate
the maturity of the indebtedness hereby evidenced. In addition to the
foregoing late charge, at the option of the Lender, after the occurrence of
any Event of Default (as defined in the Loan Agreement), the unpaid balance
of this Note will bear interest at that rate which is equal to two percent
(2.0%) per annum in excess of the Note Rate and such interest which has
accrued will be paid at the time of and as a condition precedent to curing
any Default (as defined in the Loan Agreement). During the existence of any
Default, the Lender may apply payments received on any amount due hereunder
or under the terms of any instrument now or hereafter evidencing or securing
payment of this indebtedness as the Lender determines from time to time.
Payment of the indebtedness hereby evidenced is secured by certain
liens and security interests described in the Loan Documents (as defined
under the Loan Agreement). On the breach by the Borrowers of any provision of
this Note, or any one or more of the Loan Documents or any other instrument
now or hereafter evidencing or securing payment of the indebtedness hereby
evidenced, at the option of the Lender, the entire indebtedness evidenced by
this Note will become immediately due, payable and collectible then or
thereafter as the Lender might elect, regardless of the date of maturity of
this Note. Failure by the Lender to exercise such option will not constitute
a waiver of the right to exercise the same on the occurrence of any
subsequent Event of Default.
The makers, endorsers, sureties, guarantors and all other persons
who might be or become liable for all or any part of this obligation
severally waive presentment for payment, protest and notice of nonpayment.
Such parties consent to any extension of time (whether one or more) of
payment hereof, release of all or any part of the collateral securing payment
hereof or release of any party liable for the payment of this obligation. Any
such extension or release may be made without notice to any such party and
without discharging such party's liability hereunder. If more than one maker
executes this Note, the liability of each of the undersigned is and shall be
joint and several.
The lending transaction contemplated by this Note and the Loan
Documents has been negotiated, consummated and is to be performed in the
State of California. This Note and the other Loan Documents (as described in
the Loan Agreement), except to the extent otherwise provided therein, shall
be governed by, and construed and enforced in accordance with the substantive
law of the State of California to the fullest extent permitted by law,
including choice of laws. Any action or proceeding arising in connection with
this Note and the Loan Documents shall be brought in a federal or state court
within Los
<PAGE>
Angeles County, California, and the Borrowers hereby consent to the
jurisdiction of any federal or state court within the State of California and
located in State of California and located in Los Angeles County, California.
The Borrowers irrevocably and unconditionally submit to the jurisdiction
(both subject matter and personal) of each such court and irrevocably and
unconditionally waive (1) any objection that they might now or hereafter have
to the venue in any such court; and (2) any claim that any action or
proceeding brought in any such court has been brought in an inconvenient
forum. Notwithstanding the foregoing, the Lender may, in its sole and
absolute discretion, initiate proceedings in the courts of any other
jurisdiction in which any Borrower may be found or in which its assets may be
located.
THE BORROWERS HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE, ANY
OF THE LOAN DOCUMENTS DESCRIBED HEREIN OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES OR ANY
OF THEM WITH RESPECT TO THIS NOTE, THE LOAN AGREEMENT, THE LOAN DOCUMENTS, OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND THE BORROWERS HEREBY AGREE AND CONSENT
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES THERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
<PAGE>
IN WITNESS WHEREOF, the Borrowers have executed this instrument
effective the date first above written.
SERACARE, INC.
A DELAWARE CORPORATION
BY: /s/ Barry Plost
---------------------------------
ITS: President
--------------------------------
AVRE, INCORPORATED
A NEVADA CORPORATION
BY: /s/ Barry Plost
---------------------------------
ITS: President
--------------------------------
BINARY ASSOCIATES, INC.
A COLORADO CORPORATION
BY: /s/ Barry Plost
---------------------------------
ITS: President
--------------------------------
<PAGE>
EXHIBIT 6.12
CONTRACT FOR EXCHANGE OF CORPORATE STOCK
This contract for the exchange of corporate stock ("this contract") is
made this 9th day of July, 1996, between Mr. Burt H. McGhee ("McGhee") and
SeraCare, Inc. ("SeraCare"), a Delaware corporation.
WHEREAS, McGhee is the owner of all of the issued and outstanding
stock of BHM Labs, Inc. ("BHM Labs"), an Arkansas corporation;
WHEREAS, BHM Labs operates a blood plasma collection center in Fort
Smith, Arkansas;
WHEREAS, McGhee desires to exchange his stock in BHM Labs for THREE
THOUSAND SIX HUNDRED (3,600) shares of the Series A preferred stock of SeraCare;
NOW THEREFORE on the mutual covenants of the parties it is agreed
that:
1. EXCHANGE OF CORPORATE SHARES. At closing, McGhee shall endorse
and deliver to SeraCare, free and clear of all encumbrances, certificates for
all of the issued and outstanding shares of the stock of BHM Labs in negotiable
form. At closing, SeraCare, Inc. shall deliver to McGhee, free and clear of all
encumbrances, certificates for THREE THOUSAND SIX HUNDRED (3,600) shares of
Series A preferred stock of SeraCare ("the preferred stock").
2. CLOSING. The closing of the exchange of corporate stock shall
take place at a time and place agreed upon by the parties on July 9, 1996 (the
"closing" or "closing date").
3. REPRESENTATIONS AND WARRANTIES OF BHM LABS, INC. McGhee
represents and warrants as follows:
a. BHM Labs is a corporation duly organized,
validly existing and in good standing under
the laws of the state of Arkansas.
b. McGhee is the sole owner of and has good and
marketable title to all of the issued and
outstanding stock of BHM Labs (the "Stock"),
free and clear of all pledges, liens, claims,
mortgages and encumbrances. The Stock is
duly authorized, validly issued and
outstanding, and is fully-paid and
nonassessable.
c. Neither the execution and delivery of this contract, nor the
consummation of the transactions contemplated hereby will
<PAGE>
constitute a violation or breach of (1) the articles of
incorporation or by-laws of BHM Labs, (2) any provision of
any contract or other instruments to which McGhee or BHM
Labs is a party or by which McGhee's or BHM Labs's business,
assets, or properties may be affected or secured, or (3) any
order, writ, injunction, decree, statute, rule or
regulation. This agreement constitutes the legal, valid and
binding obligation of McGhee, enforceable against McGhee in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, and
other similar laws and equitable principles relating to or
limiting creditors' rights generally.
d. The equipment located at the Plasma Collection Center in
Fort Smith, Arkansas includes all the equipment necessary to
conduct the business of BHM Labs. Such equipment is in
working order, reasonable wear and tear excepted, and there
exists no material defect in the condition of any of the
equipment. True and correct lists of the equipment owned and
leased by BHM Labs are attached hereto as Schedules 1 and 2,
respectively.
e. McGhee has delivered to SeraCare a balance sheet for BHM
Labs at May 31, 1996, and the related statement of
operations and cash flows and changes in stockholder's
equity for the period then ended. All such financial
statements have been prepared on an accrual basis and in
conformity with GAAP applied on a consistent basis except
for changes, if any, required by GAAP and as disclosed
therein. The statement of operations and cash flows
presents fairly the results of operations and cash flows of
BHM Labs for the period covered, and the balance sheet
presents fairly the financial condition of BHM Labs as of
its date.
f. Since May 31, 1996, whether or not in the ordinary course of
business, there has not been, occurred or arisen any change
in or event affecting BHM Labs that has had or may
reasonably be expected to have a material adverse effect on
BHM Labs.
2
<PAGE>
g. BHM Labs has no liabilities or obligations, other than those
disclosed in this agreement or on Schedule 3 hereto.
h. BHM Labs has currently and shall have as of the closing date
all of the permits, licenses and labels necessary to operate
BHM Labs's business.
i. McGhee's representations and warranties contained herein
shall be true and correct on the closing date and shall be
made again at that time.
4. REPRESENTATIONS AND WARRANTIES OF SERACARE, INC. SeraCare, Inc.
represents and warrants as follows:
a. SeraCare, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware, which has taken all corporate, shareholder, and
other action necessary to authorize the execution and
delivery of this agreement, and the transactions
contemplated hereby. This agreement is a valid and binding
obligation of SeraCare, enforceable in accordance with its
terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws and
equitable principles relating to or limiting creditors'
rights generally.
b. SeraCare, Inc. has the right and authority to issue the
preferred stock, free and clear of all pledges, liens,
claims, mortgages and encumbrances.
c. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby
will constitute a violation or breach of (1) the certificate
of incorporation or by-laws of SeraCare, (2) any provision
of any contract or other instruments to which SeraCare is a
party or by which SeraCare's business, assets, or properties
may be affected or secured, or (3) any order, writ,
injunction, decree, statute, rule or regulation binding on
SeraCare.
d. SeraCare has delivered to McGhee financial statements for
1995 and for the period ending May 31, 1996. All such
financial statements have been prepared on an accrual basis
and in
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conformity with GAAP applied on a consistent basis except
for changes, if any, required by GAAP and as disclosed
therein. The statement of operations and cash flows
presents fairly the results of operations and cash flows of
SeraCare for the periods covered, and the balance sheets
present fairly the financial condition of SeraCare as of
their dates.
e. Since May 31, 1996, whether or not in the ordinary course of
business, there has not been, occurred or arisen any change
in or event affecting SeraCare that has had or may
reasonably be expected to have a material adverse effect on
SeraCare.
f. SeraCare is not currently a party to any loan agreement,
security agreement, financing statement or similar agreement
with a third party under which SeraCare has agreed to grant
the third party a security interest in or has otherwise
agreed to encumber the stock of BHM Labs or the assets of
BHM Labs.
g. SeraCare's representations and warranties contained herein
shall be true and correct on the closing date and shall be
made again at that time.
5. ACCESS TO INFORMATION. (a) McGhee has caused BHM Labs to give to
SeraCare and SeraCare's counsel, accountants and other representatives full
access, during normal business hours throughout the period prior to the closing,
to all of BHM Labs's properties, books, contracts, commitments and records and
has furnished to SeraCare during such period with all such information
concerning BHM Labs's affairs as SeraCare reasonably requested.
(b) SeraCare gave to McGhee and McGhee's counsel, accountants
and other representatives full access, during normal business hours throughout
the period prior to the closing, to (1) the financial statements of SeraCare for
1995 and 1996; (2) any filing with the Securities and Exchange Commission; (3)
the disclosure statement, and any amendments thereto, in case BK. No. LA 94-
11730A; (4) the loan agreement with CVD; (5) the amendments to the certificate
of incorporation of SeraCare; and (6) the resolutions by the board of directors
of SeraCare regarding the issuance, value, rights, preferences, privileges and
restrictions of its preferred stock and furnished to McGhee during such period
with all such information regarding the above described documents as McGhee
reasonably requested.
6. CONDITIONS PRECEDENT TO SERACARE'S CLOSING
SeraCare's obligations hereunder are specifically conditioned on
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receipt of a copy of a lease with BHM Labs as the lessee for 505 1/2 Rogers
Avenue, Fort Smith, Arkansas. Said lease shall have a primary term of five (5)
years with an option in favor of BHM Labs to extend for an additional five (5)
years. The provisions of the lease, including the amount of rent and any
escalation of the rent, shall be on terms satisfactory to SeraCare.
7. CONDITIONS PRECEDENT TO MCGHEE'S CLOSING.
McGhee's obligations hereunder are specifically conditioned on receipt of a
certificate or resolution by the Board of Directors of SeraCare approving the
contract and authorizing the issuance of the preferred stock.
8. FAILURE OF CONDITIONS PRECEDENT. If the conditions precedent
contained in paragraph 7 or 8 fail to occur prior to closing for any reason,
this contract shall terminate and neither party shall have any further liability
to the other party hereunder.
9. CASH, BANK ACCOUNTS AND ACCOUNTS RECEIVABLE OF BHM LABS. At
closing, BHM Labs shall deliver to McGhee its cash on hand and all funds in any
bank or other account of BHM Labs (to the extent that checks or drafts have not
been written) and shall assign to McGhee the accounts receivable listed in
Exhibit A and any account receivable generated prior to closing (collectively
referred to hereinafter as the "assigned assets").
10. TRANSFERS TO MCGHEE. At closing, BHM Labs shall (i) assign to
McGhee that certain promissory note in favor of BHM Labs from Plank Street Labs,
and (ii) McGhee shall assume the liabilities and obligations of BHM set forth on
Schedule 3 hereto.
11. ACCOUNTS PAYABLE AND OTHER INDEBTEDNESS. At closing, McGhee
shall assume and shall indemnify and hold BHM Labs and SeraCare harmless from
any losses arising from: (1) the accounts payable listed in Exhibit B and any
accounts payable incurred prior to closing (for which a check or draft has not
been written or for which sufficient funds do not remain in any account of BHM
Labs pursuant to Section 9; and (2) except for the contract to purchase the
Minolta copier (the "Minolta contract"), any indebtedness or obligation of BHM
Labs, including but not limited to any of BHM Labs' federal, state or local tax
liability, arising on or prior to the date of closing (collectively referred to
hereinafter as the "assumed indebtedness"). At closing, McGhee will forgive and
cancel that certain indebtedness in favor of McGhee in the approximate amount of
$10,000 from BHM Labs. McGhee represents and warrants that at closing, except
for the assumed indebtedness, the Minolta contract, the Alpha Therapeutic
contract, and the lease, BHM Labs shall have no liabilities of any nature,
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due.
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12. RESPONSIBLE HEAD/GOOD STANDING CERTIFICATE.
(a) RESPONSIBLE HEAD. McGhee is currently the "responsible head"
under BHM Labs's FDA label. After closing McGhee agrees, at the option of
SeraCare, to continue to act as and to perform the functions of the "responsible
head" under BHM Labs's label until such time as a new "responsible head" has
been approved by the FDA and the change in the ownership of the stock of BHM
Labs has been approved by the FDA. After closing, SeraCare or BHM Labs, or
both, shall forthwith apply for and shall use their reasonable efforts to
promptly obtain FDA approval of a change of the responsible head and the change
in the stock ownership of BHM Labs.
(b) GOOD STANDING CERTIFICATE. McGhee agrees to deliver to SeraCare a
good standing certificate from the Arkansas Secretary of State for BHM Labs,
evidencing the good standing of BHM Labs as of the closing date.
13. NONCOMPETITION AGREEMENT.
(a) RESTRICTIONS. McGhee agrees for a period of three years
after the Closing, McGhee shall not, directly or indirectly, within 50 miles of
any collection center owned by SeraCare or BHM Labs, compete with, assist any
person in competing with or acquire an interest in any person competing with,
SeraCare or BHM Labs, whether as an owner, shareholder, joint venturer, partner,
officer, employee, consultant, agent or otherwise.
(b) SPECIAL REMEDIES AND ENFORCEMENT. SeraCare and McGhee agree
that a breach by McGhee of any of the covenants set forth in this Section 13
could cause irreparable harm to SeraCare, that SeraCare's remedies at law in the
event of such breach would be inadequate, and that, accordingly, in the event of
such breach, a restraining order or injunction or both may be issued against
Seller, in addition to any other rights and remedies that are available to
SeraCare. In connection with any such action or proceeding for injunctive
relief, McGhee hereby waives the claim or defense that a remedy at law alone is
adequate and agrees, to the maximum extent permitted by Law, to have each
provision of this Section 13 specifically enforced against McGhee and consents
to the entry of injunctive relief against McGhee enforcing or restraining any
breach or threatened breach of this Section 13.
(c) SEVERABILITY. If this Section 13 is more restrictive than
permitted by the laws of any jurisdiction in which SeraCare seeks enforcement
hereof, this Section 13 shall be limited to the extent required to permit
enforcement under such laws. If the provisions of this Section 13 shall ever be
deemed to exceed the duration or geographic limitations or scope permitted by
applicable law, then such provisions shall be
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reformed to the maximum time or geographic limitations in scope, as the case may
be, permitted by applicable Law.
14. INDEMNIFICATION BY SERACARE. (a) SeraCare warrants that all
statements contained herein or in any document delivered in connection with the
transactions contemplated hereby shall be true and correct. Said warranties
shall be unaffected by any investigation conducted by, to be conducted by, or
which could have been conducted by McGhee. Except as limited herein below,
SeraCare agrees to defend, indemnify and hold McGhee harmless from and against
any and all demands, claims, causes of action, losses, damages, liabilities,
costs and expenses asserted against, resulting to or incurred by McGhee by
reason of or resulting from any breach of said warranty. The liability of
SeraCare under this indemnification shall continue for the maximum period
provided by law. SeraCare's indemnity obligation shall be limited to the value
of the preferred shares immediately at closing.
(b) SeraCare also agrees to indemnify and hold McGhee harmless
from all claims arising from the operation of BHM Labs's business after closing,
including but not limited to any claim arising from any act or omission by an
officer, director, employee or representative of BHM Labs other than McGhee, so
long as the act or omission giving rise to the claim occurs after the date of
closing.
15. INDEMNIFICATION BY MCGHEE. (a) McGhee warrants that all
statements contained herein or in any document delivered in connection with the
transactions contemplated hereby shall be true and correct. Said warranties
shall be unaffected by an investigation conducted by, to be conducted by, or
which could have been conducted by SeraCare. Except as limited herein below,
McGhee agrees to defend, indemnify and hold SeraCare, its shareholders,
directors and officers harmless from and against any and all demands, claims,
causes of action, losses, damages, liabilities, costs and expenses asserted
against, resulting to or incurred by SeraCare, its shareholders, directors or
officers by reason of or resulting from any breach of said warranty. The
liability of McGhee under this indemnification shall continue for the maximum
period provided by law. McGhee's indemnity obligation shall be limited to the
value of the preferred shares immediately at closing.
(b) McGhee also agrees to indemnify and hold SeraCare harmless
from all claims arising from the operation of BHM Labs's business whether prior
to or after closing, including but not limited to any claim arising from any act
or omission by an officer, director, employee or representative of BHM Labs so
long as the act or omission giving rise to the claim occurs on or prior to the
date of closing.
16. RESIGNATION OF OFFICERS AND DIRECTORS. At closing, McGhee shall
make available to SeraCare the written
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resignation of BHM Labs current directors and officers and shall take, or cause
to be taken, such action as SeraCare may request with respect to changes in
directors and officers.
17. SPECIFIC PERFORMANCE. Upon execution of this contract, McGhee
and SeraCare shall both have the right to demand specific performance on the
part of the other as a remedy for either party's breach of this agreement.
18. CONFIDENTIALITY. The parties agree that the terms of this
agreement shall remain absolutely confidential. Unless required by law, neither
party shall disclose the existence or the terms of this agreement without the
express, written consent of the other party, which consent shall not be
unreasonably withheld.
19. ARBITRATION. All disputes arising out of or in connection with
this contract, which cannot be settled by mutual agreement between the parties,
shall be settled by arbitration in Fort Smith, Arkansas in accordance with the
rules in effect of the American Arbitration Association. Within ten (10) days
from the date either party receives notice from the other party of its appointed
arbitrator, such party shall appoint its arbitrator. In the event such party has
not appointed its arbitrator within such time, the arbitration may be conducted
by the sole arbitrator appointed by the first appointing party. In the event
such party does appoint an arbitrator within such time period, the two
arbitrators shall then appoint a third arbitrator, within ten (10) business days
from the date of appointment of the second arbitrator. If the arbitrators are
unable to agree upon the selection of the third arbitrator within such time
period, then the appointment of such third arbitrator shall be deemed a
"controversy" and either party hereto may request the American Arbitration
Association to appoint such third arbitrator. Any award by the Arbitrator shall
be final, binding and non-appealable. Notwithstanding anything herein to the
contrary, the parties may apply to any court of competent jurisdiction for
injunctive relief without breach of this arbitration provision.
20. MISCELLANEOUS.
a. JOINT DRAFTING. Both McGhee and SeraCare have jointly
participated in the negotiations and drafting of this
contract. In the event of a question of intent or
interpretation arises, this contract shall be construed as
if drafted by both parties.
b. ATTORNEY'S FEES. In the event of any dispute arising out of
or related to this contract, the prevailing party shall be
entitled to recover, in addition to any other damages
afforded by law, all reasonable attorney's
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fees incurred in the prosecution and defense of such an
action.
c. GOVERNING LAW. This contract shall be governed by Arkansas
law.
21. PURCHASE FOR INVESTMENT. The parties acknowledge that they have
had full and free access to and have reviewed all books, records, financial
statements and other information of SeraCare and BHM Labs in formulating their
decision to invest in, and in evaluating the risk of exchanging, the stock. The
parties represent that they are acquiring their respective stock solely for
their own account and not for the interest of any other party and not for resale
to others or with a view to further distribution. The parties further represent
that they have sufficient knowledge and experience in the operation of SeraCare
and BHM Labs to evaluate the risk of the exchange and to make an informed
investment decision. The parties acknowledge that the stock of BHM Labs and
SeraCare have not been registered, or exempted from registration, under the
securities or other laws of the United States or the states of California and
Arkansas. All stock certificates representing the shares exchanged under this
agreement shall be endorsed with the following restrictive legends:
The securities represented by this certificate have not been
registered under United States or state securities laws, and were
acquired by the registered holder pursuant to a representation that
such holder was acquiring such securities for investment. These
securities may not be sold, transferred or assigned in the absence of
an effective registration statement for the securities under
applicable United States or states securities law or an opinion of
counsel satisfactory to the issuer to the effect that registration is
not required thereunder.
22. SURVIVAL OP REPRESENTATIONS. All representations, warranties,
indemnifications and agreements made by McGhee and SeraCare in this contract, or
pursuant hereto, shall survive the closing and any investigation at any time
made by or on behalf of SeraCare for a period of 3 years.
23. BENEFIT. This contract shall be binding upon, and inure to the
benefit of, the respective successors, assigns and legal representatives of
McGhee and SeraCare.
24. NOTICES. All notices, requests, demands, and other
communications hereunder shall be in writing, and shall be deemed to have been
duly given if delivered or mailed, first class postage prepaid, if to McGhee, at
1923 So. 72nd Street, Fort Smith, Arkansas 72901, or at such other address as
McGhee
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may have furnished to SeraCare in writing, or, if to SeraCare, 1925 Century Park
East, Suite 1970, Los Angeles, California, 90067 or such other address as
SeraCare may furnish to McGhee in writing.
25. COUNTERPARTS. This contract may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties have set their hands and seals on the
date above first written.
SERACARE, INC.
By: /s/ Barry Plost
---------------------------
Its: President and CEO
---------------------------
ATTEST:
/s/ Jerry L. Burdick
- -----------------------------
Secretary
/s/ Burt H. McGhee
--------------------------------
Burt H. McGhee
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SCHEDULE 1
OWNED EQUIPMENT
MICROCENTRIFUGE 4 (3 not working)
REFRACTOMETER 2
LIGHT STAND 1 (for refractometer)
CHAIRS 4
HEAT SEALER 2
DESK 4
FREEZER 1
REFRIGERATOR 1
BED 19 (upstairs)
PILLOWS 19
CHAIRS 20 (in reception area)
BREAKROOM FURNITURE: TABLE 1
CHAIRS 4
MICROWAVE 1
MINOLTA 2130 PHOTOCOPIER 1 (serial no. 3623430)
(Purchase agreement with Bull's Office Systems)
<PAGE>
SCHEDULE 2
LEASED EQUIPMENT
None
<PAGE>
SCHEDULE 3
LIABILITIES TO BE ASSUMED BY MCGHEE
None.
The following liabilities are obligations of Burt McGhee individually, and not
of BHM Labs, Inc.:
1. City National Bank Loan
2. Winifred W. Page Loans
3. Merchant National Bank Loans
/s/ Burt H. McGhee
- -------------------------------
Burt H. McGhee
<PAGE>
EXHIBIT A
Accounts receivable to be determined by David Damron of Beall & Co.,
plc, within 30 days of the date hereof.
<PAGE>
EXHIBIT B
Accounts payable and accrued liabilities to be determined by David
Damron of Beall & Co., plc, within 30 days of the date hereof.
<PAGE>
EXHIBIT 6.13
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or any state securities laws and
neither the securities nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except pursuant to an
effective registration statement under such Act and such laws or an
exemption from registration under such Act and such laws which, in the
opinion of counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation, is available.
SERIES A WARRANT AGREEMENT
This Agreement (the "AGREEMENT") dated September 4, 1996 between SeraCare,
Inc., a Delaware corporation (the "COMPANY" and the "WARRANT AGENT") and those
individuals and entities purchasing the "Units" in a private offering by the
Company,
W I T N E S S E T H:
WHEREAS, the Company proposes to privately offer (the "PRIVATE
OFFERING") up to 200 Units (subject to an option for an additional 80 Units)
to individuals and entities, each Unit to consist of five-thousand shares of
the Company's common stock (the "Common Stock"), and two-thousand
five-hundred warrants to purchase an additional share of Common Stock, such
right to be evidenced by a "Series A Warrant", with the Series A Warrants
being collectively referred to herein as the "Series A Warrants" or
"Warrants";
WHEREAS, exclusive of the aforesaid option, in connection with the
proposed Private Offering, the Company anticipates its issuance of up to
500,000 Series A Warrants to purchase up to 500,000 shares of Common Stock
(the shares received upon exercise of the Series A Warrants are referred to
herein as the "WARRANT SHARES");
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Series A Warrants (a "Series A Warrant Certificate" or
collectively the "Series A Warrant Certificates");
WHEREAS, the Company desires to act as its own warrant agent in
connection with the issuance, registration, transfer and exchange of Series A
Warrant Certificates and the exercise of the Series A Warrants;
NOW, THEREFORE, in consideration of the above and foregoing premises and
the mutual promises and agreements hereinafter set forth, it is agreed that:
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1. SERIES A WARRANT CERTIFICATES.
(a) Each Series A Warrant shall entitle the holder (the
"Registered Holder," or, in the aggregate, the "Registered Holders") in whose
name the certificate shall be registered on the books maintained by the
Company to purchase one (1) share of Common Stock on the exercise thereof,
subject to modification and adjustment as provided in Section 9 hereof.
Series A Warrant Certificates shall be executed by the Company's Chairman,
President or Senior Vice President and attested to by the Company's
Secretary. The Series A Warrant Certificates shall be immediately detachable
from certificates representing shares of Common Stock and shall be
distributed to the purchasers thereof concurrently with each closing of the
Private Offering.
(b) Subject to the provisions of Sections 3, 5, and 7 hereof, the
Company shall deliver Series A Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or
exchange permitted under this Agreement. Except as provided in Section 7
hereof, no certificates shall be issued except (i) certificates initially
issued hereunder, (ii) certificates issued on or after their initial issuance
date upon the exercise of any Warrant to evidence the unexercised Series A
Warrants held by the exercising Registered Holder and (iii) Series A Warrant
certificates issued after their initial issuance date, upon any transfer or
exchange of certificates or replacements of lost or mutilated certificates.
2. FORM AND EXECUTION OF SERIES A WARRANT CERTIFICATES.
(a) The Series A Warrant certificates shall be dated the date of
the original issuance of the Series A Warrants, whether on initial transfer
or exchange or in lieu of mutilated, lost, stolen or destroyed certificates.
The form of Series A Warrant certificate is annexed hereto as "Exhibit A."
(b) Each Series A Warrant certificate shall be numbered serially
bearing "WA" as an initial designation, and subsequent to this designation
the serial numbering of the Series A Warrant certificate should match, to the
extent possible, the serial numbering of the Common Stock initially attached
thereto.
(c) The Series A Warrant Certificates shall be manually signed on
behalf of the Company by a proper officer thereof and shall not be valid for
any purpose unless so signed. In the event any officer of the Company who
executed certificates shall cease to be an officer of the Company such
certificates may be issued and delivered by the Company or transferred by the
Registered Holders with the same force and effect as though the person who
signed such certificate had not ceased to be an
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officer of the Company; and any certificate signed on behalf of the Company
by any person, who at the actual date of the execution of such certificate
was a proper officer of the Company, shall be proper notwithstanding that at
the date of execution of this Agreement any such person was not such an
officer.
3. EXERCISE.
(a) Subject to the provisions of Sections 5 and 9 hereof, the
Series A Warrants, as they may be adjusted as set forth herein, may be
exercised at a price (the "WARRANT EXERCISE PRICE") of $2.75 per share of
Common Stock subject to adjustment, in whole or in part at any time during
the period (the "WARRANT EXERCISE PERIOD") commencing on the date of issuance
of the Series A Warrant and terminating on the earlier of (i) the date three
years after effectiveness of the Initial Registration Statement, provided,
however, that (x) if the Common Stock underlying the Warrants is not subject
to an effective registration for an aggregate of 600 days within three years
after the final closing of the Private Offering, then the remaining exercise
period under this clause (i) shall be tolled until the Common Stock
underlying the Warrants shall have been subject to an effective registration
for an aggregate of 600 days and (y) in no event shall the Series A Warrants
terminate under this clause (i) unless a registration statement covering the
Warrant Shares shall have then been in effect for 45 days prior to such
termination, and (ii) six years from the date of issuance (the "WARRANT
EXPIRATION DATE"), unless extended by a majority vote of the Board of
Directors for such length of time as they, in their sole discretion, deem
reasonable and necessary.
(b) Each Series A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date (each, an "EXERCISE
DATE") of the surrender to the Company for exercise of the Series A Warrant
certificate. The exercise form shall be executed by the Warrant Holder
thereof or his attorney duly authorized in writing and shall be delivered
together with payment to the Company at its corporate offices located at 1875
Century Park East, Suite 2130, Los Angeles, CA. 90067 (the "CORPORATE
OFFICE"), or at any such other office or agency as the Company may designate,
in cash or by official bank or certified check, of an amount equal to the
aggregate Exercise Price, in lawful money of the United States of America.
(c) Unless Warrant Shares may not be issued as provided herein,
the person entitled to receive the number of Warrant Shares deliverable on
exercise shall be treated for all purposes as the holder of such Warrant
Shares as of the close of business on the Exercise Date. The Company shall
not be obligated to issue any fractional share interest in Warrant Shares
issuable or deliverable on the exercise of any Series A
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<PAGE>
Warrant or scrip or cash therefore and such fractional shares shall be of no
value whatsoever.
(d) Within ten days after the Exercise Date and in any event prior
to the Warrant Expiration Date, the Company, at its own expense, shall cause
to be issued and delivered to the person or persons entitled to receive the
same, a certificate or certificates in the name requested by the Registered
Holder for the number of Warrant Shares deliverable on such exercise. No
adjustment shall be made in respect of cash dividends on Warrant Shares
delivered on exercise of any Series A Warrant. All shares of Common Stock
delivered upon the exercise of the Series A Warrants shall be validly issued,
fully paid and non-assessable. Any Series A Warrants redelivered to the
Registered Holder in the event of the exercise of less than all of the Series
A Warrants pertaining to a surrendered Series A Warrant certificate, shall be
validly issued, fully paid and non-assessable.
(e) The Series A Warrants shall not entitle the holder thereof to
any of the rights of shareholders or to any dividend declared on the Common
Stock unless such holder or holders shall have exercised the Series A
Warrants prior to the record date fixed by the Board of Directors for the
determination of holders of Common Stock entitled to such dividends or other
rights.
4. REGISTRATION RIGHTS.
The holders of Series A Warrants shall have the registration rights
under the Securities Act of 1933, as amended (the "ACT"), and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission
(the "COMMISSION"), provided for in that certain Registration Rights
Agreement executed by the Company and the A Warrant holders on even date
herewith (the "REGISTRATION RIGHTS AGREEMENT"). The Registration Rights
Agreement is incorporated herein by this reference in its entirety as if
fully set forth herein.
5. RESERVATION OF SHARES AND PAYMENT OF TAXES.
(a) The Company covenants that it shall at all times reserve and
have available from its authorized Common Stock such number of shares as
shall then be issuable on the exercise of all outstanding Series A Warrants.
The Company covenants that all Warrant Shares shall be duly and validly
issued, fully paid and non-assessable, and shall be free from all taxes,
liens and charges with respect to the issuance thereof.
(b) The Company shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect of the issuance
of the Series A Warrants, and/or the issuance of any Common Stock
constituting the Warrant Shares on the exercise of the Series A Warrants. In
the event the Warrant
4
<PAGE>
Shares are to be delivered in a name other than the name of the initial
Registered Holder of the certificate, no such delivery shall be made unless the
person requesting the same has paid to the Company the amount of any such taxes,
charges, or transfer fees incident thereto.
6. REGISTRATION OF TRANSFER.
(a) The Series A Warrant certificates may, subject to provisions
of the Federal Securities Laws and any applicable state securities laws, be
transferred in whole or in part Certificates to be transferred shall be
surrendered to the Company at its Corporate Office. The Company shall
execute, issue and deliver in exchange therefor the Series A Warrant
certificates in the names and amounts that the holder making the transfer
shall have designated in writing. The Company shall keep transfer books at
its Corporate Office which shall register certificates and the transfer
thereof. On due presentment for registration of transfer of any certificate
at the Corporate Office, the Company shall execute, issue and deliver to the
transferee or transferees a new certificate or certificates representing an
equal aggregate number of securities. All such certificates shall be duly
endorsed or be accompanied by a written instrument or instruments of transfer
in form reasonably satisfactory to the Company. The established transfer fee
for any registration of transfer of certificates shall be paid by the Warrant
Holder or the person presenting the certificate for transfer.
(b) Prior to due presentment for registration or transfer thereof,
the Company may treat the Registered Holder of any certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone), and the parties hereto shall not be affected by any
notice to the contrary.
7. LOSS OR MUTILATION.
On receipt by the Company of evidence satisfactory as to the ownership
of and the loss, theft, destruction or mutilation of any Series A Warrant
certificate, the Company shall execute and deliver in lieu thereof a new
certificate representing an equal number of Series A Warrants. In the case of
loss, theft or destruction of any certificate, the individual requesting
reissuance of a new certificate shall be required to indemnify the Company and,
at the request of the Company, to post an open-penalty insurance or indemnity
bond. In the event a certificate is mutilated, such certificate shall be
surrendered and canceled by the Company prior to delivery of a new certificate.
Applicants for a new certificate shall also comply with such other regulations
and pay such other reasonable charges as the Company may prescribe.
5
<PAGE>
8. REDEMPTION OPTION.
The Company shall have the right and option, upon 30 days' prior written
notice to each Registered Holder, to, at any time thereafter, call, redeem
and acquire all or a portion of the Series A Warrants which remain
outstanding and unexercised at the date fixed for redemption (the "Series A
Warrant Redemption Date") at a price of $.01 per Series A Warrant if, and
only if, the average of the closing bid and closing asked price per share of
the Common Stock for each of the 20 consecutive trading days immediately
prior to the mailing of said notification, and for each day thereafter until
the Series A Warrant Redemption Date shall have exceeded 133.3% of the then
Exercise Price. The Series A Warrant Holders shall in all events have the
right during the period immediately following the date of such notice and
prior to the Series A Warrant Redemption Date to exercise the Series A
Warrants in accordance with the provisions of Section 3 hereof.
No call for redemption and no redemption of the Series A Warrants shall
be made unless the Company shall have an effective registration statement
under the Act on file during such period from the date of mailing of the
notice of redemption through the applicable redemption date with the
Commission and all applicable state securities commissions relating to the
Common Stock and the Warrant Shares, except that this obligation, as it
relates to the Warrant Shares or Common Stock, may be satisfied if such
Warrant Shares or Common Stock, respectively, may be transferred publicly in
accordance with Rule 144 or otherwise without registration under the Act. In
the event that any Series A Warrants are exercised following notice but prior
to redemption, this call option shall be deemed not to have been exercised by
the Company as to the Series A Warrants so exercised.
The redemption notice shall require each Warrant Holder to surrender the
Series A Warrants on or before the Redemption Date in accordance with the
provisions of the redemption notice. In the event the Series A Warrant
Certificates representing the Series A Warrants called for redemption have
not been surrendered for redemption and cancellation on the applicable
redemption date, such Series A Warrants shall be deemed to have expired and
all rights of the holders of such unsurrendered Series A Warrants shall cease
and terminate, other than the right to receive the redemption price without
interest; provided, however, that such right to receive the redemption price
shall itself expire one year from the Series A Warrant Redemption Date if no
claim is made therefor prior to such date.
6
<PAGE>
9. ADJUSTMENT OF INITIAL EXERCISE
PRICE AND NUMBER OF SHARES PURCHASABLE.
For purposes hereof, the term "INITIAL EXERCISE PRICE" shall mean,
with respect to the A Warrants, $2.75. The Initial Exercise Price and the
number of shares of Common Stock purchasable pursuant to the A Warrants shall
be subject to adjustment from time to time as hereinafter set forth in this
Section 9.
9.1 ADJUSTMENTS. The number of Warrant Shares purchasable upon the
exercise of the Warrants and the Exercise Price shall be subject to adjustment
as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its Common Stock other
securities of the Company, the number of Warrant Shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so
that the holder shall be entitled to receive the kind and number of
Common Stock or other securities of the Company which it would have
owned or would have been entitled to receive after the happening of any
of the events described above, had the Warrants been exercised
immediately prior to the happening of such event or any record date with
respect thereto. Any adjustment made pursuant to this Paragraph (a)
shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any consideration, entitling them to subscribe for or to
purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then Current Market Price (as
defined below), the number of Warrant Shares thereafter purchasable upon
the exercise of a Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon exercise of each Warrant
by a fraction, of which the numerator shall be (1) the number of shares
of Common Stock outstanding immediately prior to the issuance of such
rights, options or warrants plus (2) the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering
price of the total number of shares offered would
7
<PAGE>
purchase at the Current Market Price. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become
effective immediately and retroactively after the record date for the
determination of shareholders entitled to receive such rights, options
or warrants.
(c) In case the Company shall distribute to all or substantially
all holders of its shares of Common Stock evidences of its indebtedness
or assets (excluding cash dividends or distributions out of earnings) or
rights, options, warrants or convertible securities containing the right
to subscribe for or purchase shares of Common Stock (excluding those
referred to in paragraph (b) above), then, in each case, the number of
Warrant Shares thereafter purchasable upon the exercise of the Warrants
shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of the Warrants by a fraction, of
which the numerator shall be the then Current Market Price on the date
of such distribution, and of which the denominator shall be such Current
Market Price on such date minus the then fair value of the portion of
the assets or evidence of indebtedness so distributed or of such
subscription rights, options or warrants applicable to one share. Such
adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution retroactive to the
record date for the determination of shareholders entitled to receive
such distribution.
(d) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of
Shares then purchasable upon the exercise of a Warrant; PROVIDED,
HOWEVER, that any adjustments which by reason of this Paragraph (d) are
not required to be made immediately shall be carried forward and taken
into account in any subsequent adjustment.
(e) Whenever the number of Warrant Shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Exercise Price
payable upon exercise of a Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Warrant Shares purchasable
upon the exercise of a Warrant immediately prior to such adjustment, and
of which the denominator shall be the number of Shares so purchasable
immediately thereafter.
(f) The Exercise Price of the Series A Warrants shall be
automatically and permanently reduced by $.10 per share each if (i) the
Initial Registration Statement (as defined
8
<PAGE>
in the Registration Rights Agreement) has not become effective on or
prior to that date which is 270 days from the Final Closing Date, (ii)
the Commission shall have issued a stop order suspending the
effectiveness of the Initial Registration Statement and the number of
days stop orders have been in effect, together with the number of days a
notice under Section 4.1(d) of the Registration Rights Agreement has
been issued or required to be issued, exceeds 180 days, or (iii) (A) the
Company for the third time, notifies or is required to notify the
holders of the Warrants pursuant to Section 4.1(d) of the Registration
Rights Agreement, or (B) a notice under such Section 4.1(d) is effective
or required to be effective at a time when the aggregate number of days
for which all such notices issued or required to be issued pursuant to
such Section 4.1(d) have been, or were required to be, in effect,
exceeds 180 days (270 days from the Final Closing Date in the case of
clause (i), or the date the third notice is sent or required to be sent
or the date on which the 180-day limit is exceeded in the case of clause
(ii) or (iii), is each referred to herein as an "Event Date").
Additionally, the Exercise Price of each Series A Warrant then
outstanding shall be subject to further downward adjustment in the
amount of $.10 each on the same day of each month following the initial
Event Date (or, if there is no numerically corresponding day in any such
subsequent month, then on the last day of such applicable subsequent
month) until the Registration Statement becomes effective; PROVIDED,
HOWEVER, that such adjustments will, in each case, cease to accrue on
the date which (x) the Initial Registration Statement is declared
effective, with respect to the adjustments for failure to be declared
effective by that date which is 270 days from the Final Closing Date,
(y) the Initial Registration Statement is no longer subject to an order
suspending the effectiveness thereof, with respect to adjustments for
the failure to remain effective or (z) a notice issued, or required to
be issued, pursuant to Section 5.1(d) is no longer effective or required
to be effective, with respect to adjustments payable pursuant to clause
(iii) above. In no event shall the Series A Warrant exercise price be
adjusted below $1.50 solely due to this Section 9.1
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of a Warrant or the Exercise Price is adjusted as herein
provided, the Company shall cause to be promptly mailed to the holder by
first class mail, postage prepaid, notice of such adjustment or
adjustments and a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may
be the regular accountants employed by the Company) setting forth the
number of Warrant Shares purchasable upon the
9
<PAGE>
exercise of a Warrant and the Exercise Price after such adjustment, a
brief statement of the facts requiring such adjustment and the
computation by which such adjustment was made.
(h) For the purpose of this Subsection 9.1, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement or (ii) any other class of
stock resulting from successive changes or reclassifications of such
Common Stock. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the holder shall become
entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so
purchasable upon exercise of the Warrant and the Exercise Price of such
securities shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with
respect to the Warrant Shares contained in this Section 9.
(i) Upon the expiration of any rights, options, warrants or
conversion privileges which caused an adjustment under this Section 9.1,
if such shall not have been exercised, the number of Warrant Shares
purchasable upon exercise of the Warrants and the Exercise Price, to the
extent the Warrants have not then been exercised, shall, upon such
expiration, be readjusted and shall thereafter be such as they would
have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) on the basis of (A)
the fact that the only shares of Common Stock so issued were the shares
of Common Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion rights and (B) the fact
that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus
the consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or
conversion rights whether or not exercised; PROVIDED, HOWEVER, that no
such readjustment shall have the effect of increasing the Exercise Price
by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, options, warrants
or conversion privileges.
9.2 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale or reconveyance to another
corporation of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or
10
<PAGE>
purchasing corporation, as the case may be, shall provide that the holder
shall have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of the Warrant the
kind and amount of shares and other securities and property which he would
have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Warrant been exercised
immediately prior to such action. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The provisions of this
Subsection 9.2 shall similarly apply to successive consolidations, mergers,
sales or conveyances.
9.3 PAR VALUE OF COMMON STOCK. Before taking any action which would
cause an adjustment reducing the Exercise Price below the then par value of
the shares of Common Stock issuable upon exercise of the Warrant, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted Warrant Price.
9.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any adjustments
in the Exercise Price or the number of securities purchasable upon the
exercise of the Warrant, the Warrant certificate or certificates theretofore
or thereafter issued may continue to express the same price and number of
securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement. However, the Company may at any time in
its sole discretion (which shall be conclusive) make any change in the form
of the Warrant certificate that it may deem appropriate and that does not
affect the substance thereof, and any Warrant certificate thereafter issued,
whether upon registration or transfer of, or in exchange or substitution for,
an outstanding Warrant certificate, may be in the form so changed.
9.5 PRIOR NOTICE TO WARRANT HOLDERS. In the event that at any time
prior to the expiration of the Warrant and prior to its exercise, any of the
following events shall occur:
1. any action which would require an adjustment pursuant to
Sections 9.1 or 9.2; or
2. a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property,
assets and business, as an entirety) shall be proposed;
then, in any such event, the Company shall cause at least twenty (20) days'
prior written notice to be mailed to each Warrant
11
<PAGE>
Holder at the address of such holder shown on the books of the Company. The
notice shall also specify the date on which the books of the Company shall
close or a record be taken for such stock dividend, distribution or
subscription rights, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution, winding up, or dividend, as the case may be, shall
take place, and the date of participation therein by the holders of shares of
Common Stock if any such date is to be fixed, and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the rights of the Warrant Holder.
9.6 DISPUTES. In the event that there is any dispute as to the
computation of the Exercise Price or the number of shares of Common Stock
required to be issued upon the exercise of the Warrants, the Company will
retain an independent and nationally recognized accounting firm to conduct an
audit of the computations pursuant to the terms hereof involved in such
dispute, including the financial statements or other information upon which
such computations were based. The determination of such nationally
recognized accounting firm shall, in the absence of manifest error, be
binding. If there shall be a dispute as to the selection of such nationally
recognized accounting firm, such firm shall be appointed by the American
Institute of Certified Public Accountants ("AICPA") if willing, otherwise the
American Arbitration Association ("AAA"). If the Exercise Price or number of
shares of Common Stock as determined by such accounting firm is one percent
or more higher or lower than the calculations thereof computed by the
Company, the expenses of such accounting firm and, if any, off AICPA and AAA,
shall be borne completely by the Company. In all other cases, they shall be
borne by the complaining Warrant Holders, as applicable.
9.5 CURRENT MARKET PRICE. For the purpose of this Section 9, the term
"Current Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market or on the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), the average per share closing
bid prices of the Common Stock on the 20 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent
generally accepted reporting service, or (ii) if the Common Stock is traded
on a national securities exchange, the average for the 20 consecutive trading
days immediately preceding the date in question of the daily per share
closing prices of the Common Stock on the principal stock exchange on which
it is listed, as the case may be. The closing price referred to in clause
(ii) above shall be the last reported sales price or in case no such reported
sale takes place on such day, the average of the reported closing bid and
asked prices, in either case on the national securities exchange on which the
Common Stock is then listed.
12
<PAGE>
10. NOTICES.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by confirmed telex,
telegram, facsimile transmission or cable to, in the case of the Company:
SeraCare, Inc.
1925 Century Park East
Suite 1970
Los Angeles, CA. 90067
telecopier: (310) 772-7770
and if to the Warrant Holder at the address of such holder as set forth on
the books maintained by or on behalf of the Company.
11. BINDING AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Warrant Holders. Nothing in this Agreement is intended or shall
be construed to confer upon any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
12. FURTHER INSTRUMENTS.
The parties shall execute and deliver any and all such other
instruments and take any and all other actions as may be reasonably necessary
to carry out the intention of this Agreement.
13. SEVERABILITY.
If any provision of this Agreement shall be held, declared or
pronounced void, voidable, invalid, unenforceable, or inoperative for any
reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect
adversely any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its terms, and
the effect of such holding, declaration or pronouncement shall be limited to
the territory or jurisdiction in which made.
14. AMENDMENTS/WAIVER.
(a) Except as otherwise provided herein, the provisions of this
Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of Holders of at least a majority in
number of Warrant
13
<PAGE>
Shares then outstanding affected by such amendment, modification, supplement,
waiver or departure. Such amendment, modification or supplement, waiver or
departure, if consented to in writing by such majority of holders, shall thereby
amend, modify or supplement, waive or act to consent to depart from, this
Agreement on behalf of all Holders of Series A Warrants.
(b) No delay or failure on the part of any party in the exercise of
any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach
of this Agreement.
15. RELEVANT MARKETS.
For the purposes of this Agreement, it is assumed that the Common
Stock is quoted on the National Association of Securities Dealers, Inc.
NASDAQ Small Cap market ("NASDAQ Small Cap"), however, in the event the
Common Stock is:
(a) listed on NASDAQ, NASDAQ Small Cap, a national securities exchange
or admitted to unlisted trading privileges on such exchange, the price of the
Common Stock to be determined during any applicable twenty (20) day trading
period shall be the last reported sale price of the Common Stock on such
exchange; or
(b) not quoted on the Bulletin Board listed or admitted to unlisted
trading privileges, the price of the Common Stock to be determined during any
applicable twenty (20) day trading period shall be the high closing bid as
reported on the "pink sheets" by the National Daily Quotation Bureau, Inc.
16. GENERAL PROVISIONS.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAWS OR THE STATE OF CALIFORNIA. The headings of this
Agreement are for convenience and reference only and shall not limit or
otherwise affect the meaning hereof.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first set forth above.
SERACARE, INC
By: /s/ Jerry L. Burdick
--------------------------------
Jerry L. Burdick
Executive Vice President
and Vice Financial Officer
[CORPORATE SEAL]
ATTEST: /s/ Jerry L. Burdick
---------------------------
Secretary
WARRANTHOLDERS:
By: /s/ Jerry L. Burdick
--------------------------------
Title: Attorney-In-Fact
-----------------------------
15
<PAGE>
EXHIBIT A
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or any state securities laws and
neither the securities nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except pursuant to an
effective registration statement under such Act and such laws or an
exemption from registration under such Act and such laws which, in the
opinion of counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation, is available.
SERIES A WARRANT CERTIFICATE
SERACARE, INC.
Warrant No. WA-1 No. of A Warrants: 2
This certifies that, for value received and subject to the terms and
conditions set forth herein, 3 or his registered assign (the "Warrant Holder")
is the registered holder of 2 Series A Warrants.
1. EXERCISE. The warrants evidenced hereby ("Series A Warrants"), as
they may be adjusted from time to time, may be exercised at a price of $2.75
per Warrant to acquire one (1) share of the common stock of SeraCare, Inc.
which is with par value of $0.001 (the "Common Stock" and the "Company,"
respectively). (The Common Stock acquirable upon exercise hereof is referred
to herein as "Warrant Stock.") If, at the time of any exercise of a Series A
Warrant, the Shares deliverable upon exercise of such Warrant shall not be
registered under the Securities Act, the Company may require, as a condition
of allowing such exercise, that the holder or transferee of such Warrant
furnish to the Company an opinion of counsel of recognized standing in
securities law to the effect that such exercise may be made without
registration under the Securities Act; provided that, the exercise of the
Warrant shall at all times be within the control of such holder or
transferee, as the case may be, and, if required by the Company, accompanied
by a written representation (i) that the shares being acquired by the
exercise of the Warrant are being purchased for investment and not for
distribution, (ii) acknowledging that such shares have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and (iii)
agreeing that such shares may not be sold or transferred unless there is an
effective Registration Statement for them under the 1933 Act, or in the
opinion of counsel to the Company such sale or transfer is not in violation
A-1
<PAGE>
of the 1933 Act. No fractional shares may be acquired upon exercise hereof.
2. TERM OF WARRANT. This Series A Warrant may be exercised at any
time and from time to time in whole or in part commencing immediately upon
issuance and terminating on the earlier of (i) the date three years after
effectiveness of the Initial Registration Statement (as defined in the
Warrant Agreement), provided, however, that (x) if the Common Stock
underlying the Warrants is not subject to an effective registration for an
aggregate of 600 days within three years after the final closing of the
Private Offering, then the remaining exercise period under this clause (i)
shall be tolled until the Common Stock underlying this Series A Warrant shall
have been subject to an effective registration for an aggregate of 600 days
and (y) in no event shall this Series A Warrant terminate under this clause
(i) unless a registration statement covering the Warrant Stock shall have
then been in effect for 45 days prior to such termination, and (ii) six years
from the date of issuance, unless extended by a majority vote of the Board of
Directors for such length of time as they, in their sole discretion, deem
reasonable and necessary.
3. ADJUSTMENT OF EXERCISE PRICE. The number of shares purchasable
upon exercise of this Series A Warrant is subject to adjustment in accordance
with the Series A Warrant Agreement.
4. REDEMPTION. These Warrants may be redeemed upon 30 days advance
notice upon conditions set forth in the Series A Warrant Agreement.
5. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the A
Warrants upon the basis set forth herein will at all times during the term of
this Series A Warrant be reserved for the exercise hereof.
6. MANNER OF EXERCISE. Exercise may be made of all or any part of the
A Warrants by surrendering this certificate, with the purchase form to be
provided by the Company, duly executed by the Warrant Holder or by the
Warrant Holder's duly authorized attorney, plus payment of the exercise price
therefor in cash at the office of the Company or its designated assign.
7. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its own
expense, shall cause to be issued, within ten (10) days after exercise of
this Series A Warrant, a certificate or certificates in the name or names
requested by the Warrant Holder representing the number of shares of Common
Stock to which the Warrant Holder is entitled upon such exercise. All shares
of Common Stock or other securities delivered upon the exercise of
A-2
<PAGE>
this Series A Warrant shall be validly issued, fully paid and non-assessable.
Irrespective of the date of issuance and delivery of any certificate
representing the shares of Common Stock upon the exercise of this Series A
Warrant, each person in whose name any such certificate is to be issued will
for all purposes be deemed to have become the holder of record of the Common
Stock acquired on the date on which a duly executed notice of exercise of
this A Warrant and payment for the number of shares exercised are received by
the Company.
8. REGISTRATION RIGHTS. The Company will use its best efforts to
register the Warrant Stock prior to that date which is 270 days after the Final
Closing of the Private Offering and the Company agrees to use its best efforts
to maintain an effective Registration Statement during the term of the A
Warrants, as more fully set forth in the Warrant Agreement and the Registration
Rights Agreement governing the issuance and registration of the A Warrants and
Warrant Stock.
9. NO RIGHT AS STOCKHOLDER. The Warrant Holder is not, by virtue of his
ownership of this Series A Warrant, entitled to any rights whatsoever as a
stockholder of the Company.
10. ASSIGNMENT. This Series A Warrant may not be assigned without
providing the Company an opinion satisfactory to its counsel that an
exemption from registration for the transfer exists.
11. STATE LEGENDS. Residents of Connecticut are advised of the
following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF
THE CONNECTICUT UNIFORM SECURITIES ACT, CHAPTER 662 OF THE
CONNECTICUT GENERAL STATUTES, AND ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND SALE AND CANNOT BE RESOLD UNLESS THEY ARE
REGISTERED IN CONNECTICUT OR EXEMPT PROM REGISTRATION IN
CONNECTICUT.
Residents of Pennsylvania are advised of the following:
THE INVESTOR AGREES NOT TO TRANSFER THESE SECURITIES FOR 12 MONTHS
PROM THE DATE OP PURCHASE. (THIS RESTRICTION MAY BE AUTOMATICALLY
WAIVED IN ACCORDANCE WITH SECTION 204.011 OP THE PENNSYLVANIA BLUE
SKY REGULATIONS.)
12. WARRANT AGREEMENT. The actual terms and conditions of this Series A
Warrant are contained in a Warrant Agreement entered into by and between the
Company and the Warrant holder,
A-3
<PAGE>
the terms and conditions of which are incorporated herein by this reference
as if fully set forth herein and made a part hereof. To the extent of any
conflict herewith, the terms and conditions of the Warrant Agreement shall
apply.
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to be
signed on its behalf by its President or Senior Vice President, his signature to
be attested to by its Secretary, and its corporate seal to be hereunto affixed
this ________ day of September, 1996.
[SEAL] SERACARE, INC.
on behalf of the Company
and as Warrant Agent
By:
--------------------------------
Attest:
----------------------------
Name:
-----------------------
Title:
----------------------
A-4
<PAGE>
[LOGO]
October 4, 1996
TO THE PURCHASERS OF UNITS FROM SERACARE, INC.
Re: Subscription Agreement
----------------------
Ladies and Gentlemen:
Enclosed for your records is a corrected page 5 from the Subscription
Agreement in connection with your recent purchase of Units from SeraCare,
Inc. Section 7 of the Subscription Agreement originally provided that Barry
Plost and Jerry Burdick be appointed as your attorney-in-fact to execute the
Registration Rights Agreement, but inadvertently failed to provide for the
execution of the Series A Warrant Agreement included in the subscription
documents provided to you. Section 7 of the Subscription Agreement has been
revised to clarify that Barry Plost and Jerry Burdick may also execute the
Series A Warrant Agreement as attorney-in-fact on your behalf.
Please acknowledge your agreement to the foregoing by signing the
enclosed copy of this letter and returning it in the enclosed self-addressed
stamped envelope. If you have any questions, please feel free to call me at:
(310) 771-7777.
Very Truly Yours,
/s/ Jerry L. Burdick
Jerry L. Burdick
Executive Vice President and
Chief Financial Officer
ACKNOWLEDGED AND AGREED TO:
- -----------------------------------
(Signature)
- -----------------------------------
(Print Name of Purchaser)
- -----------------------------------
(Print Title, if applicable)
[LETTERHEAD]
<PAGE>
The securities represented hereby have not been
registered under the Securities Act of 1933, as amended,
or any state securities laws and neither the securities
nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except
pursuant to an effective registration statement under
such Act and such laws or an exemption from registration
under such Act and such laws which, in the opinion of
counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation,
is available.
SERIES A WARRANT AGREEMENT
This Agreement (the "AGREEMENT") dated October 23, 1996 between SeraCare,
Inc., a Delaware corporation (the "COMPANY" and the "WARRANT AGENT") and those
individuals and entities purchasing the "Units" in a private offering by the
Company,
W I T N E S S E T H:
WHEREAS, the Company proposes to privately offer (the "PRIVATE OFFERING")
up to 200 Units (subject to an option for an additional 80 Units) to individuals
and entities, each Unit to consist of five-thousand shares of the Company's
common stock (the "Common Stock"), and two-thousand five-hundred warrants to
purchase an additional share of Common Stock, such right to be evidenced by a
"Series A Warrant", with the Series A Warrants being collectively referred to
herein as the "Series A Warrants" or "Warrants";
WHEREAS, exclusive of the aforesaid option, in connection with the proposed
Private Offering, the Company anticipates its issuance of up to 500,000 Series A
Warrants to purchase up to 500,000 shares of Common Stock (the shares received
upon exercise of the Series A Warrants are referred to herein as the "WARRANT
SHARES");
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Series A Warrants (a "Series A Warrant Certificate" or
collectively the "Series A Warrant Certificates");
WHEREAS, the Company desires to act as its own warrant agent in connection
with the issuance, registration, transfer and exchange of Series A Warrant
Certificates and the exercise of the Series A Warrants;
NOW, THEREFORE, in consideration of the above and foregoing premises and
the mutual promises and agreements hereinafter set forth, it is agreed that:
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1. SERIES A WARRANT CERTIFICATES.
(a) Each Series A Warrant shall entitle the holder (the
"Registered Holder," or, in the aggregate, the "Registered Holders") in whose
name the certificate shall be registered on the books maintained by the
Company to purchase one (1) share of Common Stock on the exercise thereof,
subject to modification and adjustment as provided in Section 9 hereof.
Series A Warrant Certificates shall be executed by the Company's Chairman,
President or Senior Vice President and attested to by the Company's
Secretary. The Series A Warrant Certificates shall be immediately detachable
from certificates representing shares of Common Stock and shall be
distributed to the purchasers thereof concurrently with each closing of the
Private Offering.
(b) Subject to the provisions of Sections 3, 5, and 7 hereof, the
Company shall deliver Series A Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or
exchange permitted under this Agreement. Except as provided in Section 7
hereof, no certificates shall be issued except (i) certificates initially
issued hereunder, (ii) certificates issued on or after their initial issuance
date upon the exercise of any Warrant to evidence the unexercised Series A
Warrants held by the exercising Registered Holder and (iii) Series A Warrant
certificates issued after their initial issuance date, upon any transfer or
exchange of certificates or replacements of lost or mutilated certificates.
2. FORM AND EXECUTION OF SERIES A WARRANT CERTIFICATES.
(a) The Series A Warrant certificates shall be dated the date of
the original issuance of the Series A Warrants, whether on initial transfer
or exchange or in lieu of mutilated, lost, stolen or destroyed certificates.
The form of Series A Warrant certificate is annexed hereto as "Exhibit A."
(b) Each Series A Warrant certificate shall be numbered serially
bearing "WA" as an initial designation, and subsequent to this designation
the serial numbering of the Series A Warrant certificate should match, to the
extent possible, the serial numbering of the Common Stock initially attached
thereto.
(c) The Series A Warrant Certificates shall be manually signed on
behalf of the Company by a proper officer thereof and shall not be valid for
any purpose unless so signed. In the event any officer of the Company who
executed certificates shall cease to be an officer of the Company such
certificates may be issued and delivered by the Company or transferred by the
Registered Holders with the same force and effect as though the person who
signed such certificate had not ceased to be an
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officer of the Company; and any certificate signed on behalf of the Company
by any person, who at the actual date of the execution of such certificate
was a proper officer of the Company, shall be proper notwithstanding that at
the date of execution of this Agreement any such person was not such an
officer.
3. EXERCISE.
(a) Subject to the provisions of Sections 5 and 9 hereof, the
Series A Warrants, as they may be adjusted as set forth herein, may be
exercised at a price (the "WARRANT EXERCISE PRICE") of $2.75 per share of
Common Stock subject to adjustment, in whole or in part at any time during
the period (the "WARRANT EXERCISE PERIOD") commencing on the date of issuance
of the Series A Warrant and terminating on the earlier of (i) the date three
years after effectiveness of the Initial Registration Statement, provided,
however, that (x) if the Common Stock underlying the Warrants is not subject
to an effective registration for an aggregate of 600 days within three years
after the final closing of the Private Offering, then the remaining exercise
period under this clause (i) shall be tolled until the Common Stock
underlying the Warrants shall have been subject to an effective registration
for an aggregate of 600 days and (y) in no event shall the Series A Warrants
terminate under this clause (i) unless a registration statement covering the
Warrant Shares shall have then been in effect for 45 days prior to such
termination, and (ii) six years from the date of issuance (the "WARRANT
EXPIRATION DATE"), unless extended by a majority vote of the Board of
Directors for such length of time as they, in their sole discretion, deem
reasonable and necessary.
(b) Each Series A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date (each, an "EXERCISE
DATE") of the surrender to the Company for exercise of the Series A Warrant
certificate. The exercise form shall be executed by the Warrant Holder
thereof or his attorney duly authorized in writing and shall be delivered
together with payment to the Company at its corporate offices located at 1875
Century Park East, Suite 2130, Los Angeles, CA. 90067 (the "CORPORATE
OFFICE"), or at any such other office or agency as the Company may designate,
in cash or by official bank or certified check, of an amount equal to the
aggregate Exercise Price, in lawful money of the United States of America.
(c) Unless Warrant Shares may not be issued as provided herein,
the person entitled to receive the number of Warrant Shares deliverable on
exercise shall be treated for all purposes as the holder of such Warrant
Shares as of the close of business on the Exercise Date. The Company shall
not be obligated to issue any fractional share interest in Warrant Shares
issuable or deliverable on the exercise of any Series A
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Warrant or scrip or cash therefore and such fractional shares shall be of no
value whatsoever.
(d) Within ten days after the Exercise Date and in any event
prior to the Warrant Expiration Date, the Company, at its own expense, shall
cause to be issued and delivered to the person or persons entitled to receive
the same, a certificate or certificates in the name requested by the
Registered Holder for the number of Warrant Shares deliverable on such
exercise. No adjustment shall be made in respect of cash dividends on
Warrant Shares delivered on exercise of any Series A Warrant. All shares of
Common Stock delivered upon the exercise of the Series A Warrants shall be
validly issued, fully paid and non-assessable. Any Series A Warrants
redelivered to the Registered Holder in the event of the exercise of less
than all of the Series A Warrants pertaining to a surrendered Series A
Warrant certificate, shall be validly issued, fully paid and non-assessable.
(e) The Series A Warrants shall not entitle the holder thereof to
any of the rights of shareholders or to any dividend declared on the Common
Stock unless such holder or holders shall have exercised the Series A
Warrants prior to the record date fixed by the Board of Directors for the
determination of holders of Common Stock entitled to such dividends or other
rights.
4. REGISTRATION RIGHTS.
The holders of Series A Warrants shall have the registration rights
under the Securities Act of 1933, as amended (the "ACT"), and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission
(the "COMMISSION"), provided for in that certain Registration Rights
Agreement executed by the Company and the A Warrant holders on even date
herewith (the "REGISTRATION RIGHTS AGREEMENT"). The Registration Rights
Agreement is incorporated herein by this reference in its entirety as if
fully set forth herein.
5. RESERVATION OF SHARES AND PAYMENT OF TAXES.
(a) The Company covenants that it shall at all times reserve and
have available from its authorized Common Stock such number of shares as
shall then be issuable on the exercise of all outstanding Series A Warrants.
The Company covenants that all Warrant Shares shall be duly and validly
issued, fully paid and non-assessable, and shall be free from all taxes,
liens and charges with respect to the issuance thereof.
(b) The Company shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect of the issuance
of the Series A Warrants, and/or the issuance of any Common Stock
constituting the Warrant Shares on the exercise of the Series A Warrants. In
the event the Warrant
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Shares are to be delivered in a name other than the name of the initial
Registered Holder of the certificate, no such delivery shall be made unless
the person requesting the same has paid to the Company the amount of any such
taxes, charges, or transfer fees incident thereto.
6. REGISTRATION OF TRANSFER.
(a) The Series A Warrant certificates may, subject to provisions
of the Federal Securities Laws and any applicable state securities laws, be
transferred in whole or in part Certificates to be transferred shall be
surrendered to the Company at its Corporate Office. The Company shall
execute, issue and deliver in exchange therefor the Series A Warrant
certificates in the names and amounts that the holder making the transfer
shall have designated in writing. The Company shall keep transfer books at
its Corporate Office which shall register certificates and the transfer
thereof. On due presentment for registration of transfer of any certificate
at the Corporate Office, the Company shall execute, issue and deliver to the
transferee or transferees a new certificate or certificates representing an
equal aggregate number of securities. All such certificates shall be duly
endorsed or be accompanied by a written instrument or instruments of transfer
in form reasonably satisfactory to the Company. The established transfer fee
for any registration of transfer of certificates shall be paid by the Warrant
Holder or the person presenting the certificate for transfer.
(b) Prior to due presentment for registration or transfer
thereof, the Company may treat the Registered Holder of any certificate as
the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone), and the parties hereto shall not be affected
by any notice to the contrary.
7. LOSS OR MUTILATION.
On receipt by the Company of evidence satisfactory as to the
ownership of and the loss, theft, destruction or mutilation of any Series A
Warrant certificate, the Company shall execute and deliver in lieu thereof a
new certificate representing an equal number of Series A Warrants. In the
case of loss, theft or destruction of any certificate, the individual
requesting reissuance of a new certificate shall be required to indemnify the
Company and, at the request of the Company, to post an open-penalty insurance
or indemnity bond. In the event a certificate is mutilated, such certificate
shall be surrendered and canceled by the Company prior to delivery of a new
certificate. Applicants for a new certificate shall also comply with such
other regulations and pay such other reasonable charges as the Company may
prescribe.
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8. REDEMPTION OPTION.
The Company shall have the right and option, upon 30 days' prior written
notice to each Registered Holder, to, at any time thereafter, call, redeem
and acquire all or a portion of the Series A Warrants which remain
outstanding and unexercised at the date fixed for redemption (the "Series A
Warrant Redemption Date") at a price of $.01 per Series A Warrant if, and
only if, the average of the closing bid and closing asked price per share of
the Common Stock for each of the 20 consecutive trading days immediately
prior to the mailing of said notification, and for each day thereafter until
the Series A Warrant Redemption Date shall have exceeded 133.3% of the then
Exercise Price. The Series A Warrant Holders shall in all events have the
right during the period immediately following the date of such notice and
prior to the Series A Warrant Redemption Date to exercise the Series A
Warrants in accordance with the provisions of Section 3 hereof.
No call for redemption and no redemption of the Series A Warrants shall
be made unless the Company shall have an effective registration statement
under the Act on file during such period from the date of mailing of the
notice of redemption through the applicable redemption date with the
Commission and all applicable state securities commissions relating to the
Common Stock and the Warrant Shares, except that this obligation, as it
relates to the Warrant Shares or Common Stock, may be satisfied if such
Warrant Shares or Common Stock, respectively, may be transferred publicly in
accordance with Rule 144 or otherwise without registration under the Act. In
the event that any Series A Warrants are exercised following notice but prior
to redemption, this call option shall be deemed not to have been exercised by
the Company as to the Series A Warrants so exercised.
The redemption notice shall require each Warrant Holder to surrender the
Series A Warrants on or before the Redemption Date in accordance with the
provisions of the redemption notice. In the event the Series A Warrant
Certificates representing the Series A Warrants called for redemption have not
been surrendered for redemption and cancellation on the applicable redemption
date, such Series A Warrants shall be deemed to have expired and all rights of
the holders of such unsurrendered Series A Warrants shall cease and terminate,
other than the right to receive the redemption price without interest; provided,
however, that such right to receive the redemption price shall itself expire one
year from the Series A Warrant Redemption Date if no claim is made therefor
prior to such date.
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9. ADJUSTMENT OF INITIAL EXERCISE
PRICE AND NUMBER OF SHARES PURCHASABLE.
For purposes hereof, the term "INITIAL EXERCISE PRICE" shall mean,
with respect to the A Warrants, $2.75. The Initial Exercise Price and the
number of shares of Common Stock purchasable pursuant to the A Warrants shall
be subject to adjustment from time to time as hereinafter set forth in this
Section 9.
9.1 ADJUSTMENTS. The number of Warrant Shares purchasable upon the
exercise of the Warrants and the Exercise Price shall be subject to adjustment
as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue
by reclassification of its Common Stock other securities of the Company, the
number of Warrant Shares purchasable upon exercise of the Warrants
immediately prior thereto shall be adjusted so that the holder shall be
entitled to receive the kind and number of Common Stock or other securities
of the Company which it would have owned or would have been entitled to
receive after the happening of any of the events described above, had the
Warrants been exercised immediately prior to the happening of such event or
any record date with respect thereto. Any adjustment made pursuant to this
Paragraph (a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any consideration, entitling them to subscribe for or to
purchase shares of Common Stock at a price per share which is lower at the
record date mentioned below than the then Current Market Price (as defined
below), the number of Warrant Shares thereafter purchasable upon the
exercise of a Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of each Warrant by a
fraction, of which the numerator shall be (1) the number of shares of Common
Stock outstanding immediately prior to the issuance of such rights, options
or warrants plus (2) the number of additional shares of Common Stock offered
for subscription or purchase, and of which the denominator shall be (x) the
number of shares of Common Stock outstanding immediately prior to the
issuance of such rights, options or warrants plus (y) the number of shares
which the aggregate offering price of the total number of shares offered
would
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purchase at the Current Market Price. Such adjustment shall be made whenever
such rights, options or warrants are issued, and shall become effective
immediately and retroactively after the record date for the determination of
shareholders entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or
rights, options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred
to in paragraph (b) above), then, in each case, the number of Warrant Shares
thereafter purchasable upon the exercise of the Warrants shall be determined
by multiplying the number of Warrant Shares theretofore purchasable upon
exercise of the Warrants by a fraction, of which the numerator shall be the
then Current Market Price on the date of such distribution, and of which the
denominator shall be such Current Market Price on such date minus the then
fair value of the portion of the assets or evidence of indebtedness so
distributed or of such subscription rights, options or warrants applicable
to one share. Such adjustment shall be made whenever any such distribution
is made and shall become effective on the date of distribution retroactive
to the record date for the determination of shareholders entitled to receive
such distribution.
(d) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of Shares
then purchasable upon the exercise of a Warrant; PROVIDED, HOWEVER, that any
adjustments which by reason of this Paragraph (d) are not required to be
made immediately shall be carried forward and taken into account in any
subsequent adjustment.
(e) Whenever the number of Warrant Shares purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Exercise Price
payable upon exercise of a Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of Warrant Shares purchasable upon the
exercise of a Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Shares so purchasable immediately
thereafter.
(f) The Exercise Price of the Series A Warrants shall be automatically
and permanently reduced by $.10 per share each if (i) the Initial
Registration Statement (as defined
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in the Registration Rights Agreement) has not become effective on or prior
to that date which is 270 days from the Final Closing Date, (ii) the
Commission shall have issued a stop order suspending the effectiveness of
the Initial Registration Statement and the number of days stop orders have
been in effect, together with the number of days a notice under Section
4.1(d) of the Registration Rights Agreement has been issued or required to
be issued, exceeds 180 days, or (iii) (A) the Company for the third time,
notifies or is required to notify the holders of the Warrants pursuant to
Section 4.1(d) of the Registration Rights Agreement, or (B) a notice under
such Section 4.1(d) is effective or required to be effective at a time when
the aggregate number of days for which all such notices issued or required
to be issued pursuant to such Section 4.1(d) have been, or were required to
be, in effect, exceeds 180 days (270 days from the Final Closing Date in the
case of clause (i), or the date the third notice is sent or required to be
sent or the date on which the 180-day limit is exceeded in the case of
clause (ii) or (iii), is each referred to herein as an "Event Date").
Additionally, the Exercise Price of each Series A Warrant then outstanding
shall be subject to further downward adjustment in the amount of $.10 each
on the same day of each month following the initial Event Date (or, if there
is no numerically corresponding day in any such subsequent month, then on
the last day of such applicable subsequent month) until the Registration
Statement becomes effective; PROVIDED, HOWEVER, that such adjustments will,
in each case, cease to accrue on the date which (x) the Initial Registration
Statement is declared effective, with respect to the adjustments for failure
to be declared effective by that date which is 270 days from the Final
Closing Date, (y) the Initial Registration Statement is no longer subject to
an order suspending the effectiveness thereof, with respect to adjustments
for the failure to remain effective or (z) a notice issued, or required to
be issued, pursuant to Section 5.1(d) is no longer effective or required to
be effective, with respect to adjustments payable pursuant to clause (iii)
above. In no event shall the Series A Warrant exercise price be adjusted
below $1.50 solely due to this Section 9.1(f).
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of a Warrant or the Exercise Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the holder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the
Board of Directors of the Company (who may be the regular accountants
employed by the Company) setting forth the number of Warrant Shares
purchasable upon the
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exercise of a Warrant and the Exercise Price after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by
which such adjustment was made.
(h) For the purpose of this Subsection 9.1, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock.
In the event that at any time, as a result of an adjustment made pursuant to
this Section 9, the holder shall become entitled to purchase any securities
of the Company other than shares of Common Stock, thereafter the number of
such other securities so purchasable upon exercise of the Warrant and the
Exercise Price of such securities shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in this Section 9.
(i) Upon the expiration of any rights, options, warrants or conversion
privileges which caused an adjustment under this Section 9.1, if such shall
not have been exercised, the number of Warrant Shares purchasable upon
exercise of the Warrants and the Exercise Price, to the extent the Warrants
have not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (A) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion rights and (B)
the fact that such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus
the consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion
rights whether or not exercised; PROVIDED, HOWEVER, that no such
readjustment shall have the effect of increasing the Exercise Price by an
amount in excess of the amount of the adjustment initially made in respect
of the issuance, sale or grant of such rights, options, warrants or
conversion privileges.
9.2 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION. CONSOLIDATION
ETC. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale or reconveyance to another
corporation of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or
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purchasing corporation, as the case may be, shall provide that the holder shall
have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of the Warrant the
kind and amount of shares and other securities and property which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Warrant been exercised
immediately prior to such action. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Subsection 9.2 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
9.3 PAR VALUE OF COMMON STOCK. Before taking any action which would cause
an adjustment reducing the Exercise Price below the then par value of the shares
of Common Stock issuable upon exercise of the Warrant, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock at such adjusted Warrant Price.
9.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any adjustments in
the Exercise Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issuable pursuant to this
Agreement. However, the Company may at any time in its sole discretion (which
shall be conclusive) make any change in the form of the Warrant certificate that
it may deem appropriate and that does not affect the substance thereof; and any
Warrant certificate thereafter issued, whether upon registration or transfer of,
or in exchange or substitution for, an outstanding Warrant certificate, may be
in the form so changed.
9.5 PRIOR NOTICE TO WARRANT HOLDERS. In the event that at any time prior
to the expiration of the Warrant and prior to its exercise, any of the following
events shall occur:
1. any action which would require an adjustment pursuant to
Sections 9.1 or 9.2; or
2. a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its
property, assets and business, as an entirety) shall be proposed;
then, in any such event, the Company shall cause at least twenty (20) days'
prior written notice to be mailed to each Warrant
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Holder at the address of such holder shown on the books of the Company. The
notice shall also specify the date on which the books of the Company shall close
or a record be taken for such stock dividend, distribution or subscription
rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, disposition, liquidation, dissolution,
winding up, or dividend, as the case may be, shall take place, and the date of
participation therein by the holders of shares of Common Stock if any such date
is to be fixed, and shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action on the
rights of the Warrant Holder.
9.6 DISPUTES. In the event that there is any dispute as to the
computation of the Exercise Price or the number of shares of Common Stock
required to be issued upon the exercise of the Warrants, the Company will retain
an independent and nationally recognized accounting firm to conduct an audit of
the computations pursuant to the terms hereof involved in such dispute,
including the financial statements or other information upon which such
computations were based. The determination of such nationally recognized
accounting firm shall, in the absence of manifest error, be binding. If there
shall be a dispute as to the selection of such nationally recognized accounting
firm, such firm shall be appointed by the American Institute of Certified Public
Accountants ("AICPA") if willing, otherwise the American Arbitration Association
("AAA"). If the Exercise Price or number of shares of Common Stock as
determined by such accounting firm is one percent or more higher or lower than
the calculations thereof computed by the Company, the expenses of such
accounting firm and, if any, off AICPA and AAA, shall be borne completely by the
Company. In all other cases, they shall be borne by the complaining Warrant
Holders, as applicable.
9.5 CURRENT MARKET PRICE. For the purpose of this Section 9, the term
"Current Market Price" shall mean (i) if the Common Stock is traded in the over-
the-counter market or on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average per share closing bid prices
of the Common Stock on the 20 consecutive trading days immediately preceding the
date in question, as reported by NASDAQ or an equivalent generally accepted
reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing prices of the
Common Stock on the principal stock exchange on which it is listed, as the case
may be. The closing price referred to in clause (ii) above shall be the last
reported sales price or in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices, in either case on the
national securities exchange on which the Common Stock is then listed.
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10. NOTICES.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by confirmed telex,
telegram, facsimile transmission or cable to, in the case of the Company:
SeraCare, Inc.
1925 Century Park East
Suite 1970
Los Angeles, CA. 90067
telecopier: (310) 772-7770
and if to the Warrant Holder at the address of such holder as set forth on the
books maintained by or on behalf of the Company.
11. BINDING AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Warrant Holders. Nothing in this Agreement is intended or shall
be construed to confer upon any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
12. FURTHER INSTRUMENTS.
The parties shall execute and deliver any and all such other
instruments and take any and all other actions as may be reasonably necessary to
carry out the intention of this Agreement.
13. SEVERABILITY.
If any provision of this Agreement shall be held, declared or
pronounced void, voidable, invalid, unenforceable, or inoperative for any reason
by any court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other
provision of this Agreement, which shall otherwise remain in full force and
effect and be enforced in accordance with its terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
14. AMENDMENTS/WAIVER.
(a) Except as otherwise provided herein, the provisions
of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written
consent of Holders of at least a majority in number of Warrant
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Shares then outstanding affected by such amendment, modification, supplement,
waiver or departure. Such amendment, modification or supplement, waiver or
departure, if consented to in writing by such majority of holders, shall thereby
amend, modify or supplement, waive or act to consent to depart from, this
Agreement on behalf of all Holders of Series A Warrants.
(b) No delay or failure on the part of any party in the
exercise of any right or remedy arising from a breach of this
Agreement shall operate as a waiver of any subsequent right or
remedy arising from a subsequent breach of this Agreement.
15. RELEVANT MARKETS.
For the purposes of this Agreement, it is assumed that the Common
Stock is quoted on the National Association of Securities Dealers, Inc. NASDAQ
Small Cap market ("NASDAQ Small Cap"), however, in the event the Common Stock
is:
(a) listed on NASDAQ, NASDAQ Small Cap, a national securities exchange
or admitted to unlisted trading privileges on such exchange, the price of the
Common Stock to be determined during any applicable twenty (20) day trading
period shall be the last reported sale price of the Common Stock on such
exchange; or
(b) not quoted on the Bulletin Board listed or admitted to unlisted
trading privileges, the price of the Common Stock to be determined during any
applicable twenty (20) day trading period shall be the high closing bid as
reported on the "pink sheets" by the National Daily Quotation Bureau, Inc.
16. GENERAL PROVISIONS.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAWS OF THE STATE OF CALIFORNIA. The headings of this
Agreement are for convenience and reference only and shall not limit or
otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date first set forth above.
SERACARE, INC
By: /s/ Barry D. Plost
----------------------------------
Barry D. Plost
President and Chief Executive
Officer
[CORPORATE SEAL)
ATTEST: /s/ Jerry L. Burdick
-----------------------------
Jerry L. Burdick
Secretary
WARRANTHOLDERS:
By: /s/ Jerry L. Burdick
----------------------------------
Title: Attorney-In-Fact
--------------------------------
15
<PAGE>
EXHIBIT A
The securities represented hereby have not been
registered under the Securities Act of 1933, as amended,
or any state securities laws and neither the securities
nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except
pursuant to an effective registration statement under
such Act and such laws or an exemption from registration
under such Act and such laws which, in the opinion of
counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation,
is available.
SERIES A WARRANT CERTIFICATE
SERACARE, INC.
Warrant No. WA-1 No. of A Warrants: 2
This certifies that, for value received and subject to the terms and
conditions set forth herein, 3 or his registered assign (the "Warrant Holder")
is the registered holder of 2 Series A Warrants.
1. EXERCISE. The warrants evidenced hereby ("Series A Warrants"), as
they may be adjusted from time to time, may be exercised at a price of $2.75 per
Warrant to acquire one (1) share of the common stock of SeraCare, Inc. which is
with par value of $0.001 (the "Common Stock" and the "Company," respectively).
(The Common Stock acquirable upon exercise hereof is referred to herein as
"Warrant Stock.") If, at the time of any exercise of a Series A Warrant, the
Shares deliverable upon exercise of such Warrant shall not be registered under
the Securities Act, the Company may require, as a condition of allowing such
exercise, that the holder or transferee of such Warrant furnish to the Company
an opinion of counsel of recognized standing in securities law to the effect
that such exercise may be made without registration under the Securities Act;
provided that, the exercise of the Warrant shall at all times be within the
control of such holder or transferee, as the case may be, and, if required by
the Company, accompanied by a written representation (i) that the shares being
acquired by the exercise of the Warrant are being purchased for investment and
not for distribution, (ii) acknowledging that such shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
(iii) agreeing that such shares may not be sold or transferred unless there is
an effective Registration Statement for them under the 1933 Act, or in the
opinion of counsel to the Company such sale or transfer is not in violation
A-1
<PAGE>
of the 1933 Act. No fractional shares may be acquired upon exercise hereof.
2. TERM OF WARRANT. This Series A Warrant may be exercised at any time
and from time to time in whole or in part commencing immediately upon issuance
and terminating on the earlier of (i) the date three years after effectiveness
of the Initial Registration Statement (as defined in the Warrant Agreement),
provided, however, that (x) if the Common Stock underlying the Warrants is not
subject to an effective registration for an aggregate of 600 days within three
years after the final closing of the Private Offering, then the remaining
exercise period under this clause (i) shall be tolled until the Common Stock
underlying this Series A Warrant shall have been subject to an effective
registration for an aggregate of 600 days and (y) in no event shall this Series
A Warrant terminate under this clause (i) unless a registration statement
covering the Warrant Stock shall have then been in effect for 45 days prior to
such termination, and (ii) six years from the date of issuance, unless extended
by a majority vote of the Board of Directors for such length of time as they, in
their sole discretion, deem reasonable and necessary.
3. ADJUSTMENT OF EXERCISE PRICE. The number of shares purchasable upon
exercise of this Series A Warrant is subject to adjustment in accordance with
the Series A Warrant Agreement.
4. REDEMPTION. These Warrants may be redeemed upon 30 days advance
notice upon conditions set forth in the Series A Warrant Agreement.
5. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the A Warrants
upon the basis set forth herein will at all times during the term of this Series
A Warrant be reserved for the exercise hereof.
6. MANNER OF EXERCISE. Exercise may be made of all or any part of the A
Warrants by surrendering this certificate, with the purchase form to be provided
by the Company, duly executed by the Warrant Holder or by the Warrant Holder's
duly authorized attorney, plus payment of the exercise price therefor in cash at
the office of the Company or its designated assign.
7. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its own
expense, shall cause to be issued, within ten (10) days after exercise of this
Series A Warrant, a certificate or certificates in the name or names requested
by the Warrant Holder representing the number of shares of Common Stock to which
the Warrant Holder is entitled upon such exercise. All shares of Common Stock
or other securities delivered upon the exercise of
A-2
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this Series A Warrant shall be validly issued, fully paid and non-assessable.
Irrespective of the date of issuance and delivery of any certificate
representing the shares of Common Stock upon the exercise of this Series A
Warrant, each person in whose name any such certificate is to be issued will for
all purposes be deemed to have become the holder of record of the Common Stock
acquired on the date on which a duly executed notice of exercise of this A
Warrant and payment for the number of shares exercised are received by the
Company.
8. REGISTRATION RIGHTS. The Company will use its best efforts to
register the Warrant Stock prior to that date which is 270 days after the Final
Closing of the Private Offering and the Company agrees to use its best efforts
to maintain an effective Registration Statement during the term of the A
Warrants, as more fully set forth in the Warrant Agreement and the Registration
Rights Agreement governing the issuance and registration of the A Warrants and
Warrant Stock.
9. NO RIGHT AS STOCKHOLDER. The Warrant Holder is not, by virtue of his
ownership of this Series A Warrant, entitled to any rights whatsoever as a
stockholder of the Company.
10. ASSIGNMENT. This Series A Warrant may not be assigned without
providing the Company an opinion satisfactory to its counsel that an exemption
from registration for the transfer exists.
11. STATE LEGENDS. Residents of Connecticut are advised of the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION
36-485 OF THE CONNECTICUT UNIFORM SECURITIES ACT, CHAPTER
662 OF THE CONNECTICUT GENERAL STATUTES, AND ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND SALE AND CANNOT BE
RESOLD UNLESS THEY ARE REGISTERED IN CONNECTICUT OR EXEMPT
FROM REGISTRATION IN CONNECTICUT.
Residents of Pennsylvania are advised of the following:
THE INVESTOR AGREES NOT TO TRANSFER THESE SECURITIES FOR
12 MONTHS FROM THE DATE OF PURCHASE. (THIS RESTRICTION
MAY BE AUTOMATICALLY WAIVED IN ACCORDANCE WITH SECTION
204.011 OF THE PENNSYLVANIA BLUE SKY REGULATIONS.)
12. WARRANT AGREEMENT. The actual terms and conditions of this Series A
Warrant are contained in a Warrant Agreement entered into by and between the
Company and the Warrant holder,
A-3
<PAGE>
the terms and conditions of which are incorporated herein by this reference as
if fully set forth herein and made a part hereof. To the extent of any conflict
herewith, the terms and conditions of the Warrant Agreement shall apply.
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to
be signed on its behalf by its President or Senior Vice President, his
signature to be attested to by its Secretary, and its corporate seal to be
hereunto affixed this ___________ day of October, 1996.
[SEAL] SERACARE, INC.
on behalf of the Company
and as Warrant Agent
By:
-----------------------------------
Attest:
----------------------------
Name:
---------------------
Title:
---------------------
A-4
<PAGE>
EXHIBIT 6.15
SERACARE, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into on September 4 , 1996, by and among SERACARE, INC., a Delaware corporation
(the "COMPANY"), and those individuals and entities (the "PURCHASERS")
purchasing units (the "UNITS"), each consisting of five-thousand shares (the
"SHARES") of the Company's Common Stock, with $0.001 par value (the "COMMON
STOCK"), and two-thousand five-hundred warrants to purchase one share of Common
Stock exercisable at $2.75 (the "A WARRANTS" or "WARRANTS").
In order to induce the Purchasers to enter into the Subscription
Agreements, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution of this Agreement is a condition to the
closing under the Subscription Agreements. Capitalized terms used herein
without definition shall have the meaning set forth in the Subscription
Agreements.
The parties hereby agree as follows:
1. DEFINITIONS.
(a) "REGISTRABLE SECURITIES" means each of the following: (i) the
shares of Common Stock included in the Units to be sold to the Purchasers
pursuant to the Subscription Agreements, and (ii) the shares of Common Stock
issued or issuable upon exercise of the Warrants, provided that Registrable
Securities shall not include any shares which (x) can be publicly resold by
the holders thereof without registration under the Securities Act of 1933, as
amended (the "ACT") or the availability of an exemption thereunder, (y) which
are currently registered under an effective registration statement, or (z)
which have been sold to the public or in a private transaction in which the
transferor's rights under this agreement are not assigned.
(b) "RESTRICTED REGISTRABLE SECURITIES" means the Registrable
Securities until (i) a registration statement covering such Registrable
Securities has been declared effective and they have been disposed of
pursuant to such effective registration statement, (ii) they are eligible for
distribution to the public pursuant to Rule 144 (or any similar provision
then in force) under the Act or (iii) they have been otherwise transferred
and the Company has delivered new certificates or other evidences of
ownership for them not subject to any stop transfer order or other
restriction on transfer (including, without limitation, sale).
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<PAGE>
(c) "HOLDER(S)" means (i) the Purchasers who are the record owners
of Registrable Securities and/or Restricted Registrable Securities, as
applicable; and/or (ii) the record owners of Registrable Securities and/or
Restricted Registrable Securities, as applicable, to whom registration rights
have been transferred in accordance with Section 10(c) below.
2. MANDATORY REGISTRATION
(a) The Company will use its best efforts to file with the
Securities and Exchange Commission (the "COMMISSION") and to cause to become
effective no later than that date which is 270 days from the Final
Closing(such day is referred to herein as the "EFFECTIVE DATE"), a
registration statement (the "INITIAL REGISTRATION STATEMENT") under the Act
for the offering and sale of the Restricted Registrable Securities, and,
further, the Company shall use its best efforts to keep such Initial
Registration Statement effective through the earliest of: (i) the expiration
date of all the Warrants issued to the Holders, and (ii) the exercise in full
of all Warrants by the Holders, and (iii) the redemption of all Warrants
issued to the Holders by the Company, but in any event, with respect to the
Shares, until such time as the Shares are no longer deemed Restricted
Registrable Securities hereunder (the period during which the Initial
Registration Statement remains effective is hereinafter referred to as the
"Initial Registration Period.")
(b) The Company further agrees, if necessary, to supplement or
make amendments to the Initial Registration Statement and any prospectus
contained therein, if required by the Initial Registration Statement form
utilized by the Company or by the instructions applicable to such registration
form or by the Act or the rules and regulations thereunder, and the Company
agrees to furnish copies of such Initial Registration Statement, prospectus,
supplement or amendment as soon as practicable after its being used and/or
filed with the Commission to the security holders whose Restricted Registrable
Securities are included in the Initial Registration Statement.
(c) The Company will pay all Registration Expenses (as hereinafter
defined) incurred in connection with the Company's registration obligations
pursuant to this Section 2.
(d) The Company agrees to take whatever actions are reasonably
deemed necessary by First Equity Capital Securities, Inc. (the "PLACEMENT
AGENT") in order to assist the Investors, First Equity, and their agents when
selling securities of the Company in complying with Rule 15c6-1 of the
Securities Exchange Act of 1934, as amended.
(e) The Company will make available to its security holders, as
soon as reasonably practicable, an earnings statement
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<PAGE>
covering a period of twelve months, commencing on the first day of the fiscal
quarter next succeeding the effective date of each sale of any Restricted
Registrable Securities pursuant to the Initial Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act.
(f) The Company and the Purchasers acknowledge and agree that the
rights of First Equity Capital Securities, Inc. (the "PLACEMENT AGENT") and
any other dealers or registered representatives thereof chosen by the
Placement Agent with the approval of the Company that are members of the
National Association of Securities Dealers, Inc. (each, a "SELECTED DEALER"
and collectively, the "SELECTED DEALERS"), under Section 3 of that certain
Dealer Registration Rights Agreement dated the date hereof by and between the
Company and the Placement Agent (the "DEALER REGISTRATION RIGHTS AGREEMENT"),
include the right of the Placement Agent and/or any Selected Dealer to have
added to and made a part of the Initial Registration Statement the number of
shares of Common Stock of the Company (including those shares included in the
Dealer Warrants and underlying the "Series B Warrants" as such term is defined
in the Dealer Registration Rights Agreement) requested in writing by the
Placement Agent and/or the Selected Dealers. The Placement Agent and each
Selected Dealer shall each be direct third party beneficiaries of this Section
2 and the rights arising therefrom, and may enforce the provisions of this
Agreement with respect to this Section 2 directly against the Company in any
manner permitted by applicable law, as if the Placement Agent and each
Selected Dealer were signatories hereto.
3. PIGGYBACK REGISTRATION
(a) If, prior to the effectiveness of the Initial Registration
Statement or at any time the Initial Registration Statement is not effective,
any Registrable Securities continue to be Restricted Registrable Securities,
each time that the Company shall propose the registration under the Act of any
shares of Common Stock of the Company, other than a registration relating to
employee benefit plans, or a corporate reorganization or other transactions
under Rule 145, notice of such proposed registration stating the total number
of shares proposed to be the subject of such registration shall be given to
the Holders of Restricted Registrable Securities and Warrants, if any have not
yet been exercised. The Company will use its best efforts to include in any
registration statement filed with the Commission with regard to such proposed
registration the number of Restricted Registrable Securities specified in
writing by any such Holders to it within 20 days after receipt of said notice,
provided that any Holders of any Warrant exercises such of his Warrants within
20 days after receipt of said notice as is necessary to have included in the
registration statement the shares of Common Stock so specified by him. Any
Holders who
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<PAGE>
participates in the public offering pursuant to such registration statement
shall be entitled to all the benefits of this Agreement in connection with any
registration hereunder, except as otherwise provided in this Section 3. The
right to registration provided in this Section is in addition to and not in
lieu of the registration rights provided in Section 2 hereof.
(b) All Registration Expenses, as hereinafter defined, in
connection with the offering of securities of the Company pursuant to any
registration statement filed pursuant to this Section 3, whether or not such
registration statement becomes effective under the Act, shall be borne by the
Company and the Holders, provided that the Holders of Restricted Registrable
Securities then being registered shall pay (pro rata between or among the
Holders thereof) to the Company only that portion of such Registration
Expenses attributable to the inclusion in such registration statement of such
Restricted Registrable Securities (i.e., the marginal amount). Such Holders
shall pay all transfer taxes and out-of-pocket expenses incurred by them with
respect to the registration and sale of the shares of Restricted Registrable
Securities owned by them and included in such registration statement.
Notwithstanding the foregoing, in the event the Company fails to file and
cause to become effective, and/or thereafter maintain the effectiveness of, a
registration statement for the Initial Registration Period as provided for in
Section 2 above, all Registration Expenses shall be borne by the Company.
(c) Notwithstanding anything to the contrary in this Section 3,
the Holders of the Restricted Registrable Securities and Warrants shall not be
entitled to include in any registration statement filed pursuant to this
Section 3 Restricted Registrable Securities to the extent such inclusion would
materially and adversely affect the proposed distribution of the Common Stock
in respect of which registration was originally to be effected. The number of
Restricted Registrable Securities to be included by each Holder shall be
allocated in accordance with Section 3(e), below.
(d) The piggyback registration rights provided in this Section 3
may be exercised by the Holders of Restricted Registrable Securities from time
to time with respect to any or all registrations under the Act of Common Stock
of the Company in accordance with the provisions of this Section 3.
(e) In any circumstances in which all of the Restricted
Registrable Securities requested to be included in a registration cannot be so
included as a result of limitations on the aggregate number of shares of
Restricted Registrable Securities that may be so included, the number of
shares of Restricted Registrable Securities that may be so included shall
4
<PAGE>
be allocated among the Holders of Restricted Registrable Securities pro rata
on the basis of the number of shares of Restricted Registrable Securities that
would be held by such Holders, assuming exercise of the Warrants; provided,
however, that if any Holder does not request inclusion of the maximum number
of shares of Restricted Registrable Securities allocated to him pursuant to
the above-described procedure, then the remaining portion of his allocation
shall be reallocated among those requesting Holders whose allocations did not
satisfy their requests pro rata on the basis of the number of shares of
Restricted Registrable Securities which would be held by such Holders,
assuming exercise, and this procedure shall be repeated until all of the
shares of Restricted Registrable Securities which may be included in the
registration have been so allocated. Such allocation shall not operate to
reduce the aggregate number of Restricted Registrable Securities permitted to
be included in such registration.
4. REGISTRATION PROCEDURES
4.1 In connection with each registration provided for in Sections 2 or 3
hereof, the Company will as expeditiously as practicable:
(a) furnish to each seller of Restricted Registrable Securities,
the prospectus included in such registration statement and amendments thereto
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Restricted Registrable Securities owned by
such seller;
(b) use its best efforts to register or qualify the Restricted
Registrable Securities included in any registration statement filed in
accordance with Sections 2 or 3 hereof under such securities or blue sky laws
of such jurisdictions as any such seller reasonably requests and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Restricted Registrable Securities owned by such seller; provided that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (b), (ii) subject itself to taxation in any such jurisdiction by
reason of such registration or qualification of any Restricted Registrable
Securities, or (iii) consent to general service of process in any such
jurisdiction;
(c) use its best efforts to cause the Restricted Registrable
Securities covered by any such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable
the seller or
5
<PAGE>
sellers thereof to consummate the disposition of such Restricted Registrable
Securities;
(d) notify each seller of such Restricted Registrable Securities,
at any time when a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event as a result of which the
prospectus included in any such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Restricted Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(e) use its best efforts to cause all such Restricted Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed, provided that the applicable
listing requirements are satisfied;
(f) make available for inspection by any seller of such Restricted
Registrable Securities, any underwriter participating in any disposition
pursuant to any such registration statement, and any attorney, accountant or
other agent retained by any such seller or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such inspector in
connection with such registration statement. All such records shall be deemed
to be confidential and each seller shall cause the Inspectors to keep the
information therein confidential and not disclose it to third parties unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the release of
such Records is ordered pursuant to regulatory reporting requirements or a
subpoena or other order from a court of competent jurisdiction or (iii) the
filing of such Records as exhibits to such registration statement is required
by the Commission's rules and regulations. Each seller of such Restricted
Registrable Securities agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Records;
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(g) in the event the sale of such Restricted Registrable
Securities is pursuant to an underwritten offering, use its best efforts to
obtain a "comfort" letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
"comfort" letters as the underwriters reasonably request; and
(h) otherwise use its bast efforts to comply with all applicable
rules and regulations of the Commission.
4.2 The Company may require, as a condition to its obligations under
this Agreement, that each seller of Restricted Registrable Securities
registered pursuant to Sections 2 or 3 hereof furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
4.3 Each seller of Restricted Registrable Securities registered pursuant
to Sections 2 or 3 hereof agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 4.1(d)
hereof, such seller will forthwith discontinue disposition of such Restricted
Registrable Securities pursuant to the registration statement covering such
securities until such seller's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4.1(d) hereof, and, if so directed
by the Company, such seller will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such seller's
possession, of the prospectus covering such Restricted Registrable Securities
that is current at the time of receipt of such notice.
5. REGISTRATION EXPENSES
Registration Expenses shall be borne as set forth in Sections 2 and
3 hereof. Registration Expenses ("Registration Expenses") shall consist of
all expenses incidental to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Restricted Registrable Securities), printing expenses,
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of such securities on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and of its independent certified
public accountants (including the expenses of any
7
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special audit or "comfort" letters required by or incident to such
performance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special
experts retained by the Company in connection with any registration of
Restricted Registrable Securities.
6. INDEMNIFICATION: CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each seller of Restricted
Registrable Securities, its officers and directors and each person who
controls such seller (within the meaning of the Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or amendment or supplement thereto or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made not misleading, and the Company
will reimburse legal or other expenses reasonably incurred by such seller in
investigating or defending any claims relating to or arising from such untrue
statements or omissions, in all cases except insofar as such are caused by (i)
statements or omissions made in reliance upon or contained in any information
with respect to such seller furnished in writing to the Company by such seller
expressly for use therein or (ii) such seller's failure to deliver a copy of
the final prospectus as then amended or supplemented after the Company has
furnished such seller with a sufficient number of copies of the same, but only
if delivery of same is required by law and if same would have cured the defect
giving rise to any such loss, claim, damage, liability or expense. Such
indemnification shall be effective irrespective of any investigation by any
seller.
(b) INDEMNIFICATION BY SELLERS OF RESTRICTED REGISTRABLE
SECURITIES. In connection with any registration statement relating to a sale
of Restricted Registrable Securities, each seller thereof will furnish to the
Company in writing such information and affidavits with respect to such seller
as the Company reasonably requests for use in connection with any such
registration statement (or prospectus contained therein) and will indemnify,
to the extent permitted by law, the Company, its directors, its officers who
sign the registration statement and each person who controls the Company
(within the meaning of the Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of material fact or any omission or alleged omission of a material fact
required to be stated in such registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein,
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in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with such written information
or affidavits relating to such seller furnished to the Company by such seller
expressly for use therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled
to indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such person will claim indemnification or
contribution pursuant to this Agreement and, unless in the reasonable judgment
of such indemnified party a conflict of interest may exist between such
indemnified party and the indem-nifying party, shall permit the indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to such indemnified party. If the indemnifying party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for the indemnified party with
respect to such claim. The indemnifying party will not be subject to any
liability for any settlement made without its consent. Failure of notice by a
seller of Restricted Registrable Securities entitled to indemnification
hereunder will not relieve the Company of its obligations under this Section 6
unless the Company is actually prejudiced thereby.
(d) CONTRIBUTION
(i) If the indemnification provided for in this Section 6
from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute (on the basis of relative fault) to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses. The relative fault of such
indemnifying and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to informa-tion
supplied by, such indemnifying or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in
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Section 6(c), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. Notwithstanding the
provisions of this Section 6(5)(i), in no case shall any seller of Restricted
Registrable Securities be liable or responsible for any amount in excess of
the net proceeds received by such seller from the sale of the Restricted
Registrable Securities of such seller which are included in any registration
statement contemplated by this Agreement.
(ii) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(iii) If indemnification is available under this Section 6, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 6(a) and (b) without regard to the relative fault of said
indemnifying party or indemnified party.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
(a) No Holder of Restricted Registrable Securities may
participate, pursuant to Section 3 hereof, in any underwritten offering of
Common Stock of the Company, notice of which is given pursuant to Section 3
hereof, unless such owner (i) agrees to sell its Restricted Registrable
Securities pursuant to the underwriting arrangements approved by the Company
and its counsel and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(b) The Company shall have no obligation under Section 3 to the
extent that any underwriter in connection with the registered public offering
reasonably notifies the Company of its determination that the Restricted
Registrable Securities or a portion thereof should be excluded therefrom. In
the event that a portion is to be excluded, the number of Restricted
Registrable Securities to be included by each Holder shall be allocated in
accordance with Section 3(e), above.
8. RULE 144
The Company covenants that it will timely file the reports required
to be filed by it under the Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder, and it will take such
further action as any record owner of Restricted Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such owner to sell Restricted Registrable Securities without
10
<PAGE>
registration under the Act within the limitation of the exemptions provided by
(a) Rule 144 under the Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any record owner of Restricted Registrable Securities, the
Company will deliver to such owner a written statement as to whether it has
complied with such requirements.
9. TERMINATION
This Agreement shall terminate on the fifth anniversary of the final
closing (as that term is defined in the Confidential Private Placement
Memorandum dated June 1, 1996). The provisions of Section 6 hereof shall
survive such termination.
10. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at
least a majority in number of shares of Restricted Registrable Securities then
outstanding affected by such amendment, modification, supplement, waiver or
departure. Such amendment, modification or supplement, waiver or departure,
if consented to in writing by such majority of Holders, shall thereby amend,
modify or supplement, waive or act to consent to depart from, this Agreement
on behalf of all Holders of Restricted Registrable Securities.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested:
(i) if to a holder of Restricted Registrable Securities, at
the most current address given by such holder to the Company in writing; and
(ii) if to the Company, at its address set forth in Section 11
of the Placement Agency Agreement dated the date hereof by and between the
Company and the Placement Agent. All such notices and communications shall be
deemed to have been duly given when delivered by hand, if personally
delivered; four business days after being deposited in the mail, postage
prepaid, if mailed.
(c) SUCCESSORS AND ASSIGNS. Subject to the following sentence,
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. The rights to cause the Company
to register securities under Section 3 may be transferred or assigned only to
a transferee or
11
<PAGE>
assignee of not less than 1,000 shares of Restricted Registerable Securities
per transfer or assignment (as presently constituted and subject to subsequent
adjustments for stock splits, stock dividends, reverse stock splits and the
like), provided that the Company is given written notice at the time of or
within a reasonable time after said transfer or assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned,
and, provided further, that the transferee or assignee of such rights assumes
in writing the obligations of such transferor under this agreement.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OP THE STATE OR CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the Company and the Purchasers shall be en-forceable to the fullest-extent
permitted by law.
(h) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
representations, promises, warranties or undertakings, other than
12
<PAGE>
those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SERACARE, INC.
By: /s/ Jerry L. Burdick
--------------------------------------------
Jerry K. Burdick
Executive Vice President and
Chief Financial Officer
PURCHASERS:
By: /s/ Jerry L. Burdick
--------------------------------------------
Title: Attorney-In-Fact
13
<PAGE>
SCHEDULE OF SUBSCRIPTIONS
SERACARE, INC.
PRIVATE PLACEMENT DATED JUNE 1, 1996
<TABLE>
<CAPTION>
NAME UNITS $ AMOUNT # OF SHARES # of WARRANTS
- ---- ----- -------- ---------- -------------
<S> <C> <C> <C> <C>
The Samuel and 14 105,000.00 70,000 35,000
Mary Ann Anderson Trust Check $5,000 and Conversion of
63 Beacon Bay $100,000 Loan
Newport Beach, CA. 92660
Darrell Atkin 2 15,000.00 10,000 5,000
434 S. Rios Avenue Check
Solana Beach, CA. 92075
(619) 792-5010
IRA f/b/o Stanley S. Becker 6 45,000.00 30,000 15,000
DLJSC as Custodian Wire
c/o Westminster Securities
19 Rector Street
New York, N.Y. 10006
Att.: John O'Shea
IRA f/b/o Samuel E. Benjamin MD 5 37,500.00 25,000 12,500
DLJSC As Custodian Rollover Account Wire
Retirement Accounts, 9th Floor
Pershing Division of
Donaldson, Lufkin & Jenrette
Securities Corp.
One Pershing Plaza
Jersey City, NJ. 07399
IRA Acc. #6E2-043895
Rachel R. Bensimon 13 97,500.00 65,000 32,000
c/o Smith Barney Wire
Attn.: Gerald Malinow
767 Fifth Avenue
7th Floor
New York, N.Y. 10153
Acct. # 101-363-34-15-010
Michael Besen 1 7,500.00 5,000 2,500
c/o Smith Barney, Inc Wire
767 Fifth Avenue
7th Floor
New York, NY. 10153
Att. Jerry Malinow
</TABLE>
1
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Stephen Besen 1 7,500.00 5,000 2,500
7 Boulder Trail Check
Chappaqua, N.Y. 10514
Steven Glassman 1 7,500.00 5,000 2,500
29 Steeplechase Dr. Wire
Marlboro, NJ. 07746
(908) 577-0898
James J. Hanosh, Jr. 3 22,500.00 15,000 7,500
c/o Kalb Voorhis & Co. Check
Attn: Mark Criscitello
27 William Street
New York, N.Y. 10005
For Account of:
James J. Hanosh, Jr.
Account # 142-28680
William M. Hitchcock 7 52,500.00 35,000 17,500
WH Newbolds Wire
1500 Walnut Street
Philadelphia, PA. 19102
FAO William M. Hitchcock
Acct. A16-087-5702
DTC: 571
Herb Hoelscher 7 52,500.00 35,000 17,500
c/o Thermo-King of Southern California Check
6118 Alcoa Ave.
Los Angeles, CA. 90058
(213) 585-1271
Jack Malinow 3 22,500.00 15,000 7,500
c/o Smith Barney
Att.: Gerald Malinow
767 5th Avenue, 7th Floor
New York, N.Y. 10153
Account # 101-82327-18-010
George L. Newport and 1 7,500 5,000 2,500
Lorene F. Newport Check
602 E. Madison
Athens, TN. 37303
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Barry D. Plost 14 105,000.00 70,000 35,000
10430 Wilshire Blvd., # 1103 Loan Conversion
Los Angeles, CA. 90024
(310) 474-6514
Rena Plost 3 22,500.00 15,000 7,500
10430 Wilshire Blvd. # 1103 Loan Conversion
Los Angeles, CA. 90024
(310) 474-6514
James K. & Julie M. Strattman 5 37,500.00 25,000 12,500
2925 Via Pepita Check
Carlsbad, CA. 92009
(619) 942-9050
Stranco Investments, Ltd. 10 75,000.00 50,000 25,000
SHR Nominees, Ltd. Wire
Arawak Chambers
P.O. Box 173
Main Street
Roadtown
Tortola, British Virgin Islands
Robert A. Strattman and 6 45,000.00 30,000 15,000
Joan F. Strattman Check
6439 Johnson Rd.
Indianapolis, IN. 46220
(317) 849-4469
Vestcom, Ltd. 10 75,000.00 50,000 25,000
SHR Nominees, Ltd. Wire
10 Rue De Bude
Geneva, Switzerland 1202
Mark J. Willey 1 7,500.00 5,000 2,500
12984 Carmel Creek Rd., # 157 Check
San Diego, CA. 92130
(619) 794-7823
----- ----------- ---------- -------------
113 $847,500,00 565,000 282,500
----- ----------- ---------- -------------
----- ----------- ---------- -------------
</TABLE>
3
<PAGE>
SERACARE, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into on October 23, 1996, by and among Seracare, Inc., a Delaware
corporation (the "COMPANY"), and those individuals and entities (the
"PURCHASERS") purchasing units (the "UNITS"), each consisting of
five-thousand shares (the "SHARES") of the Company's Common Stock, with
$0.001 par value (the "COMMON STOCK"), and two-thousand five-hundred warrants
to purchase one share of Common Stock exercisable at $2.75 (the "A WARRANTS"
or "WARRANTS").
In order to induce the Purchasers to enter into the Subscription
Agreements, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to
the closing under the Subscription Agreements. Capitalized terms used herein
without definition shall have the meaning set forth in the Subscription
Agreements.
The parties hereby agree as follows:
1. DEFINITIONS.
(a) "REGISTRABLE SECURITIES" means each of the following: (i) the
shares of Common Stock included in the Units to be sold to the Purchasers
pursuant to the Subscription Agreements, and (ii) the shares of Common Stock
issued or issuable upon exercise of the Warrants, provided that Registrable
Securities shall not include any shares which (x) can be publicly resold by
the holders thereof without registration under the Securities Act of 1933, as
amended (the "ACT") or the availability of an exemption thereunder, (y) which
are currently registered under an effective registration statement, or (z)
which have been sold to the public or in a private transaction in which the
transferor's rights under this agreement are not assigned.
(b) "RESTRICTED REGISTRABLE SECURITIES" means the Registrable
Securities until (i) a registration statement covering such Registrable
Securities has been declared effective and they have been disposed of
pursuant to such effective registration statement, (ii) they are eligible for
distribution to the public pursuant to Rule 144 (or any similar provision
then in force) under the Act or (iii) they have been otherwise transferred
and the Company has delivered new certificates or other evidences of
ownership for them not subject to any stop transfer order or other
restriction on transfer (including, without limitation, sale).
1
<PAGE>
(c) "HOLDER(S)" means (i) the Purchasers who are the record owners
of Registrable Securities and/or Restricted Registrable Securities, as
applicable; and/or (ii) the record owners of Registrable Securities and/or
Restricted Registrable Securities, as applicable, to whom registration rights
have been transferred in accordance with Section 10(c) below.
2. MANDATORY REGISTRATION
(a) The Company will use its best efforts to file with the
Securities and Exchange Commission (the "COMMISSION") and to cause to become
effective no later than that date which is 270 days from the Final
Closing(such day is referred to herein as the "EFFECTIVE DATE"), a
registration statement (the "INITIAL REGISTRATION STATEMENT") under the Act
for the offering and sale of the Restricted Registrable Securities, and,
further, the Company shall use its best efforts to keep such Initial
Registration Statement effective through the earliest of: (i) the expiration
date of all the Warrants issued to the Holders, and (ii) the exercise in full
of all Warrants by the Holders, and (iii) the redemption of all Warrants
issued to the Holders by the Company, but in any event, with respect to the
Shares, until such time as the Shares are no longer deemed Restricted
Registrable Securities hereunder (the period during which the Initial
Registration Statement remains effective is hereinafter referred to as the
"Initial Registration Period.")
(b) The Company further agrees, if necessary, to supplement or
make amendments to the Initial Registration Statement and any prospectus
contained therein, if required by the Initial Registration Statement form
utilized by the Company or by the instructions applicable to such
registration form or by the Act or the rules and regulations thereunder, and
the Company agrees to furnish copies of such Initial Registration Statement,
prospectus, supplement or amendment as soon as practicable after its being
used and/or filed with the Commission to the security holders whose
Restricted Registrable Securities are included in the Initial Registration
Statement.
(c) The Company will pay all Registration Expenses (as hereinafter
defined) incurred in connection with the Company's registration obligations
pursuant to this Section 2.
(d) The Company agrees to take whatever actions are reasonably
deemed necessary by First Equity Capital Securities, Inc. (the "PLACEMENT
AGENT") in order to assist the Investors, First Equity, and their agents when
selling securities of the Company in complying with Rule 15c6-1 of the
Securities Exchange Act of 1934, as amended.
(e) The Company will make available to its security holders, as
soon as reasonably practicable, an earnings statement
2
<PAGE>
covering a period of twelve months, commencing on the first day of the fiscal
quarter next succeeding the effective date of each sale of any Restricted
Registrable Securities pursuant to the Initial Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act.
(f) The Company and the Purchasers acknowledge and agree that the
rights of First Equity Capital Securities, Inc. (the "PLACEMENT AGENT") and
any other dealers or registered representatives thereof chosen by the
Placement Agent with the approval of the Company that are members of the
National Association of Securities Dealers, Inc. (each, a "SELECTED DEALER"
and collectively, the "SELECTED DEALERS"), under Section 3 of that certain
Dealer Registration Rights Agreement dated the date hereof by and between the
Company and the Placement Agent (the "DEALER REGISTRATION RIGHTS AGREEMENT"),
include the right of the Placement Agent and/or any Selected Dealer to have
added to and made a part of the Initial Registration Statement the number of
shares of Common Stock of the Company (including those shares included in the
Dealer Warrants and underlying the "Series B Warrants" as such term is
defined in the Dealer Registration Rights Agreement) requested in writing by
the Placement Agent and/or the Selected Dealers. The Placement Agent and
each Selected Dealer shall each be direct third party beneficiaries of this
Section 2 and the rights arising therefrom, and may enforce the provisions of
this Agreement with respect to this Section 2 directly against the Company in
any manner permitted by applicable law, as if the Placement Agent and each
Selected Dealer were signatories hereto.
3. PIGGYBACK REGISTRATION
(a) If, prior to the effectiveness of the Initial Registration
Statement or at any time the Initial Registration Statement is not effective,
any Registrable Securities continue to be Restricted Registrable Securities,
each time that the Company shall propose the registration under the Act of
any shares of Common Stock of the Company, other than a registration relating
to employee benefit plans, or a corporate reorganization or other
transactions under Rule 145, notice of such proposed registration stating the
total number of shares proposed to be the subject of such registration shall
be given to the Holders of Restricted Registrable Securities and Warrants, if
any have not yet been exercised. The Company will use its best efforts to
include in any registration statement filed with the Commission with regard
to such proposed registration the number of Restricted Registrable Securities
specified in writing by any such Holders to it within 20 days after receipt
of said notice, provided that any Holders of any Warrant exercises such of
his Warrants within 20 days after receipt of said notice as is necessary to
have included in the registration statement the shares of Common Stock so
specified by him. Any Holders who
3
<PAGE>
participates in the public offering pursuant to such registration statement
shall be entitled to all the benefits of this Agreement in connection with
any registration hereunder, except as otherwise provided in this Section 3.
The right to registration provided in this Section is in addition to and not
in lieu of the registration rights provided in Section 2 hereof.
(b) All Registration Expenses, as hereinafter defined, in
connection with the offering of securities of the Company pursuant to any
registration statement filed pursuant to this Section 3, whether or not such
registration statement becomes effective under the Act, shall be borne by the
Company and the Holders, provided that the Holders of Restricted Registrable
Securities then being registered shall pay (pro rata between or among the
Holders thereof) to the Company only that portion of such Registration
Expenses attributable to the inclusion in such registration statement of such
Restricted Registrable Securities (i.e., the marginal amount). Such Holders
shall pay all transfer taxes and out-of-pocket expenses incurred by them with
respect to the registration and sale of the shares of Restricted Registrable
Securities owned by them and included in such registration statement.
Notwithstanding the foregoing, in the event the Company fails to file and
cause to become effective, and/or thereafter maintain the effectiveness of,
a registration statement for the Initial Registration Period as provided for
in Section 2 above, all Registration Expenses shall be borne by the Company.
(c) Notwithstanding anything to the contrary in this Section 3,
the Holders of the Restricted Registrable Securities and Warrants shall not
be entitled to include in any registration statement filed pursuant to this
Section 3 Restricted Registrable Securities to the extent such inclusion
would materially and adversely affect the proposed distribution of the Common
Stock in respect of which registration was originally to be effected. The
number of Restricted Registrable Securities to be included by each Holder
shall be allocated in accordance with Section 3(e), below.
(d) The piggyback registration rights provided in this Section 3
may be exercised by the Holders of Restricted Registrable Securities from
time to time with respect to any or all registrations under the Act of Common
Stock of the Company in accordance with the provisions of this Section 3.
(e) In any circumstances in which all of the Restricted
Registrable Securities requested to be included in a registration cannot be
so included as a result of limitations on the aggregate number of shares of
Restricted Registrable Securities that may be so included, the number of
shares of Restricted Registrable Securities that may be so included shall
4
<PAGE>
be allocated among the Holders of Restricted Registrable Securities pro rata
on the basis of the number of shares of Restricted Registrable Securities
that would be held by such Holders, assuming exercise of the Warrants;
provided, however, that if any Holder does not request inclusion of the
maximum number of shares of Restricted Registrable Securities allocated to
him pursuant to the above-described procedure, then the remaining portion of
his allocation shall be reallocated among those requesting Holders whose
allocations did not satisfy their requests pro rata on the basis of the
number of shares of Restricted Registrable Securities which would be held by
such Holders, assuming exercise, and this procedure shall be repeated until
all of the shares of Restricted Registrable Securities which may be included
in the registration have been so allocated. Such allocation shall not operate
to reduce the aggregate number of Restricted Registrable Securities permitted
to be included in such registration.
4. REGISTRATION PROCEDURES
4.1 In connection with each registration provided for in Sections 2 or
3 hereof, the Company will as expeditiously as practicable:
(a) furnish to each seller of Restricted Registrable Securities,
the prospectus included in such registration statement and amendments thereto
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Restricted Registrable Securities owned by
such seller;
(b) use its best efforts to register or qualify the Restricted
Registrable Securities included in any registration statement filed in
accordance with Sections 2 or 3 hereof under such securities or blue sky laws
of such jurisdictions as any such seller reasonably requests and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Restricted Registrable Securities owned by such seller; provided that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (b), (ii) subject itself to taxation in any such jurisdiction by
reason of such registration or qualification of any Restricted Registrable
Securities, or (iii) consent to general service of process in any such
jurisdiction;
(c) use its best efforts to cause the Restricted Registrable
Securities covered by any such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable
the seller or
5
<PAGE>
sellers thereof to consummate the disposition of such Restricted Registrable
Securities;
(d) notify each seller of such Restricted Registrable Securities,
at any time when a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event as a result of which the
prospectus included in any such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Restricted Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(e) use its best efforts to cause all such Restricted Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed, provided that the
applicable listing requirements are satisfied;
(f) make available for inspection by any seller of such Restricted
Registrable Securities, any underwriter participating in any disposition
pursuant to any such registration statement, and any attorney, accountant or
other agent retained by any such seller or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such inspector in
connection with such registration statement. All such records shall be
deemed to be confidential and each seller shall cause the Inspectors to keep
the information therein confidential and not disclose it to third parties
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the release of
such Records is ordered pursuant to regulatory reporting requirements or a
subpoena or other order from a court of competent jurisdiction or (iii) the
filing of such Records as exhibits to such registration statement is required
by the Commission's rules and regulations. Each seller of such Restricted
Registrable Securities agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Records;
6
<PAGE>
(g) in the event the sale of such Restricted Registrable
Securities is pursuant to an underwritten offering, use its best efforts to
obtain a "comfort" letter from the Company's independent public accountants
in customary form and covering such matters of the type customarily covered
by "comfort" letters as the underwriters reasonably request; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission.
4.2 The Company may require, as a condition to its obligations under
this Agreement, that each seller of Restricted Registrable Securities
registered pursuant to Sections 2 or 3 hereof furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
4.3 Each seller of Restricted Registrable Securities registered
pursuant to Sections 2 or 3 hereof agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 4.1(d) hereof, such seller will forthwith discontinue disposition of
such Restricted Registrable Securities pursuant to the registration statement
covering such securities until such seller's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.1(d) hereof,
and, if so directed by the Company, such seller will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then
in such seller's possession, of the prospectus covering such Restricted
Registrable Securities that is current at the time of receipt of such notice.
5. REGISTRATION EXPENSES
Registration Expenses shall be borne as set forth in Sections 2 and 3
hereof. Registration Expenses ("Registration Expenses") shall consist of all
expenses incidental to the Company's performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Restricted Registrable Securities), printing expenses,
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of such securities on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and of its independent certified public
accountants (including the expenses of any
7
<PAGE>
special audit or "comfort" letters required by or incident to such
performance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special
experts retained by the Company in connection with any registration of
Restricted Registrable Securities.
6. INDEMNIFICATION; CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each seller of Restricted
Registrable Securities, its officers and directors and each person who
controls such seller (within the meaning of the Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or amendment or supplement thereto or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made not misleading, and the
Company will reimburse legal or other expenses reasonably incurred by such
seller in investigating or defending any claims relating to or arising from
such untrue statements or omissions, in all cases except insofar as such are
caused by (i) statements or omissions made in reliance upon or contained in
any information with respect to such seller furnished in writing to the
Company by such seller expressly for use therein or (ii) such seller's
failure to deliver a copy of the final prospectus as then amended or
supplemented after the Company has furnished such seller with a sufficient
number of copies of the same, but only if delivery of same is required by law
and if same would have cured the defect giving rise to any such loss, claim,
damage, liability or expense. Such indemnification shall be effective
irrespective of any investigation by any seller.
(b) INDEMNIFICATION BY SELLERS OF RESTRICTED REGISTRABLE
SECURITIES. In connection with any registration statement relating to a sale
of Restricted Registrable Securities, each seller thereof will furnish to the
Company in writing such information and affidavits with respect to such
seller as the Company reasonably requests for use in connection with any such
registration statement (or prospectus contained therein) and will indemnify,
to the extent permitted by law, the Company, its directors, its officers who
sign the registration statement and each person who controls the Company
(within the meaning of the Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged omission of a material
fact required to be stated in such registration statement or prospectus or
any amendment thereof or supplement thereto or necessary to make the
statements therein,
8
<PAGE>
in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with such written information
or affidavits relating to such seller furnished to the Company by such seller
expressly for use therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled
to indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such person will claim indemnification or
contribution pursuant to this Agreement and, unless in the reasonable
judgment of such indemnified party a conflict of interest may exist between
such indemnified party and the indemnifying party, shall permit the
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to such indemnified party. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one counsel for
the indemnified party with respect to such claim. The indemnifying party
will not be subject to any liability for any settlement made without its
consent. Failure of notice by a seller of Restricted Registrable Securities
entitled to indemnification hereunder will not relieve the Company of its
obligations under this Section 6 unless the Company is actually prejudiced
thereby.
(d) CONTRIBUTION
(i) If the indemnification provided for in this Section 6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute (on the basis of relative fault) to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses. The relative fault of such indemnifying and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in
9
<PAGE>
Section 6(c), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. Notwithstanding
the provisions of this Section 6(d)(i), in no case shall any seller of
Restricted Registrable Securities be liable or responsible for any amount in
excess of the net proceeds received by such seller from the sale of the
Restricted Registrable Securities of such seller which are included in any
registration statement contemplated by this Agreement.
(ii) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(iii) If indemnification is available under this Section 6,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 6(a) and (b) without regard to the relative fault
of said indemnifying party or indemnified party.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
(a) No Holder of Restricted Registrable Securities may
participate, pursuant to Section 3 hereof, in any underwritten offering of
Common Stock of the Company, notice of which is given pursuant to Section 3
hereof, unless such owner (i) agrees to sell its Restricted Registrable
Securities pursuant to the underwriting arrangements approved by the Company
and its counsel and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(b) The Company shall have no obligation under Section 3 to the
extent that any underwriter in connection with the registered public offering
reasonably notifies the Company of its determination that the Restricted
Registrable Securities or a portion thereof should be excluded therefrom. In
the event that a portion is to be excluded, the number of Restricted
Registrable Securities to be included by each Holder shall be allocated in
accordance with Section 3(e), above.
8. RULE 144
The Company covenants that it will timely file the reports required to
be filed by it under the Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder, and it will take such further action as
any record owner of Restricted Registrable Securities may reasonably request,
all to the extent required from time to time to enable such owner to sell
Restricted Registrable Securities without
10
<PAGE>
registration under the Act within the limitation of the exemptions provided
by (a) Rule 144 under the Act, as such Rule may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any record owner of Restricted Registrable Securities,
the Company will deliver to such owner a written statement as to whether it
has complied with such requirements.
9. TERMINATION
This Agreement shall terminate on the fifth anniversary of the
final closing (as that term is defined in the Confidential Private Placement
Memorandum dated June 1, 1996). The provisions of Section 6 hereof shall
survive such termination.
10. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of Holders of at least a majority in number of shares of Restricted
Registrable Securities then outstanding affected by such amendment,
modification, supplement, waiver or departure. Such amendment, modification
or supplement, waiver or departure, if consented to in writing by such
majority of Holders, shall thereby amend, modify or supplement, waive or act
to consent to depart from, this Agreement on behalf of all Holders of
Restricted Registrable Securities.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested:
(i) if to a holder of Restricted Registrable Securities, at
the most current address given by such holder to the Company in writing; and
(ii) if to the Company, at its address set forth in Section
11 of the Placement Agency Agreement dated the date hereof by and between the
Company and the Placement Agent. All such notices and communications shall
be deemed to have been duly given when delivered by hand, if personally
delivered; four business days after being deposited in the mail, postage
prepaid, if mailed.
(c) SUCCESSORS AND ASSIGNS. Subject to the following sentence,
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. The rights to cause the
Company to register securities under Section 3 may be transferred or assigned
only to a transferee or
11
<PAGE>
assignee of not less than 1,000 shares of Restricted Registerable Securities
per transfer or assignment (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock
splits and the like), provided that the Company is given written notice at
the time of or within a reasonable time after said transfer or assignment,
stating the name and address of the transferee or assignee and identifying
the securities with respect to which such registration rights are being
transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes in writing the obligations of such transferor
under this agreement.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the Company and the Purchasers shall be en-forceable to the fullest-extent
permitted by law.
(h) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
representations, promises, warranties or undertakings, other than
12
<PAGE>
those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SERACARE, INC.
By: /s/ Jerry L. Burdick
---------------------------------
Jerry L. Burdick
Executive Vice President and
Chief Financial Officer
PURCHASERS:
By: /s/ Jerry L. Burdick
----------------------------------
Title: Attorney-In-Fact
-------------------------------
13
<PAGE>
2ND CLOSING SERACARE, INC. 10/23/96
SCHEDULE OF SUBSCRIPTIONS
<TABLE>
<CAPTION>
NAME UNITS $ AMOUNT # OF SHARES # OF WARRANTS
- --- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
David J. Anderson 3 22,500.00 15,000 7,500
10430 Cueva Del Oso N.E. Check
Albuquerque, NM. 87111
(505) 292-6821
Doherty & Co. 4 30,000.00 20,000 10,000
c/o Kalb Voorhis & Co. Wire
Attn: Mark Criscitello
27 William Street
New York, N.Y. 10005
For Account of:
Doherty & Co.
Account # 142-12310
Doherty Trust B 2 15,000.00 10,000 5,000
c/o Kalb Voorhis & Co. Wire
Attn: Mark Criscitello
27 William Street
New York, N.Y. 10005
For Account of:
Doherty Trust B
Account # 142-12810
Delaware Charter GTY & TR. Co. 1 7,500.00 5,000 2,500
F/B/0 Dr. Steven Glassman, IRA Wire
C/0 Josephthal, Lyon & Ross, Inc.
45 Broadway - 24th Floor
NY, NY 10006
AC# 671-10131-1-7
Mary F. Smith 7 52,500.00 35,000 17,500
2112 Century Park Lane Wire
Los Angeles, California 90067
(310) 552-2047
Guadalupe Lopez & Rosa Lopez 3 22,500.00 15,000 7,500
- - Joint Tenants Check
8365 Cantaloupe Avenue
Panorama City, CA 91402
(818) 892-2625
Delaware Charter Guaranty & Trust Co. 6 45,000.00 30,000 15,000
Custodian f/b/o Ronald Levin - Ira Account
Acct # 022 19045 -1-9-237
Ernst & Co.
One Battery Park Plaza
New York, New York 10004-1478
1
<PAGE>
MSTC Custodian - 14 105,000.00 70,000 35,000
f/b/o Douglas A. Campbell - IRA Rollover
MSTC account number: BM 80000
Attn: Retirement Plans Dept., 10th Floor
One Pierrepont Plaza
Brooklyn, New York 11201
Delaware Charter Guaranty & Trust Co. 1 7,500.00 5,000 2,500
Custodian f/b/o Bernard S. Carrey - Ira Account
Acct # 022 - 20443 - 1 - 5
Ernst & Co.
One Battery Park Plaza
New York, New York 10004-1478
Fidelity Management Trust Co. (IRA Custodian)
f/b/o Adam J. Holiber - IRA Account 4 30,000.00 20,000 10,000
Account 0 114586854
% National Financial Services Corporation
Attn: Customer Securities Processing
200 Liberty St., 5th Floor
New York, New York 10281
Ted M. Goldberg 3 22,500.00 15,000 7,500
16 Vickies Place
Millington, N.J. 07946
The Arel Co. 5 37,500.00 25,000 12,500
C/0 Arnold R. Sollar
805 Third Avenue, Suite 1100
New York, New York 10022
James McConnaughy + Holly McConnaughy
9 Abbey Road 3 22,500.00 15,000 7,500
Darien, CT 06820
Victor Teicher & Co. L.P. Profit Plan V/A Dtd. 10/1/85
f/b/o Elliott H. Herskowitz - Michael E. Antera, Jr. Trustee
% Elliot H. Herskowitz 1 7,500.00 5,000 2,500
251 West 89th Street, Apt. 6F
New York, New York 10024
------- ----------- ----------- -------------
57 $427,500.00 285,000 142,500
</TABLE>
2
<PAGE>
EXHIBIT 6.17
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and neither the
securities nor any interest therein may be offered, sold, transferred, pledged
or otherwise disposed of except pursuant to an effective registration statement
under such Act and such laws or an exemption from registration under such Act
and such laws which, in the opinion of counsel for the holder, which counsel and
opinion are reasonably satisfactory to counsel for this corporation, is
available.
DEALER WARRANT AGREEMENT
This Agreement (the "AGREEMENT") is made and entered into as of September
4, 1996, by and among SERACARE, INC., a Delaware corporation (the "COMPANY"),
FIRST EQUITY CAPITAL SECURITIES, INC., a Delaware corporation (the "PLACEMENT
AGENT"), Kenneth R. Levine and Marshall M. Becker.
W I T N E S S E T H:
WHEREAS, the Company proposes to privately offer (the "PRIVATE OFFERING")
through the Placement Agent and dealers or registered agents thereof that are
members of the National Association of Securities Dealers, Inc. chosen by the
Placement Agent with the approval of the Company (collectively, the "SELECTED
DEALERS"), up to 200 Units (subject to an overallotment option for up to an
additional 80 Units) to individuals and entities (collectively, the
"INVESTORS"), each Unit to consist of five-thousand shares of the Company's
common stock (the "COMMON STOCK"), and two-thousand five-hundred warrants to
purchase an additional share of Common Stock, such right to be evidenced by a
"SERIES A WARRANT", with the Series A Warrants being collectively referred to
herein as the "SERIES A WARRANTS";
WHEREAS, in connection with the proposed Private Offering and pursuant to a
certain Placement Agency Agreement between the Placement Agent and the Company
(the "PLACEMENT AGENCY AGREEMENT"), the Company has agreed to issue to the
Placement Agent (or, at the direction of the Placement Agent, to the Registered
Representatives of the Placement Agent or, to Selected Dealers) certain warrants
(each, a "DEALER WARRANT" and collectively, the "DEALER WARRANTS") to purchase
at an exercise price of $3.00 per Dealer Warrant certain units (each a "DEALER
UNIT" and collectively, the "DEALER UNITS") made up of two shares of the
Company's Common Stock (the "DEALER SHARES") and one warrant, each full warrant
to purchase one share of the Company's Common Stock (the "SERIES B WARRANT
SHARES") at an initial price of $2.75 (each, a "SERIES B WARRANT" and
collectively, the "SERIES B WARRANTS") (the Dealer Warrants and Series B
Warrants are collectively referred to as the "WARRANTS") in an aggregate amount
of Dealer Shares and Series B Warrant Shares equal to twelve percent (12%) of
the shares of Common Stock and Series A Warrants sold to Investors;
1
<PAGE>
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Dealer Warrants and the Series B Warrants (a "Dealer Warrant
Certificate" or collectively the "DEALER WARRANT CERTIFICATES", or a "SERIES B
WARRANT CERTIFICATE" or collectively the "SERIES B WARRANT CERTIFICATES", as
applicable); and
WHEREAS, the Company desires to act as its own warrant agent in connection
with the issuance, registration, transfer and exchange of Warrant certificates
and the exercise of the Warrants;
NOW, THEREFORE, in consideration of the above and foregoing premises and
the mutual promises and agreements hereinafter set forth, it is agreed that:
1. DEALER WARRANT CERTIFICATES: SERIES B WARRANT CERTIFICATES.
(a) (i) Each Dealer Warrant shall entitle the Placement Agent or any
person or entity in whose name the Dealer Warrant shall be registered on the
books maintained by the Company (each, a "DEALER WARRANT HOLDER" and
collectively, the "DEALER WARRANT HOLDERS") to purchase on the exercise thereof
one Dealer Unit consisting of (A) two shares of Common Stock (subject to
adjustment as provided in Section 9 hereof), and (B) one B Warrant subject to
modification and adjustment as provided in Section 9 hereof. Certificates
representing the Dealer Warrants shall be executed by the Company's President or
Chief Executive Officer and attested to by the Company's Secretary or Assistant
Secretary and shall be distributed to the Placement Agent at each closing of the
Private Offering.
(ii) Each whole Series B Warrant shall entitle the Placement
Agent or any person or entity in whose name the Series B Warrant shall be
registered on the books maintained by the Company (each, a "B WARRANT HOLDER"
and collectively the "B WARRANT HOLDERS"; the Dealer Warrant Holders and the B
Warrant Holders are hereinafter sometimes referred to individually as a "WARRANT
HOLDER" and collectively as the "WARRANT HOLDERS") to purchase on the exercise
thereof, one share of Common Stock, subject to modification and adjustment as
provided in Section 9 hereof. Certificates representing the Series B Warrants
shall be executed by the Company's President or Chief Executive Officer and
attested to by the Company's Secretary or Assistant Secretary, shall be
immediately detachable from certificates representing shares of Common Stock,
and shall be distributed to the exercising Dealer Warrant Holder or its assigns
within 10 days following the exercise of the corresponding Dealer Warrant.
(b) Subject to the provisions of Sections 3, 5, and 7 hereof, the
Company shall deliver certificates representing Warrants in required whole
number denominations to Warrant
2
<PAGE>
Holders in connection with any transfer or exchange permitted under this
Agreement. Except as provided in Section 7 hereof, no certificates .shall be
issued except (i) certificates initially issued hereunder, (ii) certificates
issued or. or after their initial issuance date upon the exercise of any Dealer
Warrant or Series B Warrant to evidence the unexercised Dealer Warrants or
Series B Warrants held by the exercising Warrant Holder and (iii) certificates
issued after their initial issuance date, upon any transfer or exchange of
certificates or replacements of lost or mutilated certificates,
2. FORM AND EXECUTION OF DEALER WARRANT CERTIFICATES AND
SERIES B WARRANT CERTIFICATES
(a) The certificates representing the Warrants shall be dated the
date of their issuance, whether on initial transfer or exchange or in lieu of
mutilated, lost, stolen or destroyed certificates. The form of certificate
representing the Dealer Warrants is attached hereto as Exhibit A and the form of
certificate representing the Series B Warrants is attached hereto as Exhibit B.
(b) Each certificate representing the Dealer Warrants shall have set
forth thereon the designation "DW", and each certificate representing the Series
B Warrants Shall have Set forth thereon the designation "WB".
(c) The certificates representing the Warrants shall be manually
sighted on behalf of the Company by a proper officer thereof and shall not be
valid for any purpose unless so signed, In the event any officer of the Company
who executed certificates shall cease to be an officer of the Company such
certificates may be issued and delivered by the Company or transferred by the
Warrant Holders with the same force and affect as though the person who signed
such certificate had not ceased to be an officer of the Company; any certificate
signed on behalf of the Company by any person, who at the actual date of the
execution of such. certificate was a proper officer of the Company, shall be
proper notwithstanding that at the date of execution of this Agreement any such
person was not such an officer.
3. EXERCISE.
(a) (i) Subject to the provisions of Sections 5 and 9 hereof, the
Dealer Warrants, as they may be adjusted as set forth herein, may be exercised
at a price (the "Dealer Warrant Exercise Price") of $3.00 per Dealer Unit, in
whole or is part at any time during the period commencing at the first
anniversary of the date (the "Final Closing Date") of the final closing of the
Private Offering and terminating on the earlier of (i) the date four years after
the final closing of the Private Offering, provided, however, that (x) if the
Dealer Shares and the Series 2 Warrant Shares are not subject to an effective
registration for an
3
<PAGE>
aggregate of 600 days within three years after the final closing of the Private
Offering, then the remaining exercise period under this clause (i) shall be
tolled until the Dealer Shares and the Series B Warrant Shares shall have been
subject to an effective registration for an aggregate of 600 days and (y) in no
event shall the Dealer Warrants terminate under this clause (i) unless a
registration statement covering the Dealer Shares and the Series B Warrant
Shares shall have then been in effect for 45 days prior to such termination, and
(ii) six years from the date of issuance, unless extended by a majority vote of
the Board of Directors for such length of time as they, in their sole
discretion, deem reasonable and necessary. Each date on which a Dealer Warrant
is exercised is hereafter referred to as a "DEALER WARRANT EXERCISE DATE".
(ii) Subject to the provisions of Section 9 hereof the Series B
Warrants, as they may be adjusted as set forth herein, may be exercised at a
price (the "SERIES B WARRANT EXERCISE PRICE") of $2.75 per share of Common
Stock, in whole or in part at any time during the period commencing on the
Dealer Warrant Exercise Date or Dates corresponding to such Series B Warrant (or
Series B Warrants) and terminating on a date ending three (3) years thereafter.
(b) Each Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date (each, an "EXERCISE DATE") of the
surrender for exercise of the certificate representing such warrant. The
exercise form shall be executed by the Warrant Holder thereof or his attorney
duly authorized in writing and shall be delivered together with payment to the
Company at its corporate offices located at 1875 Century Park East, Suite 2130,
Los Angeles, California 90067 (the "CORPORATE OFFICE"), or at any such other
office or agency as the Company may designate, in cash or by official bank or
certified check, of an amount equal to the aggregate Exercise Price, as adjusted
pursuant to Section 9 hereof, in lawful money of the United States of America.
(c) Unless Dealer Shares or Series B Warrant Shares may not be
issued as provided herein, the person entitled to receive the number of Dealer
Shares and/or Series B Warrant Shares deliverable on exercise shall be treated
for all purposes as the holder of such Dealer Shares and/or Series B Warrant
Shares, as applicable, as of the close of business on the Exercise Date. The
Company shall not be obligated to issue any fractional share interest in Dealer
Shares or Series B Warrant Shares issuable or deliverable on the exercise of any
Dealer Warrant or any Series B Warrant or scrip or cash therefore and such
fractional shares shall be of no value whatsoever.
(d) Within ten days after the Exercise Date and in any event prior
to the expiration date of the applicable Dealer Warrant or Series B Warrant, the
Company, at its own expense,
4
<PAGE>
shall cause to be issued and delivered to the person or persons entitled to
receive the same, a certificate or certificates in the name requested by the
holder of such Dealer Warrant or Series B Warrant for the number of Dealer
Shares or Series B Warrant Shares deliverable on such exercise. No adjustment
shall be made in respect of cash dividends on Dealer Shares or Series B Warrant
Shares delivered on exercise of any Dealer Warrant or Series B Warrant. All
shares of Common Stock or other securities delivered upon the exercise of the
Dealer Warrants or the Series B Warrants shall be validly issued, fully paid and
nonassessable.
(e) Neither the Dealer Warrants nor the Series B Warrants shall
entitle the holder thereof to any of the rights of shareholders or to any
dividend declared on the Common Stock unless such holder or holders shall have
exercised the Dealer Warrants or the Series B Warrants, as applicable, prior to
the record date fixed by the Board of Directors for the determination of holders
of Common Stock entitled to such dividends or other rights.
4. REGISTRATION RIGHTS.
The Dealer Warrant Holders and the Series B Warrant Holders shall have
the registration rights under the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder by the Securities
and Exchange Commission (the "COMMISSION"), provided in that certain Dealer
Registration Rights Agreement executed by the Company and the Placement Agent on
the date hereof (the "DEALER REGISTRATION RIGHTS AGREEMENT").
5. RESERVATION OF SHARES AND PAYMENT OF TAXES.
(a) The Company covenants that it shall at all times reserve and
have available from its authorized Common Stock such number of shares as shall
then be issuable on the exercise of all outstanding Dealer Warrants and Series B
Warrants. The Company covenants that all the Dealer Shares and all the Series B
Warrant Shares shall be duly and validly issued, fully paid and non- assessable,
and shall be free from all taxes, liens and charges with respect to the issuance
thereof.
(b) The Company shall pay all documentary, stamp or similar taxes and
other government charges that may be imposed with respect of the issuance of the
Dealer Warrants and the Series B Warrants, and/or the issuance and delivery of
any Common Stock constituting the Dealer Shares or the Series B Warrant Shares
upon exercise of the Dealer Warrants and the Series B Warrants, as applicable.
In the event the Common Stock constituting the Dealer Shares or the shares
issuable upon the exercise of the Series B Warrants are to be delivered in a
name other than the name of the initial Dealer Warrant Holder, no such delivery
shall be made unless the person requesting the same has
5
<PAGE>
paid to the Company the amount of any such taxes, charges, or transfer fees
incident thereto.
6. REGISTRATION OF TRANSFER.
(a) The Dealer Warrant Certificates and the Series B Warrant
Certificates may, subject to provisions of the Federal Securities Laws and any
applicable state securities laws, be transferred in whole or in part.
Certificates to be transferred shall be surrendered to the Company at its
Corporate Office. The Company shall execute, issue and deliver in exchange
therefor the Dealer Warrant Certificates or Series B Warrant Certificates, as
applicable, in the names and amounts that the holder making the transfer shall
have designated in writing. The Company shall keep transfer books at its
Corporate Office which shall register certificates and the transfer thereof. On
due presentment for registration of transfer of any certificate at the Corporate
Office, the Company shall execute, issue and deliver to the transferee or
transferees a new certificate or certificates representing an equal aggregate
number of securities. All such certificates shall be duly endorsed or be
accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company. The established transfer fee for any
registration of transfer of certificates shall be paid by the Warrant Holder or
the person presenting the certificate for transfer.
(b) Prior to due presentment for registration or transfer thereof,
the Company may treat the Registered Holder of any certificate as the absolute
owner thereof (notwithstanding any notations of ownership or writing thereon
made by anyone), and the parties hereto shall not be affected by any notice to
the contrary.
7. LOSS OR MUTILATION.
On receipt by the Company of evidence satisfactory to the Company as
to the ownership of and the loss, theft, destruction or mutilation of any
certificate representing a Warrant, the Company shall execute and deliver in
lieu thereof a new certificate representing an equal number of Dealer Warrants
or Series B Warrants, as applicable. In the case of loss, theft or destruction
of any certificate, the individual requesting reissuance of a new certificate
shall be required to indemnify the Company and, at the request of the Company,
also to post an open-penalty insurance or indemnity bond. In the event a
certificate is mutilated, such certificate shall be surrendered and canceled by
the Company prior to delivery of a new certificate. Applicants for a new
certificate shall also comply with such other regulations and pay such other
reasonable charges as the Company may prescribe.
6
<PAGE>
8. NO REDEMPTION OPTION.
Neither the Dealer Warrants nor the Series B Warrants may be called or
redeemed by the Company.
9. ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF SHARES PURCHASABLE.
For purposes hereof, the term "EXERCISE PRICE" shall mean (i) with
respect to the Dealer Warrants, $3.00, and (ii) with respect to the Series B
Warrants, $2.75. The Exercise Price and the number of shares of Common Stock
purchasable pursuant to the Dealer Warrants and the Series B Warrants shall be
subject to adjustment from time to time as hereinafter set forth in this Section
9; PROVIDED, HOWEVER, that no adjustment shall be made unless such adjustment
would not conflict with the applicable rules of the National Association of
Securities Dealers, Inc.
9.1 ADJUSTMENTS. The number of Dealer Shares and Series B Warrant
Shares purchasable upon the exercise of the Dealer Warrants and the Series B
Warrants and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue
by reclassification of its Common Stock other securities of the Company,
the number of Dealer Shares and Series B Warrant Shares purchasable upon
exercise of the Dealer Warrants and the Series B Warrants, respectively,
immediately prior thereto shall be adjusted so that the holder of any such
Dealer Warrant or Series B Warrant shall be entitled to receive the kind
and number of Common Stock or other securities of the Company which it
would have owned or would have been entitled to receive after the
happening of any of the events described above, had the Dealer Warrants and
the Series B Warrants been exercised immediately prior to the happening of
such event or any record date with respect thereto. Any adjustment made
pursuant to this Paragraph (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any consideration, entitling them to subscribe for or to
purchase shares of Common Stock at a price per share which is lower at the
record date mentioned below than the then Current Market Price (as defined
below), the number of Dealer Shares and Series B Warrant Shares thereafter
purchasable upon the
7
<PAGE>
exercise of a Dealer Warrant and a Series B Warrant, respectively, shall be
determined by multiplying the number of Dealer Shares and Series B Warrant
Shares theretofore purchasable upon exercise of each Dealer Warrant and
Series B Warrant by a fraction, of which the numerator shall be (1) the
number of shares of Common Stock outstanding immediately prior to the
issuance of such rights, options or warrants plus (2) the number of
additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options or
warrants plus (y) the number of shares which the aggregate offering price
of the total number of shares offered would purchase at the Current Market
Price. Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective immediately and
retroactively after the record date for the determination of shareholders
entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or
rights, options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred
to in paragraph (b) above), then, in each case, the number of Dealer Shares
and Series B Warrant Shares thereafter purchasable upon the exercise of the
Dealer Warrants and the Series B Warrants, respectively, shall be
determined by multiplying the number of Dealer Shares and Series B Warrant
Shares, as applicable, theretofore purchasable upon exercise of the Dealer
Warrants and the Series B Warrants, respectively, by a fraction, of which
the numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market
Price on such date minus the then fair value of the portion of the assets
or evidence of indebtedness so distributed or of such subscription rights,
options or warrants applicable to one share. Such adjustment shall be made
whenever any such distribution is made and shall become effective on the
date of distribution retroactive to the record date for the determination
of shareholders entitled to receive such distribution.
(d) No adjustment in the number of Dealer Shares or Series B Warrant
Shares purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the number
of shares then purchasable upon the exercise; PROVIDED, HOWEVER. that any
adjustments which by reason of this Paragraph (d) are not required to be
made immediately shall
8
<PAGE>
be carried forward and taken into account in any subsequent adjustment.
(e) Whenever the number of Dealer Shares or Series B Warrant
Shares purchasable upon the exercise of a Dealer Warrant or Series B
Warrant is adjusted as herein provided, the Exercise Price payable upon
exercise of a Dealer Warrantor Series B Warrant shall be adjusted by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Dealer Warrant
Shares or Series B Warrant Shares purchasable upon the exercise of the
Dealer Warrant or Series B Warrant, respectively, immediately prior to
such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter.
(f) The Exercise Price of the Series B Warrants shall be
automatically and permanently reduced by $.10 per share each if (i) the
Initial Registration Statement (as defined in the Dealer Registration
Rights Agreement) has not become effective on or prior to that date
which is 270 days from the Final Closing Date, (ii) the Commission shall
have issued a stop order suspending the effectiveness of the Initial
Registration Statement and the number of days stop orders have been in
effect, together with the number of days a notice under Section 4.1(d)
of the Dealer Registration Rights Agreement has been issued or required
to be issued, exceeds 180 days, or (iii) (A) the Company for the third
time, notifies or is required to notify the holders of the Warrants
pursuant to Section 4.1(d) of the Dealer Registration Rights Agreement,
or (B) a notice under such Section 4.1(d) is effective or required to be
effective at a time when the aggregate number of days for which all such
notices issued or required to be issued pursuant to such Section 4.1(d)
have been, or were required to be, in effect, exceeds 180 days (270 days
from the Final Closing Date in the case of clause (i), or the date the
third notice is sent or required to be sent or the date on which the
180-day limit is exceeded in the case of clause (ii) or (iii), is each
referred to herein as an "Event Date"). Additionally, the Exercise Price
of each Series B Warrant then outstanding shall be subject to further
downward adjustment in the amount of $.10 each on the same day of each
month following the initial Event Date (or, if there is no numerically
corresponding day in any such subsequent month, then on the last day of
such applicable subsequent month) until the Registration Statement
becomes effective; PROVIDED, HOWEVER, that such adjustments will, in
each case, cease to accrue on the date which (x) the Initial
Registration Statement is declared effective, with respect to the
adjustments for failure to be declared effective by that date which is
270 days from the Final Closing Date, (y) the Initial Registration
Statement is no longer subject to an order
9
<PAGE>
suspending the effectiveness thereof, with respect to adjustments for the
failure to remain effective or (z) a notice issued, or required to be
issued, pursuant to Section 4.1(d) of the Dealer Registration Rights
Agreement is no longer effective or required to be effective, with
respect to adjustments payable pursuant to clause (iii) above. In no
event shall the Series B Warrant Exercise Price be adjusted below $1.50
solely due to this Section 9.1 (f).
(g) Whenever the number of Shares purchasable upon the exercise of a
Warrant or the Exercise Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the holder by first class
mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by the
Board of Directors of the Company (who may be the regular accountants
employed by the Company) setting forth the number of Shares purchasable
upon the exercise of a Dealer Warrant or Series B Warrant, as the case
may be, and the related Exercise Price after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by
which such adjustment was made.
(h) For the purpose of this Subsection 9.1, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement or (ii) any other class of
stock resulting from successive changes or reclassifications of such
Common Stock. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the holder shall become
entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so
purchasable upon exercise of the Dealer Warrant or the Series B Warrant
and the Exercise Price of such securities shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Dealer Shares and
Series B Warrant Shares contained in this Section 9.
(i) Upon the expiration of any rights, options, warrants or
conversion privileges which caused an adjustment under this Section 9.1,
if such shall not have been exercised, the number of Dealer Shares and
Series B Warrant Shares purchasable upon exercise of the Dealer Warrants
and the Series B Warrants and the applicable Exercise Prices, to the
extent the Dealer Warrants or the Series B Warrants have not then been
exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case
may be) on the basis of (A) the fact that the only shares of Common
Stock so issued were the shares of Common Stock, if any, actually
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<PAGE>
issued or sold upon the exercise of such rights, options, warrants or
conversion rights and (B) the fact that such shares of Common Stock, if
any, were issued or sold for the consideration actually received by the
Company upon such exercise plus the consideration, if any, actually
received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion rights whether or not exercised;
PROVIDED, HOWEVER, that no such readjustment shall have the effect of
increasing the applicable Exercise Prices of the Dealer Warrants or
Series B Warrants by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or conversion privileges.
(j) The Company shall have the right to reduce the exercise price
of any or all of the Dealer Warrants or the Series B Warrants at any
time and from time to time that such appears in the Company's best
interests to do so.
9.2 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION.
CONSOLIDATION. ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or reconveyance
to another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall provide that the holder shall
have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of the Dealer Warrant
the kind and amount of shares and other securities and property which he would
have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Dealer Warrant been exercised
immediately prior to such action. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Subsection 9.2 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
9.3 PAR VALUE OF COMMON STOCK. Before taking any action which would
cause an adjustment reducing the Exercise Price below the then par value of the
shares of Common Stock issuable upon exercise of the Dealer Warrant, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Exercise Price.
9.4 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Exercise Price or the number of securities purchasable upon
the exercise of the Dealer Warrant or Series B Warrant, the Warrant certificate
or certificates theretofore or thereafter issued may continue to express the
same
11
<PAGE>
price and number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may at any
time in its sole discretion (which shall be conclusive) make any change in the
form of the Warrant certificate that it may deem appropriate and that does not
affect the substance thereof; and any Warrant certificate thereafter issued,
whether upon registration or transfer of, or in exchange or substitution for, an
outstanding Warrant certificate, may be in the form so changed.
9.5 PRIOR NOTICE TO WARRANT HOLDERS. In the event that at any time
prior to the expiration of the Warrants and prior to their exercise, any of the
following events shall occur:
i. any action which would require an adjustment
pursuant to Sections 9.1 or 9.2; or
ii. a dissolution, liquidation or winding up of the
Company (other than in connection with a
consolidation, merger or sale of its property,
assets and business, as an entirety) shall be
proposed;
then, in any such event, the Company shall cause at least twenty (20) days'
prior written notice to be mailed to each Warrant Holder at the address of such
holder shown on the books of the Company. The notice shall also specify the
date on which the books of the Company shall close or a record be taken for such
stock dividend, distribution or subscription rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up, or dividend, as the case may
be, shall take place, and the date of participation therein by the holders of
shares of Common Stock if any such date is to be fixed, and shall also set forth
such facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the rights of the Warrant Holder.
9.6 DISPUTES. In the event that there is any dispute as to the
computation of the Exercise Price or the number of shares of Common Stock or
other securities required to be issued upon the exercise of the Warrants, the
Company will retain an independent and nationally recognized accounting firm to
conduct an audit of the computations pursuant to the terms hereof involved in
such dispute, including the financial statements or other information upon which
such computations were based. The determination of such nationally recognized
accounting firm shall, in the absence of manifest error, be binding. If there
shall be a dispute as to the selection of such nationally recognized accounting
firm, such firm shall be appointed by the American Institute of Certified Public
Accountants ("AICPA") if willing, otherwise the American Arbitration Association
("AAA"). If the Exercise Price or number of shares of Common Stock as
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<PAGE>
determined by such accounting firm is one percent or more higher or lower than
the calculations thereof computed by the Company, the expenses of such
accounting firm and, if any, of AICPA and AAA, shall be borne completely by the
Company. In all other cases, they shall be borne by the complaining Warrant
Holders, as applicable.
9.7 CURRENT MARKET PRICE. For the purpose of this Section 9, the term
"Current Market Price" shall mean (i) if the Common Stock is traded in the over-
the-counter market or on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), the average per share closing bid prices
of the Common Stock on the 20 consecutive trading days immediately preceding the
date in question, as reported by NASDAQ or an equivalent generally accepted
reporting service, or (ii) if the Common Stock is traded on a national
securities exchange, the average for the 20 consecutive trading days immediately
preceding the date in question of the daily per share closing prices of the
Common Stock on the principal stock exchange on which it is listed, as the case
may be. The closing price referred to in clause (ii) above shall be the last
reported sales price or in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices, in either case on the
national securities exchange on which the Common Stock is then listed.
10. NOTICES.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by confirmed telex, telegram,
facsimile transmission or cable to, in the case of the Company:
SeraCare, Inc.
1925 Century Park East
Suite 1970
Los Angeles, CA 90067
Telecopier: (310) 772-7770
and if to the Warrant Holder at the address of such holder as set forth on the
books maintained by or on behalf of the Company.
11. BINDING AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Warrant Holders. Nothing in this Agreement is intended or shall
be construed to confer upon any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
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<PAGE>
12. FURTHER INSTRUMENTS.
The parties shall execute and deliver any and all such other
instruments and take any and all other actions as may be reasonably necessary to
carry out the intention of this Agreement.
13. SEVERABILITY.
If any provision of this Agreement shall be held, declared or
pronounced void, voidable, invalid, unenforceable, or inoperative for any reason
by any court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other
provision of this Agreement, which shall otherwise remain in full force and
effect and be enforced in accordance with its terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
14. AMENDMENTS/WAIVER.
(a) Except as otherwise provided herein, the provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of Warrants covering at least a majority
in number of Dealer Shares and Warrant Shares affected by such amendment,
modification, supplement, waiver or departure. Such amendment, modification or
supplement, waiver or departure, if consented to in writing by such majority of
holders, shall thereby amend, modify or supplement, waive or act to consent to
depart from, this Agreement on behalf of all Holders of Warrants.
(b) No delay or failure on the part of any party in the exercise of
any right or remedy arising from a breach of this Agreement shall operate as a
waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement.
15. RELEVANT MARKETS.
For the purposes of this Agreement, it is assumed that the Common
Stock is quoted on the National Association of Securities Dealers, Inc. NASDAQ
Small Cap market ("NASDAQ Small Cap"), however, in the event the Common Stock
is:
(a) listed on NASDAQ, NASDAQ Small Cap, a national securities exchange or
admitted to unlisted trading privileges on such exchange, the price of the
Common Stock to be determined during any applicable twenty (20) day trading
period shall be the last reported sale price of the Common Stock on such
exchange; or
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<PAGE>
(b) not quoted on the Bulletin Board listed or admitted to unlisted
trading privileges, the price of the Common Stock to be determined during any
applicable twenty (20) day trading period shall be the high closing bid as
reported on the "pink sheets" by the National Daily Quotation Bureau, Inc.
16. GENERAL PROVISIONS.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OP CALIFORNIA. The headings of this
Agreement are for convenience and reference only and shall not limit or
otherwise affect the meaning hereof.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first set forth above.
SERACARE, INC.
By: /s/ Jerry L Burdick
------------------------------
Title: Executive Vice President
----------------------------
[CORPORATE SEAL]
ATTEST: /s/ Jerry L. Burdick
--------------------------
Secretary
FIRST EQUITY CAPITAL SECURITIES, INC.
By: ______________________________________
Title: ___________________________________
__________________________________________
Kenneth R. Levine
__________________________________________
Marshall M. Becker
16
<PAGE>
EXHIBIT A TO DEALER WARRANT AGREEMENT
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and neither the
securities nor any interest therein may be offered, sold, transferred, pledged
or otherwise disposed of except pursuant to an effective registration statement
under such Act and such laws or an exemption from registration under such Act
and such laws which, in the opinion of counsel for the holder, which counsel and
opinion are reasonably satisfactory to counsel for this corporation, is
available.
DEALER WARRANT CERTIFICATE
SERACARE, INC
Warrant No. DW __________ No. of Dealer Warrants: ____________
This certifies that, for value received and subject to the terms and
conditions set forth herein, ______________ or his registered assign (the
""Warrant Holder") is the registered holder _______________ of Dealer
Warrants.
l. EXERCISE. The warrants evidenced hereby ("Dealer Warrants"), as they
may be adjusted from time to time, may be exercised at a price of $3.00 per
Warrant to acquire two (2) shares of the common stock of SeraCare, Inc. which is
with par value of $0.001 (the "Common Stock" and the "Company," respectively)
and one (1) Series B Warrant to purchase one share of Common Stock at an
exercise price of $2.75. (The Common Stock acquirable upon exercise of the
Dealer Warrants is referred to herein as "Dealer Shares.") If, at the time of
any exercise of a Dealer Warrant, the Dealer Shares deliverable upon exercise of
such Dealer Warrant shall not be registered under the Securities Act of 1933, as
amended (the "1933 Act"), the Company may require, as a condition of allowing
such exercise, that the holder or transferee of such Dealer Warrant furnish to
the Company an opinion of counsel of recognized standing in securities law to
the effect that such exercise may be made without registration under the 1933
Act; provided that, the exercise of the Dealer Warrant shall at all times be
within the control of such holder or transferee, as the case may be, and, if
required by the Company, accompanied by a written representation (i) that the
shares being acquired by the exercise of the Dealer Warrant are being purchased
for investment and not for distribution, (ii) acknowledging that such shares
have not been registered under the 1933 Act, and (iii) agreeing that such shares
may not be sold or transferred unless there is an effective Registration
Statement for them under the 1933 Act, or in the opinion of counsel to the
Company such sale or transfer is not in violation of the 1933 Act. No fractional
shares may be acquired upon exercise hereof.
A-1
<PAGE>
2. TERM OF WARRANT. This Dealer Warrant may be exercised at any time and
from time to time in whole or in part at any time during the three year period
commencing on the first anniversary of the date of the final closing of the
Private Offering and terminating on the earlier of (i) the date three years
after the final closing of the Private Offering, provided, however, that (x) if
the Dealer Shares and the Series B Warrant Shares are not subject to an
effective registration for an aggregate of 600 days within three years after the
final closing of the Private Offering, then the remaining exercise period under
this clause (i) shall be tolled until the Dealer Shares and the Series B Warrant
Shares shall have been subject to an effective registration for an aggregate of
600 days and (y) in no event shall the Dealer Warrants terminate under this
clause (i) unless a registration statement covering the Dealer Shares and the
Series B Warrant Shares shall have then been in effect for 45 days prior to such
termination, and (ii) six years from the date of issuance, unless extended by a
majority vote of the Board of Directors for such length of time as they, in
their sole discretion, deem reasonable and necessary.
3. ADJUSTMENT OF EXERCISE PRICE. The number of shares purchasable upon
exercise of this Dealer Warrant is subject to adjustment in accordance with the
Dealer Warrant Agreement.
4. REDEMPTION. These Warrants may neither be redeemed nor called.
5. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the Dealer
Warrants and the Series B Warrants upon the basis set forth herein will at all
times during the term of this Dealer Warrant be reserved for the exercise
hereof.
6. MANNER OF EXERCISE. Exercise may be made of all or any part of the
Dealer Warrants by surrendering this certificate, with the purchase form to be
provided by the Company, duly executed by the Warrant Holder or by the Warrant
Holder's duly authorized attorney, plus payment of the exercise price therefor
in cash at the office of the Company or its designated assign.
7. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its own
expense, shall cause to be issued, within ten (10) days after exercise of this
Dealer Warrant, a certificate or certificates in the name or names requested by
the Warrant Holder representing the number of shares of Common Stock to which
the Warrant Holder is entitled upon such exercise and representing the Series B
Warrants to which the Warrant Holder is entitled upon such exercise. All shares
of Common Stock and Series B Warrants delivered upon the exercise of this Dealer
Warrant shall be validly issued, fully paid and non-assessable.
A-2
<PAGE>
Irrespective of the date of issuance and delivery of any certificate
representing the shares of Common Stock upon the exercise of this Dealer
Warrant, each person in whose name any such certificate is to be issued will for
all purposes be deemed to have become the holder of record of the Common Stock
acquired on the date on which a duly executed notice of exercise of this Dealer
Warrant and payment for the number of shares exercised are received by the
Company.
Irrespective of the date of issuance and delivery of any certificate
representing the Series B Warrants upon the exercise of this Dealer Warrant,
each person in whose name any such certificate is to be issued will for all
purposes be deemed to have become the holder of record of the Series B Warrant
acquired on the date on which a duly executed notice of exercise of this Dealer
Warrant and payment for the number of Dealer Units (as defined in the Dealer
Warrant Agreement) exercised are received by the Company.
8. REGISTRATION RIGHTS. The Company will use its best efforts to
register and maintain the registration of the Dealer Shares and the Series B
Warrant Shares in accordance with the terms of the Dealer Warrant Agreement and
the Dealer Registration Rights Agreement executed by the Company on even date
herewith.
9. NO RIGHT AS STOCKHOLDER. The Warrant Holder is not, by virtue of his
ownership of this Dealer Warrant, entitled to any rights whatsoever as a
stockholder of the Company.
10. ASSIGNMENT. This Dealer Warrant may not be assigned without providing
the Company an opinion satisfactory to its counsel that an exemption from
registration for the transfer exists.
11. STATE LEGENDS. Residents of Connecticut are advised of the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE
CONNECTICUT UNIFORM SECURITIES ACT, CHAPTER 662 OF THE CONNECTICUT
GENERAL STATUTES, AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND SALE AND CANNOT BE RESOLD UNLESS THEY ARE REGISTERED IN
CONNECTICUT OR EXEMPT FROM REGISTRATION IN CONNECTICUT.
Residents of Pennsylvania are advised of the following:
THE INVESTOR AGREES NOT TO TRANSFER THESE SECURITIES FOR 12 MONTHS
FROM THE DATE OF PURCHASE. (THIS RESTRICTION MAY BE AUTOMATICALLY
WAIVED IN ACCORDANCE WITH SECTION 204.011 OF THE PENNSYLVANIA BLUE
SKY REGULATIONS.)
A-3
<PAGE>
12. WARRANT AGREEMENT. The actual terms and conditions of this Dealer
Warrant are contained in a Dealer Warrant Agreement entered into by and between
the Company and the Warrant Holder, the terms and conditions of which are
incorporated herein by this reference as if fully set forth herein and made a
part hereof. To the extent of any conflict herewith, the terms and conditions of
the Dealer Warrant Agreement shall apply. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Dealer Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to be signed
on its behalf by its President or Senior Vice President, his signature to be
attested to by its Secretary, and its corporate seal to be hereunto affixed
this ________________ day of _____________, 1996.
[ SEAL ] SERACARE, INC.
on behalf of the Company
and as Warrant Agent
By: ___________________________________
Attest: ___________________________
Name: ____________________
Title: ___________________
A-4
<PAGE>
EXHIBIT B TO DEALER WARRANT AGREEMENT
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and neither the
securities nor any interest therein may be offered, sold, transferred, pledged
or otherwise disposed of except pursuant to an effective registration statement
under such Act and such laws or an exemption from registration under such Act
and such laws which, in the opinion of counsel for the holder, which counsel and
opinion are reasonably satisfactory to counsel for this corporation, is
available.
SERIES B WARRANT CERTIFICATE
SERACARE, INC .
Warrant No. WB- __________ No. of B Warrants: ____________
This certifies that, for value received and subject to the terms and
conditions set forth herein, or his registered assign (the "Warrant Holder") is
the registered holder of Series B Warrants.
1. EXERCISE. The warrants evidenced hereby ("Series B Warrants"), as
they may be adjusted from time to time, may be exercised at a price of $2.75 per
Warrant to acquire one (1) share of the common stock of SeraCare, Inc. which is
with par value of $0.001 (the "Common Stock" and the "Company," respectively)
(The Common Stock acquirable upon exercise hereof is referred to herein as
"Warrant Stock.") If, at the time of any exercise of a Series B warrant, the
Shares deliverable upon exercise of such Warrant shall not be registered under
the Securities Act of 1933, as amended (the "1933 Act"), the Company may
require, as a condition of allowing such exercise, that the holder or transferee
of such Warrant furnish to the Company an opinion of counsel of recognized
standing in securities law to the effect that such exercise may be made without
registration under the 1933 Act; provided that, the exercise of the Warrant
shall at all times be within the control of such holder or transferee, as the
case may be, and, if required by the Company, accompanied by a written
representation (i) that the shares being acquired by the exercise of the Warrant
are being purchased for investment and not for distribution, (ii) acknowledging
that such shares have not been registered under the 1933 Act, and (iii) agreeing
that such shares may not be sold or transferred unless there is an effective
Registration Statement for them under the 1933 Act, or in the opinion of counsel
to the Company such sale or transfer is not in violation of the 1933 Act. No
fractional shares may be acquired upon exercise hereof.
2. TERM OF WARRANT. This Series B Warrant may be exercised at any time
and from time to time in whole or in part
B-1
<PAGE>
commencing immediately upon issuance and terminating on the date three years
after the Dealer Warrant Exercise Date (as defined in the Dealer Warrant
Agreement).
3. ADJUSTMENT OF EXERCISE PRICE. The number of shares purchasable upon
exercise of this Series B Warrant is subject to adjustment in accordance with
the Dealer Warrant Agreement.
4. REDEMPTION. These Warrants may neither be redeemed nor called by the
Company.
5. RESERVATION OF COMMON STOCK. The Company agrees that the number of
shares of Common Stock sufficient to provide for the exercise of the Series B
Warrants upon the basis set forth herein will at all times during the term of
this Series B Warrant be reserved for the exercise hereof.
6. MANNER OF EXERCISE. Exercise may be made of all or any part of the
Series B Warrants by surrendering this certificate, with the purchase form to be
provided by the Company, duly executed by the Warrant Holder or by the Warrant
Holder's duly authorized attorney, plus payment of the exercise price therefor
in cash at the office of the Company or its designated assign.
7. ISSUANCE OF COMMON STOCK UPON EXERCISE. The Company, at its own
expense, shall cause to be issued, within ten (10) days after exercise of this
Series B Warrant, a certificate or certificates in the name or names requested
by the Warrant Holder representing the number of shares of Common Stock to which
the Warrant Holder is entitled upon such exercise. All shares of Common Stock
or other securities delivered upon the exercise of this Series B Warrant shall
be validly issued, fully paid and non-assessable.
Irrespective of the date of issuance and delivery of any certificate
representing the shares of Common Stock upon the exercise of this Series B
Warrant, each person in whose name any such certificate is to be issued will for
all purposes be deemed to have become the holder of record of the Common Stock
acquired on the date on which a duly executed notice of exercise of this B
Warrant and payment for the number of shares exercised are received by the
Company.
8. REGISTRATION RIGHTS. The Company will use its best efforts to
register and maintain the registration of the Dealer Shares and the Series B
Warrant Shares in accordance with the terms of the Dealer Warrant Agreement and
the Dealer Registration Rights Agreement executed by the Company on even date
herewith.
9. NO RIGHT AS STOCKHOLDER. The Warrant Holder is not, by virtue of his
ownership of this Series B Warrant, entitled to any rights whatsoever as a
stockholder of the Company.
B-2
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10. ASSIGNMENT. This Series B Warrant may not be assigned without
providing the Company an opinion satisfactory to its counsel that an exemption
from registration for the transfer exists.
11. STATE LEGENDS. Residents of Connecticut are advised of the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE
CONNECTICUT UNIFORM SECURITIES ACT, HAPTER 662 OP THE CONNECTICUT
GENERAL STATUTES, AND RE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND SALE AND CANNOT BE RESOLD UNLESS THEY ARE REGISTERED IN
CONNECTICUT OR EXEMPT PROM REGISTRATION IN CONNECTICUT.
Residents of Pennsylvania are advised of the following.
THE INVESTOR AGREES NOT TO TRANSFER THESE SECURITIES FOR 12 MONTHS
FORM THE DATE OF PURCHASE. (THIS RESTRICTION MAY BE AUTOMATICALLY
WAIVED IN ACCORDANCE WITH SECTION 204.011 OP THE PENNSYLVANIA BLUE SKY
REGULATIONS.
12. WARRANT AGREEMENT. The actual terms and conditions of this Series B
Warrant are contained in a Dealer Warrant Agreement entered into by and between
the Company and the Warrant Holder, the terms and conditions of which are
incorporated herein by this reference as if fully set forth herein and made a
part hereof. To the extent of any conflict herewith, the terms and conditions of
the Dealer Warrant Agreement shall apply. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Dealer Warrant
Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant certificate to be signed
on its behalf by its President or Senior Vice President, his signature to be
attested to by its Secretary, and its corporate seal to be hereunto affixed this
ay of 1996.
[ SEAL ] SERACARE, INC.
on behalf of the Company
and as Warrant Agent
By: _______________________________
Attest: _____________________________
Name: ______________________
Title: _____________________
B-4
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EXHIBIT 6.18
SERACARE, INC.
DEALER REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into on September 4, 1996, by and among SERACARE, Inc., a Delaware corporation
(the "COMPANY"), and those individuals and entities (the "PURCHASERS")
purchasing warrants (the "DEALER WARRANTS") pursuant to the Dealer Warrant
Agreement, dated as of the date hereof, by and between the Company and the
Purchasers, which Dealer Warrants entitle the Purchasers to acquire an
aggregate of 34,500 Dealer Units at an exercisable price of $3.00 per Dealer
Unit. Each Dealer Unit consists of two shares (the "SHARES") of the Company's
Common Stock, with $0.001 par value (the "COMMON STOCK"), and a warrant to
purchase one share of Common Stock exercisable at $2.75 (the "B WARRANTS").
In order to induce the Agent to enter into the Placement Agency Agreement
relating to the offering of the Units (the "PLACEMENT AGENCY AGREEMENT"), the
Company has agreed to provide the registration rights set forth in this
Agreement. Capitalized terms used herein without definition shall have the
meaning set forth in the Placement Agency Agreement.
The parties hereby agree as follows:
1. DEFINITIONS.
(a) "REGISTRABLE SECURITIES" means each of the following: (i) the
shares of Common Stock included in the Dealer Units issuable upon exercise of
the Dealer Warrants (the "DEALER UNIT COMMON STOCK"), whether or not such
Common Stock has been issued and (ii) the shares of Common Stock issuable
upon exercise of the B Warrants, whether or not such B Warrants or the Common
Stock underlying such B Warrants have been issued; provided that Registrable
Securities shall not include any shares which (x) can be publicly resold by
the holders thereof without registration under the Securities Act of 1933, as
amended (the "ACT") or the availability of an exemption thereunder, (y) which
are currently registered under an effective registration statement, or (z)
which have been sold to the public or in a private transaction in which the
transferor's rights under this agreement are not assigned.
(b) "HOLDER(S)" means (i) the record owners of Registrable
Securities (including the record owners of the Dealer Warrants and Series B
Warrants issued pursuant to Section 1(g) of the Placement Agency Agreement);
and (ii) the record owners of Registrable Securities (including the record
owners of the Dealer Warrants and Series B Warrants issued pursuant to
Section 1(g) of the Placement Agency Agreement), as applicable, to whom
registration rights have been transferred in accordance with Section 10(c)
below.
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2. MANDATORY AND DEMAND REGISTRATION RIGHTS.
(a) MANDATORY REGISTRATION RIGHTS. The Company will use its best
efforts to file with the Securities and Exchange Commission (the
"COMMISSION") and to cause to become effective no later than that date which
is 270 days from the Final Closing (such day is referred to herein as the
"EFFECTIVE DATE"), a registration statement (the "INITIAL REGISTRATION
STATEMENT") under the Act for the offering and sale of the Registrable
Securities and the securities registrable pursuant to Section 2(a) of the
Registration Rights Agreement, dated September 4, 1996, by and among the
Company and certain purchasers of Units of the Company (the "PURCHASER
REGISTRATION RIGHTS AGREEMENT"). The Company shall use its best efforts to
keep such Initial Registration Statement effective for the period required
under the Purchaser Registration Rights Agreement.
(b) DEMAND REGISTRATION RIGHTS. If the Company has failed to
register the Registrable Securities in accordance with Section 2(a) above, or
if such Initial Registration Statement is not then effective, and the
majority of the Holders of Registrable Securities shall so request in
writing, but no more than six (6) years after the final closing of the
offering of the Units, the Company shall use its best efforts to effect the
registration of the Registrable Securities under the Act (the "DEMAND
REGISTRATION STATEMENT"). This right may be exercised at any time during the
aforesaid period, but may be exercised one time only. In the event of such a
demand, the Company shall, as expeditiously as practicable, use its best
efforts to effect the registration under the Act of the Registrable
Securities, but in no event shall such Demand Registration Statement become
effective later than 150 days after such demand (the ""EFFECTIVE DATE").
Further, the Company shall use its best efforts to keep the Demand
Registration Statement effective throughout the 180 day period commencing on
the Effective Date. (The period during which the Demand Registration
Statement is in effect shall hereinafter be referred to as the "REGISTRATION
PERIOD".) Only the days during which such Demand Registration Statement is
effective shall be counted for the purpose of the 180 day period referred to
above in this Section 2(b). The Company agrees to promptly notify all
Holders of the (formerly) Registrable Securities upon the effectiveness
thereof.
(c) AMENDMENTS TO DEMAND REGISTRATION STATEMENT. The Company
further agrees, if necessary, to supplement or make amendments to the Demand
Registration Statement and any prospectus contained therein, if required by
the Registration Statement form utilized by the Company or by the
instructions applicable to such registration form or by the Act or the rules
and regulations thereunder, and the Company agrees to furnish copies of each
Demand Registration Statement, prospectus, supplement or amendment prior to
or concurrently with its being used and/or filed with the Securities and
Exchange Commission
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(the "Commission") to the Holders of Registrable Securities making the demand
specified under subsection (b) of this Section 2.
(d) EARNINGS STATEMENT. The Company will make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve months, commencing on the first day of the fiscal
quarter next succeeding the effective date of each sale of any Registrable
Securities pursuant to the Demand Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
(e) The Company will pay all Registration Expenses (as hereinafter
defined) incurred in connection with the Company's registration obligations
pursuant to this Section 2.
(f) The Company agrees to take whatever actions are reasonably
deemed necessary by the Agent in order to assist the Purchasers and their
agents when selling securities of the Company in complying with Rule 15c6-1
of the Securities Exchange Act of 1934, as amended.
3. PIGGYBACK REGISTRATION.
(a) If, prior to the effectiveness of the Initial Registration
Statement or at any time the Initial Registration Statement or a Demand
Registration Statement is not effective, any Registrable Securities continue
to be Registrable Securities, each time that the Company shall propose the
registration under the Act of any shares of Common Stock of the Company,
other than a registration relating to employee benefit plans, or a corporate
reorganization or other transactions under Rule 145, notice of such proposed
registration stating the total number of shares proposed to be the subject of
such registration shall be given to the Holders of Registrable Securities.
The Company will use its best efforts to include in any registration
statement filed with the Commission with regard to such proposed registration
the number of Registrable Securities specified in writing by any such Holders
to it within 20 days after receipt of said notice, provided that any Holders
of any Warrant exercises such of his Warrants within 20 days after receipt of
said notice as is necessary to have included in the registration statement
the shares of Common Stock so specified by him. Any Holder who participates
in the public offering pursuant to such registration statement shall be
entitled to all the benefits of this Agreement in connection with any
registration hereunder, except as otherwise provided in this Section 3. The
right to registration provided in this Section is in addition to and not in
lieu of the registration rights provided in Section 2 hereof.
(b) All Registration Expenses, as hereinafter defined, and any
transfer taxes incurred by the Holders of Registrable
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Securities, in connection with the offering of securities of the Company
pursuant to any registration statement filed pursuant to this Section 3,
whether or not such registration statement becomes effective under the Act,
shall be borne by the Company. Such Holders shall pay all out-of-pocket
expenses incurred by them with respect to the registration and sale of the
shares of Registrable Securities owned by them and included in such
registration statement. Notwithstanding the foregoing, in the event the
Company fails to file and cause to become effective, and thereafter maintain
the effectiveness of, an Initial Registration Statement as provided for in
Section 2 above, all Registration Expenses shall be borne by the Company.
(c) Notwithstanding anything to the contrary in this Section 3, the
Holders of the Registrable Securities shall not be entitled to include in any
registration statement filed pursuant to this Section 3 Registrable Securities
to the extent such inclusion would materially and adversely affect the proposed
distribution of the Common Stock in respect of which registration was originally
to be effected. The number of Registrable Securities to be included by each
Holder shall be allocated in accordance with Section 3(e), below.
(d) The piggyback registration rights provided in this Section 3
may be exercised by the Holders of Registrable Securities from time to time
with respect to any or all registrations under the Act of Common Stock of the
Company in accordance with the provisions of this Section 3.
(e) In any circumstances in which all of the Registrable
Securities requested to be included in a registration cannot be so included
as a result of limitations on the aggregate number of shares of Registrable
Securities that may be so included, the number of shares of Registrable
Securities that may be so included shall be allocated among the Holders of
Registrable Securities pro rata on the basis of the number of shares of
Registrable Securities that would be held by such Holders, assuming exercise
of the Warrants; provided, however, that if any Holder does not request
inclusion of the maximum number of shares of Registrable Securities allocated
to him pursuant to the above-described procedure, then the remaining portion
of his allocation shall be reallocated among those requesting Holders whose
allocations did not satisfy their requests pro rata on the basis of the
number of shares of Registrable Securities which would be held by such
Holders, assuming exercise, and this procedure shall be repeated until all of
the shares of Registrable Securities which may be included in the
registration have been so allocated. Such allocation shall not operate to
reduce the aggregate number of Registrable Securities permitted to be
included in such registration.
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<PAGE>
4. REGISTRATION PROCEDURES
4.1 In connection with each registration provided for in Sections 2 or 3
hereof, the Company will as expeditiously as practicable:
(a) furnish to each seller of Registrable Securities, the prospectus
included in such registration statement and amendments thereto and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(b) use its best efforts to register or qualify the Registrable
Securities included in any registration statement filed in accordance with
Sections 2 or 3 hereof under such securities or blue sky laws of such
jurisdictions as any such seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (b), (ii)
subject itself to taxation in any such jurisdiction by reason of such
registration or qualification of any Registrable Securities, or (iii) consent
to general service of process in any such jurisdiction;
(c) use its best efforts to cause the Registrable Securities
covered by any such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities;
(d) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the Act, of
the happening of any event as a result of which the prospectus included in any
such registration statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(e) use its best efforts to cause all such Registrable Securities
to be listed on each securities exchange on which similar securities issued
by the Company are then listed, provided that the applicable listing
requirements are satisfied;
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(f) make available for inspection by any seller of such
Registrable Securities, any underwriter participating in any disposition
pursuant to any such registration statement, and any attorney, accountant or
other agent retained by any such seller or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such inspector in
connection with such registration statement. All such records shall be
deemed to be confidential and each seller shall cause the Inspectors to keep
the information therein confidential and not disclose it to third parties
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the release of
such Records is ordered pursuant to regulatory reporting requirements or a
subpoena or other order from a court of competent jurisdiction or (iii) the
filing of such Records as exhibits to such registration statement is required
by the Commission's rules and regulations. Each seller of such Registrable
Securities agrees that it will, upon learning that disclosure of such Records
is sought in a court of competent jurisdiction, give notice to the Company
and allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records;
(g) in the event the sale of such Registrable Securities is
pursuant to an underwritten offering, use its best efforts to obtain a
"comfort" letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
"comfort" letters as the underwriters reasonably request; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission.
4.2 The Company may require, as a condition to its obligations under this
Agreement, that each seller of Registrable Securities registered pursuant to
Sections 2 or 3 hereof furnish to the Company such information regarding the
distribution of such securities as the Company may from time to time reasonably
request in writing.
4.3 Each seller of Registrable Securities registered pursuant to Sections
2 or 3 hereof agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.1(d) hereof, such
seller will forthwith discontinue disposition of such Registrable Securities
pursuant to the registration statement covering such securities until such
seller's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4.1(d) hereof, and, if so directed by the Company, such
seller will deliver to the
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Company (at the Company's expense) all copies, other than permanent file copies
then in such sellers possession, of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.
5. REGISTRATION EXPENSES
Registration Expenses shall be borne as set forth in Sections 2 and 3
hereof. Registration Expenses ("Registration Expenses") shall consist of all
expenses incidental to the Company's performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), the fees and expenses incurred in connection with the
listing of such securities on each securities exchange on which similar
securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company and of its independent certified public accountants
(including the expenses of any special audit or "comfort" letters required by or
incident to such performance), securities acts liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and expenses of
any special experts retained by the Company in connection with any registration
of Registrable Securities.
6. INDEMNIFICATION: CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each seller of Registrable
Securities, its officers and directors and each person who controls such
seller (within the meaning of the Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or
preliminary prospectus or amendment or supplement thereto or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made not misleading, and the Company will
reimburse legal or other expenses reasonably incurred by such seller in
investigating or defending any claims relating to or arising from such untrue
statements or omissions, in all cases except insofar as such are caused by
(i) statements or omissions made in reliance upon or contained in any
information with respect to such seller furnished in writing to the Company
by such seller expressly for use therein or (ii) such seller's failure to
deliver a copy of the final prospectus as then amended or supplemented after
the Company has furnished such seller with a
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sufficient number of copies of the same, but only if delivery of same is
required by law and if same would have cured the defect giving rise to any such
loss, claim, damage, liability or expense. Such indemnification shall be
effective irrespective of any investigation by any seller.
(b) INDEMNIFICATION BY SELLERS OF REGISTRABLE SECURITIES. In
connection with any registration statement relating to a sale of Registrable
Securities, each seller thereof will furnish to the Company in writing such
information and affidavits with respect to such seller as the Company
reasonably requests for use in connection with any such registration
statement (or prospectus contained therein) and will indemnify, to the extent
permitted by law, the Company, its directors, its officers who sign the
registration statement and each person who controls the Company (within the
meaning of the Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material
fact or any omission or alleged omission of a material fact required to be
stated in such registration statement or prospectus or any amendment thereof
or supplement thereto or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with such written information
or affidavits relating to such seller furnished to the Company by such seller
expressly for use therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled
to indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such person will claim indemnification or
contribution pursuant to this Agreement and, unless in the reasonable
judgment of such indemnified party a conflict of interest may exist between
such indemnified party and the indemnifying party, shall permit the
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to such indemnified party. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one counsel for
the indemnified party with respect to such claim. The indemnifying party will
not be subject to any liability for any settlement made without its consent.
Failure of notice by a seller of Registrable Securities entitled to
indemnification hereunder will not relieve the Company of its obligations
under this Section 6 unless the Company is actually prejudiced thereby.
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(d) CONTRIBUTION
(i) If the indemnification provided for in this Section 6
from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute (on the basis of relative fault) to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses. The relative fault of such
indemnifying and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to information
supplied by, such indemnifying or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 6(c),
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. Notwithstanding the
provisions of this Section 6(d)(i), in no case shall any seller of
Registrable Securities be liable or responsible for any amount in excess of
the net proceeds received by such seller from the sale of the Registrable
Securities of such seller which are included in any registration statement
contemplated by this Agreement.
(ii) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(iii) If indemnification is available under this Section 6, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 6(a) and (b) without regard to the relative fault
of said indemnifying party or indemnified party.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
(a) No Holder of Registrable Securities may participate, pursuant
to Section 3 hereof, in any underwritten offering of Common Stock of the
Company, notice of which is given pursuant to Section 3 hereof, unless such
owner (i) agrees to sell its Registrable Securities pursuant to the
underwriting arrangements approved by the Company and its counsel and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
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(b) The Company shall have no obligation under Section 3 to the
extent that any underwriter in connection with the registered public offering
reasonably notifies the Company of its determination that the Registrable
Securities or a portion thereof should be excluded therefrom. In the event
that a portion is to be excluded, the number of Registrable Securities to be
included by each Holder shall be allocated in accordance with Section 3(e),
above.
8. RULE 144
The Company covenants that it will timely file the reports required to
be filed by it under the Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder, and it will take such further action as
any record owner of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such owner to sell Registrable
Securities without registration under the Act within the limitation of the
exemptions provided by (a) Rule 144 under the Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any record owner of Registrable Securities,
the Company will deliver to such owner a written statement as to whether it has
complied with such requirements.
9. TERMINATION
This Agreement shall terminate on the sixth anniversary of the final
closing (as that term is defined in the Confidential Private Placement
Memorandum dated June 1, 1996). The provisions of Section 6 hereof shall
survive such termination.
10. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of Holders of at least a majority in number of shares of Registrable
Securities then outstanding affected by such amendment, modification,
supplement, waiver or departure. Such amendment, modification or supplement,
waiver or departure, if consented to in writing by such majority of Holders,
shall thereby amend, modify or supplement, waive or act to consent to depart
from, this Agreement on behalf of all Holders of Registrable Securities.
(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested:
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(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in writing; and
(ii) if to the Company, at its address set forth in Section
11 of the Placement Agency Agreement dated the date hereof by and between the
Company and the Placement Agent. All such notices and communications shall
be deemed to have been duly given when delivered by hand, if personally
delivered; four business days after being deposited in the mail, postage
prepaid, if mailed.
(c) SUCCESSORS AND ASSIGNS. Subject to the following sentence,
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. The rights to cause the
Company to register securities under Sections 2 and 3 may be transferred or
assigned only to a transferee or assignee of not less than 1,000 shares of
Registrable Securities per transfer or assignment (as presently constituted
and subject to subsequent adjustments for stock splits, stock dividends,
reverse stock splits and the like), provided that the Company is given
written notice at the time of or within a reasonable time after said transfer
or assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes in writing the obligations of such transferor
under this agreement.
(d) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) READINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights
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and privileges of the Company and the Purchasers shall be enforceable to the
fullest-extent permitted by law.
(h) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
representations, promises, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SERACARE, INC.
By: /s/ Jerry L. Burdick
-----------------------------------------
Title: Executive Vice President
--------------------------------------
FIRST EQUITY CAPITAL SECURITIES, INC.
By:
-----------------------------------------
Title:
--------------------------------------
--------------------------------------------
Kenneth R. Levine
--------------------------------------------
Marshall M. Becker
12
<PAGE>
MARTIN J. BRILL (State Bar No. 53220)
DOUGLAS D. KAPPLER (State Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Telecopier: (310) 277-7584
Attorneys for Debtors in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA 94-11730-AA Chapter 11
)
AMERICAN BLOOD INSTITUTE, INC., ) (Joint Administration of Case Nos. LA
a Delaware corporation; AVRE, INC., ) 94-11730-AA, LA 94-11736-AA, and LA
a Nevada corporation; and BINARY ) 94-11738-AA)
ASSOCIATES, INC., a Colorado )
corporation, ) [Cases Not Consolidated]
)
Debtors. ) MOTION FOR ORDER CONFIRMING THIRD
) AMENDED JOINT PLAN OF REORGANIZATION
) OF AMERICAN BLOOD INSTITUTE, INC.,
) AVRE, INC. AND BINARY ASSOCIATES, INC.
)
) Date: January 24, 1996
) Time: 10:30 a.m.
) Place: Courtroom "1375"
) Roybal Federal Building
) 255 East Temple Street
- ---------------------------------------) Los Angeles, CA 90012
<PAGE>
TABLE OF CONTENTS
----------------- PAGE
----
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. ABBREVIATED HISTORY OF THESE PROCEEDINGS . . . . . . . . . . . . . 3
III. THE DISCLOSURE STATEMENT AND THE PLAN. . . . . . . . . . . . . . . 5
IV. CONFIRMATION CRITERIA. . . . . . . . . . . . . . . . . . . . . . . 6
A. The Plan Complies With The Applicable
Provisions Of Chapter 11 (Section 1129(a)(1)) . . . . . . . . . 7
1. Section 1122 . . . . . . . . . . . . . . . . . . . . . . . 7
2. Section 1123 . . . . . . . . . . . . . . . . . . . . . . . 9
B. Under Section 1129(a)(2) The Proponents Of The Plan Comply
With The Applicable Provisions Of Chapter 11. . . . . . . . . . 13
C. Under Section 1129(a)(3) The Plan Has Been
Proposed In Good Faith And Not By Any Means Forbidden By Law. . 16
D. Under Section 1129(a)(4) Various Disclosures Have Been Made . . 16
E. Under Section 1129(a)(5) Disclosures Regarding Insiders Have
Been Made. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
F. Regulatory Approval Under Section 1129(a)(6). . . . . . . . . . 17
G. Under Section 1129(a)(7) The Plan Satisfies
The Best Interests Of Creditors Test . . . . . . . . . . . . . 17
H. All Classes Except Class 2 Have Accepted The Plan Or Are Not
Impaired Under The Plan Under Section 1129(a)(8). . . . . . . . 18
I. Acceptance By Class 2 Of The Plan Is Not
Necessary (Section 1129(b)) . . . . . . . . . . . . . . . . . . 19
J. Under Section 1129(a)(9) Priority Payments Are
Treated Appropriately Under The Plan. . . . . . . . . . . . . . 24
K. Under Section 1129(a)(10) At Least One Class
Of Impaired Claims Has Accepted The CCI Plan . . . . . . . . . 25
L. Under Section 1129(a)(11) The Plan Is Feasible . . . . . . . . 26
i
<PAGE>
TABLE OF CONTENTS (CONTINUED)
----------------------------- PAGE(S)
-------
M. Under Section 1129(a)(12), All Fees Payable
Under Section 1930 Of Title 28 Have Been Paid . . . . . . . . 26
N. The Requirements Of Section 1129(a)(13) Have
Been Met . . . . . . . . . . . . . . . . . . . . . . . . . . 27
V. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DECLARATION OF MARTIN J. BRILL . . . . . . . . . . . . . . . . . . . . . . . 29
DECLARATION OF JERRY L. BURDICK . . . . . . . . . . . . . . . . . . . . . . 33
DECLARATION OF STEVEN GREEN . . . . . . . . . . . . . . . . . . . . . . . . 35
DECLARATION OF CHELL CHELLIAH . . . . . . . . . . . . . . . . . . . . . . . 38
ii
<PAGE>
TABLE OF AUTHORITIES
--------------------
CASES PAGE(S)
- ----- --------
IN RE HOLLINGER,
15 B.R. 35 (Bankr. W.D.L.A. 1981) . . . . . . . . . . . . 22,23
IN RE HOTEL ASSOCIATES,
165 B.R. 470 (9th BAP 1994) . . . . . . . . . . . . . . . . . 23
IN RE PINE LAKE VILLAGE APARTMENT CO.,
19 B.R. 819 (Bankr. S.D.N.Y. 1982) . . . . . . . . . . . . . 21
IN RE SULLIVAN,
26 B.R. 677 (Bankr. W.D.N.Y. 1982) . . . . . . . . . . . . . . 7
STATUTES
11 U.S.C. section 503(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . 25
11 U.S.C. section 507(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11 U.S.C. section 507(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 24
11 U.S.C. section 507(a)(3) . . . . . . . . . . . . . . . . . . . . . . . 7,25
11 U.S.C. section 507(a)(4) . . . . . . . . . . . . . . . . . . . . . . . 7,25
11 U.S.C. section 507(a)(5) . . . . . . . . . . . . . . . . . . . . . . . 7,25
11 U.S.C. section 507(a)(6) . . . . . . . . . . . . . . . . . . . . . . . 7,25
11 U.S.C. section 507(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . . 7
11 U.S.C. section 507(a)(8) . . . . . . . . . . . . . . . . . . . . . . . . 25
11 U.S.C. section 544 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 545 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 546 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 548 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 549 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 550 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 551 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11 U.S.C. section 1121 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11 U.S.C. section 1122 . . . . . . . . . . . . . . . . . . . . . . . . . . 7,14
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<PAGE>
TABLE OF AUTHORITIES (CONTINUED)
-------------------------------- PAGE(S)
-------
11 U.S.C. section 1123 . . . . . . . . . . . . . . . . . . . . . . 7, 9, 11, 14
11 U.S.C. section 1123(a) . . . . . . . . . . . . . . . . . . . . . . . . 9-11
11 U.S.C. section 1123(a)(6) . . . . . . . . . . . . . . . . . . . . . . . 14
11 U.S.C. section 1123(b) . . . . . . . . . . . . . . . . . . . . . . . . 11,12
11 U.S.C. section 1124(3) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11 U.S.C. section 1125 . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11 U.S.C. section 1126 . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11 U.S.C. section 1127 . . . . . . . . . . . . . . . . . . . . . . . . . 13,14
11 U.S.C. section 1129(a)(1) . . . . . . . . . . . . . . . . . . . . . . 6,7,13
11 U.S.C. section 1129(a)(2) . . . . . . . . . . . . . . . . . . . . . . 13,15
11 U.S.C. section 1129(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . 16
11 U.S.C. section 1129(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . 16
11 U.S.C. section 1129(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 17
11 U.S.C. section 1129(a)(6) . . . . . . . . . . . . . . . . . . . . . . . . 17
11 U.S.C. section 1129(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . 17
11 U.S.C. section 11l9(a)(8) . . . . . . . . . . . . . . . . . . . . . . . . 18
11 U.S.C. section 1129(a)(9) . . . . . . . . . . . . . . . . . . . . . . 13,24
11 U.S.C. section 1129(a)(9)(B) . . . . . . . . . . . . . . . . . . . . . . 25
11 U.S.C. section 1129(a)(9)(C) . . . . . . . . . . . . . . . . . . . . . . 25
11 U.S.C. section 1129(a)(10) . . . . . . . . . . . . . . . . . . . . . . 25,26
11 U.S.C. section 1129(a)(11) . . . . . . . . . . . . . . . . . . . . . . . 26
11 U.S.C. section 1129(a)(12) . . . . . . . . . . . . . . . . . . . . . . 26,27
11 U.S.C. section 1129(a)(13) . . . . . . . . . . . . . . . . . . . . . . .6,27
11 U.S.C. section 1129(b) . . . . . . . . . . . . . . . . . . . . . 18,19,21,22
11 U.S.C. section 1129(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . 21
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<PAGE>
TABLE OF AUTHORITIES (CONTINUED)
-------------------------------- PAGE(S)
-------
11 U.S.C. section 3020(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 16
28 U.S.C. section 1930 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
RULES
Federal Rule of Bankruptcy Procedure 3019 . . . . . . . . . . . . . . . . . 14
OTHER
5 COLLIER ON BANKRUPTCY
PARA 1122.03[6] at 1122-12 (15th ed. 1983) . . . . . . . . . . . . . . 21
Klee,
"All You Ever Wanted to Know About Cramdown Under the New Bankruptcy
Code, " 53 Am. Bankr. L.J. 133, 141-142, 167-168 (1979) . . . . . . . . . . 21
Pachulski,
"The Cramdown and Valuation Under Chapter 11 of the
Bankruptcy Code, " 58 N.C.L. Rev. 925, 936-938 (1980) . . . . . . . . 21
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<PAGE>
TO THE HONORABLE ALAN M. AHART, UNITED STATES BANKRUPTCY JUDGE; THE UNITED
STATES TRUSTEES; CREDITORS OF THE ABOVE-NAMED DEBTORS AND ALL OTHER
INTERESTED PARTIES:
PLEASE TAKE NOTICE that on January 24, 1996 at 10:30 a.m. in
Courtroom 1375 of the above-entitled Court located at 255 East Temple Street,
Los Angeles, California, American Blood Institute, Inc. ("ABI"), AVRE, Inc.
("AVRE"), and Binary Associates, Inc. ("Binary") (collectively the "Debtors") a
hearing will be held on the Debtors Motion to Confirm the Third Amended
Joint Plan of Reorganization of ABI, AVRE and Binary (the "Motion" and the
"Plan", respectively).
This Motion is made on the grounds that the Plan meets all of the
requirements for confirmation set forth in 11 U.S.C. section 1129(a)(1)-(13)
and should be confirmed by the Court.
This Motion is based on these moving papers, the memorandum of
points and authorities that follows, the supporting declarations attached
hereto, all of the papers and records on file herein, and such further
evidence, both oral and documentary, as may be presented at the hearing on
this Motion.
PLEASE TAKE NOTICE that Local Bankruptcy Rule 111(1)(g) requires
that any response to this Motion be filed with the Clerk of the Court and
served upon the attorneys for the Debtors at the address set forth in the
upper left-hand corner of the first page hereof not later than eleven (11)
days prior to the hearing date. Pursuant to Local Bankruptcy Rule 111(1)(j),
the failure to timely file and serve written opposition may be deemed by the
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<PAGE>
Court to be consent to the granting of the relief requested in the Motion.
DATED: January 3, 1996 ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: Martin J. Brill
--------------------------------
MARTIN J. BRILL
Attorneys for
Debtors in Possession
2
<PAGE>
MEMORANDUM OF POINTS AND AUTHORITIES
------------------------------------
I.
INTRODUCTION
------------
This memorandum and the materials filed concurrently as exhibits
hereto are submitted for the purpose of assisting the Court at arriving at a
fully informed judgment on the issue of whether the plan is worthy of
confirmation. Since its inception, this reorganization proceeding has been a
great challenge to all involved in it. The final act of the reorganization
process is now at hand, and it remains for this Court to determine whether
the Plan meets the statutory requirements for confirmation. This memorandum
attempts to make comprehensive analysis of the economic, financial and legal
issues placed before the Court in this case.
II.
ABBREVIATED HISTORY OF THESE PROCEEDINGS
----------------------------------------
These proceedings were commenced January 7, 1994 by the filing of voluntary
petitions by each of the Debtors under chapter 11 of the Bankruptcy Code.
Early in the case the Court entered an order approving joint administration
of all these cases thereby avoiding duplication of costs and expenses.
By order entered September 21, 1994 the Bankruptcy Court authorized ABI
to obtain up to $4.5 million in credit through the issuance of Debtors'
Notes. The Debtors filed a plan
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based on such financing. ABI initially attempted to place the Notes through
Relco Corporation ("Relco"), an investment banking firm primarily engaged in
restructuring and financing companies in chapter 11. Relco was unable to
place the Notes, and ABI was forced to turn to other sources and withdraw the
Plan based on financing from Relco.
More recently, ABI received a best efforts commitment from First Equity
Capital Corporation ("First Equity") to place $1.2 million in Debtors' Notes
with its clients, which will net approximately $1 million to ABI. Based on
this new financing source, the Debtors filed their Second Amended Joint Plan
on October 26, 1995. In order to meet certain objections to the Second
Amended Joint Plan and its accompanying disclosure statement, the Debtors
filed their Third Amended Joint Plan of Reorganization (the "Plan") and
accompanying disclosure statement. The disclosure statement for the Plan was
approved by the Court by order entered December 28, 1996 pursuant to the
hearing held on December 6, 1995 as containing adequate information, it was
disseminated to creditors and other interested parties together with the
ballots and certain other materials on December 8, 1995. A copy of the order
approving the disclosure statement for the Plan is attached hereto as Exhibit
"A"
As of the date of the filing of this Motion, the $1.2 million in Debtors'
Notes have been substantially subscribed. As is shown more fully in the
disclosure statement to the Plan, full subscription of $1.2 million in
Debtors' Notes will yield sufficient cash to fund the Plan.
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<PAGE>
Meanwhile, CVD Financial Corporation ("CVD") obtained relief from stay to
foreclose on its security effective January 2, 1996 by order entered August
25, 1995. CVD is the major creditor of the Debtors and is secured by the
assets of each of the Debtors and the stock of AVRE and Binary. On November
29, 1995 the Debtors filed a complaint against CVD seeking to enjoin CVD from
proceeding with foreclosure until after the confirmation hearing on the Plan.
Hearing on a preliminary injunction in connection with the complaint
scheduled for December 20, 1995 has been continued to January 17, 1996, and
CVD has agreed that it will not foreclose on its security until after the
hearing on the preliminary injunction.
III.
THE DISCLOSURE STATEMENT AND THE PLAN
As noted above, on November 27, 1995 the Debtors filed the Plan with the
Court. Also on November 27, 1995 the Debtors filed the Disclosure Statement
with respect to the Plan, which Disclosure Statement was approved by this
Court's order entered December 28, 1995.
The Debtors' management worked closely with bankruptcy counsel to prepare
the Disclosure Statement, which the Court has ruled contains adequate
information regarding the Plan. After obtaining approval of the Disclosure
Statement, the Debtors caused materials consisting of the Disclosure
Statement, the form of ballots, the Plan, the Notice of Hearing to Consider
Confirmation of the Plan and Time Fixed for Filing Acceptance or
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<PAGE>
Rejection of the Plan, and a letter from counsel to the Official Creditors
Committee to be disseminated to creditors. A copy of the materials so
disseminated is filed herewith as Exhibit "B."
The Disclosure Statement is quite complete, describing the history and
nature of the Debtors and the reorganization proceedings and describing the
management, business and finances of the Debtors. The Disclosure Statement
also summarizes the Plan, including a forecast of post-reorganization
operations, and has a copy of the Plan attached as an exhibit. The
Disclosure Statement contains the liquidation, implementation and feasibility
analysis that will serve as a cornerstone for showing that the Plan complies
with the confirmation requirements of the Code discussed below. Rather than
repeat material contained is the Disclosure Statement, this memorandum
incorporates by reference the discussion in the Disclosure Statement.
IV.
CONFIRMATION CRITERIA
In order to be confirmed, the Plan must comply with all of the
requirements set forth in 11 U.S.C. sections 1129(a)(1)-(13). This memorandum
demonstrates conclusively that the Plan complies with each of the
requirements set forth in the Code and should therefore be confirmed by this
Court.
-6-
<PAGE>
A. THE PLAN COMPLIES WITH THE APPLICABLE PROVISIONS
OF CHAPTER 11 (SECTION 1129(a)(1)).
Section 1129(a)(1) of the Code requires a plan to comply with the
applicable provisions of Chapter 11. In general, a plan must comply with
sections 1121 and 1123 of the Code. IN RE SULLIVAN, 26 B.R. 677, 678 (Bankr.
W.D.N.Y. 1982).
1. SECTION 1122.
Section 1122 of the Code relates to classification of claims or
interests. Section 1122 (a) requires a plan to place a claim or interest in a
particular class only if the claim or interest is substantially similar to
other claims or interests of such class. Article II of the Plan designates
classes of claims and interests.
Class 1 consists of all allowed unsecured claims entitled to priority
under Section 507(a)(3), (4), (5), (6) or (7) of the Code. Since these
claims are all entitled to priority and all receive identical treatment under
the Plan, and since this class is unimpaired under Section 1124(3) of the
Code because each holder of a class 1 claim will receive cash on the
effective date of the plan equal to the allowed amount of the claim, it is
not necessary to classify separately the various priority claims into
different classes.
Class 2 consists of the allowed secured claim of CVD, estimated at
approximately $1.6 million. The Plan provides that the Class 2 claimant will
be paid $600,000 cash on the effective date, the balance to be amortized and
paid over four years with interest of 14% per annum on the unpaid balance. A
copy of the
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<PAGE>
proposed note to be given CVD is attached hereto as Exhibit "C" and is
incorporated herein by this reference. CVD shall retain any valid security
interest it holds for its claim.
Class 3 consists of all allowed unsecured claims against
ABI. Pursuant to Section 4.4 of the Plan, holders of Class 3 Claims will
share in the distribution of the balance remaining from $200,000 cash after
payment of Class 5 and Class 6 Claims therefrom up to a maximum payment of
Class 3 Claims of $.10 cash for each claim dollar. Holders of Class 3 Claims
will also share 10,000 shares of Reorganized ABI common stock and 50% of any
net affirmative recovery received by Debtors on account of any avoidable
transfers.
Class 4 consists of holders of unsecured Notes of ABI. Holders of
unsecured Notes shall receive 105,275 shares of common stock of reorganized
ABI.
Class 5 consists of all allowed unsecured claims against AVRE. Pursuant
to Section 4.6 of the Plan, holders of Class 5 Claims shall receive $.80 for
each claim dollar in cash as soon as practicable after the effective date.
Class 6 consists of all allowed unsecured claims against Binary pursuant
to Section 4.7 of the Plan, creditors of Binary holding unsecured claims
shall receive $.80 for each claim dollar in cash as soon as practicable after
the effective date.
Class 7 consists of preferred and common equity interests of ABI.
Pursuant to Section 4.8 of the Plan, on the effective date all preferred and
common equity interests of ABI shall be deemed cancelled, annulled and
terminated, and the
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<PAGE>
holders of such interests shall receive no distribution under the Plan on
account of their interests in such class.
Class 8 consists of the holder of the issued and outstanding common stock
of AVRB and Binary. Pursuant to Section 4.a of the Plan, the holder of such
stock, ABI, shall retain all such interests.
2. SECTION 1123.
A plan must also comply with the requirements of Section 1123 of the
Code. Subsection (a) of Section 1123 sets forth seven mandatory
requirements. Under paragraph one, a plan must designate classes of claims
other than claims of a kind specified in paragraphs 1, 2 and 8 of
Section 507(a). Article II of the Plan designates classes of claims and
interests in accordance with this requirement. Claims of the kind specified in
paragraphs 1, 2 and 8 of Section 507(a) are not classified and are treated in
Article III of the Plan.
Paragraph 2 of Section 1123(a) requires that a plan specify any class of
claims or interests that is not impaired under the plan. Article V of the
Plan specifies classes of claims and interests that are not impaired under
the plan thereby satisfying this requirement.
Paragraph 3 of Section 1123(a) requires that a plan specify the treatment
of any class of claims or interests that is impaired under the Plan. Article
IV of the Plan indicates the treatment of the impaired classes of claims and
interests under the Plan.
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<PAGE>
Paragraph 4 of Section 1123(a) requires that a plan provide the same
treatment for each claim or interest of a particular class unless the holder
of particular claim or interest agrees to less favorable treatment of such
particular claim or interact. Articles III and IV of the Plan each specify
identical treatment of all claims and interests in a various class unless a
holder agrees to a different or a lees favorable treatment.
Paragraph 5 of Section 1123(a) requires that a plan provide adequate
means for the execution of the plan. Article VII of the Plan provides the
means for the implementation and execution of the plan, including continued
business operations of the Debtors' entities and the borrowing of up to
$1,175,000 by means of Debtors' Notes.
Paragraph 6 of Section 1123(a) specifies that a plan must provide for the
inclusion in the charter of the debtor of a provision prohibiting the
issuance of non-voting equity securities and providing, as to the several
classes of securities possessing voting power, an appropriate distribution of
such power among such classes. Article X of the Plan, which provides for the
amendment to charter documents of the Debtors, is consistent with these
requirements. Furthermore, the Amendment to the Plan filed contemporaneously
herewith and attached hereto as Exhibit 'D' specifies that the Reorganized
Debtor shall adopt an amendment to its Articles of Incorporation that shall
contain provisions that prohibit the issuance of nonvoting equity securities.
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<PAGE>
Paragraph 7 of Section 1123(a) requires that a plan contain only
provisions that are consistent with the interests of creditors and equity
security holders and with public policy with respect to the manner of
selection of any officer, director or trustee under the plan, and any
successor to such officer, director or trustee. The Plan does not propose to
alter the rights of shareholders with respect to the election of directors in
accordance with applicable law. The exercise of voting rights under
applicable law is consistent with the interests of creditors and equity
security holders and with public policy.
Subsection (b) of Section 1123 specifies five permissive provisions that
may be included in the plan. Paragraph 1 of Section 1123(b) provides that a
plan may impair or leave unimpaired any class of claims, secured or
unsecured, or of interests. The plan does so in Article IV.
Paragraph 2 of Section 1123(b) specifies that, subject to Section 365 of
the Code, a plan may provide for the assumption or rejection of any executory
contract or unexpired lease of the Debtors not previously rejected. Article
IX of the Ply does so. The Debtors, by means of this Notice, request as order
of the Court assuring the following executory contracts consistent with
Article IX of the Plan:
(1) Leases of real property for the following
locations:
a) 611 North Las Vegas Boulevard, Las Vegas,
Nevada;
b) 1174 Fort Campbell Boulevard, Clarksville,
Tennessee;
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<PAGE>
c) 129 and 141 North Spruce, Colorado Springs,
Colorado; and
d) 411 and 413 West 4th Street, Pueblo,
Colorado.
(2) Contracts for sale of source plasma with Alpha
Therapeutics, Inc.
The Debtors are current with respect to their obligations under each of the
contracts or leases specified above and are entitled to assume each such
contract or lease.
Paragraph 3 of Section 1123(b) specifies that a plan may provide for the
settlement or adjustment of any claim or interest belonging to the debtor or
to the estate and for the retention and enforcement by the debtor, by the
trustee, or by a representative of the estate appointed for such purpose of
any such claim or interest. Section 7.5 of the Plan provides that all
property of each of the bankruptcy estates, including but not limited to
claims for relief under 11 U.S.C. Sections 544, 545, 546, 548, 549, 550 and
551, shall be revested in the reorganized debtor of that estate.
Paragraph 4 of Section 1123(b) specifies that a plan may provide for the
sale of all or part of the property of the estate. The provision is
permissive, and the Plan does not provide for any sale of property.
Paragraph 5 of Section 1123(b) specifies that a plan may include any
other appropriate provision not inconsistent with the applicable provisions
of the Code. For example, Article III of the Plan specifies the treatment of
unclassified claims. This is entirely appropriate due to the confirmation
requirements
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<PAGE>
specified in Section 1129(a)(9) of the Code. Article I of the Plan contains
the definitions of various terms of the Plan consistent with the purposes of
the Code. Miscellaneous provisions of the Plan provide for retention of
jurisdiction by the Court, the discharge of the Debtors, and the issuance of
stock. Each of these provisions is consistent with the Code.
Based upon the foregoing analysis, it is respectfully submitted that the
Plan complies with the applicable provisions of Chapter 11, and, therefore,
the requirements of Section 1129(a)(1) are met.
B. UNDER SECTION 1129(a)(2) THE PROPONENTS OF THE
PLAN COMPLY WITH THE APPLICABLE PROVISIONS OF
CHAPTER 11.
The Debtors are the proponents of the Plan. Chapter 11 essentially
requires the proponent to comply with Section 1125 before soliciting
acceptances of the Plan and to comply with Section 1127 for any modification
of a plan.
Section 1125 of the Code specifies that acceptance or rejection of a plan
may not be solicited after the commencement of a case unless at the time of
or before such solicitation there is transmitted to the party being solicited
a summary of the plan and a written disclosure statement approved by the
court. Section 1125 also requires the same disclosure statement to be
transmitted to each holder of the claim or interest of a particular class.
As previously noted, the Debtors obtained entry of an order of this Court
approving the Disclosure Statement. The order specifies that the Disclosure
Statement
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<PAGE>
contains adequate information. SEE Exhibit "A" filed concurrently
herewith.
The attached Declarations of Jerry L. Burdick and Martin J. Brill show
that the Debtors did not solicit the acceptance or rejection of the Plan from
a holder of a claim or interest prior to the dissemination to such holder of
a summary of the Plan and the written Disclosure Statement approved by the
Court in the form of Exhibit "B" filed concurrently herewith. As is shown by
the Declaration of Martin J. Brill attached hereto, the Disclosure Statement
was transmitted to each holder of a claim or interest of a particular class.
Section 1127 of the Code provides that the proponent of the Plan may
modify such Plan at any time before confirmation, but may not modify such
Plan so that such Plan as modified fails to meet the requirements of sections
1122 and 1123 of this Title. Contemporaneously with the Motion, the Debtor
has filed a modification to the Plan, a copy of which is attached as Exhibit
"D" hereto. The modification provides (1) that Barry D. Plost will become
chairman, president and CEO of the Reorganized Debtors on the effective date
of the Plan instead of Alfred Jay Moran, Jr. and (2) that the Reorganized
Debtors shall amend their Articles of Incorporation to prohibit the issuance
of nonvoting equity securities in compliance with section 1123(a)(6) of the
Code.
These amendments conform to and meet the requirements of sections 1122
and 1123 of the Code.
Furthermore, Federal Rule of Bankruptcy Procedure 3019 provides as follows:
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<PAGE>
"In a chapter 9 or chapter 11 case, after a
plan has been accepted and before its
confirmation, the proponent may file a
modification of the plan. If the court finds
after hearing on notice to the trustee, any
committee appointed under the Code, and any
other entity designated by the Court that the
proposed modification does not adversely
change the treatment of the claim of any
creditor or the interest of any equity
security holder who has not accepted in
writing the modification, it shall be deemed
accepted by all creditors and equity security
holders who have previously accepted the
plan."
The modifications described above do not adversely change the rights of
any creditor or interest holder. By this Motion, the Debtor requests that
the Court so find and that the Court order that the modification is deemed
accepted by all creditors and equity security holders who have previously
accepted the Plan.
Based on the foregoing, it is respectfully submitted that the Debtors
have complied with the applicable provisions of Chapter 11. Therefore the
requirements of Section 1129(a)(2) of the Code are met.
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<PAGE>
C. UNDER SECTION 1129(a)(3) THE PLAN HAS BEEN
PROPOSED IN GOOD FAITH AND NOT BY ANY MEANS
FORBIDDEN BY LAW.
Bankruptcy Rule 3020(b)(2) provides that the Court need not require
evidence that a plan has been proposed in good faith and not by any means
forbidden by law if no objection has been filed. The Debtors are not aware
of any objections to the Plan on the basis that it was not proposed in good
faith or was proposed by any means forbidden by law. Therefore, this Court
need not receive evidence on this issue. The Debtors are prepared to offer
testimony to show that the Plan has been proposed in good faith and not by
any means forbidden by law to the extent it becomes an issue.
D. UNDER SECTION 1129(a)(4) VARIOUS DISCLOSURES HAVE
BEEN MADE.
Section 1129(a)(4) of the Code requires that any payment made or promised
by the proponent, debtor or person issuing securities or acquiring property
under a plan for services or for costs and expenses in, or connection with,
the case, or in connection with the plan, and incident to the case, has been
disclosed to the Court and that any such payment, if made before
confirmation, be reasonable or, if fixed after confirmation, be subject to
the approval of the Court as reasonable. Under the Plan, all professionals
rendering services in the case are receiving compensation only with Court
approval; all payments made or promised under the Plan have been disclosed to
the Court in the Plan.
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<PAGE>
E. UNDER SECTION 1129(a)(5) DISCLOSURES REGARDING
INSIDERS HAVE BEEN MADE.
Section 1129(a)(5) of the Code requires the proponent of a Plan to
disclose the identity of any individuals proposed to serve as officers,
directors or voting trustees of the debtor after confirmation. Such
disclosures with respect to the Debtors have been made in Article IX of the
Disclosure Statement. Concurrently with the filing of this Motion, the
Debtors are filing an amendment to the Plan, which provides, in part, that on
the Effective Date Barry D. Plost will replace Alfred Jay Moran, Jr. as
Chairman, President and Chief Executive Officer. The amendment, a copy of
which is attached hereto as Exhibit "D", makes all the disclosures as
required by Section 1129(a)(5).
F. REGULATORY APPROVAL UNDER SECTION 1129(a)(6)
Section 1129(a)(6) of the Code requires the approval of any regulatory
commission of any rate change provided for in a plan. The Plan provides for
no rate change and, to the best knowledge of Debtors' management, no
regulation commission has such jurisdiction.
G. UNDER SECTION 1129(a)(7) THE PLAN SATISFIES THE
BEST INTERESTS OF CREDITORS TEST.
Section 1129(a)(7) of the Code requires, with respect to each class of
claims or interests, that the holder of a claim or interest in such class
will receive or retain under a plan, on account of such claim or interest,
property of a value, as of the affective date of the plan, that is not less
than the holder
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<PAGE>
would receive or retain if the debtor were liquidated under Chapter 7 of the
Code on such date. This provision requires a liquidation analysis commonly
referred to as the "best interest of creditors test."
A liquidation analysis for each of the three debtor entities is presented
in Article XII of the Disclosure Statement. In essence, it shows that
unsecured creditors and shareholders would not recover any consideration for
their claims or interests on liquidation. Under the Plan, general unsecured
creditors of ABI will receive a cash distribution up to a maximum of $.10 on
the dollar, a PRO RATA distribution of common stock of reorganized ABI, plus
50% of any net affirmative recovery received by the Debtors against the
recipients of avoidable transfers. Furthermore, general unsecured creditors
of AVRE and Binary will receive cash in the amount of 80% of the allowed
amount of their claims. Thus, the Plan satisfies the requirements of Section
1129(a)(7).
H. ALL CLASSES EXCEPT CLASS 2 HAVE ACCEPTED THE PLAN
OR ARE NOT IMPAIRED UNDER THE PLAN UNDER SECTION
1129(a)(8).
Section 1129(a)(8) of the Code requires that each class of claims or
interests is either unimpaired under the Plan or has accepted the Plan,
subject to the so called "cramdown" provisions of Section 1129(b). Pursuant
to Section 1126 of the Code a class of claims has accepted a plan if at least
two-thirds an amount and more than one-half in number of those voting have
accepted the plan. A class of interests has accepted a plan if at least
two-thirds in
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<PAGE>
amount of the allowed interests of those voting have accepted the plan.
In this case, all classes and interests other than Class 2 are either
unimpaired or have voted to accept the Plan. A tally of the balloting on the
Plan has been filed contemporaneously with this Motion and a copy of the
tally is attached hereto as Exhibit "E". The tally is summarized in the chart
that follows:
I. ACCEPTANCE BY CLASS 2 OF THE PLAN IS NOT NECESSARY
(SECTION 1129(b)).
Section 1129(b) of the Code states, in pertinent part that:
"(1) notwithstanding Section 510(a) of this Title, if all
of the applicable requirements of subsection (a) of this
Section other than paragraph (8) are met with respect to
a plan, the court, on request of the proponent of the plan,
shall confirm the plan notwithstanding the requirements of
such paragraph if the plan does not discriminate unfairly,
and is fair and equitable, with respect to each class of
claims or interests that is impaired under, and has not
accepted, the plan.
(2) For the purpose of this subsections the condition that a plan be
fair and equitable
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS IMPAIRMENT TOTAL TOTAL NUMBER NUMBER AMOUNT AMOUNT % OF % OF % OF % OF
NUMBER AMOUNT ACCEPTING REJECTING ACCEPTING REJECTING NUMBER NUMBER AMOUNT AMOUNT
VOTING VOTING ACCEPTING REJECTING ACCEPTING REJECTING
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Unimpaired 0
- -----------------------------------------------------------------------------------------------------------------------------------
2 Impaired 1 $1,913,954 0 1 0 1,913,954 0% 100% 0% 100%
- -----------------------------------------------------------------------------------------------------------------------------------
3 Impaired 43 $1,755,627 42 1 1,753,627 2,000 97.67% 2.33% 99.89% .11%
- -----------------------------------------------------------------------------------------------------------------------------------
4 Impaired 1 $150,000 1 0 150,000 0 100% 0% 100% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
5 Impaired 2 $872 2 0 872 0 100% 0% 100% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
6 Impaired 6 $3,890 6 0 3,890 0 100% 0% 100% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
7 Impaired 2 UK 2 0 UK 0 100% 0% 100% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
8 Unimpaired 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
with respect to a class includes the
following requirements: (A) with respect to a
class of secured claims, the plan provides --
(i) (I) that the holders of such claims
retain the liens securing such claims,
whether the property subject to such liens
is retained by the debtor or transferred to
another entity, to the extent of the allowed
amount of such claims; and (II) that each
holder of a claim of such class receive on
account of such claim deferred cash payments
totalling at least the allowed amount of such
claim, of a value, as of the effective date
of the plan, of at least the value of such
holder's interest in the estate's interest
in such property; . . . "
Thus, the acceptance of the Plan by the holder of the Class 2 Claim is
not necessary if the Plan does not discriminate unfairly and provides that
the holder of such claim retains its security interest and receives deferred
cash payments totalling at least the allowed amount of the claim with a value
as of the effective date of the holder's interest in its security.
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<PAGE>
Unfair discrimination under Section 1129(b) only concerns the different
treatment of unsecured claims of equal rank. SEE Pachulski, "The Cramdown and
Valuation Under Chapter 11 of the Bankruptcy Code," 58 N.C.L. Rev. 925,
936-938 (1980) ("...requirement that a plan not 'discriminate unfairly' seems
to be designed to ensure that the defending class is not treated in an
unfairly discriminatory manner vis-a-vis other classes of equal rank."); Klee,
"All You Ever Wanted to Know About Cramdown Under the New Bankruptcy Code,"
53 Am. Bankr. L.J. 133, 141-142, 167-168 (1979) ("the legislative history
states that the [prohibition against unfair discrimination] 'is included for
clarity' and applies in the context of subordinated debentures. The
requirement is intended . . . to permit the court to evaluate the complex
relationship inherent in the relative priority of classes caused by partial
subordination." (footnote omitted)); IN RE PINE LAKE VILLAGE APARTMENT CO.,
19 B.R. 819, 830 (Bankr. S.D.N.Y. 1982) (debtor cannot "cramdown" class
consisting of the unsecured deficiency claim of an undersecured creditor
while treating other unsecured claims differently, "this [Section 1122(b)
which allows a class of reduced claims for administrative convenience] is
the only exception expressed in the Code for separately designating unsecured
claims. Any other designation would have to comply with 11 U.S.C. Section
1129(b)(1) that prescribes as a prerequisite for confirmation that 'the plan
does not discriminates unfairly.'"
CVD's secured claim was properly treated in a separate class from all
other claims because it is secured by different property than any other
claims. 5 COLLIER ON BANKRUPTCY
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<PAGE>
1122.03[6] at 1122-12 (15th ed. 1983) ("ordinarily each holder of an allowed
claim secured by a security interest in specific property of the debtor must
be placed in a separate class."); IN RE HOLLINGER, 15 B.R. 35 (Bankr.
W.D.L.A. 1981) (Chapter 11 plan separately classifying creditors secured by
different properties as property). Thus, since there is no other secured
claim of equal rank with respect to which Class 2 Claims are discriminated
and, to the extent CVD may have any unsecured claim, that unsecured claim
will be treated identically with all other unsecured claims in Class 3, the
Plan does not unfairly discriminate against Class 2.
It is also evident that the Plan satisfies the fair and equitable
requirement by giving CVD a replacement note amortized over four years. It
has long been held that a stretching out of a secured creditor for a
reasonable time with appropriate interest meets the fair and equitable
requirement of S1129(b):
- - . . . where dissenting claimant is receiving
payment in full over a reasonable period of time,
with an appropriate interest or discount factor being
paid, that creditor is receiving all that the law
requires, that is - full payment over a reasonable
period of time . . . Therefore, payment over a
reasonable period of time with an appropriate interest
or discount factor is generally the equivalent of
payment now; or at least, it is a satisfactory
substitute (provided by
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<PAGE>
reorganization law) for any rights
surrendered by the secured claimant pursuant
to the 'cram down' provided in the plan."
IN RE HOLLINGER, 15 B.R. 35 (Bankr. W.D.La. 1981). The Ninth Circuit
standard for determining a fair interest or discount rate has been set forth
IN RE HOTEL ASSOCIATES, 165 B.R. 470 (9th BAP 1994) as follows:
"To determine whether a secured creditor has been
provided the present value of its claim, the
bankruptcy court must make a case-by-case
determination of what interest the reorganizing
debtor would have to pay a creditor in order to obtain
a loan on equivalent terms in the open market.
(citations omitted) The appropriate interest rate
is the prevailing market rate for that type and
quality of loan."
In the instant case, the Debtors propose to pay down the current
balance on the CVD obligation by $600,000 on the Effective Date and issue a
replacement Note for the balance. A copy of the proposed replacement Note is
attached as Exhibit "C". The Note terms are fair and equitable as to CVD and
provide, INTER ALIA, to fully amortize the balance over four years at an
interest rate of 14% per annum.
As the declaration of Steven Green, a partner of the business
consulting firm of Kibel, Green Inc. shows, the 14% rate
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<PAGE>
proposed here actually exceeds the market rate for this type of loan and is
more than fair and equitable -- even generous -- under the Ninth Circuit
standard cited above. Furthermore, CVD will retain all valid security
interests it previously enjoyed. This includes all of the issued stock of
AVRE and Binary. This stock has been valued by the outside accounting firm
of Duitch Franklin & Company at over $2,000,000.00. SEE, Declaration of
Chell Chelliah attached hereto. Accordingly, the CVD obligation, which will
be paid down to approximately $1 million on the Effective Date will be
secured by assets worth at least $2 million. Furthermore, business
projections of the Debtors, which Duitch Franklin & Company have examined and
find reasonable, show the Reorganized Debtor will be able to meet its
obligations under the Plan, including repayment of the replacement Note to
CVD.
Thus, since the Plan does not discriminate unfairly and is fair and
equitable with respect to Class 2, the acceptance of the Plan by Class 2 is
not necessary for the Plan to be confirmed.
J. UNDER SECTION 1129(a)(9) PRIORITY PAYMENTS ARE
TREATED APPROPRIATELY UNDER THE PLAN.
Section 1129(a)(9) of the Code requires particular treatment with
respect to priority claims. Under subparagraph (A), administrative claims and
expenses entitled to priority under Section 507(a)(1) are entitled to cash on
the effective date of the Plan equal to the allowed amount of the claim
unless the holder of the claim agrees to a different treatment. Section 3.1
of the Plan so provides.
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<PAGE>
Under subparagraph (B), a class of claims of the kind specified in
Section 507(a)(3), (4), (5), (6) or (7) is entitled to receive cash on the
effective date of the Plan equal to the allowed amount of such claim unless
the class has voted to accept deferred payment. Under Section 4.1 of the
Plan, Class 1 (consisting of unsecured claims entitled to priority under
507(a)(3), (4), (5), (6) or (7) of the Bankruptcy Code) is entitled to
receive cash on the effective date of the Plan, unless such holder shall have
agreed to a different treatment. Thus, the Plan complies with Section
1129(a)(9)(B).
Under subparagraph (C), each holder of a priority tax claim as
specified in 507(a)(8) is entitled to receive deferred cash payments over a
period not exceeding six years after the date of assessment of such claim of a
value, as of the effective date of the Plan, equal to the allowed amount of
such claim. Under Section 3.2 of the Plan, tax claims against the Debtors shall
be paid in full in cash on the effective date or as soon thereafter as is
practicable. Accordingly, since the Plan provides more favorable treatment
than required by the Code, the Plan complies with Section 1129(a)(9)(C).
K. UNDER SECTION 1129(a)(10) AT LEAST ONE CLASS OF
IMPAIRED CLAIMS HAS ACCEPTED THE CCI PLAN.
Section 1129(a)(10) of the Coda requires that if a class of claims is
impaired under the Plan, at least one class of claims that is impaired under
the Plan has accepted the Plan, determined without including any acceptance
of the Plan by any insider. In this case, Classes 3, 4, 5, 6, and 7, all
impaired
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<PAGE>
classes, have voted to accept the Plan as discussed in Section H of this
memorandum. Also SEE Exhibit "E." Thus the requirements of 1129(a)(10) are
satisfied.
L. UNDER SECTION 1129(a)(11) THE PLAN IS FEASIBLE.
Section 1129(a)(11) requires that the Court find that confirmation of the
Plan is not likely to be followed by the liquidation or the need for further
financial reorganization of the Debtor. In this connection, the Debtors have
provided financial projections for the life of the Plan. Those projections
show that the Debtors will be able to meet all of their post-confirmation
obligations without the further need of financial reorganization. These
projections together with supporting records have been analyzed by the
outside accounting firm of Duitch Franklin & Company and found to be
reasonable. SEE Declaration of Chell Chelliah attached hereto.
Furthermore, the Debtors have obtained the necessary funding to meet its
obligations under the Plan following confirmation. SEE Declaration of Jerry
Burdick attached hereto. Accordingly, the Debtors will be able to make all
payments required under the Plan and the Reorganized Debtors will be able to
operate following confirmation of the Plan without liquidation or the need
for further financial reorganization.
M. UNDER SECTION 1129(a)(12), ALL FEES PAYABLE UNDER
SECTION 1930 OF TITLE 28 HAVE BEEN PAID.
Section 1129(a)(12) requires that the Court find all fees payable under
Section 1930 of Title 28, as determined by the
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<PAGE>
Court at the hearing on confirmation of the Plan, have been paid or the Plan
provides for the payment of all such fees as of the effective date of the
Plan. As is shown by the Declaration of Jerry Burdick, all such fees have
been paid or will be paid prior to the hearing on confirmation of the Plan.
Accordingly, the requirements of 11 U.S.C. Section 1129(a)(12) have been mat.
N. THE REQUIREMENTS OF SECTION 1129(a)(13) HAVE BEEN
MET.
Section 1129(a)(13) requires that the Plan provide for the continuation
after its effective date of payment of all retiree benefits established prior
to confirmation of the Plan for the duration of the period the Debtor is
obligated itself to provide such benefits. In this case, none of the Debtors
have provided retiree benefits at any time prior to confirmation.
Accordingly, the Debtors are not required to make provisions in the Plan
under this section and have therefore met the requirements of Section
1129(a)(13).
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<PAGE>
V.
CONCLUSION
Based on the foregoing discussion, the Debtors respectfully request that
the Plan be confirmed by this Court.
DATED: January 3, 1996 ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: /s/ Martin J. Brill
--------------------------------
MARTIN J. BRILL
Attorneys for Debtors in Possession
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<PAGE>
DECLARATION OF MARTIN J. BRILL
------------------------------
I, MARTIN J. BRILL, do hereby declare as follows:
1. I am an attorney at law duly licensed to practice before this Court.
I am a member of Robinson, Diamant, Brill & Klausner, attorneys for the
Debtors herein. I have personal knowledge of the facts stated herein and if
called as a witness, could and would testify competently thereto.
2. These proceedings were commenced January 7, 1994 by the filing of
voluntary petitions by each of the Debtors under chapter 11 of the Bankruptcy
Code. Early in the case the Court entered an order approving joint
administration of all these cases thereby avoiding duplication of costs and
expenses.
3. By order entered September 21, 1994 the Bankruptcy Court authorized
ABI to obtain up to $4.5 million in credit through the issuance of Debtors'
Notes. The Debtors filed a plan based on such financing. ABI initially
attempted to place the Notes through Relco Corporation ("Relco"), an
investment banking firm primarily engaged in restructuring and financing
companies in chapter 11. Relco was unable to place the Notes, and ABI was
forced to turn to other sources and withdraw the Plan based on financing from
Relco.
4. More recently, ABI received a best efforts commitment from First
Equity Capital Corporation ("First Equity") to place $1.2 million in Debtors'
Notes with its clients, which will net approximately $1 million to ABI.
Based on this new financing source, the Debtors filed their Second Amended
Joint Plan on October 26, 1995. In order to meet certain objections to
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<PAGE>
the Second Amended Joint Plan and its accompanying disclosure statement, the
Debtors filed their Third Amended Joint Plan of Reorganization (the "Plan")
and accompanying disclosure statement. The disclosure statement for the Plan
was approved by the Court on by order entered December 28, 1995 pursuant to a
hearing held December 6, 1995 as containing adequate information and was
disseminated to creditors and other interested parties together with the
ballots and certain other materials on December 8, 1995. A copy of the order
approving the disclosure statement for the Plan is attached hereto as Exhibit
"A".
5. As of the date of the filing of this Motion, the $1.2 million in
Debtors' Notes have been substantially subscribed. As is shown more fully in
the disclosure statement to the Plan, full subscription of $1.2 million in
Debtors' Notes will yield sufficient cash to fund the Plan.
6. Meanwhile, CVD Financial Corporation ("CVD") obtained relief from
stay to foreclose on its security effective January 2, 1996 by order entered
August 25, 1995. CVD is the major creditor of the Debtors and is secured by
the assets of each of the Debtors and the stock of AVRE and Binary. On
November 29, 1995 the Debtors filed a complaint against CVD seeking to enjoin
CVD from proceeding with foreclosure until after the confirmation hearing on
the Plan. Hearing on a preliminary injunction in connection with the company
scheduled for December 20, 1995 has been continued to January 17, 1996, and
CVD has agreed that it will not foreclose on its security until after the
hearing on January 17, 1996.
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<PAGE>
7. After obtaining approval of the Disclosure Statement, on behalf of
the Debtors, I caused materials consisting of the Disclosure Statement, the
form of Ballots, the Notice of Hearing to Consider Confirmation of the Plan
and time for fixed for filing acceptances or rejections of Plan, and a letter
from counsel to the Official Creditors Committee to be mailed to creditors
and interested parties. A true and correct copy of the materials so mailed
is attached hereto as Exhibit "B".
8. These materials were mailed on December 8, 1995 under my direction
to all entities for whom Proofs of Claim or interest have been filed under
the Chapter 11 cases, to the holders of allowed claims, to holders of record
of the Debtors securities, the U.S. Trustee, and to all persona requesting
special notice in the cases.
9. To my knowledge, none of the Debtors solicited votes accepting or
rejecting the Plan prior to December 8, 1995.
10. The Plan proposes to pay down the CVD obligation by $600,000 on the
effective date and give CVD a Replacement Note for the balance amortized over
4 years. A true and correct copy of the proposed Replacement Note la
attached hereto as Exhibit "C" and is incorporated herein by this reference.
11. I am the person responsible for tabulation of the votes accepting or
rejecting the Plan. True and correct copies of the tabulations of the votes
accepting or rejecting the Plan, which votes were received prior to 5:00
p.m., December 29, 1995, are attached hereto as Exhibit "E" and incorporated
herein by
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<PAGE>
this reference. To the beat of my knowledge, the tabulations filed as
Exhibit "E" are accurate and complete.
12. Attached hereto as Exhibit 'D' is a true and correct copy of the
Amendment to the Plan filed by the Debtors, the Plan proponents herein.
I declare under penalty of perjury that the foregoing is true and correct
and that this Declaration was executed on January 2, 1996, at Los Angeles,
California.
/s/ Martin J. Brill
-----------------------------
MARTIN J. BRILL
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<PAGE>
DECLARATION OF JERRY L. BURDICK
-------------------------------
I, JERRY L. BURDICK, do hereby declare as follows:
1. I am the Executive Vice-President, Finance and Administration, and
Chief Financial Officer of each of the Debtor entities. I have personal
knowledge of each of the facts set forth herein and if called as a witness,
could and would testify competently thereto.
2. Pursuant to Article IX of the Plan, the Debtor seeks to assume the
executory contracts and unexpired leases:
(1) Leases of real property for the following locations:
(a) 611 N. Law Vegas Boulevard, Las Vegas,
Nevada;
(b) 1174 Port Campbell Boulevard, Clarksville,
Tennessee;
(c) 129 and 141 N. Spruce, Colorado Springe,
Colorado; and
(d) 411 and 413 West 4th Street, Pueblo,
Colorado.
(2) Contracts for sale of source plasma with Alpha Therapeutics, Inc.
3. The Debtors are current with respect to their obligations under each
of the executory contracts or unexpired leases specified above, and are
entitled to assume such contracts or leases.
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<PAGE>
4. To my knowledge, neither the Debtors herein nor anyone acting on
their behalf solicited votes accepting or rejecting the Plan prior to
December 8, 1995.
5. I am informed and believe that the funding to be provided by First
Equity Capital Corporation is substantially in place and will be fully
subscribed in advance of the date set for hearing on the Disclosure Statement.
6. Each of the Debtors is current with respect to fees payable under
Section 1930 of Title 28 and will make such further payments as determined
by the Court at the hearing on the confirmation of the Plan.
7. I have personally prepared the insolvency analysis contained in the
Disclosure Statement for the Third Amended Joint Plan of Reorganization of
American Blood Institute, Inc.; AVRE, Inc., and Binary Associates, Inc. The
statements contained therein are based on records of the Debtors and
accurately reflect those records. The liquidation analysis shows, and it is
my opinion that in the event of a Chapter 7 liquidation there would be no
funds to distribute to general unsecured creditors in any of the bankruptcy
estates herein.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct and that this Declaration was
executed at Los Angeles, California on January 2, 1996.
/s/ Jerry L Burdick
---------------------------
JERRY L BURDICK
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<PAGE>
DECLARATION OF STEVEN GREEN
---------------------------
I, Steven Green, do hereby declare as follows:
l. I am 42 years of age, a recognized specialist in turnaround crisis
consulting management, and the Co-Pounder and President of the Los
Angeles-based management consulting firm of Kibel, Green Inc. I am known for
taking troubled companies and turning their crisis condition into one of
healthy stability. I have had extensive experience assisting debtor companies
restructure and refinance in Chapter 11 bankruptcy proceedings.
2. Founded in 1984, Kibel, Green Inc. advises a wide range of companies
in a diversified array of industries such as real estate, manufacturing,
aerospace, service, distribution, retail and financial institutions. The
firm has been involved with more than $5 billion of refinancing and has
advised hundreds of companies.
3. Prior to starting Kibel, Green Inc., I directed the turnaround of
several failing companies. Working concurrently as Chief Operating Officer
for four separate companies, one operating under the protection of Chapter 11
bankruptcy proceedings, while the other three experienced varying degrees of
financial and operational difficulties, I was able to reorganize and
stabilize each company. These successful turnarounds earned me a reputation
for creativity, tenacity, and financial acumen, and led me to co-found the
now nationally recognized advisory firm of Kibel, Green Inc.
4. I am one of a handful of individuals across the nation who has both
an undergraduate and graduate degree in
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<PAGE>
entrepreneurship. My undergraduate degree is from Northeastern University,
Boston (1976), and my graduate degree is from the University of Southern,
California (1977). I have taught classes at Cal Poly and given seminars of
"Managing Your Company During Crisis Situations." In addition, I am a
sought-after lecturer and have written published articles covering topics
associated with financially troubled companies.
5. Also active in other educational pursuits, I am a member of the
Advisory Council for the Entrepreneur Program at the University of Southern
California. The Advisory Council is comprised of successful business men and
women who donate their time and money to students in the Entrepreneur
Program. Recently I was honored as the "Outstanding Alumni of the Year" award
by the University of Southern California Entrepreneur Program. I am also a
member of the Los Angeles Chapter of Young Presidents Organization.
6. I am familiar with the obligation owed to CVD Financial Corporation
("CVD") by American Blood Institute, Inc. ("ABI"), AVRE, Inc. ("AVRE") and
Binary Associates, Inc. ("Binary'). I am also familiar with the provisions
made by payment of the CVD obligation in the Third Plan of Reorganization of
ABI, AVRE, and Binary. In that regard, I am familiar with the terms of the
Replacement Note to be given CVD under the Plan.
7. Current market interest rates for secured loans to reorganized
Debtors is in the range of Prime plus 4% to Prime plus 7%, which in today's
market would be 12 1/2% to 15 1/2%.
-36-
<PAGE>
8. It is my opinion that the proposed rate of 14% interest on the CVD
Replacement Note is in the range of current market interest rates for loans
of this nature.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct and that this Declaration was
executed at Los Angeles, California on January 3, 1996.
/s/ Steven Green
--------------------------
STEVEN GREEN
37
<PAGE>
DECLARATION OF S. CHELL CHELLIAH
-------------------------------
I, S. CHELL CHELLIAH, declare as follows:
1. I submit this declaration in support of the THIRD AMENDED JOINT PLAN
OF REORGANIZATION ("PROPOSED PLAN") of American Blood Institute, Inc.
("ABI"); AVRE, Inc. ("AVRE") and Binary Associates, Inc. ("Binary"), Debtors
in Possession herein (collectively "the Debtors") and to address the
objections of CVD Financial Corporation ("CVD") relating to the financial
viability of the PROPOSED PLAN. I am a member of Duitch, Franklin & Co.,
("DF&Co.") Certified Public Accountants and Business Consultants, which has
been retained by the Debtors as financial consultants subject to
authorization by the United States Bankruptcy Court. The facts stated herein
are based on my own personal knowledge, except those on information and
belief, and as to those facts, I am informed and believe that they are true.
2. I am a Certified Public Accountant, a Certified Fraud Examiner, a
Certified Insolvency and Reorganization Accountant and the head of the
Litigation Support and Insolvency Services Group of DF&Co. I have spent the
last fourteen years in public accounting as an investigative accountant,
financial consultant and auditor with an international firm as well as with
DF&Co. During this time I have performed numerous audits, business
valuations, due-diligence reviews including financial viability studies and
collateral reviews for buyers of businesses and finance corporations,
directed Chapter 7 liquidations, Chapter 11 plans of reorganization and state
court receiverships, including litigation support services as accountant to
the trustee, examiner, creditors' committee, debtor in possession and
receiver. Further details regarding my background and qualifications can be
found in my resume, a true and correct copy of which is attached as Exhibit 7
and is incorporated herein by this reference.
3. This declaration sets forth my opinions as an independent accountant
concerning the reasonableness of the underlying assumptions of the Debtors
financial projections and the related impact on the overall financial
viability of the PROPOSED PLAN. Based on the Debtors financial projections, I
have also opined on the estimated collective value of the stock of AVRE and
Binary. Furthermore, I have investigated the issues and objections raised by
CVD pertaining to certain financial aspects of the PROPOSED PLAN. The outcome
of these investigations and my opinion on the validity of these issues
-l-
<PAGE>
and concerns are also set forth in this declaration. In forming these
opinions, I have relied only on the types of information upon which I and
other persons within my area of expertise customarily and necessarily rely
upon.
4. Specifically, I have relied primarily upon my personal inspection of
the past financial history, disclosure statement, PROPOSED PLAN, the Debtors
financial projections, articles and statistics published by the American
Blood Resources Association ("ABRA") on the plasma and plasma products
industry, discussions with Mr. Alfred J. Moran, Jr., Mr. Jerry L. Burdick and
Mr. Brian Olsen, the key personnel of the Debtors ("Management").
OVERVIEW
5. Based on my personal inspection and investigation of the Debtors
financial history, future outlook and the plasma industry, it is my opinion
that the underlying assumptions of the Debtors projections, as reflected in
the disclosure statement (see Exhibit 6) and PROPOSED PLAN, are reasonable.
Based on this, it is my opinion that the PROPOSED PLAN is viable with respect
to these aspects. The estimated total collective value of the stock of AVRE
and Binary, based on the Debtors financial projections, is in my opinion,
in excess of $2,000,000. The issues and objections raised by CVD, relating
to the financial viability of the PROPOSED PLAN, were investigated (addressed
in detail below) and were found to be without merit. The financial
projections were prepared by Management of the Debtors and are based upon
assumptions which I believe are reasonable. Nevertheless, no assurance can
be given that any of the results or events described in the PROPOSED PLAN and
the Debtors financial projections will occur in the manner stated and at
the predicted times. Actual results may vary from projected results.
BACKGROUND
6. ABI was incorporated in 1986 and was initially engaged in the business
of whole blood collection and distribution on a "for profit" basis, which
proved to be unprofitable. The current Management team was brought in 1993,
to perform an in-depth analysis of the business and to formulate and
implement corrective measures. After completing the analysis, the Management
decided to change the focus of the business from whole blood to the more
profitable plasma collection business.
-2-
<PAGE>
Accordingly, ABI obtained financing and acquired the six plasma collection
centers (AVRE and Binary) which now form the core business of the Debtors.
The Debtors product is source plasma. Source plasma is plasma collected from
humans. Plasma is the liquid part of blood and is collected with a procedure
similar to giving blood. The clear plasma is mechanically separated from the
cellular elements of the blood (such as red and white blood cells and
platelet) through centrifugation and/or membrane filtration at the time of
the donation. These cellular elements are then returned to the donor as part
of the same procedure. The process of collecting plasma is known as
plasmapheresis. Because blood cells are returned, it is possible for
individuals to donate plasma more frequently than whole blood. Donations of
plasma can be made up to twice a week or 104 times per year by an individual
pursuant to FDA rules (medically, a donor can give 182 times a year). Most
regular donors give between 40 to 60 times per year. The six plasma centers
of the wholly owned subsidiaries (AVRE and Binary) of ABI are currently
operating under the d.b.a. SeraCare. The name SeraCare is registered with the
United States Patent and Trademark Office. Management anticipates that after
emergence from Chapter 11, ABI will file for a name change from ABI to
SeraCare, Inc. The locations of the six plasma collection centers are:
a) Las Vegas, Nevada
b) Phoenix, Arizona
c) Colorado Springs, Colorado (two centers)
d) Pueblo, Colorado
e) Clarksville, Tennessee
The Debtors filed for protection under Chapter 11 of the Federal Bankruptcy
Code on January 7, 1994 when the secured lender (CVD) called a default and
attempted to foreclose on the six plasma collection centers.
7. Based on the foregoing, the factors that should be taken into
consideration in reviewing the financial history of the Debtors are:
(a) ABI's business changed dramatically in late 1993 and 1994
from whole blood to plasma
-3-
<PAGE>
(b) The change was achieved through acquisition of six plasma
collection centers via two wholly owned subsidiaries, AVRE, Inc.
and Binary Associates, Inc.
(c) During 1994 and early 1995 Management has essentially completed the
internal restructuring of the plasma operations which included;
structural and cosmetic upgrades to the centers; personnel changes
and improved marketing efforts.
(d) Internal restructuring would have impacted the immediate revenue and
profitability of the business whilst in transition.
(e) The later period in 1995 would therefore, be more indicative of the
future potential and profitability of the Debtors.
PLASMA INDUSTRY OVERVIEW
8. The source plasma is sold to fractionators who process the plasma
into two primary groups of plasma products; injectible and non-injectible.
The fractionators process the collected plasma through two sterilization
processes which are specifically designed to kill bacterial or viral
occurrences. Because of the commingling of plasma from various suppliers and
the sterilization process, the fractionators bear substantially all risks of
plasma received by end users.
9. Specialty plasmas generally contain high concentrations of specific
antibodies and are used primarily to manufacture immune globulin therapeutic
products, which bolster the immunity of patients or treat certain immune
system disorders. The Debtors currently collect and sell two specialty
plasmas, Cytomegalovirus Antibody Plasma ("CMV") and Tetanus antibody plasma.
The Debtors intends to place a greater emphasis on the collection of
specialty plasmas by identifying potential specialty plasma donors through
screening and testing procedures, and by developing more FDA-licensed
programs to inoculate donors.
10. Depending on the rarity of the antibody or medical history of the
donor, the pricing for specialty plasmas currently range from $80 to $3,500
per liter. The average spot price of source plasma is currently
approximately $76. Donors are typically paid from $15 to $25 per visit. The
source plasma industry has experienced a number of fluctuations in the supply
and demand cycles. The market factors driving the plasma industry include:
-4-
<PAGE>
a) The expanded use of immune globulins to prevent and treat
disease.
b) The worldwide plasma shortage.
c) Extensive public concern over the safety of blood products.
d) An increase in regulatory control over the collection and testing
of plasma.
A worldwide shortage of plasma began in 1991, driven partly by the increased
need for plasma components to treat larger and older populations, and partly
by a diminished pool of donors that resulted from more restrictive testing
and screening requirements imposed by regulatory authorities. In 1991 the
FDA required mandatory screening for Hepatitis C, thereby disqualifying
donations from a significant portion of the then existing donor base.
Another market factor has been the increasing concern over HIV and other
viruses, which has led to increased testing and higher scrutiny.
11. The source plasma is sold to fractionators. The five leading
fractionators in the U.S. are:
a) Alpha Therapeutic Corporation
b) Armour Pharmaceutical
c) Miles Laboratories
d) Hyland Therapeutics
e) North American Biologicals, Inc.
The Debtors generally sell their plasma (approximately 32% currently) under
contracts ranging from one to three years which allow for annual pricing
renegotiations. Pricing for product deliveries is generally mutually agreed
to prior to the beginning of the contract year and fixed for that year.
Consequently, the Debtors may be adversely or beneficially affected if,
costs of producing and selling plasma rise or fall during the year, as a
result of changes in governmental regulation, changes in donor fees or other
factors. In fact the Debtors operations were adversely impacted in April
1995 due to a surprise curtailment in volume by their main contractual
customer (see section on Current Operations).
12. The total number of plasma centers in the U.S. was estimated at 440
as of February 1994. Total collections of plasma in the U.S. for the
comparable period approximated 8,100,000 liters which approximates to
18,400 liters per center per year. The industry is fairly evenly distributed
with large numbers of small operators and three larger operators with greater
than 30 centers (see below) . These
-5-
<PAGE>
organizations would form the main competitors to the Debtors operations.
Note that the larger competitors are also the main contractual customers of
the Debtors:
--------------------------------------------------------------------
MAIN COMPETITORS % of Number of
(As of February 1994) Total Centers
--------------------------------------------------------------------
Alpha Therapeutic 15% 68
North America Biological 13% 59
SeraTec 8% 33
Miles 4% 17
Plasma Alliance 5% 21
Community 3% 15
Plasma Services 3% 12
ARC 3% 14
Assoc. Bioscience 2% 8
SERACARE 1% 6
All Others (smaller or equivalent) 43% 187
--------------------------------------------------------------------
Total number of centers in the U.S. 100% 440
--------------------------------------------------------------------
13. Donors vary depending upon the location of the centers as well as
the donor's economic status. Donors are typically paid from $15 to $25 per
visit. They commonly include blue collar workers, housewives, college
students and military personnel. Ages range from 18 to 60, with the
predominant number being white males under 30 and middle-aged housewives.
Typically 20% are females, 22% are college students, 77% are Caucasians and
85% are below 40 years of age. Medically, a donor could give 182 times a
year; however, FDA standards restrict the frequency to twice a week or 104
times per year. Most regular donors give between 40 to 60 times per year.
Quality Plasma Program certification now excludes drug or alcoholic addicts
or homeless persons by requiring proof of permanent address as well as
alcohol and drug use testing.
14. The Debtors has qualified all six centers for Quality Plasma Program
("QPP") certification by the American Blood Resources Association. Within the
past five years, ABRA has created this certification process which has been
successful in upgrading the U.S. plasma collection industry. Examples of the
strict rules which are enforced by the FDA, state authorities and ABRA
-6-
<PAGE>
include facilities upgrade, high operating standards, strict donor screening
for drugs and disease, verified addressess for all donors, use of a national
registry of deferred donors and viral reactive rate within prescribed limits.
CURRENT OPERATIONS
15. The Debtors six plasma collection centers currently collect
approximately 9,500 liters of plasma per month (114,000 liters per annum or
19,000 liters per center per annum). Approximately thirty two percent (32%)
of this plasma is sold under a long term contract to Alpha Therapeutics
Corporation, a subsidiary of Green Cross Corporation of Japan. Alpha
Therapeutics is one of the major companies in the plasma collection,
fractionation and product distribution businesses in the U.S. Approximately
forty two percent (42%) of the Debtors plasma is sold through brokers to
European fractionators. Approximately twenty six percent (26%) of the
Debtors collected plasma is sold as specialty plasma (Hyperimmune
plasma-Tetanus and CMV) to domestic customers.
16. The actual operating results for the ten month period to October 31,
1995 were as follow (See Exhibit 1 and 2):
<TABLE>
<CAPTION>
TOTAL TO 10/95 PER CENTER PER CENTER PER MONTH
<S> <C> <C> <C>
Revenue $5,454,000 $909,000 $91,000
Net operating Profit $215,000 $36,000 $4,000
Liters of Plasma 95,000 16,000 1,583
Price per liter $57 $57 $57
</TABLE>
[Chart]
-7-
<PAGE>
17. The actual results of the Debtors for the 10 month period to October
31, 1995 (for the existing six centers), show that the months April, May,
June, and July were abnormally low compared to the months January, February,
March, August, September and October of 1995 (See Exhibit 1). This reduction
reflects the fact that Alpha Therapeutics, for the first time in ten years
exercised its contractual option to decrease its purchase of source plasma
volumes by twenty five percent (25%) for six months. The Debtors Management
used this opportunity to negotiate a CMV Hyperimmune program and a Tetanus
hyperimmune stimulation program with North American Biologicals,
Incorporated; thus, more than compensating for the twenty five percent (25%)
shortfall in volume, at a $2.00 per liter increase in margin for Tetanus and
an $8.00 per liter increase in margin for CMV hyperimmune plasma. The time
it took to initiate the hyperimmune programs negatively impacted earnings;
however, as can be seen, beginning with September 1995, the earnings
recovered to near first quarter actual for 1995. Furthermore, the new
contract with Alpha Therapeutics, beginning January 1996, includes a lower
maximum reduction possible of ten percent (10%) instead of the previous
twenty five percent (25%).
OVERVIEW OF FINANCIAL OUTLOOK AND PROJECTIONS
18. The Management believes that the Debtors are ready to emerge from
Chapter 11 and that it can improve the profitability of the present centers
by expanding marketing efforts, focussing more on specialty plasmas, and
continuing to reduce costs. In addition, the Debtors plan to grow over the
next four years through the acquisition of additional plasma collection
centers and the development of higher profit hyperimmune plasma stimulation
programs in addition to its current Tetanus and CMV programs. Currently,
most of the specialty plasma is derived serendipitiously (not the result of
stimulation).
19. The fundamental elements of the Debtors business strategy are:
a) To manage the existing centers effectively to increase operating
efficiency, monthly volume and profitability.
b) To maintain all facilities at QPP standards (the industry quality
standards for plasma collection centers).
c) To pay close attention to trends in the plasma market in order to
maintain an optimal mix of contract and spot market sales.
-8-
<PAGE>
d) To initiate an aggressive program to acquire additional plasma
centers, utilizing internally generated cash flow. The Debtors
believes that it will be possible to increase its centers from
the current six (6) to twelve (12) over a four year period from
internally generated cash flows. This does not take into account
the additional significant impact possible from acquiring
additional centers by raising external financing.
e) To institute a specialty plasma collection program whereby
specialty plasma donors within the Debtors donor base are
identified and their plasma is collected and sold at higher
margins.
f) To develop a hyper-immune specialty plasma business by converting
certain SeraCare centers to hyper-immune plasma collection.
[CHART]
ASSUMPTIONS UNDERLYING FOUR YEAR FORECAST
20. The detailed assumptions prepared by the Debtors which supports the
Debtors financial projections is attached as Exhibit 6 and was extracted
from Exhibit C of the disclosure statement of the PROPOSED PLAN. A review of
the charts above and supporting Exhibits 1, 2 and 3 show that the revenue
projections for Year 1 are approximately 11% below the annualized current
year (1995) results with net operating profits almost on-par with the
annualized 1995 results. The increased margins are
-9-
<PAGE>
likely to be achieved given that Management already has a more profitable
contract with North American Biologicals, Incorporated. As mentioned
before, during 1995, Management negotiated a CMV hyperimmune program and a
Tetanus hyperimmune stimulation program with North American Biologicals,
Incorporated, at a $2.00 per liter increase in margin for Tetanus and an
$8.00 per liter increase in margin for CMV hyperimmune plasma. Based on all
of the foregoing, I believe that the Debtors financial projections for Year 1
are reasonable.
21. The Debtors financial projections for Year 2 to 4 are all based on
similar gross profit margins as Year 1, but take into account increased
revenues and profits from newly acquired centers. The increase in indirect
(administrative and overhead type) expenses are reasonably expected to be
less than directly proportional. In other words as the Debtors continue to
expand through acquisition of new centers, economies of scale would help
beneficially impact the net operating profits.
[CHART]
Overall the Debtors revenue projections and gross profit margins per center
are reasonable based on the actual results to date. Furthermore, the Debtors
projected gross profit margins show a progressive decrease with the
increasing number of centers. This is reasonable and allows for any
inefficiencies that may arise as a result of the expansion. Eventually it
can be contemplated that the higher profit margins will be achieved by the
Debtors as the business stabilizes after a period of rapid growth.
-10-
<PAGE>
[CHART]
The average monthly net operating profit per the Debtors actual and
projections are as follows:
Total Per Month # of Centers Per Center
--------------- ------------ ----------
August $20,440 6 $3,407
September $29,608 6 $4,935
October $37,219 6 $6,203
Full Year - 1995 $21,498 6 $3,583
Projection - Year 1 $21,220 6 $3,537
Projection - Year 2 $28,096 6.42 $4,376
Projection - Year 3 $37,557 7.67 $4,897
Projection - Year 4 $54,688 10.75 $5,087
Based on all of the foregoing, I believe that the assumptions underlying the
Debtors four year financial projections are reasonable.
ISSUES AND CONCERNS RAISED BY CVD
22. Pertinent excerpts from CVD Financial Corporation's objections to
the disclosure statement for the PROPOSED PLAN ("the CVD objections") read as
follows:
a) Page 3, lines 11 and 17; "The Debtors actual post-petition
financial results severely question the plan's feasibility and
the Debtors projections. The Debtors
-11-
<PAGE>
so-called profitable operations appear to be no more than creative
accounting by delaying and doubling the unpaid accounts payable.
The Debtors projections forecast more than double the average
monthly net income per plasma center received in the 12 months
operating results."
b) Page 5, lines 1 to 3; "The operating reports of Binary show
that the outstanding accounts payable as of August 31, 1995, have
doubles since March 1995 while gross sales have declined."
c) Page 5, lines 6 to 8; "The substantial unpaid accounts payable
raise questions about the purported "profitability" of Debtors
operations 1995."
d) Page 5, lines 20 to 22; "However, in the three months
ending August 31, 1995, AVRE and Binary had a combined net income,
before bankruptcy expenses, of approximately $42,000."
RESPONSE TO ISSUES AND CONCERNS RAISED BY CVD
23. The main issue raised in (a), (c) and (d) relates to the past
profitability of the operations as an indicator of the future profitability as
reflected in the Debtors financial projections. In expressing concern
regarding the profitability of the Debtors, CVD fails to take into
consideration the following facts:
a) The Debtors operations have undergone a significant
reorganization and are now returning to a more stable mode of
operations.
b) The Debtors operations during the months of April, May, June and
July were adversely affected by the surprise volume reduction
action taken by their main contractual customer (see section on
Current Operations).
c) Management had taken corrective action to compensate for this
unforeseen and unusual event (see section on Current Operations).
d) Based on all of the foregoing and on the profitable results of
the earlier months. The later months in 1995 should accepted as
more indicative of the future potential and profitability of the
Debtors.
-12-
<PAGE>
24. The actual operating results of August, September and October of
1995 were significantly profitable and show a marked improvement compared to
the prior months (see section on "Current Operations"). The Debtors net
operating profit for the later months in 1995 were as follows:
August $20,440
September $29,608
October $37,219
-------
Total for three months $87,267
-------
MONTHLY AVERAGE $29,089
-------
The Debtors were also significantly more profitable in the earlier months of
1995 as follows:
January $35,712
February $34,248
March $34,672
-------
Total for three months $104,632
-------
MONTHLY AVERAGE $34,877
-------
Therefore, it is clear that net operating profits in excess of $25,000 per
month with six operating centers is reasonable for the Debtors and that this
amount can reasonably be expected to increase with additional centers.
25. The financial projections for the first twelve months after
reorganization ("Year 1") are based on average monthly net operating profits
of $21,220 (based on six operating locations) and are thus comparable and
consistent with the actual results proven to be achievable in 1995. In my
opinion, the amounts reflected in the first twelve month projections by the
Debtors, are reasonable for the reasons specified above. The latter twelve
month periods show progressive increase in net operating profits with a
progressive increase in the number of operating locations. The rationale for
this is that indirect expenses will not increase in direct proportion to the
increase in location and associated revenues and profits. This correctly
assumes that the infra-structure required to support the operations such as
upper management, financial etc. are already in place and have excess
capacity capable of handling the planned expansion. Per the Debtors
projections, the amounts of average monthly net operating profits of
-13-
<PAGE>
$28,096 for the second twelve month period ("Year 2") is based on increasing
the number of locations by one during this period (total seven), with the
average number of operating locations during the year computed as 6.42. Per
the Debtors projections, the amounts of average monthly net operating profits
of $37,558 for the third twelve month period ("Year 3") is based on
increasing the number of locations by two during this period (total nine),
with the average number of operating locations during the year computed as
7.67. Per the Debtors projections, the amounts of average monthly net
operating profits of $54,688 for the fourth twelve month period ("Year 4")
is based on increasing the number of locations by three during this period
(total twelve), with the average number of operating locations during the
year computed as 10.75.
The average monthly net operating profit per the Debtors actual and
projections are as follows:
Total Per Month # of Centers Per Center
--------------- ------------ ----------
August $20,440 6 $3,407
September $29,608 6 $4,935
October $37,219 6 $6,203
Full Year - 1995 $21,498 6 $3,583
Projection - Year 1 $21,220 6 $3,537
Projection - Year 2 $28,096 6.42 $4,376
Projection - Year 3 $37,557 7.67 $4,897
Projection - Year 4 $54,688 10.75 $5,087
This comparison of actual operating results in 1995 to the Debtors projected
results, clearly indicates that the Debtors financial projections are
reasonable. The average monthly net operating profit per location assumed in
the financial projections for Year 1 is $3,537; Year 2 is $4,379; Year 3 is
$4,899 and Year 4 is $5,087. The amount projected for Year 4 is lower than
that already achieved by the Debtors in October 1995. Based on all of the
foregoing, I believe that the operating profits reflected in the financial
projections are reasonable.
26. In expressing concern regarding accounts payable increasing from
March 1995 to August 1995 (paragraph 22, (a) (b) & (c)) CVD is choosing to
ignore the fact that the operations of the Debtors
-14-
<PAGE>
did not generate significant profits during this specific period due to the
unexpected and unusual action taken by Alpha Therapeutics as described in
paragraph 17, which is reiterated below. This reduction reflects the fact
that Alpha Therapeutics, for the first time in ten years, exercised its
contractual option to decrease its purchase of source plasma volumes by
twenty five percent (25%), for six months. This adversely impacted the
earnings for this period. The Debtors management used this opportunity to
negotiate a CMV hyperimmune program and a Tetanus hyperimmune stimulation
program with North American Biologicals, Incorporated; thus, more than
compensating for the twenty five percent (25%) shortfall in volume, at a
$2.00 per liter increase in margin for Tetanus and an $8.00 per liter
increase in margin for CMV hyperimmune plasma. The time it took to initiate
the hyperimmune programs negatively impacted earnings; however, as can be
seen, beginning with September 1995, the earnings recovered to near first
quarter historical actual for early 1995. The new contract with Alpha
Therapeutics beginning January 1996, includes a lower maximum reduction
possible of ten percent (10%) instead of the previous twenty five percent
(25%). The resulting decrease in cash flow led to the increase in accounts
payable, the eventual payment of which is clearly contemplated and addressed
in the Debtors PROPOSED PLAN.
27. Based on all of the foregoing it is my opinion that the issues and
concerns raised by CVD are without merit and are clearly unsupported by the
facts available relating to the actual operating results and profitability of
the Debtors.
ESTIMATED TOTAL COLLECTIVE VALUE OF THE STOCK OF AVRE AND BINARY
28. I have performed a business valuation to estimate the collective
value of the stock of AVRE and Binary and have found this to be in excess of
$2,000,000 (see Exhibit 4 and 5). For this business valuation, I have
selected an income approach of business valuation which discounts the
projected net cash flows of the business to their present value. This method
handles expected uneven income or cash flow streams, unusual lump sum
payments, new centers and the likes, thus is particularly suitable to the
Debtors business. Additional reasons for selecting the income method were
the unsuitability of the asset based methods for a business of this type the
lack of availability or reliable comparable data for this type of small
privately owned businesses in a rather specialized market niche.
-15-
<PAGE>
The latter fact precluded the effective use of a market comparable method.
Another available method, the asset based method is unsuitable for a non
capital intensive business with significant characteristics of a service
business. The base information for use in such a discounted cash flow method
are reasonable financial projections. I have reviewed the Debtors financial
projections and have found these to be reasonable. The Debtors financial
projections contain the expenses attributable to ABI as the parent company of
AVRE and Binary. In preparing this business valuation, I have assumed that
these expenses fairly reflect the expenses that would be incurred by AVRE and
Binary if they were to operate as independent entities. Therefore my
collective business valuation of AVRE and Binary is based on the Debtors
financial projections. No other allowances need to be made for ABI, since
ABI is not projected to generate any revenues other than through the
operations of AVRE and Binary.
29. In arriving at the estimate of business value, I have estimated that
the return an investor would require for a business of this type would be
approximately 21%. This consists of two components, the risk premium and
the safe rate of return. I estimated the risk at 15% by evaluating the risk
environment of the Debtors. I considered amongst other factors, competition,
management ability and depth, profitability and stability of earnings and
financial strength of both AVRE and Binary. The current risk free rate of
return is estimated at 6.25% based on the quoted value (Wall Street Journal -
12/18/95) of the Lehman Brothers Long Term T-Bond rate. This reflects the
nearest equivalent to a long term safe investment return currently available
in the marketplace. Based on all of the above, the total return likely to be
anticipated by an informed investor ( the discount rate) is estimated as
21.25% (15% + 6.25%). This expected rate of return was used in discounting
back to the present value, the projected future cash flows of the Debtors.
Furthermore, I have estimated that the long term real growth rate (i.e.
growth rate without any allowance for inflation) after Year 4 onwards will be
6%. The long term inflation rate based on all available current economic
data in the marketplace, is estimated at 3%. Therefore the total long term
growth is computed as 9% (6%+3%). The capitalization rate was computed as
12.25% by taking the estimated discount rate less long term growth rate
(21.25% - 9%) and was used in computing the terminal value (i.e. the value of
the business at the end of year 5 which reflects all of its earning potential
from Year 5 onwards, as a going concern). Please
-16-
<PAGE>
refer to Exhibit 4 and 5 for details of the business valuation computation,
reflecting the collective value of the stock of AVRE and Binary in excess of
$2,000,000.
CONCLUSION
30. Based on all of the foregoing it is my opinion that the underlying
assumptions on which the Debtors financial projections are based, are
reasonable and the PROPOSED PLAN is viable with respect to these aspects.
Based on the future outlook as portrayed in the Debtors financial
projections, I believe that the estimated collective value of the stock of
AVRE and Binary is in excess of $2,000,000. It is my opinion that the
issues and objections rasied by CVD relating to the financial viability of
the plan were found to be without merit, as addressed in detail above. The
financial projections were prepared by the Management of the Debtors and are
based upon assumptions which I believe to be reasonable. Nevertheless, no
assurance can be given that any of the results or events described in the
PROPOSED PLAN and the Debtors financial projections will occur in the manner
stated and at the predicted times. Actual results may vary from projected
results.
I declare, under penalty of perjury, that the above is true and correct.
Executed the 28th day of December, 1995 at Los Angeles, California.
/s/ S. Chell Chelliah
----------------------------------------
S. CHELL CHELLIAH
-17-
<PAGE>
DF and Co. - Litigation Support and Insolvency Services Group
ABI Inc., AVRE, Inc. and Binary Assoc. Inc. Chapter 11 Case No: LA 94 11730 AA
<TABLE>
<CAPTION>
SERACARE Current Current Current Current Current Current Current Current Current Current Current Current
- -----------------------------------------------------------------------------------------------------------------------------------
RESULTS OF Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual
OPERATING 1995 1995 1995 1995 1995 1995 1995 1995 1995 1995 1995 1995
ACTIVITIES ---------------------------------------------------------------------------------------------------------------------
- -------------- Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
(Source: ---------------------------------------------------------------------------------------------------------------------
Operating
Reports and
Exhibits "C"
Of Disclosure
Statement.)
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE $549,153 $591,016 $445,714 $417,565 $447,747 $464,401 $458,617 $552,403 $671,922 $655,555 Unavailable
DIRECT
EXPENSES $454,094 $504,810 $547,840 $365,162 $386,358 $393,877 $386,940 $468,674 $578,775 $555,666 Unavailable
- -----------------------------------------------------------------------------------------------------------------
GROSS PROFIT $95,059 $86,206 $97,874 $52,403 $61,389 $70,524 $71,677 $83,729 $93,147 $99,889 Unavailable
INDIRECT
EXPENSES $59,347 $51,958 $63,202 $52,838 $58,292 $66,292 $55,490 $63,289 $63,539 $62,670 Unavailable
- -----------------------------------------------------------------------------------------------------------------
NET OPERATING
PROFIT $35,712 $34,248 $34,672 ($435) $3,097 $4,232 $16,187 $20,440 $29,608 $37,219 Unavailable
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE NUMBER
OF LOCATIONS 6 6 6 6 6 6 6 6 6 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------
PER MONTH
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE SALES
PER LOCATION $91,526 $98,503 $107,619 $69,594 $74,625 $77,400 $76,436 $92,067 $111,987 $109,259
AVERAGE NET
PROFIT/LOCATION $5,952 $5,708 $5,779 ($73) $516 $705 $2,698 $3,407 $4,935 $6.203
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------
PROFITABILITY
RATIOS
- -----------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT % 17.31% 14.59% 15.16% 12.55% 13.71% 15.19% 15.63% 15.16% 13.86% 15.24%
NET PROFIT % 6.50% 5.79% 5.37% -0.10% 0.69% 0.91% 3.53% 3.70% 4.41% 5.68%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 1 PAGE 1 OF 1
<PAGE>
DF and Co. - Litigation Support and Insolvency Services Group
ABI Inc., AVRE, Inc. and Binary Assoc. Inc. Chapter 11 Case No: LA 94-11730-AA
<TABLE>
<CAPTION>
SERACARE Current Current Year 1 Year 2 Year 3 Year 4
- --------------------------------------------------------------------------------------------------------
RESULTS OF OPERATING Annualized
ACTIVITIES Actual ------------ Projection Projection Projection Projection
- -------------------------- To 10/31/95 To 12/31/95 1996 1997 1998 1999
(Source: Operating Reports -----------------------------------------------------------------------------
And Exhibit "C" Of
Disclosure Statement.) PARTIAL YEAR FULL YEAR FULL YEAR FULL YEAR FULL YEAR FULL YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE $5,454,903 $6,544,912 $5,841,977 $6,156,977 $7,101,977 $9,432,977
DIRECT EXPENSES $4,642,196 $5,570,635 $4,701,640 $4,958,705 $5,729,900 $7,632,181
- --------------------------------------------------------------------------------------------------------
GROSS PROFIT $811,897 $974,277 $1,140,337 $1,198,272 $1,372,077 $1,800,796
INDIRECT EXPENSES $596,917 $716,300 $885,688 $861,113 $921,385 $1,144,530
- --------------------------------------------------------------------------------------------------------
NET OPERATING
PROFIT $214,980 $257,977 $254,649 $337,159 $450,692 $656,266
- ------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
AVERAGE NUMBER OF
LOCATIONS 6.00 6.00 6.00 6.42 7.67 10.75
- --------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
PER YEAR PARTIAL YEAR ANNUALIZED
- --------------------------------------------------------------------------------------------------------
AVERAGE SALES PER
LOCATION $909,016 $1,090,819 $973,663 $959,031 $925,972 $877,486
AVERAGE NET
PROFIT/LOCATION $35,830 $42,996 $42,442 $52,517 $58,760 $61,048
- --------------------------------------------------------------------------------------------------------
- -----------------------
PER MONTH
- --------------------------------------------------------------------------------------------------------
AVERAGE SALES PER
LOCATION $90,902 $90,902 $81,139 $79,919 $77,162 $73,124
AVERAGE NET
PROFIT/LOCATION $3,583 $3,583 $3,537 $4,376 $4,897 $5,087
- --------------------------------------------------------------------------------------------------------
- -----------------------
PROFITABILITY RATOS
- --------------------------------------------------------------------------------------------------------
GROSS PROFIT % 14.89% 14.89% 19.52% 19.46% 19.32% 19.09%
NET PROFIT % 3.94% 3.94% 4.36% 5.48% 6.35% 6.96%
- --------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 2 PAGE 1 OF 1
<PAGE>
DF and Co. - Litigation Support and Insolvency Services Group
ABI Inc., AVRE, Inc. and Binary Assoc. Inc. Chapter 11 Case No: LA 94 11730 AA
<TABLE>
<CAPTION>
SERACARE Year 1 Year 1 Year 1 Year 1 Year 1 Year 1
- -----------------------------------------------------------------------------------------------
RESULTS OF Projection Projection Projection Projection Projection Projection
OPERATING 1996 1996 1996 1996 1996 1996
ACTIVITIES ---------------------------------------------------------------------------
- ------------------- Jan Feb Mar Apr May June
(Source: Operating ---------------------------------------------------------------------------
Reports and
Exhibit "C" of
Disclosure
Statement)
- ------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE $476,988 $426,118 $464,352 $428,345 $452,746 $475,704
DIRECT EXPENSES $387,851 $348,927 $382,154 $351,256 $372,855 $383,885
- -----------------------------------------------------------------------------------------------
GROSS PROFIT $89,137 $77,191 $82,198 $77,089 $79,891 $91,819
INDIRECT EXPENSES $75,310 $75,157 $74,487 $74,428 $74,525 $73,855
- -----------------------------------------------------------------------------------------------
NET OPERATING
PROFIT $13,827 $2,034 $7,711 $2,661 $5,366 $17,964
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
AVERAGE NUMBER OF
LOCATIONS 6 6 6 6 6 6
- -----------------------------------------------------------------------------------------------
- ------------------
PER MONTH
- -----------------------------------------------------------------------------------------------
AVERAGE SALES
PER LOCATION $79,498 $71,020 $77,392 $71,391 $75,458 $79,284
AVERAGE NET
PROFIT/LOCATION $2,305 $339 $1,285 $444 $894 $2,994
- -----------------------------------------------------------------------------------------------
- --------------------
PROFITABILITY RATIOS
- -----------------------------------------------------------------------------------------------
GROSS PROFIT % 18.69% 18.11% 17.70% 18.00% 17.65% 19.30%
NET PROFIT % 2.90% 0.48% 1.66% 0.62% 1.19% 3.78%
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SERACARE Year 1 Year 1 Year 1 Year 1 Year 1 Year 1
- -----------------------------------------------------------------------------------------------
RESULTS OF Projection Projection Projection Projection Projection Projection
OPERATING 1996 1996 1996 1996 1996 1996
ACTIVITIES ---------------------------------------------------------------------------
- ------------------- Jul Aug Sept Oct Nov Dec
(Source: Operating ---------------------------------------------------------------------------
Reports and
Exhibit "C" of
Disclosure
Statement)
- ------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE $487,263 $518,733 $510,273 $513,326 $527,044 $561,085
DIRECT EXPENSES $389,136 $414,312 $403,205 $408,919 $420,255 $438,865
- -----------------------------------------------------------------------------------------------
GROSS PROFIT $98,127 $104,421 $107,068 $104,387 $106,789 $122,220
INDIRECT EXPENSES $73,817 $73,621 $72,950 $72,895 $72,690 $71,953
- -----------------------------------------------------------------------------------------------
NET OPERATING
PROFIT $24,310 $30,800 $34,118 $31,492 $34,099 $50,267
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
AVERAGE NUMBER OF
LOCATIONS 6 6 6 6 6 6
- -----------------------------------------------------------------------------------------------
- ------------------
PER MONTH
- -----------------------------------------------------------------------------------------------
AVERAGE SALES
PER LOCATION $81,211 $86,456 $85,046 $85,554 $87,841 $93,514
AVERAGE NET
PROFIT/LOCATION $4,052 $5,133 $5,686 $5,249 $5,683 $8,178
- -----------------------------------------------------------------------------------------------
- --------------------
PROFITABILITY RATIOS
- -----------------------------------------------------------------------------------------------
GROSS PROFIT % 20.14% 20.13% 20.98% 20.34% 20.26% 21.78%
NET PROFIT % 4.99% 5.94% 6.69% 6.13% 6.47% 8.96%
- -----------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 3 PAGE 1 OF 4
<PAGE>
<TABLE>
DF and Co. - Litigation Support and Insolvency Services Group ABI Inc., AVRE, Inc. and Binary Assoc. Inc.
Chapter 11 Case No.: LA 94 11730 AA
- --------------------------------------------------------------------------------------------------------------------------
SeraCare Year 2 Year 2 Year 2 Year 2 Year 2 Year 2 Year 2 Year 2 Year 2
- --------------------------------------------------------------------------------------------------------------------------
RESULTS OF Projection Projection Projection Projection Projection Projection Projection Projection Projection
OPERATING 1997 1997 1997 1997 1997 1997 1997 1997 1997
ACTIVITIES
(Source: Jan Feb Mar Apr May Jun Jul Aug Sept
Operating
Reports and
Exhibit
"C" of
Disclosure
Statement)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE $476,988 $426,118 $464,352 $428,345 $452,746 $475,704 $487,263 $581,733 $573,273
DIRECT $387,851 $348,927 $382,154 $351,256 $372,855 $383,885 $389,136 $465,725 $454,618
EXPENESES
- --------------------------------------------------------------------------------------------------------------------------
GROSS $89,137 $77,191 $82,198 $77,089 $79,891 $91,819 $98,127 $116,008 $118,655
PROFIT
INDIRECT $71,700 $71,513 $70,938 $70,983 $70,834 $70,209 $70,121 $73,834 $73,113
EXPENSES
- --------------------------------------------------------------------------------------------------------------------------
NET $17,437 $5,678 $11,260 $6,151 $9,057 $21,610 $28,006 $42,174 $45,542
OPERATING
PROFIT
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE 6 6 6 6 6 6 6 7 7
NUMBER OF
LOCATIONS
- --------------------------------------------------------------------------------------------------------------------------
PER MONTH
- ----------
AVERAGE SALES
PER LOCATION $79,498 $71,020 $77,392 $71,391 $75,458 $79,289 $81,211 $83,105 $81,896
AVERAGE NET $2,906 $ 946 $ 1,877 $1,025 $ 1,510 $ 3,602 $ 4,668 $ 6,025 $ 6,506
PROFIT/LOCATION
- --------------------------------------------------------------------------------------------------------------------------
PROFITABLITY
RATIOS
- ------------
GROSS PROFIT % 18.69% 18.11% 17.70% 18.00% 17.65% 19.30% 20.14% 19.94% 20.70%
NET PROFIT % 3.66% 1.33% 2.42% 1.44% 2.00% 4.54% 5.75% 7.25% 7.94%
</TABLE>
--CONTINUED--
- ----------------------------------------------------
SeraCare Year 2 Year 2 Year 2
- ----------------------------------------------------
RESULTS OF
OPERATING Projection Projection Projection
ACTIVITIES 1997 1997 1997
(Source:
Operating Oct Nov Dec
Reports and
Exhibit
"C" of
Disclosure
Statement)
- ----------------------------------------------------
REVENUE $576,336 $590,044 $624,085
DIRECT $460,352 $471,668 $490,278
EXPENESES
- ----------------------------------------------------
GROSS $115,974 $118,376 $133,807
PROFIT
INDIRECT $ 73,070 $ 72,815 $ 72,028
EXPENSES
- ----------------------------------------------------
NET $ 42,904 $ 45,561 $ 61,779
OPERATING
PROFIT
- ----------------------------------------------------
AVERAGE
NUMBER OF 7 7 7
LOCATIONS
- ----------------------------------------------------
PER MONTH
- ----------
AVERAGE SALES $ 82,332 $ 84,292 $ 89,155
PER LOCATION
AVERAGE NET $ 6,129 $ 6,509 $ 8,826
PROFIT/LOCATION
- ----------------------------------------------------
PROFITABLITY
RATIOS
- ------------
GROSS PROFIT % 20.12% 20.06% 21.44%
NET PROFIT % 7.44% 7.72% 9.90%
EXHIBIT 3 PAGE 2 OF 4
<PAGE>
<TABLE>
DF and Co. - Litigation Support and Insolvency Services Group ABI Inc., AVRE, Inc. and Binary Assoc. Inc.
Chapter 11 Case No.: LA 94 11730 AA
- ----------------------------------------------------------------------------------------------------------------------
SeraCare Year 3 Year 3 Year 3 Year 3 Year 3 Year 3 Year 3 Year 3
- ----------------------------------------------------------------------------------------------------------------------
RESULTS OF Projection Projection Projection Projection Projection Projection Projection Projection
OPERATING 1998 1998 1998 1998 1998 1998 1998 1998
ACTIVITIES
(Source: Jan Feb Mar Apr May Jun Jul Aug
Operating
Reports and
Exhibit
"C" of
Disclosure
Statement)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE $539,988 $489,118 $527,352 $491,345 $515,746 $538,704 $550,263 $644,733
DIRECT $439,264 $400,340 $433,567 $402,669 $424,268 $435,298 $440,549 $517,138
EXPENESES
- ----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT $100,724 $ 88,778 $ 93,785 $ 88,676 $ 91,478 $103,406 $109,714 $127,595
INDIRECT $ 70,830 $ 65,971 $ 67,599 $ 65,526 $ 66,556 $ 70,925 $ 73,361 $ 82,703
EXPENSES
- ----------------------------------------------------------------------------------------------------------------------
NET OPERATING $ 29,894 $ 22,807 $ 26,186 $ 23,150 $ 24,922 $ 32,481 $ 36,353 $ 44,892
PROFIT
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE NUMBER OF 7 7 7 7 7 7 7 8
LOCATIONS
- ----------------------------------------------------------------------------------------------------------------------
PER MONTH
- ---------
AVERAGE SALES
PER LOCATION $ 77,141 $ 69,874 $ 75,336 $ 70,192 $ 73,678 $ 76,958 $ 78,609 $ 80,592
AVERAGE NET
PROFIT/LOCATION $ 4,271 $ 3,258 $ 3,741 $ 3,307 $ 3,560 $ 4,640 $ 5,193 $ 5,612
- ----------------------------------------------------------------------------------------------------------------------
PROFITABLITY RATIOS
- -------------------
GROSS PROFIT % 18.65% 18.15% 17.78% 18.05% 17.74% 19.20% 19.94% 19.79%
NET PROFIT % 5.54% 4.66% 4.97% 4.71% 4.83% 6.03% 6.61% 6.96%
</TABLE>
- -- CONTIUNED --
- -----------------------------------------------------------------------
SeraCare Year 3 Year 3 Year 3 Year 3
- -----------------------------------------------------------------------
RESULTS OF Projection Projection Projection Projection
OPERATING 1998 1998 1998 1998
ACTIVITIES
(Source: Sept Oct Nov Dec
Operating
Reports and
Exhibit
"C" of
Disclosure
Statement)
- -----------------------------------------------------------------------
REVENUE $636,273 $702,326 $716,044 $750,085
DIRECT $506,031 $563,178 $574,494 $593,104
EXPENESES
- -----------------------------------------------------------------------
GROSS PROFIT $130,242 $139,148 $141,550 $156,981
INDIRECT $83,300 $89,148 $89,909 $ 95,557
EXPENSE
- -----------------------------------------------------------------------
NET OPERATING $46,942 $50,000 $51,641 $ 61,414
PROFIT
- -----------------------------------------------------------------------
AVERAGE NUMBER OF 8 9 9 9
LOCATIONS
- -----------------------------------------------------------------------
PER MONTH
- ---------
AVERAGE SALES
PER LOCATION 79,534 $78,016 $79,560 $83,343
AVERAGE NET
PROFIT/LOCATION $5,868 $5,556 $5,738 $6,825
- ------------------------------------------------------------------------
PROFITABLITY RATIOS
- ------------------------------------------------------------------------
GROSS PROFIT % 20.47% 19.81% 19.77% 20.91%
NET PROFIT % 7.38% 7.12% 7.21% 8.19%
EXHIBIT 3 PAGE 3 OF 4
<PAGE>
<TABLE>
DF and Co. - Litigation Support and Insolvency Services Group ABI Inc., AVRE, Inc. and Binary Assoc. Inc.
Chapter 11 Case No.: LA 94 11730 AA
- --------------------------------------------------------------------------------------------------------------------------
RESULTS OF Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4
OPERATING Projection Projection Projection Projection Projection Projection Projection Projection Projection
ACTIVITIES 1999 1999 1999 1999 1999 1999 1999 1999 1999
(Source:
Operating
Reports and Jan Feb Mar Apr May Jun Jul Aug Sept
Exhibit
"C" of
Disclosure
Statement)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE $728,988 $678,118 $716,352 $680,345 $704,746 $727,704 $802,263 $833,733 $825,273
DIRECT $593,503 $554,579 $587,806 $556,908 $578,507 $589,537 $646,201 $671,377 $660,270
EXPENESES
- --------------------------------------------------------------------------------------------------------------------------
GROSS $135,485 $123,539 $128,546 $123,437 $126,239 $138,167 $156,062 $162,356 $165,003
PROFIT
INDIRECT $ 88,834 $ 83,976 $ 85,604 $ 83,530 $ 84,561 $ 88,930 $ 98,433 $100,750 $101,284
EXPENSES
- --------------------------------------------------------------------------------------------------------------------------
NET
OPERATING
PROFIT $ 46,651 $ 39,563 $ 42,942 $ 39,907 $ 41,678 $ 49,237 $ 57,629 $ 61,606 $ 63,719
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE NUMBER OF
LOCATIONS 10 10 10 10 10 10 11 11 11
- --------------------------------------------------------------------------------------------------------------------------
PER MONTH
- ---------
AVERAGE SALES
PER LOCATION $ 72,899 $ 67,812 $ 71,635 $ 68,035 $ 70,475 $ 72,770 $ 72,933 $ 75,794 $ 75,023
AVERAGE NET
PROFIT/LOCATION $ 4,665 $ 3,956 $ 4,294 $ 3,991 $ 4,168 $ 4,924 $ 5,239 $ 5,601 $ 5,793
- --------------------------------------------------------------------------------------------------------------------------
PROFITABLITY RATIOS
- -------------------
GROSS PROFIT % 18.59% 18.22% 17.94% 18.14% 17.91% 18.99% 19.45% 19.47% 19.99%
NET PROFIT % 6.40% 5.83% 5.99% 5.87% 5.91% 6.77% 7.18% 7.39% 7.72%
</TABLE>
- -- CONTINUED --
- -----------------------------------------------------
RESULTS OF Year 4 Year 4 Year 4
OPERATING Projection Projection Projection
ACTIVITIES 1999 1999 1999
(Source:
Operating
Reports and Oct Nov Dec
Exhibit
"C" of
Disclosure
Statement)
- -----------------------------------------------------
REVENUE $ 891,326 $ 905,044 $ 939,085
DIRECT
EXPENESES $ 717,417 $ 728,733 $ 747,343
- -----------------------------------------------------
GROSS
PROFIT $ 173,909 $ 176,311 $ 191,742
INDIRECT $ 107,153 $ 107,914 $ 113,561
EXPENSES
- ------------------------------------------------------
NET
OPERATING $ 66,756 $ 68,397 $ 78,181
PROFIT
- ------------------------------------------------------
AVERAGE NUMBER OF
LOCATIONS 12 12 12
- ------------------------------------------------------
PER MONTH
- ---------
AVERAGE SALES
PER LOCATION $ 74,277 $ 75,420 $ 78,257
AVERAGE NET
PROFIT/LOCATION $ 5,563 $ 5,700 $ 6,515
- -----------------------------------------------------
PROFITABLITY RATIOS
- ------------------
GROSS PROFIT % 19.51% 19.48% 20.42%
NET PROFIT % 7.49% 7.56% 8.33%
EXHIBIT 3 PAGE 4 OF 4
<PAGE>
<TABLE>
<CAPTION>
DF and Co. - Litigation Support and Insolvency Services Group ABI Inc., AVRE, Inc. and Binary Assoc. Inc.
Chapter 11 Case No.: LA 94 11730 AA
SeraCare Year 1 Year 2 Year 3 Year 4 Year 5
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATING ACTIVITIES Projection Projection Projection Projection Projection
- ------------------------------- 1996 1997 1998 1999 2000
(Source: Operating Reports and ----------------------------------------------------------------------------------
Exhibit "C" of Disclosure Statement.) Full Year Full Year Full Year Full Year Full Year
- --------------------------------------------------------------------------------------------------------------------------
REVENUE $5,841,977 $6,156,977 $7,101,977 $9,432,977 $10,529,832
Based on 12 locations
DIRECT EXPENESES $4,701,640 $4,958,705 $5,729,900 $7,632,181
- --------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT $1,140,337 $1,198,272 $1,372,077 $1,800,796
INDIRECT EXPENSES $885,688 $861,113 $921,385 $1,144,530
Based on 12 locations
- --------------------------------------------------------------------------------------------------------------------------
NET OPERATING PROFIT $254,649 $337,159 $450,692 $656,266 $732,576
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE NUMBER OF LOCATIONS 6.00 6.42 7.67 10.75 12
- --------------------------------------------------------------------------------------------------------------------------
PER YEAR
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE SALES PER LOCATION $973,663 $959,031 $925,942 $877,486 $877,486
AVERAGE NET PROFIT/LOCATION $42,442 $52,517 $58,760 $61,048 $61,048
- --------------------------------------------------------------------------------------------------------------------------
PER MONTH
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE SALES PER LOCATION $81,139 $79,919 $77,162 $73,124 $73,124
AVERAGE NET PROFIT/LOCATION $3,537 $4,376 $4,897 $5,087 $5,087
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
NET OPERATING PROFIT $254,649 $337,159 $450,692 $656,266 $732,576
- --------------------------------------------------------------------------------------------------------------------------
Add: Amortization $104,016 $105,266 $109,010 $118,266 $118,266
Add: Depreciation $72,000 $72,000 $72,000 $72,000 $72,000
-------------------------------------------------------------------------------
Cash Flow from Operations $430,665 $514,425 $631,702 $846,532 $922,842
Accounts Receivable $171,000 ($50,000) ($75,000)
Inventory $70,000 ($19,000) ($30,000) ($45,000)
Goodwill ($60,000) ($120,000) ($120,000)
Fixed Assets ($150,000) ($240,000) ($330,000)
Accounts Payable ($224,000) $20,000 $40,000 $50,000
Accrued Liabilities ($35,000) $5,000 $10,000 $20,000
Notes/Payable - Secured Creditors ($250,000) ($250,000) ($250,000) ($250,000) ($250,000)
----------------------------------------------------------------------------------
NET CASH FLOW $162,665 $60,425 ($8,298) $96,532 $672,842
----------------------------------------------------------------------------------
</TABLE>
EXHIBIT 4 PAGE 1 OF 1
<PAGE>
<TABLE>
<CAPTION>
DF and Co. - Litigation Support and Insolvency Services Group ABI Inc., AVRE, Inc. and Binary Assoc. Inc.
Chapter 11 Case No.: LA 94 11730 AA
- --------------------------------------------------------------------------------------------------------------------------
AVRE & BINARY Year 1 Year 2 Year 3 Year 4 Year 5
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ESTIMATION OF BUSINESS VALUE Projection Projection Projection Projection Projection
- ------------------------------- 1996 1997 1998 1999 2000
(Source: Operating Reports and ----------------------------------------------------------------------------------
Exhibit "C" of Disclosure Statement.) Full Year Full Year Full Year Full Year Full Year
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
NET CASH FLOW (Years 1 to 5) $162,665 $60,425 ($8,298) $96,532 $672,842
----------------------------------------------------------------------------------
(/Capitalization Rate)
= Terminal Value
----------------------------------------------------------------------------------
PROJECTED FUTURE CASHFLOWS $162,665 $60,425 ($8,298) $96,532 $5,492,588
----------------------------------------------------------------------------------
Capitalization Rate
of 12.25%
----------------------
-------------
RISK PREMIUM 15.00%
-----------------------------------------------------------------
RISK FREE RATE OF RETURN 6.25% Lehman Bros. - Long Term T-Bond Rate Wall Street Jnl - 12/18/95)
-----------------------------------------------------------------
DISCOUNT RATE 21.25%
-----------------------------------------------------------------
LONG TERM GROWTH RATE 9.00% Real Growth Rate of 6% & Long Term Inflation Rate of 3%=9%
-----------------------------------------------------------------
CAPITALIZATION RATE 12.25%
-------------
-------------
TOTAL OF FUTURE CASH FLOWS $5,803,912
-------------
-------------------------------------------
NET PRESENT VALUE OF ABOVE $2,311,154 Discounted at: 21.25%
-------------------------------------------
-------------
VALUE OF TANGIBLE NET ASSETS Estimated at
Zero
-------------
-------------
ESTIMATED COLLECTIVE VALUE
OF 100% OF ISSUED STOCK OF $2,311,154
AVRE & BINARY @ 12/95 -------------
-------------
</TABLE>
EXHIBIT 5 PAGE 1 OF 1
<PAGE>
SeraCare
Assumptions Underlying Four Year Forecast
The attached financial forecast were prepared by management of SeraCare and are
based upon assumptions which management believes are reasonable. Nevertheless,
the attached financial forecast are based upon assumptions which may or may not
prove to be accurate or appropriate. No assurances can be given that any of
the results or events described herein will occur, or that if they do occur,
they will occur at the predicted times. Actual results may vary widely from
projected results. Accordingly, the financial forecasts should not be relied
upon to indicate the actual results which will be attained by SeraCare during
the forecasted periods.
The four years forecasted herein have been predicated on meeting the Company's
strategic objective of expanding the business through internally generated cash
flow. To this end, the forecast illustrates how additional plasma centers can
be acquired during the four year period. While there is no particular reason
why such acquisitions can not be made, there can be no guarantees that they
will be made or that the results will be presented herein.
Other assumptions are as follows:
1. The assumed rate of acquisition is reflected on the projected Statements
of Income attached herewith.
2. The attached forecasts assume that production from acquired centers
will be sold domestically at approximately the same prices as currently
being received.
EXHIBIT C
-79-
EXHIBIT 6 PAGE 1 OF 15
<PAGE>
3. It is expected that by January 1996, 25% of the plasma collected
(approximately 25,000 annually) will be hyperimmune and will yield a $3.00
to $8.00 premium per liter over source plasma.
4. The cost of acquired centers is assumed to be $200,000 each with
fixed assets of $90,000, goodwill of $60,000, and net current assets of
$50,000. It has been assumed that all acquisitions will be made for cash
with no financing.
5. Goodwill has been amortized over 17 years consistent to the AICPA
pronouncement.
6. After considering the impact of the "1986 tax act", taxes have been
calculated based upon the assumption that the current loss carry-forward
of approximately $6.5 million will be available to SeraCare at the rate of
$150,000 per year for 15 years. Under the provisions of the 1986 tax act,
such an assumption may or may not be valid depending upon the ultimate
determination of ownership, control and business activity.
7. The basic framework of this presentation is that a net of $.995 million is
received by SeraCare and used as follows:
<TABLE>
<CAPTION>
<S> <C>
To pay down secured lender $600,000
To pay Unsecured Creditors $200,000
Administrative legal fees $195,000
--------
$995,000
--------
--------
</TABLE>
EXHIBIT C
-80-
EXHIBIT 6 PAGE 2 OF 15
<PAGE>
8. In preparation of the four year forecast for SeraCare, the following
Monthly Acquisition Model was used to reflect the impact of acquisitions:
<TABLE>
<CAPTION>
<S> <C>
Revenue (1) 63,000
------
Direct Expense:
Donor fees 20,790
Salaries & related exp. (2) 17,063
Testing & softgoods 0
Rent 3,000
Other direct expenses 10,560
------
Total expenses 51,413
------
Gross Profit 11,587
Indirect Expenses 3,000
------
Net income before taxes 8,587
------
</TABLE>
(1) Represents 1,810 donors; 1,448 liters per month or 337
liters per week.
(2) Staffing includes: one manager @ $2,500; one nurse
@ $2,500; 10 technicians/receptionists/phlebotomists
@ $8,000; and one regional manager for each ten new
centers.
(3) An average plasma center has been defined herein as one
collecting approximately 15,000 liters of plasma per year.
EXHIBIT C
-81-
EXHIBIT 6 PAGE 3 OF 15
<PAGE>
SeraCare
POST EMERGENCE FORECAST
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 476,988 426,118 464,352 428,345 452,746 475,704 487,263 518,733 510,273 513,326 527,044 561,085 5,841,977
---------------------------------------------------------------------------------------------------------------------
Direct
Expenses
Donor Fees 226,219 201,095 221,818 202,367 214,998 222,000 227,408 242,959 239,014 241,869 250,404 265,773 2,755,924
Salaries
and related
expenses 98,438 88,453 100,133 89,479 98,108 101,623 99,453 107,102 101,558 104,843 106,871 108,577 1,204,638
Testing 0 0 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0 0 0
Rent 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 174,780
Other Direct
Expenses 48,629 44,814 45,638 44,845 45,184 45,697 47,710 49,686 48,068 47,662 48,415 49,950 566,298
---------------------------------------------------------------------------------------------------------------------
Total 387,851 348,927 382,154 351,256 372,855 383,855 389,136 414,312 403,205 408,939 420,255 438,865 4,701,640
---------------------------------------------------------------------------------------------------------------------
Gross Profit 89,137 77,191 82,198 77,089 79,891 91,819 98,127 104,421 107,068 104,387 106,789 122,220 1,140,337
Indirect
Administrative
Expenses 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,260 55,260 55,260 662,085
Interest income (169) (322) (264) (322) (225) (167) (204) (400) (342) (513) (717) (725) (4,370)
Interest
expense 11,667 11,667 10,938 10,938 10,938 10,208 10,208 10,208 9,479 9,479 9,479 8,750 123,958
Amortization
of Goodwill 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 104,016
---------------------------------------------------------------------------------------------------------------------
Net Profit from
Operations 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
Taxes on Income 0 0 0 0 0 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------------------------
Net Income 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Number of
locations 6 6 6 6 6 6 6 6 6 6 6 6
</TABLE>
EXHIBIT C
-82-
EXHIBIT 6 PAGE 4 OF 15
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 40,827 77,528 63,408 75,737 54,770 39,903
Accounts receivable-trade 456,000 426,000 400,000 375,000 375,000 350,000
Inventory 466,000 446,000 426,000 406,000 406,000 406,000
Prepaid Expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
--------------------------------------------------------------
Total Current Assets 1,052,827 1,039,528 979,408 946,737 925,770 885,903
--------------------------------------------------------------
Fixed Assets(at cost) 515,000 515,000 515,000 515,000 515,000 515,000
Accumulated depreciation (395,000) (401,000) (407,000) (413,000) (419,000) (425,000)
--------------------------------------------------------------
Net Fixed Assets 120,000 114,000 108,000 102,000 96,000 90,000
--------------------------------------------------------------
Fresh Start Goodwill 1,700,000 1,691,332 1,682,664 1,673,996 1,665,328 1,656,668
--------------------------------------------------------------
Total Assets 2,872,827 2,844,860 2,770,072 2,772,733 2,687,098 2,632,563
--------------------------------------------------------------
--------------------------------------------------------------
LIABILITIES
Accounts payable 529,000 499,000 479,000 459,000 418,000 400,000
Accrued liabilities 155,000 155,000 155,000 125,000 125,000 125,000
Notes payable - Secured Creditor 1,000,000 1,000,000 937,500 937,500 937,500 875,000
-------------------------------------------------------------
Total Liabilities 1,684,000 1,654,000 1,571,500 1,521,500 1,480,500 1,408,000
-------------------------------------------------------------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 0 0 0 0 0 0
Current year earnings 13,827 15,860 23,572 26,233 31,598 49,563
-------------------------------------------------------------
Total Shareholders Equity 1,188,827 1,190,860 1,198,572 1,201,233 1,206,598 1,224,563
-------------------------------------------------------------
Total Liabilities and
Shareholders Equity 2,872,827 2,844,860 2,770,072 2,722,733 2,687,098 2,632,563
-------------------------------------------------------------
-------------------------------------------------------------
0 0 0 0 0 0
Month Month Month Month Month Month
7 8 9 10 11 12
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 48,880 96,348 82,634 123,794 172,560 174,995
Accounts receivable-trade 350,000 325,000 325,000 300,000 300,000 300,000
Inventory 406,000 406,000 406,000 406,000 406,000 406,000
Prepaid expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
-------------------------------------------------------------
Total Current Assets 894,880 917,348 903,634 919,794 968,560 970,995
-------------------------------------------------------------
Fixed Assets(at cost) 515,000 515,000 515,000 515,000 515,000 515,000
Accumulated depreciation (431,000) (437,000) (443,000) (449,000) (455,000)(461,000)
-------------------------------------------------------------
Net Fixed Assets 84,000 78,000 72,000 66,000 60,000 54,000
-------------------------------------------------------------
Fresh Start Goodwill 1,647,992 1,639,324 1,639,656 1,621,988 1,613,320 1,604,652
-------------------------------------------------------------
Total Assets 2,626,872 2,634,672 2,606,290 2,607,782 2,641,880 2,629,647
-------------------------------------------------------------
-------------------------------------------------------------
LIABILITIES
Accounts payable 378,000 355,000 355,000 325,000 325,000 325,000
Accrued liabilities 125,000 125,000 125,000 125,000 125,000 125,000
Notes payable - Secured Creditor 875,000 875,000 812,500 812,500 812,500 750,000
-------------------------------------------------------------
Total Liabilities 1,378,000 1,355,000 1,292,500 1,262,500 1,262,500 1,200,000
-------------------------------------------------------------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 0 0 0 0 0 0
Current year earnings 73,872 104,672 138,790 170,282 204,380 254,647
-------------------------------------------------------------
Total Shareholders Equity 1,248,872 1,279,672 1,313,790 1,345,282 1,379,380 1,429,647
-------------------------------------------------------------
Total Liabilities and
Shareholders Equity 2,626,872 2,634,672 2,606,290 2,607,782 2,641,880 2,629,647
-------------------------------------------------------------
-------------------------------------------------------------
0 0 0 0 0 0
</TABLE>
EXHIBIT C
-83-
EXHIBIT 6 PAGE 5 OF 15
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month Month Month TOTAL
1 2 3 4 5 6 7 8 9 10 11 12
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income after
taxes 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
Add: Amortization 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 104,016
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000
--------------------------------------------------------------------------------------------------------
Cash Flow From
Operations 28,495 16,702 22,379 17,329 20,034 32,632 38,978 45,468 48,786 46,160 48,767 64,935 430,663
--------------------------------------------------------------------------------------------------------
Decr (Incr) in current
assets:
Accounts Receivable 15,000 30,000 26,000 25,000 0 25,000 0 25,000 0 25,000 0 0 171,000
Inventory 10,000 20,000 20,000 20,000 0 0 0 0 0 0 0 0 70,000
Prepaid expenses 0 0 0 0 0 0 0 0 0 0 0 0 0
Deposits 0 0 0 0 0 0 0 0 0 0 0 0 0
Incr (Decr) in
liabilities:
Accounts payable (20,000)(30,000)(20,000)(20,000)(41,000)(10,000)(30,000)(23,000) 0 (30,000) 0 0 (224,000)
Accrued liabilities (5,000) 0 0 (30,000) 0 0 0 0 0 0 0 0 (35,000)
Note payable -
Secured Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0 0 (62,500)(250,000)
--------------------------------------------------------------------------------------------------------
Net Cash Flow 28,495 36,702 (14,121) 12,329 (20,967)(14,868) 8,978 47,468 (13,715) 41,160 48,767 2,435 162,663
Beginning cash balance 12,332 40,872 77,529 63,408 75,737 54,770 39,903 48,881 96,348 82,634 123,794 172,561 12,332
--------------------------------------------------------------------------------------------------------
Ending Cash Balance 40,827 77,529 63,408 75,737 54,770 39,903 48,881 96,348 82,634 123,794 172,561 174,996 174,996
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT C
-84-
EXHIBIT 6 PAGE 6 OF 15
<PAGE>
SeraCare
POST EMERGENCE FORECAST
Second Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 476,988 426,118 464,352 428,345 452,746 475,704 487,263 581,733 573,273 576,326 590,044 624,085 6,156,977
----------------------------------------------------------------------------------------------------------
Direct Expenses
Donor
Fees 226,219 201,095 221,818 202,367 214,998 222,000 227,408 263,749 259,804 262,659 271,194 286,263 2,859,874
Salaries
and
related
expenses 98,438 88,453 100,133 89,479 98,108 101,623 99,453 124,165 118,621 121,906 123,934 125,640 1,289,953
Testing 0 0 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0 0 0
Rent 14,565 14,565 14,565 14,565 14,565 14,565 14,565 17,565 17,565 17,565 17,565 17,565 189,780
Other
Direct
Expenses 48,629 44,814 45,638 44,845 45,184 45,697 47,710 60,246 58,628 58,222 58,975 60,510 619,098
----------------------------------------------------------------------------------------------------------
Total 387,851 348,927 382,154 351,256 372,855 383,885 389,136 465,725 454,618 460,352 471,668 490,278 4,958,705
----------------------------------------------------------------------------------------------------------
Gross
Profit 89,137 77,191 82,198 77,089 79,891 91,819 98,127 116,008 118,655 115,974 118,376 133,807 1,198,272
Indirect
Adminis-
trative
Expenses 55,145 55,145 55,145 55,145 55,145 55,145 55,145 58,145 58,145 58,260 58,260 58,260 677,085
Interest
income (863) (1,050) (896) (896) (1,000) (896) (983) (521) (513) (671) (925) (983) (10,196)
Interest
expense 8,750 8,750 8,021 8,021 8,021 7,292 7,292 7,292 6,563 6,563 6,563 5,833 88,958
Amortization
of Goodwill 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,918 8,918 8,918 8,918 8,918 105,266
----------------------------------------------------------------------------------------------------------
Net Profit
From
Operations 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,174 45,542 42,904 45,561 61,779 337,159
Taxes on
Income 0 0 0 0 0 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------------
Net Income 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,174 45,542 42,904 45,561 61,779 337,159
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Number of
locations 6 6 6 6 6 6 6 7 7 7 7 7 0
</TABLE>
EXHIBIT C
-85-
EXHIBIT 6 PAGE 7 OF 15
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
Second Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
investments 207,100 252,446 215,874 216,693 240,418 215,196 236,870 124,962 122,922
Accounts
receivable -
trade 300,000 275,000 275,000 275,000 275,000 275,000 275,000 300,000 300,000
Inventory 406,000 406,000 406,000 406,000 406,000 405,000 406,000 425,000 425,000
Prepaid expenses 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
--------------------------------------------------------------------------------------------------------
Total
Current
Assets 1,003,100 1,023,446 986,874 987,693 1,011,418 985,196 1,007,870 939,962 937,922
---------------------------------------------------------------------------------- --------------------
Fixed Assets (at
cost) 515,000 515,000 515,000 535,000 535,000 535,000 555,000 645,000 645,000
Accumulated
depreciation (467,000) (473,000) (479,000) (485,000) (491,000) (497,000) (503,000) (509,000) (515,000)
--------------------------------------------------------------------------------------------------------
Net Fixed
Assets 48,000 42,000 36,000 50,000 44,000 38,000 52,000 136,000 130,000
--------------------------------------------------------------------------------------------------------
Fresh Start
Goodwill 1,595,984 1,587,316 1,578,648 1,569,980 1,561,312 1,592,644 1,543,976 1,595,058 1,586,140
--------------------------------------------------------------------------------------------------------
Total Assets 2,647,084 2,652,762 2,601,522 2,607,673 2,616,730 2,575,840 2,603,846 2,671,020 2,654,062
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
LIABILITIES
Accounts
payable 325,000 325,000 325,000 325,000 325,000 325,000 325,000 345,000 345,000
Accrued
liabilities 125,000 125,000 125,000 125,000 125,000 125,000 125,000 130,000 130,000
Notes payable -
Secured Creditor 750,000 750,000 687,500 687,500 687,500 625,000 625,000 625,000 562,500
-------------------------------------------------------------------------------------------------------
Total
Liabilities 1,200,000 1,200,000 1,137,500 1,137,500 1,137,500 1,075,000 1,075,000 1,100,000 1,037,500
-------------------------------------------------------------------------------------------------------
SHAREHOLDERS EQUITY
Paid in
surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock
@ $.001 per
share 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 254,647 254,647 254,647 254,647 254,647 254,647 254,647 254,647 254,647
Current year
earnings 17,437 23,115 34,375 40,526 49,583 71,193 99,199 141,373 186,915
-------------------------------------------------------------------------------------------------------
Total
Shareholders
Equity 1,447,084 1,452,762 1,464,022 1,470,173 1,479,230 1,500,840 1,528,846 1,571,020 1,616,562
-------------------------------------------------------------------------------------------------------
Total
Liabilities
and
Shareholders
Equity 2,647,084 2,652,762 2,601,522 2,607,673 2,616,730 2,575,840 2,603,846 2,671,020 2,654,062
-------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
Month Month Month
10 11 12
- --------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and
investments 160,744 221,223 235,420
Accounts
receivable -
trade 300,000 300,000 300,000
Inventory 425,000 425,000 425,000
Prepaid expenses 75,000 75,000 75,000
Deposits 15,000 15,000 15,000
-----------------------------------
Total Current
Assets 975,744 1,036,223 1,050,420
-----------------------------------
Fixed Assets
(at cost) 665,000 665,000 665,000
Accumulated
depreciation (521,000) (527,000) (533,000)
-----------------------------------
Net Fixed
Assets 144,000 138,000 132,000
-----------------------------------
Fresh Start
Goodwill 1,577,222 1,568,304 1,559,386
-----------------------------------
Total Assets 2,696,966 2,742,527 2,741,806
-----------------------------------
-----------------------------------
LIABILITIES
Accounts payable 345,000 345,000 345,000
Accrued
liabilities 130,000 130,000 130,000
Notes payable -
Secured
Creditor 562,500 562,500 500,000
-----------------------------------
Total Liabilities 1,037,500 1,037,500 975,000
-----------------------------------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885
Common stock @
$.001 per share 2,115 2,115 2,115
Accumulated
earnings 254,647 254,647 254,647
Current year
earnings 229,819 275,380 337,159
-----------------------------------
Total
Shareholders
Equity 1,659,466 1,705,027 1,766,806
-----------------------------------
Total
Liabilities and
Shareholders
Equity 2,696,966 2,742,527 2,741,806
-----------------------------------
0 0 0
</TABLE>
EXHIBIT C
-86-
EXHIBIT 6 PAGE 8 OF 15
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
Second Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Income after taxes 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,174 45,542 42,904
Add: Amortization 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,918 8,918 8,918
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
-----------------------------------------------------------------------------------------
Cash Flow From Operations 32,105 20,346 25,928 20,819 23,725 36,278 42,674 57,092 60,460 57,822
-----------------------------------------------------------------------------------------
Decr (Incr) in current
assets:
Accounts Receivable 0 25,000 0 0 0 0 0 (25,000) 0 0
Inventory 0 0 0 0 0 1,000 (1,000) (19,000) 0 0
Prepaid expenses 0 0 0 0 0 0 0 0 0 0
Goodwill 0 0 0 0 0 0 0 (60,000) 0 0
Fixed Assets 0 0 0 (20,000) 0 0 (20,000) (90,000) 0 (20,000)
Incr (Decr) in
liabilities:
Accounts payable 0 0 0 0 0 0 0 20,000 0 0
Accrued liabilities 0 0 0 0 0 0 0 5,000 0 0
Note payable - Secured
Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0
-----------------------------------------------------------------------------------------
Net Cash Flow 32,105 45,346 (36,572) 819 23,725 (25,222) 21,674 (111,908) (2,040) 37,822
Beginning cash balance 174,995 207,100 252,446 215,874 216,693 240,148 215,196 236,870 124,962 122,922
-----------------------------------------------------------------------------------------
Ending Cash balance 207,100 252,446 215,874 216,693 240,418 215,196 236,870 124,962 122,922 160,744
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
<CAPTION>
Month Month
11 12 Total
--------------------------
<S> <C> <C> <C>
Net Income after taxes 45,561 61,779 337,159
Add: Amortization 8,918 8,918 105,266
Depreciation 6,000 6,000 72,000
--------------------------
Cash flow from operations 60,479 76,697 514,425
--------------------------
Decr. (Incr.) In current
assets:
Accounts receivable 0 0
Inventory 0 0 (19,000)
Prepaid expenses 0 0 0
Goodwill 0 0 (60,000)
Fixed Assets 0 0 (150,000)
Incr. (decr.)in
liabilities:
Accounts payable 0 0 20,000
Accrued liabilities 0 0 5,000
Note payable - Secured
Creditors 0 (62,500) (250,000)
--------------------------
Net Cash Flow 60,479 14,197 60,425
Beginning cash balance 160,744 221,223 174,995
--------------------------
Ending Cash balance 221,223 235,420 235,420
--------------------------
--------------------------
</TABLE>
EXHIBIT C
-87-
EXHIBIT 6 PAGE 9 OF 15
<PAGE>
SERACARE
POST EMERGENCE FORECAST
THIRD TWELVE MONTHS
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue 539,988 489,118 527,352 491,345 515,746 538,704 550,263
----------------------------------------------------------------
Direct Expense
Donor Fees 247,009 221,885 242,608 223,157 235,788 242,790 248,198
Salaries and related expenses 115,501 105,516 117,196 106,542 115,171 118,686 116,516
Testing 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0
Rent 17,565 17,565 17,565 17,565 17,565 17,565 17,565
Other Direct Expense 59,189 55,374 56,198 55,405 55,744 56,257 58,270
----------------------------------------------------------------
Total 439,264 400,340 433,567 402,669 424,268 435,298 440,549
----------------------------------------------------------------
Gross Profit 100,724 88,778 93,785 88,676 91,478 103,406 109,714
Indirect Administrative Expenses 58,145 58,145 58,145 58,145 58,145 58,145 58,145
Interest Income (1,163) (1,296) (1,192) (1,242) (1,392) (1,333) (1,479)
Interest expense 5,833 5,833 5,104 5,104 5,104 4,375 4,375
Amortization of Goodwill 8,918 8,918 8,918 8,918 8,918 8,918 8,918
----------------------------------------------------------------
Net Profit From Operating 28,990 17,178 22,810 17,751 20,703 33,301 39,755
Taxes on Income (904) (5,629) (3,376) (5,400) (4,219) 821 3,402
----------------------------------------------------------------
Net Income 29,894 22,807 26,186 23,150 24,922 32,481 36,353
----------------------------------------------------------------
----------------------------------------------------------------
Number of Locations 7 7 7 7 7 7 7
MONTH MONTH MONTH MONTH MONTH
8 9 10 11 12 TOTAL
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue 644,733 636,273 702,326 716,044 750,085 7,101,977
----------------------------------------------------------
Direct Expense
Donor Fees 284,539 280,594 304,239 312,774 328,143 3,171,724
Salaries and related expenses 141,228 135,684 156,032 158,060 159,766 1,545,898
Testing 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0
Rent 20,565 20,565 23,565 23,565 23,565 234,780
Other Direct Expense 70,806 69,188 79,342 80,095 81,630 777,498
----------------------------------------------------------
Total 517,138 506,031 563,178 574,494 593,104 5,729,900
----------------------------------------------------------
Gross Profit 127,595 130,242 139,148 141,550 156,981 1,372,077
Indirect Administrative Expenses 61,145 61,145 64,260 64,260 64,260 722,085
Interest Income (1,079) (1,121) (675) (1,008) (1,154) (14,133)
Interest expense 4,375 3,646 3,646 3,646 2,917 53,958
Amortization of Goodwill 9,168 9,168 9,418 9,418 9,418 109,016
----------------------------------------------------------
Net Profit From Operating 53,986 57,404 62,499 65,235 81,541 501,151
Taxes on Income 9,094 10,462 12,500 13,594 20,116 50,460
----------------------------------------------------------
Net Income 44,892 46,942 50,000 51,641 61,424 450,691
----------------------------------------------------------
----------------------------------------------------------
Number of Locations 8 8 9 9 9
</TABLE>
EXHIBIT C
-88-
EXHIBIT 6 PAGE 10 OF 15
<PAGE>
SERACARE
POST EMERGENCE BALANCE SHEET
THIRD TWELVE MONTHS
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 280,232 317,957 296,560 314,629 354,468 339,367 370,638
Accounts receivable - trade 300,000 300,000 300,000 300,000 300,000 300,000 300,000
Inventory 425,000 425,000 425,000 425,000 425,000 425,000 425,000
Prepaid expense 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Deposit 15,000 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- --------- ---------
Total Current Assets 1,095,232 1,132,957 1,111,560 1,129,629 1,169,468 1,154,367 1,185,638
--------- --------- --------- --------- --------- --------- ---------
Fixed Assets (at cost) 665,000 665,000 665,000 685,000 685,000 685,000 705,000
Accumulated depreciation (539,000) (545,000) (551,000) (557,000) (563,000) (569,000) (575,000)
--------- --------- --------- --------- --------- --------- ---------
Net Fixed Assets 126,000 120,000 114,000 128,000 122,000 116,000 130,000
--------- --------- --------- --------- --------- --------- ---------
Fresh Start Goodwill 1,550,468 1,541,550 1,532,632 1,523,714 1,514,796 1,505,878 1,496,960
--------- --------- --------- --------- --------- --------- ---------
Total Assets 2,771,700 2,794,507 2,758,192 2,781,343 2,806,264 2,776,245 2,812,598
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts payable 345,000 345,000 345,000 345,000 345,000 345,000 345,000
Accrued liabilities 130,000 130,000 130,000 130,000 130,000 130,000 130,000
Notes payable - Secured Creditor 500,000 500,000 437,500 437,500 437,500 375,000 375,000
--------- --------- --------- --------- --------- --------- ---------
Total Liabilities 975,000 975,000 912,500 912,500 912,500 850,000 850,000
--------- --------- --------- --------- --------- --------- ---------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 591,806 591,806 591,806 591,806 591,806 591,806 591,806
Current earnings 29,894 52,701 78,886 102,037 126,958 159,439 195,792
--------- --------- --------- --------- --------- --------- ---------
Total Shareholders Equity 1,796,700 1,819,507 1,845,692 1,868,843 1,893,764 1,926,245 1,962,598
--------- --------- --------- --------- --------- --------- ---------
Total Liabilities and
Shareholders Equity 2,771,700 2,794,507 2,758,192 2,781,343 2,806,264 2,776,245 2,812,598
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
MONTH MONTH MONTH MONTH MONTH
8 9 10 11 12
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 265,698 265,308 145,726 212,784 227,127
Accounts receivable - trade 325,000 325,000 350,000 350,000 350,000
Inventory 440,000 440,000 455,000 455,000 455,000
Prepaid expense 75,000 75,000 75,000 75,000 75,000
Deposit 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- ---------
Total Current Assets 1,120,698 1,120,308 1,040,726 1,107,784 1,122,127
--------- --------- --------- --------- ---------
Fixed Assets (at cost) 795,000 795,000 905,000 905,000 905,000
Accumulated depreciation (581,000) (587,000) (593,000) (599,000) (605,000)
--------- --------- --------- --------- ---------
Net Fixed Assets 214,000 208,000 312,000 306,000 300,000
--------- --------- --------- --------- ---------
Fresh Start Goodwill 1,574,792 1,538,624 1,589,206 1,579,788 1,570,370
--------- --------- --------- --------- ---------
Total Assets 2,882,490 2,866,932 2,941,932 2,993,572 2,992,497
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
LIABILITIES
Accounts payable 365,000 365,000 385,000 385,000 385,000
Accrued liabilities 135,000 135,000 140,000 140,000 140,000
Notes payable - Secured Creditor 375,000 312,500 312,500 312,500 250,000
--------- --------- --------- --------- ----------
Total Liabilities 875,000 812,500 837,500 837,500 775,500
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 591,806 591,806 591,806 591,806 591,806
Current earnings 240,684 287,626 337,626 389,266 450,691
--------- --------- --------- --------- ----------
Total Shareholders Equity 2,007,490 2,054,432 2,104,432 2,156,072 2,217,497
--------- --------- --------- --------- ---------
Total Liabilities and
Shareholders Equity 2,882,490 2,866,932 2,941,932 2,993,572 2,992,497
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
EXHIBIT C
-89-
EXHIBIT 6 PAGE 11 OF 15
<PAGE>
SERACARE
POST EMERGENCE FUNDS FLOW
THIRD TWELVE MONTHS
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income After Taxes 28,894 22,807 26,186 23,150 24,922 32,481 36,353
Add: Amortization 8,918 8,918 8,918 8,918 8,918 8,918 8,918
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000
------- ------- ------- ------- ------- ------- -------
Cash Flow from Operations 44,812 37,725 41,104 38,068 39,840 47,399 51,271
------- ------- ------- ------- ------- ------- -------
Decr (incr) in current assets:
Accounts Receivable 0 0 0 0 0 0 0
Inventory 0 0 0 0 0 0 0
Prepaid expenses 0 0 0 0 0 0 0
Goodwill 0 0 0 0 0 0 0
Fixed Assets 0 0 0 (20,000) 0 0 (20,000)
Incr (decr) in liabilities:
Accounts Payable 0 0 0 0 0 0 0
Accrued Liabilities 0 0 0 0 0 0 0
Note payable - Secured Creditors 0 0 (62,500) 0 0 (62,500) 0
------- ------- ------- ------- ------- ------- -------
Net Cash Flow 44,812 37,725 (21,396) 18,068 39,840 (15,101) 31,271
Beginning cash balance 235,420 280,232 317,957 296,560 314,629 354,468 339,367
------- ------- ------- ------- ------- ------- -------
Ending cash balance 280,232 317,957 296,560 314,629 354,468 339,367 370,638
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
MONTH MONTH MONTH MONTH MONTH
8 9 10 11 12 TOTAL
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Income After Taxes 44,892 46,942 50,000 51,641 61,424 450,691
Add: Amortization 9,168 9,168 9,418 9,418 9,418 109,016
Depreciation 6,000 6,000 6,000 6,000 6,000 72,000
------- ------- ------- ------- ------- --------
Cash Flow from Operations 60,060 62,110 65,418 67,059 76,842 631,707
------- ------- ------- ------- ------- --------
Decr (incr) in current assets:
Accounts Receivable (25,000) 0 (25,000) 0 0 (50,000)
Inventory (15,000) 0 (15,000) 0 0 (30,000)
Prepaid expenses 0 0 0 0 0
Goodwill (60,000) 0 (60,000) 0 0 (120,000)
Fixed Assets (90,000) 0 (110,000) 0 0 (240,000)
Incr (decr) in liabilities:
Accounts Payable 20,000 0 20,000 0 0 40,000
Accrued Liabilities 5,000 0 5,000 0 0 10,000
Note payable - Secured Creditors 0 (62,500) 0 0 (62,500) (250,000)
------- ------- ------- ------- ------- --------
Net Cash Flow (104,940) (390) (119,583) 67,059 14,342 (8,293)
Beginning cash balance 370,638 265,698 265,308 145,726 212,784 235,420
------- ------- ------- ------- ------- --------
Ending cash balance 265,698 265,308 145,726 212,784 227,127 227,127
------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- --------
</TABLE>
EXHIBIT C
-90-
EXHIBIT 6 PAGE 12 OF 15
<PAGE>
SeraCare
POST EMERGENCE FORECAST
Fourth Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenue 728,988 678,118 716,352 680,345 704,746 727,704
------- ------- ------- ------- ------- -------
Direct Expenses
Donor Fees 309,379 284,255 304,978 285,527 298,158 305,160
Salaries and
related expenses 166,690 156,705 168,385 157,731 166,360 169,875
Testing 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0
Rent 26,565 26,565 26,565 26,565 26,565 26,565
Other Direct
Expenses 90,869 87,054 87,878 87,085 87,424 87,937
------- ------- ------- ------- ------- -------
Total 593,503 554,579 587,806 556,908 578,507 589,537
------- ------- ------- ------- ------- -------
Gross Profit 135,485 123,539 128,546 123,437 126,239 138,167
Indirect Admini-
strative Expense 67,145 67,145 67,145 67,145 67,145 67,145
Interest Income (1,163) (1,296) (1,192) (1,242) (1,392) (1,333)
Interest expense 2,917 2,917 2,188 2,188 2,188 1,458
Amortization of
Goodwill 9,668 9,668 9,668 9,668 9,668 9,668
------- ------- ------- ------- ------- -------
Net Profit From
Operations 56,918 45,105 50,737 45,678 48,630 61,229
Taxes on Income 10,267 5,542 7,795 5,771 6,952 11,992
------- ------- ------- ------- ------- -------
Net Income 46,651 39,563 42,942 39,907 41,678 49,237
------- ------- ------- ------- ------- -------
Number of
locations 10 10 10 10 10 10
<CAPTION>
Month Month Month Month Month Month
7 8 9 10 11 12 TOTAL
------- ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue 802,263 833,733 825,273 891,326 905,044 939,085 9,432,977
------- ------- ------- ------- ------- ------- ---------
Direct Expenses
Donor Fees 331,358 346,909 342,964 366,609 375,144 390,513 3,940,954
Salaries and
related expenses 184,768 192,417 186,873 207,221 209,249 210,955 2,177,229
Testing 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0
Rent 29,565 29,565 29,565 32,565 32,565 32,565 345,780
Other Direct
Expenses 100,510 102,486 100,868 111,022 111,775 113,310 1,168,218
------- ------- ------- ------- ------- ------- ---------
Total 646,201 671,377 660,270 717,417 728,733 747,343 7,632,181
------- ------- ------- ------- ------- ------- ---------
Gross Profit 156,062 162,356 165,003 173,909 176,311 191,742 1,800,796
Indirect Admini-
strative Expense 70,145 70,145 70,145 73,260 73,260 73,260 833,085
Interest Income (675) (1,008) (1,154) (675) (1,008) (1,154) (13,292)
Interest expense 1,458 1,458 729 729 729 0 18,958
Amortization of
Goodwill 9,918 9,918 9,918 10,168 10,168 10,168 118,266
------- ------- ------- ------- ------- ------- ---------
Net Profit From
Operations 75,216 81,843 85,365 90,427 93,162 109,468 843,778
Taxes on Income 17,586 20,237 21,646 23,671 24,765 31,287 187,511
------- ------- ------- ------- ------- ------- ---------
Net Income 57,629 61,606 63,719 66,756 68,397 78,181 656,267
------- ------- ------- ------- ------- ------- ---------
Number of
locations 11 11 11 12 12 12
</TABLE>
EXHIBIT C
-91-
EXHIBIT 6 PAGE 13 OF 15
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
Fourth Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
Investments 124,446 179,677 175,787 211,362 268,708 271,114
Accounts
receivable-
trade 375,000 375,000 375,000 375,000 375,000 375,000
Inventory 470,000 470,000 470,000 470,000 470,000 470,000
Prepaid
expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- ---------
Total
current
assets 1,059,446 1,114,677 1,110,787 1,146,362 1,203,708 1,206,114
--------- --------- --------- --------- --------- ---------
Fixed Assets
(at cost) 995,000 995,000 995,000 1,015,000 1,015,000 1,015,000
Accumulated
depreciation (611,000) (617,000) (623,000) (629,000) (635,000) (641,000)
--------- --------- --------- --------- --------- ---------
Net Fixed
Assets 384,000 378,000 372,000 386,000 380,000 374,000
--------- --------- --------- --------- --------- ---------
Fresh Start
Goodwill 1,620,702 1,611,034 1,601,366 1,591,698 1,582,030 1,572,362
--------- --------- --------- --------- --------- ---------
Total Assets 3,064,148 3,103,711 3,084,153 3,124,060 3,165,738 3,152,476
--------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts
payable 405,000 405,000 405,000 405,000 405,000 405,000
Accrued
liabilities 145,000 145,000 145,000 145,000 145,000 145,000
Notes payable-
Secured
Creditors 250,000 250,000 187,500 187,500 187,500 125,000
--------- --------- --------- --------- --------- ---------
Total
Liabilities 800,000 800,000 737,500 737,500 737,500 675,000
--------- --------- --------- --------- --------- ---------
SHAREHOLDERS EQUITY
Paid in
surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock
@ $001 per
share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497
Current year
earnings 46,651 86,214 129,156 169,063 210,741 259,979
--------- --------- --------- --------- --------- ---------
Total
Shareholders
Equity 2,264,148 2,303,711 2,346,653 2,386,560 2,428,238 2,477,476
--------- --------- --------- --------- --------- ---------
Total
Liabilities
and Share-
holders
Equity 3,064,148 3,103,711 3,084,153 3,124,060 3,165,738 3,152,476
--------- --------- --------- --------- --------- ---------
<CAPTION>
Month Month Month Month Month Month
7 8 9 10 11 12
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
Investments 154,661 232,185 249,322 147,246 231,811 263,660
Accounts
receivable-
trade 400,000 400,000 400,000 425,000 425,000 425,000
Inventory 485,000 485,000 485,000 500,000 500,000 500,000
Prepaid
expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- ---------
Total
current
assets 1,129,661 1,207,185 1,224,322 1,162,246 1,246,811 1,278,660
--------- --------- --------- --------- --------- ---------
Fixed Assets
(at cost) 1,125,000 1,125,000 1,125,000 1,235,000 1,235,000 1,235,000
Accumulated
depreciation (647,000) (653,000) (659,000) (665,000) (671,000) (677,000)
--------- --------- --------- --------- --------- ---------
Net Fixed
Assets 478,000 472,000 466,000 570,000 564,000 558,000
--------- --------- --------- --------- --------- ---------
Fresh Start
Goodwill 1,622,444 1,612,526 1,602,608 1,652,440 1,642,272 1,632,104
--------- --------- --------- --------- --------- ---------
Total Assets 3,230,105 3,291,711 3,292,930 3,384,686 3,453,083 3,468,764
--------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts
payable 420,000 420,000 420,000 435,000 435,000 435,000
Accrued
liabilities 150,000 150,000 150,000 160,000 160,000 160,000
Notes payable-
Secured
Creditors 125,000 125,000 62,500 62,500 62,500 0
--------- --------- --------- --------- --------- ---------
Total
Liabilities 695,000 695,000 632,500 657,500 657,500 595,000
--------- --------- --------- --------- --------- ---------
SHAREHOLDERS EQUITY
Paid in
surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock
@ $001 per
share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497
Current year
earnings 317,608 379,214 442,933 509,689 578,086 656,267
--------- --------- --------- --------- --------- ---------
Total
Shareholders
Equity 2,535,105 2,596,711 2,660,430 2,727,186 2,795,583 2,873,764
--------- --------- --------- --------- --------- ---------
Total
Liabilities
and Share-
holders
Equity 3,230,105 3,291,711 3,292,930 3,384,686 3,453,083 3,468,764
--------- --------- --------- --------- --------- ---------
</TABLE>
EXHIBIT C
-92-
EXHIBIT 6 PAGE 14 OF 15
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
Fourth Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Income
After Taxes 46,651 39,563 42,942 39,907 41,678 49,237
Add:
Amortization 9,668 9,668 9,668 9,668 9,668 9,668
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000
-------- -------- -------- -------- -------- --------
Cash Flow from
Operations 62,319 55,231 58,610 55,575 57,346 64,905
-------- -------- -------- -------- -------- --------
Decr (Incr) in
current assets:
Accounts
Receivable (25,000) 0 0 0 0 0
Inventory (15,000) 0 0 0 0 0
Prepaid
Expenses 0 0 0 0 0 0
Goodwill (60,000) 0 0 0 0 0
Fixed Assets (90,000) 0 0 (20,000) 0 0
Incr (Decr) In
liabilities:
Accounts
Payable 20,000 0 0 0 0 0
Accrued
Liabilities 5,000 0 0 0 0 0
Note payable-
Secured
Creditors 0 0 (62,500) 0 0 (62,500)
-------- -------- -------- -------- -------- --------
Net Cash Flow (102,681) 55,231 (3,890) 35,575 57,346 2,405
Beginning cash
balance 227,127 124,446 179,677 175,787 211,362 268,708
-------- -------- -------- -------- -------- -------- -
Ending cash
balance 124,446 179,677 175,787 211,362 268,708 271,114
-------- -------- -------- -------- -------- -------- -
<CAPTION>
Month Month Month Month Month Month
7 8 9 10 11 12 TOTAL
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income
After Taxes 57,629 61,606 63,719 66,756 68,397 78,181 656,267
Add:
Amortization 9,918 9,918 9,918 10,168 10,168 10,168 118,266
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 72,000
-------- -------- -------- -------- -------- -------- --------
Cash Flow from
Operations 73,547 77,524 79,637 82,924 84,565 94,349 846,533
-------- -------- -------- -------- -------- -------- --------
Decr (Incr) in
current assets:
Accounts
Receivable (25,000) 0 0 (25,000) 0 0 (75,000)
Inventory (15,000) 0 0 (15,000) 0 0 (45,000)
Prepaid
Expenses 0 0 0 0 0 0 0
Goodwill (60,000) 0 0 (60,000) 0 0 (180,000)
Fixed Assets (110,000) 0 0 (110,000) 0 0 (330,000)
Incr (Decr) in
liabilities:
Payable 15,000 0 0 15,000 0 0 50,000
Accrued
Liabilities 5,000 0 0 10,000 0 0 20,000
Note payable-
Secured
Creditors 0 0 (62,500) 0 0 (62,500) (250,000)
-------- -------- -------- -------- -------- -------- --------
Net Cash Flow (116,453) 77,524 17,137 (102,076) 84,565 31,849 36,533
Beginning cash
balance 271,114 154,661 232,185 249,322 147,246 231,811 227,127
-------- -------- -------- -------- -------- -------- --------
Ending cash
balance 154,661 232,185 249,322 147,246 231,811 263,660 263,660
-------- -------- -------- -------- -------- -------- --------
</TABLE>
EXHIBIT C
-93-
EXHIBIT 6 PAGE 15 OF 15
<PAGE>
[LETTERHEAD]
[PHOTO]
LITIGATION SUPPORT & INSOLVENCY SERVICES GROUPS
S. CHELL CHELLIAH, CPA, CIRA, CFE
HEAD OF LITIGATION SUPPORT & INSOLVENCY SERVICES GROUP
Direct Line: (310) 268-2018 Fax: (310) 268-2001
EXPERIENCE SUMMARY
Mr. Chelliah is a Certified Public Accountant, a Certified Fraud
Examiner and a Certified Insolvency and Reorganization Accountant with
over twelve years experience in public accounting. Mr. Chelliah has built
his forensic accounting expertise and expert witness credentials on a
broad base of investigative audit and financial reporting experience in a
variety of industries. This makes him a particularly suitable expert in a
multitude of accounting, fraud, and financial reporting issues. In the last
six years, Mr. Chelliah has focused on forensic accounting, mergers and
acquisitions, corporate restructuring and litigation support. He has
performed investigative accounting reviews for buyers in significant
mergers and acquisition transactions and has closely assisted in
reorganizations. Mr. Chelliah has performed expert witness preparation and
testimony concerning fraud, bankruptcy issues, economic damages and
business valuations. Mr. Chelliah is an experienced in-house training
instructor, skilled in the effective use of audio visual aids and
presentation techniques, and has presented various continuing education
seminars and lectures to civic and business organizations.
Previously, Mr. Chelliah directed Chapter 7 liquidations, Chapter 11 plans
of reorganization and state court receiverships, including litigation
support services as accountant to the trustee, examiner, creditors'
committee, debtor in possession and receiver. Mr. Chelliah is highly
conversant in the investigation and related litigation of preferences and
fraudulent transfers both for plaintiffs and defendants. He has
controlled acquisition reviews involving business valuations and capital
restructuring evaluations.
EMPLOYMENT HISTORY, CREDENTIALS, AND ORGANIZATIONS
Neilson, Elggren, Durkin & Co., Los Angeles, Senior Manager, 1990 to 1994
Ernst & Young, Los Angeles, Manager, Mergers & Acquisitions, 1987 to 1990
Ernst & Young, London, U.K., Audit Supervisor, 1981 to 1986
B.S. - Bachelor of Science with Honors, University of London, U.K., 1981
A.C.A. - Chartered Accountant in England & Wales, 1985
C.P.A. - Certified Public Accountant, State of California, 1990
C.I.R.A. - Certified Insolvency and Reorganization Accountant, 1993
C.F.E. - Certified Fraud Examiner, 1993
National Association of Certified Fraud Examiners
Association of Insolvency Accountants
Los Angeles Junior Chamber of Commerce - Director 1990 & 1991
National Association of Certified Valuation Analysts
American Institute of Certified Public Accountants
California Society of Certified Public Accountants
American Bankruptcy Institute
EXHIBIT 7 PAGE 1 OF 1
78
<PAGE>
[LETTERHEAD]
MARTIN J. BRILL (State Bar No. 53220)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Telephone: (310) 277-7584
Attorneys for Debtors in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk No. LA-94-11730-AA
AMERICAN BLOOD INSTITUTE, INC. ) Chapter 11
AVRE INCORPORATED, and )
BINARY ASSOCIATES, INC. ) (Joint Administration
) of Case Nos.
Debtors ) LA-94-11730-AA;
) LA-94-11736-AA; and
) LA-94-11738-AA)
)
) ORDER APPROVING
) DISCLOSURE STATEMENT,
) SETTING TIME WITHIN
) WHICH TO SERVE PLAN AND
) DISCLOSURE STATEMENT, AND
) FIXING TIME FOR FILING
) ACCEPTANCES OR REJECTIONS
____________________________________) OF PLAN
Date: December 6, 1995
Time: 9:30 a.m.
Place: Courtroom 1375
A Disclosure Statement for Debtors' Third Amended Joint Plan of
Reorganization (the "Disclosure Statement") under Chapter 11 of the
Bankruptcy Code having been filed by American Blood Institute, Inc., AVRE,
Inc. and Binary Associates, Inc. ("Debtors") referring to a Third Amended
Joint Plan of
///
EXHIBIT A PAGE 79
<PAGE>
[LETTERHEAD]
Reorganization (the "Plan") under Chapter 11 of the Code Filed by the
Debtors;
It having been determined after hearing and notice that the Disclosure
Statement contains adequate information; it is
ORDERED, that:
A. The Disclosure Statement filed by the Debtors is approved.
B. The Debtors are authorized to serve the Disclosure Statement,
the Plan and a Ballot to vote on the Plan on creditors, interest holders and
other parties in interest.
C. Creditors and interest holders shall have at least 19 days in
which to vote on the Plan pursuant to Federal Rules of Bankruptcy Procedure
Rules 2002 (b) and 9006 (c).
DATED: December DEC 21 1995 , 1995
--------------
/s/ALAN M. AHART
---------------------------
ALAN M. AHART
UNITED STATES BANKRUPTCY JUDGE
SUBMITTED BY:
ROBINSON, DIAMANT, BRILL, & KLAUSNER
A Professional Corporation
By /s/ MARTIN J. BRILL
----------------------------------
MARTIN J. BRILL
Attorneys for Debtors
-2-
EXHIBIT A PAGE 80
<PAGE>
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California. I am
over the age of 18 and not a party to the within action; my business address
is: 1888 Century Park East, Suite 1500, Los Angeles, California 90067.
On December 7, 1995 I served the foregoing document described as:
ORDER APPROVING DISCLOSURE STATEMENT, SETTING TIME WITHIN WHICH TO SERVE
PLAN AND DISCLOSURE STATEMENT, AND FIXING TIME FOR FILING ACCEPTANCES OR
REJECTIONS OF PLAN
on the interested parties in this action by placing a true copy thereof
enclosed in a sealed envelope addressed as follows:
See attached
(x) (By Mail) I caused such envelope with postage thereon fully prepaid
to be placed in the United States mail at Los Angeles, California.
( ) (By personal service) I caused the foregoing document to be
hand-delivered to the above.
Executed on December 7, 1995 at Los Angeles, California.
(x) (Federal) I declare that I am employed in the office of a member of the
bar of this court at whose direction the service was made.
/s/ Marguerite Hardin
-------------------------------------
Marguerite Hardin
EXHIBIT A PAGE 81
<PAGE>
<TABLE>
<S> <C> <C>
ORDER APPROVING DISCLOSURE STATEMENT, Russell Clementson, Esq. CYO Financial
SETTING TIME WITHIN WHICH TO SERVE PLAN Office of the United States Trustee 2121 Avenue of the Stars
AND DISCLOSURE STATEMENT, AND FIXING TIME 221 N. Figueroa St., Suite 800 #2200
FOR FILING ACCEPTANCES OR REJECTIONS OF Los Angeles, CA 90012 Los Angeles, CA 90067-5010
PLAN
Benjamin S. Seigel, Esq. Craig N. Millet, Esq. Dale V. Goodloe
Katz, Hoyt, Seigel & Kapor Gibson, Dunn & Crutcher Blood Bank of Alaska
11111 Santa Monica Blvd., Suite 820 (For: BAXTER HEALTHCARE) 4000 Laurel Street
Los Angeles, CA 90025-3342 4 Park Plaza, Ste. 1400 Anchorage, Alaska 99508
Irvine, CA 92714
Marsha A. Boysaw, Esq. Stuart I. Schneider, Esq. Alfred Jay Moran, Jr.
Katten, Muchin et al Matthew A. Meco, Esq. ABI
(For: Lifesource) Levin, Stein, et al. 1875 Century Pk East #2130
1999 Avenue of the Stars (For: Mansay USA) Los Angeles, CA 90067
#1400 12424 Wilshire Blvd #1450
Los Angeles, CA 90067-6042 Los Angeles, CA 90025
Ronald J. Grant, Esq. Herbert C. Gibson, Esq Eric G. Lardiere, Esq.
Tilles, Webb, et al. Gibson & Adams (For: Civitan Regional Blood Center)
433 N. Camden Dr., #1010 303 Banyan Blvd #400 2049 Century Pk East #755
Beverly Hills, CA 90210 P.O. Box 1629 Los Angeles, CA 90067
West Palm Beach, FL 33402-1629
Warren L. Olson Michael D. Fort, Esq. *Kaufman & Kaufman
City National Bank Comm. Employment Security (For: Brachmann)
606 S. Olive St., 20th Flr 12th Floor, Legal Dept 200 W. Santa Ana Blvd.
Los Angeles, CA 90014 500 James Robertson Pkway #605
Nashville, TN 37245-0100 Santa Ana, CA 92701-4134
Jerry S. Phillips, Esq. John Kreis, Esq. Alan Bartz Esq
Friedman & Phillips Chrystie & Berle 19100 Von Karman Ave
(For: Stone/Kotelko) 1925 Century Park East Ste 750
10920 Wilshire Blvd. #650 Suite 2200 Irvine, CA 92715-1539
Los Angeles, CA 90024-6508 Los Angeles, California 90067
Kiran A. Phansalker, Esq. Howard E. King Esq William A. Smelko, Esq.
The Hastie Law Firm King, Purtich & Holmes Webb, Smelko & Carey
3000 Oklahoma Tower 2121 Avenue of the Stars 350 West Ash St., #701
210 Park Avenue 22nd Floor San Diego, CA 92101
Oklahoma City, OK 73102 Los Angeles, CA 90067
Richard L. Wynne, Esq.
Wynne Spiegel Itkin
1901 Avenue of the Stars
Ste. 1600
Los Angeles, CA 90067-6080
</TABLE>
EXHIBIT A PAGE 82
<PAGE>
NOTE TO USER OF THIS FORM:
PHYSICALLY ATTACH THIS FORM AS THE LAST PAGE OF THE PROPOSED ORDER OR JUDGMENT.
DO NOT FILE THIS FORM AS A SEPARATE DOCUMENT.
_______________________________________________________________________________
In re (SHORT TITLE) CHAPTER 11 CASE NUMBER:
AMERICAN BLOOD INSTITUTE ------
Debtor. LA-94-11730-AA
_______________________________________________________________________________
NOTICE OF ENTRY OF JUDGMENT OR ORDER
AND CERTIFICATE OF MAILING
TO ALL PARTIES IN INTEREST ON THE ATTACHED SERVICE LIST:
1. You are hereby notified, pursuant to Local Bankruptcy Rule 116(1)(a)(iv),
that a judgment or order entitled (SPECIFY):
ORDER APPROVING DISCLOSURE STATEMENT, ETC.
was entered on (SPECIFY DATE):
Dec. 22, 1995
2. I hereby certify that I mailed a copy of this notice and a true copy of the
order or judgment to the persons and entities on the attached service list
on (SPECIFY DATE):
Dec. 25, 1995
Dated: JON D. CERETTO
Clerk of the Bankruptcy Court
By: /s/ illegible
----------------------------------------
Deputy Clerk
EXHIBIT A PAGE 83
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ORDER APPROVING DISCLOSURE STAEMENT, Russell Clementson, Esq. CYO Financial
SETTING TIME WITHIN WHICH TO SERVE PLAN Office of the United States Trustee 2121 Avenue of the Stars
AND DISCLOSURE STATEMENT, AND FIXING TIME 221 N. Figueroa St., Suite 800 #2200
FOR FILING ACCEPTANCES OR REJECTIONS OF Los Angeles, CA 90012 Los Angeles, CA 90067-5010
PLAN
Benjamin S. Seigel, Esq. Craig N. Miller, Esq. Dale V. Goodloe
Katz, Hoyt, Seigel & Kapor Gibson, Dunn & Crutcher Blood Bank of Alaska
11111 Santa Monica Blvd., Suite 820 (For: BAXTER HEALTHCARE) 4000 Laurel Street
Los Angeles, CA 90025-3342 4 Park Plaza, Ste 1400 Anchorage, Alaska 99508
Irvine, CA 92714
Marsha A. Boysaw, Esq. Stuart I. Schneider Esq Alfred Jay Moran, Jr.
Katten, Muchin et al Matthew A. Meco, Esq. ABI
(for: Lifesource) Levin, Stein, et al. 1875 Century Pk East #2130
1999 Avenue of the Stars (for: Mansy USA) Los Angeles, CA 90067
#1400 12424 Wilshire Blvd. #1450
Los Angeles, CA 90067-6042 Los Angeles, CA 90025
Ronald J. Grant, Esq. Herbert C. Gibson, Esq Eric G. Lardiere, Esq.
Tilles, Webb, et al. Gibson & Adams (For: Civitan Regional Blood Center)
433 N. Camden Dr., #1010 303 Banyan Blvd #400 2049 Century Pk East #755
Beverly Hills, CA 90210 P.O. Box 1629 Los Angeles, CA 90067
West Palm Beach, FL 33402-1629
Warren L. Olson Michael D. Fort, Esq. *Kaufman & Kaufman
City National Bank Comm. Employment Security (For: Brachmann)
606 S. Olive St., 20th Flr. 12th Floor, Legal Dept 200 W. Santa Ana Blvd.
Los Angeles, CA 90014 500 James Robertson Pkway #605
Nashville, TN 37245-0100 Santa Ana, CA 92701-4134
Jerry S. Phillips, Esq. John Kreis, Esq. Alan Bartz Esq
Friedman & Phillips Chrystie & Berle 19100 Von Karman Ave
(For: Stone/Kotelko) 1925 Century Park East Ste 750
10920 Wilshire Blvd. #650 Suite 2200 Irvine, CA 92715-1539
Los Angeles, CA 90024-6508 Los Angeles, California 90067
Kiran A. Phansalker, Esq. Howard E. King Esq William A. Smelko, Esq.
The Hastie Law Firm King, Purtich & Holmes Webb, Smelko & Carey
3000 Oklahoma Tower 2121 Avenue of the Stars 350 West Ash St., #701
210 Park Avenue 22nd Floor San Diego, CA 92101
Oklahoma City, OK 73102 Los Angeles, CA 90067
Richard L. Wynne, Esq. ROBINSON, DIAMANT, BRILL & KLAUSNER
Wynne Spiegel Itkin 1888 CENTURY PARK EAST
1901 Avenue of the Stars SUITE 1500
Ste. 1600 LOS ANGELES, CALIFORNIA 90067
Los Angeles, CA 90067-6080
</TABLE>
EXHIBIT A PAGE 84
<PAGE>
[LETTERHEAD]
December 7, 1995
To: UNSECURED CREDITORS OF AMERICAN BLOOD INSTITUTE, AVRE INC. AND
BINARY ASSOCIATES, INC.
We have been counsel to the unsecured creditors committee since the
inception of these cases. The Committee has monitored all of the debtors'
prior efforts to formulate a plan of reorganization that would permit
unsecured creditors of the three debtors to receive a reasonable dividend.
The Committee believes that the plan of reorganization that accompanies
the enclosed disclosure statement is the last opportunity that unsecured
creditors will have to receive any recovery.
Those creditors who have been following the activities in this case are
aware of the fact that CVD Financial has been granted relief from the
automatic stay provisions of the Bankruptcy Code. If the debtors' proposed
plan of reorganization is not confirmed, CVD will undoubtedly move forward to
foreclose on its collateral and as a result, the unsecured creditors of all
three debtors will receive nothing.
The Committee recommends that the proposed plan of reorganization be
confirmed and it urges all unsecured creditors to vote in favor of the plan.
To do so, creditors must indicate their acceptance of the plan on the
enclosed ballot and return it to the attorney for the debtors in the
envelope that has been provided. Ballots must be received by December 29,
1995 to be counted. However, in order to forestall CVD's foreclosure
action it would be helpful if you returned your ballot by December 19,
1995. Therefore, we ask that you give this matter your immediate attention
and mark and return your ballot today.
Very truly yours,
KATZ, HOYT, SEIGEL, & KAPOR
/s/ BENJAMIN S. SEIGEL
BENJAMIN S. SEIGEL, Counsel to the
Committee of Creditors Holding
Unsecured Claims
BSS/jn
EXHIBIT B PAGE 85
<PAGE>
UNITED SATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA-94-11730-AA
) Chapter 11
AMERICAN BLOOD INSTITUTE, INC., )
a Delaware Corporation; )
AVRE INCORPORATED, a Nevada corporation; ) (Joint Administration of Case Nos.
and BINARY ASSOCIATES, INC., ) LA-94-11730-AA,
a Colorado corporation, ) LA-94-11736-AA and
) LA-94-11738-AA)
Debtors. )
) (Case Not Consolidated)
)
) B A L L O T
)
) FOR ACCEPTING OR REJECTING
) THIRD AMENDED JOINT PLAN OF
) REORGANIZATION
- ------------------------------------------
The Debtors' Third Amended Joint Plan of Reorganization (the "Plan") can be
confirmed by the Court and thereby made binding on you if it is accepted by
the holders of two-thirds in amount and more than one-half in number of
claims in each class and the holders of two-thirds in amount of equity
security interests in each class voting on the Plan. In the event the
requesite acceptances are not obtained, the Court may nevertheless confirm a
plan if the Court finds that the Plan accords fair and equitable treatment
to the Class rejecting it. To have your vote count, you must complete and
return this Ballot.
The undersigned is a creditor (as defined in the Debtors' Plan and set forth
below) of the above-named Debtors, having a claim in the sum of
$ , and votes as follows:
-------------
( ) Class 3 General unsecured creditors of American Blood
Institute, Inc.
( ) Class 4 Unsecured Note holders of American Blood
Institute, Inc.
( ) Class 5 General unsecured creditors of AVRE, Inc.
( ) Class 6 General unsecured creditors of Binary
Associates, Inc.
and votes to:
( ) Accept ( ) Reject
the Debtors' Third Amended Joint Plan of Reorganization.
DATED: , 1995
---------
PRINT OR TYPE NAME:
---------------------------------
(Company Name, if Applicable)
SIGNED:
---------------------------------
CORPORATE TITLE (If any)
----------------------------
ADDRESS:
---------------------------------
---------------------------------
RETURN THIS BALLOT ON OR BEFORE 5:00 PM PST, NO LATER THAN
DECEMBER 29, 1995 TO:
ROBINSON, DIAMANT, BRILL & KLAUSNER
Attn: Martin J. Brill, Esq.
1888 Century Park East, Suite 15000
Los Angeles, California 90067
EXHIBIT B PAGE 86
<PAGE>
MARTIN J. BRILL (Bar No. 53220)
DOUGLAS D. KAPPLER (Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Attorneys for Debtors
UNITED SATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA-94-11730-AA
)
AMERICAN BLOOD INSTITUTE, INC. ) Chapter 11
AVRE INC. and ) (Joint Administration of Case Nos.
BINARY ASSOCIATES, INC. ) LA-94-11730-AA;
) LA-94-11736-AA; and
1875 Century Park East ) LA-94-11738-AA)
Suite 2130 )
Los Angeles, CA 90067 ) NOTICE OF:
)
I.D. Nos. ) (1) Hearing to Consider
95-4343492 ) Confirmation of Plan;
88-0242558 ) (2) Time Fixed for
94-2344650 ) Filing Acceptances or
) Rejections of Plan
)
) Date: January 24, 1996
) Time: 10:30 a.m.
) Place: Courtroom 1375
- -------------------------------
TO THE CREDITORS OF THE ABOVE ESTATES AND OTHER PARTIES IN INTEREST:
PLEASE TAKE NOTICE that a hearing will be held before the
Honorable Alan M. Ahart, United States Bankruptcy Judge, on January 24, 1996
at 10:30 a.m., in his Courtroom 1375, Roybal Federal Building, 255 East
Temple, Los Angeles, California 90012, to consider confirmation of the
Debtors' Third Amended Joint Plan of Reorganization (the "Plan"). The Plan
and the Debtors' Disclosure Statement accompany this Notice.
EXHIBIT B PAGE 87
<PAGE>
PLEASE TAKE FURTHER NOTICE that Ballots accepting or rejecting the plan
must be returned to the Debtor at the following address so that they are
received no later than 5:00 PM, Pacific Standard Time, on December 29, 1995.
Robinson, Diamant, Brill & Klausner
A Professional Corporation
Attn: Martin J. Brill
1888 Century Park East, Suite 1500
Los Angeles, California 90067
PLEASE TAKE FURTHER NOTICE that the Debtor's Confirmation Motion will
only be served upon the United States Trustee, the Official Creditors'
Committee and all impaired creditors and equity security holders who reject
the Plan.
Dated: December 8, 1995
Robinson, Diamant, Brill & Klausner
A Professional Corporation
By /s/ MARTIN J. BRILL
--------------------------------
MARTIN J. BRILL
Attorneys for Debtors
EXHIBIT B PAGE 88
<PAGE>
MARTIN J. BRILL (State Bar No. 53220)
DOUGLAS D. KAPPLER (State Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Telephone: (310) 277-7584
Attorneys for Debtors in Possession
UNITED SATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA-94-11730-AA
) Chapter 11
AMERICAN BLOOD INSTITUTE, INC., a )
Delaware corporation; AVRE INC., a ) (Joint Administration of Case Nos.
Nevada corporation; and BINARY ) LA-94-11730-AA,
ASSOCIATES, INC., a Colorado ) LA-94-11736-AA, and
corporation, ) LA-94-11738-AA)
)
Debtors. ) (Cases Not Consolidated)
)
) DISCLOSURE STATEMENT FOR THIRD AMENDED
) JOINT PLAN OF REORGANIZATON OF AMERICAN
) BLOOD INSTITUTE, INC.; AVRE, INC.; AND
) BINARY ASSOCIATES, INC.; DECLARATION OF
) ALFRED JAY MORAN, JR.
)
)
- -----------------------------------
EXHIBIT B PAGE 89
<PAGE>
TABLE OF CONTENTS
PAGE
----
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. VOTING AND CONFIRMATION PROCEDURES . . . . . . . . . . . . . . . . . 1
III. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IV. BACKGROUND AND HISTORY OF DEBTORS . . . . . . . . . . . . . . . . . . 2
A. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Product . . . . . . . . . . . . . . . . . . . . . . . . 3
3. The Industry and The Market . . . . . . . . . . . . . . . . 3
4. Quality Plasma Program (QPP) Certification . . . . . . . . 4
5. Current Operations . . . . . . . . . . . . . . . . . . . . 4
6. Business Strategy . . . . . . . . . . . . . . . . . . . . . 4
7. Management . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. Ownership . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. History of the Plasma Centers . . . . . . . . . . . . . . . 5
C. The Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
D. Business Strategy . . . . . . . . . . . . . . . . . . . . . . . 6
E. Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Management . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Regulatory Issues . . . . . . . . . . . . . . . . . . . . . 9
V. REASONS FOR FILING BANKRUPTCY CASES . . . . . . . . . . . . . . . . . 9
VI. SIGNIFICANT EVENTS DURING THE CHAPTER 11 PROCEEDINGS . . . . . . . . 9
A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
B. Appointment of Creditors Committee . . . . . . . . . . . . . . . 10
C. Retention of Professionals . . . . . . . . . . . . . . . . . . . 10
D. Payment of Priority Wages . . . . . . . . . . . . . . . . . . . 10
E. Joint Administration of Chapter 11 Cases . . . . . . . . . . . . 10
F. Extension of Exclusivity . . . . . . . . . . . . . . . . . . . . 11
G. Unexpired Leases and Executory Contracts . . . . . . . . . . . 11
H. Sales of Property . . . . . . . . . . . . . . . . . . . . . . . 11
I. Debtor Financing . . . . . . . . . . . . . . . . . . . . . . . . 11
J. Motion For Relief From Stay by CVD . . . . . . . . . . . . . . . 12
K. Stipulation Re Administrative Claim of Drs. Frisch and Golding . 12
L. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 12
-i-
EXHIBIT B PAGE 90
<PAGE>
TABLE OF CONTENTS (CONTINUED)
PAGE(S)
-------
VII. SUMMARY OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Administrative Priority Claims . . . . . . . . . . . . . . 13
2. Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . 14
3. Priority Claims, Class 1 . . . . . . . . . . . . . . . . . 14
4. The Secured Claims of CVD - Class 2 . . . . . . . . . . . . 14
5. Unsecured Creditors of ABI - Class 3 . . . . . . . . . . . 15
6. Unsecured Note Holders - Class 4 . . . . . . . . . . . . . 15
7. Unsecured Creditors of AVRE - Class 5 . . . . . . . . . . . 15
8. Unsecured Creditors of Binary - Class 6 . . . . . . . . . . 15
9. Preferred and Common Equity Interests of ABI - Class 7 . . 15
10. Common Equity Interest Holder of AVRE and
Binary - Class 8 . . . . . . . . . . . . . . . . . . . . . 15
VIII. ANALYSIS OF CLAIMS BY CLASS . . . . . . . . . . . . . . . . . . . . 16
A. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 17
X. POST-REORGANIZATION OPERATION OF REORGANIZED DEBTORS . . . . . . . . 17
XI. COMPARISON OF THE DEBTORS' PLAN TO ALTERNATIVES . . . . . . . . . . . 18
XII. LIQUIDATION ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . 20
XIII. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1. Financial Projections . . . . . . . . . . . . . . . . . . . 23
2. National Restrictions On The Import Of Plasma . . . . . . . 23
3. Development Of Recombinant Products . . . . . . . . . . . . 23
XIV. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN . . . . . . . . . 24
XV. STATUS AND RESALE OF SECURITIES TO BE ISSUED PURSUANT TO PLAN . . . . 25
XVI. ACCEPTANCE AND CONFIRMATION . . . . . . . . . . . . . . . . . . . . . 25
A. Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. Confirmation Without Acceptance By All Impaired Classes . . . . 26
XVII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
DECLARATION OF ALFRED JAY MORAN, JR. . . . . . . . . . . . . . . . . . . . 28
-ii-
EXHIBIT B PAGE 91
<PAGE>
TABLE OF AUTHORITIES
STATUTES PAGE(S)
-------
11 U.S.C. Section 507 . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 U.S.C. Section 1102 . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 U.S.C. Section 1121 (b) . . . . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. Section 1129 (b) . . . . . . . . . . . . . . . . . . . . . . . . 2
11 U.S.C. Section 1145 . . . . . . . . . . . . . . . . . . . . . . . . . . 25
OTHER
Securities Act of 1933, Rule 144 . . . . . . . . . . . . . . . . . . . . . 25
-iii-
EXHIBIT B PAGE 92
<PAGE>
I.
INTRODUCTION
Contemporaneously with this Disclosure Statement, American Blood Institute,
Inc. ("ABI"), AVRE, Inc. ("AVRE") and Binary Associates, Inc. ("Binary"),
Debtors in Possession herein (collectively the "Debtors") have filed with the
Bankruptcy Court a proposed Third Amended Joint Plan of Reorganization (the
"Plan").
The Plan herein provides for the continued operation of the Debtors under
the new name SeraCare, Inc. ("SeraCare"). Having divested its unprofitable
whole blood collection business, SeraCare will concentrate on operation and
development of its plasma collection centers.
Under the Plan, Unsecured Creditors of ABI will receive approximately 10%
of the allowed amount of their Claims, a pro rata distribution of 10,000 shares
of Reorganized ABI's (SeraCare's) common stock and fifty percent of any net
affirmative recovery received by the Debtors against recipients of avoidable
transfers. Holders of Unsecured Notes of ABU will receive securities in
Reorganized ABI. Holders of equity interests of ABI will not receive any
distributions. General unsecured creditors of AVRE and Binary will receive cash
distributions totaling 80% of the allowed amount of their claims.
II.
VOTING AND CONFIRMATION PROCEDURES
After notice and hearing, this Disclosure Statement was approved by the
Bankruptcy Court as containing adequate information in sufficient detail to
enable the Holders of Claims against the Debtors to make an informed judgment
about the merits of approving the Plan of Reorganization.
THE PLAN OF REORGANIZATION IS SET FORTH IN FULL IN EXHIBIT "A" TO THIS
DISCLOSURE STATEMENT. EACH RECIPIENT OF THIS DISCLOSURE STATEMENT IS URGED TO
REVIEW THE PROVISIONS OF THE PLAN OF REORGANIZATION FULLY PRIOR TO REVIEWING
THIS DISCLOSURE STATEMENT.
The Bankruptcy Court will set a hearing on the Confirmation of the Plan of
Reorganization after Creditors have voted. Creditors may vote on the Plan of
Reorganization by filling out and mailing the accompanying Ballot for Accepting
or Rejecting Plan of Reorganization to Douglas D. Kappler of Robinson, Diamant,
Brill & Klausner, A Professional Corporation, 1888 Century Park East, Suite
1500, Los Angeles, California 90067. In order for Creditors' votes to count,
ballots must be received on or before December 29, 1995. The Debtors will file
the ballots timely received with the Bankruptcy Court.
Each Creditor is entitled to vote for or against the Plan. As a Creditor your
vote is important. The Bankruptcy Court cannot consider Confirmation of the
Plan or Reorganization until acceptance thereof has been
-1-
EXHIBIT B PAGE 93
<PAGE>
obtaining pursuant to the affirmative vote of each impaired class of Creditors
who holds at least two-thirds ( 2/3 ) in dollar amount and more than one-half
(1/2) in number of the allowed Claims of such classes voting on the Plan of
Reorganization. Following acceptance, the Bankruptcy Court will hold a hearing
on the Confirmation of the Plan of Reorganization and will enter an Order of
Confirmation with respect to the Plan of Reorganization if it finds that, among
other things, all payments to be made by the Debtors in connection with the case
or Plan of Reorganization have been disclosed to the Bankruptcy Court; each
class of Creditors has accepted the Plan of Reorganization or is not impaired by
the provisions thereof, and that Confirmation is nor likely to be followed by
the liquidation or need for further financial reorganization of the Reorganized
Debtor.
The Plan of Reorganization may be confirmed even if it is not accepted by
all of the classes of Creditors if the Bankruptcy Court finds that the Plan does
not discriminate unfairly against and is "fair and equitable" as to such class
or classes. This provision, set forth in Section 1129 (b) of the Bankruptcy
Code, requires that, among other things, the claimants in the impaired classes
must either receive the full value of their Claims or, if they receive less
than the full value of their Claims, no class with junior liquidation priority
may receive anything and no senior claimant may receive more than full payment.
Section 1129 (b) is a complex provision and this summary is not intended to be a
complete statement of the law. The Debtor will elect to rely upon this
provision to seek Confirmation of the Plan if it is not accepted by each
impaired class of Creditors.
NO REPRESENTATIONS CONCERNING THE DEBTORS' FINANCIAL CONDITION, THE PLAN OF
REORGANIZATION, OR THE VALUE OF THE ASSETS TO BE LIQUIDATED PURSUANT TO THE PLAN
ARE AUTHORIZED BY THE DEBTORS OTHER THAN AS SET FORTH IN THIS DISCLOSURE
STATEMENT.
III.
DEFINITIONS
Unless otherwise provided in this Disclosure Statement for the Plan, all terms
used herein shall have the meanings assigned to such terms in Title 11 of the
United States Code. For purposes of both this Disclosure Statement and the
Plan, the terms defined in the Plan shall have the meanings set forth in
Articles I of the Plan entitled "Definitions," which Article is incorporated
herein by this reference. A copy of the Plan is attached hereto as Exhibit "A."
IV.
BACKGROUND AND HISTORY OF DEBTORS
A. SUMMARY.
1. OVERVIEW
American Blood Institute, Inc. ("ABI" or the "Company") is a company
engaged in the business of owning and operating of plasma collection centers.
Initially, the Company was engaged in the collection and distribution of
-2-
EXHIBIT B PAGE 94
<PAGE>
whole blood on a "for-profit" basis. When the current management analyzed the
whole blood business, it was determined that (a) the Company had lost
significant sums of money, (b) the whole blood business in California was too
cost intensive, and (c) the Plasma business presented an opportunity to build a
significant operation relatively quickly. As a result, the blood collection
activities were ceased and six (6) plasma collection centers were acquired. The
Company currently owns and operates six such centers.
ABI filed for reorganization under Chapter 11 when CVD Financial
Corporation ("CVD") commenced foreclosure upon ABI's assets. The Company is
completing its operational turnaround, and has filed its Second Amended Chapter
11 Plan or Reorganization together with this Disclosure Statement.
2. THE PRODUCT.
ABI's product is source plasma. It is the strategy of ABI to build its
source plasma operation via acquisition of ABRA Quality Plasma Program (QPP)
certified plasma centers throughout the United States and then convert
certain of its facilities to the collection of hyperimmune plasma; however,
for the purposes of this statement source plasma will be the only product
discussed. Source plasma is collected from humans, and is the liquid part of
blood. When plasma is donated during a procedure similar to that of giving
blood, the clear plasma is mechanically separated from the cellular elements
of the blood, with the later being returned to the donor. Plasma carries many
needed substances including valuable proteins and antibodies. After
donation, the plasma is shipped to pharmaceutical manufacturers who
fractionate (separate) the proteins and antibodies as part of processes to
manufacture a large number of both therapeutic and diagnostic products.
These products are used throughout the world to prevent and treat illnesses
and to treat injuries. Plasma products are the fastest growing segment of the
blood products industry and also provide vital raw materials for medical and
biotechnology research and development.
3. THE INDUSTRY AND THE MARKET.
There are currently approximately 440 plasma collection centers located
across the United States which supply 65% of the world's plasma needs. These
collection centers, which are protected under the blood immunity statutes, sell
their plasma to fractionators of which the top five are located in the United
States. Four of these five are large international companies. Commercial
source plasma operations are relatively new, beginning in the early 1960's.
The industry has grown rapidly and for the past few years, collection has
averaged around 7.5 million liters within the United States. Of this amount,
approximately 4.5 million liters is collected by or sold to major fractionators
in the U.S. Such plasma is usually sold under a long term contract, with the
fractionator paying the cost of testing and soft goods.(1) The balance is sold,
often through brokers into the spot market to
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(1) Soft goods are items such as containers, tubing and other materials
which are consumed during the plasma collection process. Testing consists of
assays to ensure that collected plasma is free from infection with, for example,
Hepatitis A, B & C and the HIV viruses.
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(usually) European customers. Plasma contracted to U.S. fractionators
typically sells for between $40 and $48 per liter. Spot market plasma sells
for approximately $76 per liter. The cost of producing plasma for the spot
market, however, must include the price of testing and soft-goods (currently
around $29 per liter).
4. QUALITY PLASMA PROGRAM (QPP) CERTIFICATION.
Within the past five years, American Blood Resources Association (ABRA),
the plasma industry trade association with self-regulatory powers, has
created a certification called Quality Plasma Program (herein called "QPP").
The QPP certification program has been successful in upgrading the United
States plasma collection industry in that a QPP certification of a Plasma
Center requires that the centers follow strict rules including facilities
upgrade, high operating standards, minimum FDA citations, strict donor
screening for drug and disease, bona fide addresses for donors, etc.
The result of the QPP program is that non-QPP plasma is less and less
desirable in the world plasma market. United States QPP plasma is considered to
be of a high quality worldwide, thus, providing product differentiation based
upon quality in the world market for United States collected plasma.
When ABI purchased AVRE and Binary, none of the six centers were QPP
certified. Under the current management, the Company has received QPP
certification for all of its six centers.
5. CURRENT OPERATIONS.
ABI's six plasma collection locations were the result of an acquisition of
two companies: AVRE, Inc. ("AVRE") and Binary Associates, Inc. ("Binary"). These
facilities owned by AVRE and Binary currently collect approximately 9,500 liters
of plasma per month. Approximately 30% of this product is currently sold under
a long-term contract to Alpha Therapeutics, a subsidiary of Green Cross of
Japan. Approximately 60% of the production is sold through brokers to European
fractionators. The balance represents tetanus and CMV hyperimmune plasma which
is sold domestically. Forecasted pretax profits before bankruptcy and
extraordinary expenses for the year ended December 31, 1995 are estimated at
$300,000.2/
6. BUSINESS STRATEGY.
ABI believes there is an opportunity to improve the profitability of the
present centers. To this end, management has been involved in re-negotiating
plasma contracts on more favorable terms as they come due, and has been working
to increase the operating efficiency of the individual centers. The Company
also intends to expand by purchasing additional centers through the use of
warrants, a secondary offering or other financial vehicles available at the
discretion of the Board of Directors. It is also felt that operations will
generate significant amounts of cash annually which can ultimately be
- -------------------
2/ ABI currently has a tax loss carry-forward of approximately $6
million. Therefore the company does not expect to pay tax on income until
1996.
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invested in additional centers or into derivative businesses including
hyperimmune plasma collection.
7. MANAGEMENT.
ABI has assembled an experienced management team including individuals with
many years' experience in source plasma collection, business turnaround
management, strategic business planning and corporate finance.
B. BACKGROUND.
American Blood Institute was founded and incorporated with its original
purpose to enter the blood collection and distribution business on a "for
profit" basis. Originally conceived as a "Blood Bank" with national roll-out
potential, ABI lost significant sums of money until 1993, when following an
analysis of the company and the industry, new management decided that the
original business was:
a. Overly complicated,
b. Too highly regulated, and
c. Not economically feasible in California as a "for profit" business.
At that time, the strategic direction of the Company was changed whereby
it was determined to acquire a core group of plasma collection centers and
ultimately to discontinue the whole blood operations. ABI acquired AVRE and
Binary and immediately entered into renegotiations of the plasma sales
contracts, began developing marketing strategies including demographic
studies and donor pricing analysis, applied for QPP designation on five of
the six centers, and began to establish consistent policies and strategies in
order to compete in the emerging QPP Plasma industry.
For the fiscal year ending December 31, 1993, ABI lost approximately $2.7
Million. For the fiscal year ending December 31, 1994, ABI, AVRE and Binary
broke even before extraordinary and chapter 11 expenses.
1. OWNERSHIP.
ABI common stock is currently held by the following entities.
Gerant Industries, Inc. 25%
Conversion Industries, Inc. 28%
Essex Venture Partners, L.P. 17%
Others 30%
Alfred Jay Moran, Jr., Chairman of the Board and President of Gerant, is
Chairman, President and CEO of ABI.
2. HISTORY OF THE PLASMA CENTERS.
In 1976, Binary was started by Dale Gallinatti and Larry Carey (both of
whom are no longer with the company) with one plasma center located in Nogales,
Arizona. The owners later added a second corporation, AVRE. Over
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the years, the two corporations had as many as ten plasma centers, but by 1993
the number had been reduced to six. In October 1993, ABI purchased both Binary
and AVRE for $1 million. The purchase was made with a $1 million loan from CVD
which was guaranteed by Company Industries, Inc. ("Conversion"). Gerant owned
over 60% of the Company prior to the CVD loan, but was required to give 1/2 of
its ownership in ABI as a fee to Conversion in order to obtain the financing.
C. THE MARKET.
The blood resource industry can be divided into two industry segments.
One is the non-profit or voluntary whole blood sector which is commonly
thought of as Red Cross or regional blood centers. The other is the
commercial or for-profit segment as plasma collection centers.
The non-profit sector is primarily concerned with providing whole blood and
components of blood for transfusion in medical applications.
The for-profit commercial sector commonly collects plasma from paid donors
and sells this source plasma to fractionators who then produce plasma products
or fractions which are used in the prevention and/or treatment for various
illnesses and injuries.
The U. S. plasma industry has continued to expand rapidly, and in 1990
there were about 50,000 donor collections per day. This total came from a donor
pool of just over 1 million individuals. There were 23 new licensed source
plasma centers opened in 1989 and 22 more in 1990 bringing the total to 440
located in the U.S.
The commercial U.S. source plasma centers collected over 7 million liters
of plasma. The market is structured among centers owned by both foreign and
U.S. fractionators and by independent companies who sell to diagnostic companies
and other fractionators.
Because of its position as a world leader in medicine and medical biotech
development, the United States plays the leading role in supplying the world's
source plasma. This is due to our superior health standards and our seeming
obsession with a high degree of regulation resulting in a superior source plasma
product. The United States commercial sector provides 65% of the world's plasma
needs.
D. BUSINESS STRATEGY.
The fundamental elements of the strategy which underlie the Debtors'
forecast are:
a. Managing the existing centers effectively to increase
operating efficiency and monthly volume
b. Upgrading all facilities to meet recent industry quality
standards for plasma collection centers (QPP standards).
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c. Paying close attention to trends in the plasma market in order to
maintain an optimum mix of contract and spot market sales.
E. OPERATIONS.
The Debtors currently operate six plasma centers at the following
locations:
* Clarksville, Tennessee
* Colorado Springs, Colorado (2 centers)
* Las Vegas, Nevada
* Phoenix, Arizona
* Pueblo Colorado
These locations are forecasted to collect approximately 105,000 liters of
plasma in calendar year 1995. This represents an increase of approximately
26,000 liters over 1993 and 10,000 liters over 1994. Management expects to
see continued growth resulting from better marketing (donor recruitment)
practices, better customer service (donor throughput), more attention to the
yield of plasma per donor and increased margins from the Company's hyperimmune
plasma programs.
1. MANAGEMENT.
ABI is headquartered in Los Angeles, California and operates with a small
head office staff in addition to the employees at the collection centers.
The Board of Directors will be comprised of five members. The members
will be: Alfred Jay Moran, Jr., Chairman, President and Chief Executive
Officer of ABI and Samuel Anderson, former Chairman and Chief Executive
Officer of Alpha Therapeutics. The three remaining Board Member positions
will be selected by the purchasers of the $1.2 million in Debtor's Notes (the
"Investor Group").
Alfred Jay Moran, Jr.
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
Mr. Moran is Chairman, President and Chief Executive Officer of the
Company. Mr. Moran is also President and CEO of Gerant Industries, Inc., one of
the major shareholders of ABI. Mr. Moran has been personally responsible for
ABI's restructure and conversion to a plasma company. Mr. Moran is formerly a
Managing Consultant of Kibel, Green, Inc., the largest crisis management
consulting turnaround firm in the Western United States, where he has executed
many restructurings since 1987. The firm, composed mainly of former CEOs,
provides management expertise in turnaround and crisis situations, typically for
engagements lasting from three months to one year. He left Kibel, Green briefly
in 1990 to become President of WET Enterprises, Inc. a company engaged in the
design, engineering and installation of major water features for theme parks and
large installations throughout the world.
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He served as Chairman and Chief Executive Officer of Moran Group
Companies from 1978 to 1987. The company provided commercial printing
services, paper management systems, consulting and business form production
services from its facilities in Dallas, Houston, New Orleans, Philadelphia,
St. Louis, Baton Rouge and Shreveport. Between 1970 and 1978 Mr. Moran was a
Vice President and member of the Board of Directors of Coenen & Co., a NYSE
Member investment banking and institutional brokerage firm in New York.
Mr. Moran received an MBA from the Harvard Business School in 1969 and a
BA in Philosophy from the University of North Carolina at Chapel Hill in 1967.
He is a member of Young Presidents Organization-Graduates (YPO-G).
Jerry L. Burdick
EXECUTIVE VICE PRESIDENT OF FINANCE & ADMINISTRATION
Jerry Burdick is Chief Financial and Administrative Officer of the
Company. He has over 20 year's experience and a proven track record in
designing and implementing profitability programs, management controls,
financial systems and SEC compliance practices and procedures. Most recently,
he was employed to analyze business operations and develop revitalization
plans for two successful Chapter 11 turnarounds.
Jerry Burdick has operated his own consulting practice since 1988 and has
held key financial management positions at International Rectifier
Corporation, Candle Corporation, Getty Oil Company, and Whittatker
Corporation. Mr. Burdick is a California Certified Public Accountant and
holds an MBA in economics and marketing, a BBA in accounting and a second BBA
in business management from Woodbury University in Glendale, California. Mr.
Burdick also completed one year of law school and has served both as an
expert witness and as a litigation consultant in various legal proceedings.
Brian Olson
VICE PRESIDENT OF OPERATIONS
Mr. Olson is the Vice President of Operations of ABI, AVRE and Binary.
Prior to joining ABI in 1992, he spent fourteen years with Alpha Therapeutics
Corporation, the largest collector and frationator of plasma in the United
States. During his tenure at Alpha, he served in many capacities including
Center Director, Regional Director, Employee Relations Manager, Corporate Real
Estate Manager and Director of Plasma Supply. In addition, he started a new
business venture for Alpha, providing highly technical therapeutic services to
hospitals in San Jose, California and Miami, Florida.
During a hiatus from Alpha Therapeutics, he spent one year as Real Estate
and Facilities Manager for Hamilton Avnet of Culver City, California. He
managed over sixty facilities in the United States and Canada as well as
negotiated and procured all commercial leases.
Prior to joining Alpha Therapeutics, Mr. Olson worked primarily in health
care related fields including hospital administration as well as various
management positions in Respiratory Therapy and Nursing. He served three years
in the United States Army, ANC, and was discharged with the rank of Captain.
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Mr. Olson attended Western Reserve University and graduated from St.
Luke's Hospital School of Nursing in 1965. In addition, he has completed
graduate work in Respiratory Therapy at Northeastern University. He has guest
lectured on pulmonary physiology at Purdue University, University of Chicago,
Northern Michigan University and University of Illinois.
2. REGULATORY ISSUES.
The plasma collection and derivative industry is one of the most heavily
regulated in the United States. Federal, state and local regulation are
basically designed to protect the health of the donors as well as the
integrity of the products. Although the Food and Drug Administration
administers the particulars of the Code of Federal Regulations rather evenly
across the country, patchworks of state and local regulations can be, in some
cases, very restrictive. In recent years, as a result of some "less than
perfect" practices in the blood and plasma industry, the FDA has become much
more focused on plasma centers and blood banks in general. Recent history has
demonstrated this by the actual closing of a number of blood banks and plasma
centers in the United States because of legal action taken by the FDA. The
Company's management has, and will continue to, closely monitor the compliance
with regulations as well as with overall quality assurance standards.
V.
REASONS FOR FILING BANKRUPTCY CASES
Because of six years of losses in the whole blood collection and
distribution business and their accumulated debt, new management decided to
effect a strategic refocusing of operations via an effort to reorganize
voluntarily outside of bankruptcy. That effort was initially agreed to by
CVD which later attempted to foreclose on ABI's primary assets thereby
forcing ABI to file for protection under the provisions of Chapter 11 of the
Federal Bankruptcy Laws in order to complete its reorganization plans.
Voluntary petitions under chapter 11 were filed by ABI, AVRE and Binary on
January 7, 1994, after CVD, the Debtor's primary lender, declared a default
under its loan agreements.
VI.
SIGNIFICANT EVENTS DURING THE CHAPTER 11 PROCEEDINGS
A. GENERAL.
Following the filing of the Debtors' petitions seeking reorganization
under chapter 11 of the Bankruptcy Code, the Debtors have operated their
businesses as debtors in possession.
The Bankruptcy Court has certain supervisory powers over the operations
of the Debtors during the reorganization. These powers generally consist of
reviewing and ruling upon any objection raised by a party in interest to
business operations or proposed transactions of the Debtor. Except as
otherwise authorized by the Bankruptcy Court, the Debtors have given notice or
any transactions not in the ordinary course of business, and of any other
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matters that require notice pursuant to Bankruptcy Court Rules or as ordered
by the Bankruptcy Court. In addition, the Bankruptcy Court has exercised
supervisory powers in connection with the employment of attorneys and other
professionals.
B. APPOINTMENT OF CREDITORS COMMITTEE.
Shortly after the commencement of the ABI's Chapter 11 case the United
States Trustee appointed an Official Committee of Unsecured Creditors (the
"Committee") pursuant to Bankruptcy Code Section 1102. The Committee consists
of Belle Bonfile Memorial; Blood Bank of Alaska, Inc.; Blood Systems, Inc.;
Central California Blood Banks; Lifesource Blood Services; and Oklahoma Blood
Institute.
C. RETENTION OF PROFESSIONALS.
The Committee has retained Katz, Hoyt, Seigel & Kapor as its attorneys.
ABI and its counsel have been in frequent communication with the Committee and
have kept the Committee regularly informed concerning the operation of the
ABI's business and other matters of interest to the Committee.
During the course of its chapter 11 proceedings, the Debtors have
employed pursuant to authority granted by the Bankruptcy Court various
professional to assist it in these Chapter 11 proceedings and in conducting
its ongoing operations. The Debtors employed Robinson, Diamant, Brill &
Klausner as bankruptcy counsel; Tilles, Webb, Kulla & Grant as special
corporate counsel; Fisher & Phillips as special litigation counsel; and Samuel
T. Anderson and Stephen Wyle as management consultants.
D. PAYMENT OF PRIORITY WAGES.
AVRE and Binary, along with their parent company ABI, filed their
voluntary petitions under chapter 11 of the Bankruptcy Code on January 7,
1994. At that time, the payroll of approximately 72 employees of AVRE and
Binary for the period from December 31, 1993 through January 7, 1994 was due
on January 21, 1994. Accordingly, AVRE and Binary each brought motions for
permission to pay prepetition priority wages that had accrued as of the
petition date. The motions were granted on an emergency basis thereby
allowing AVRE and Binary to remain in business without loss of staff for
failure to pay wages. Total amounts of gross employee compensation paid to
the Binary and AVRE employees pursuant to order of Court were $13,246.07 and
$6,323.85, respectively.
E. JOINT ADMINISTRATION OF CHAPTER 11 CASES.
Early in the case ABI, AVRE and Binary jointly moved the Bankruptcy Court
for an order authorizing joint administration of their Chapter 11 cases.
Since three Debtors were and still are, respectively, a parent company and its
two wholly owned subsidiaries, whose business operations are conducted under
common management and with consolidated administrative and operation
functions, it made sense that the three cases be jointly administered.
Furthermore, the three Debtors have in common a single secured creditor group,
whose claims on any of the three bankruptcy estates arise out of and relate to
the same events, transactions and documents. Accordingly,
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the Court entered an order for joint administration of the above-named
bankruptcy cases thereby avoiding duplication of costs and expenses and
needless complication in the administration of these three matters. The order
for joint administration further provided for the non-allocation of time
expended by professionals for each of the Debtors and such other professionals
whose employment is approved by the Court.
F. EXTENSION OF EXCLUSIVITY.
Before expiration of the exclusivity periods provided by Bankruptcy Code
Section 1121 (b), which gives a debtor an exclusive right to file and confirm a
plan of reorganization, the Debtors moved on several occasions for extensions of
such periods. The latest extension of exclusivity ended in July, 1995, and the
Debtors did not seek to have it extended further.
G. UNEXPIRED LEASES AND EXECUTORY CONTRACTS.
The Debtors have also sought and obtained extensions of time within which
to assume or reject certain nonresidential leases of real property. Currently
the Debtors intend to assume the leases for the following business locations:
611 North Las Vegas Boulevard, Las Vegas, Nevada; 1174 Fort Campbell Boulevard,
Clarksville, Tennessee; 129 and 141 North Spruce, Colorado Springs, Colorado;
and 411 and 413 West 4th Street, Pueblo, Colorado. The Debtors are current on
all of their obligations under the foregoing leases.
H. SALES OF PROPERTY.
Prior to bankruptcy, ABI discontinued its business operations consisting of
collecting and distributing whole blood and blood components. As a result, ABI
owned certain equipment, furniture and inventory that could be sold. Prior to
bankruptcy, ABI had received offers to purchase some of its personal property.
Following bankruptcy, ABI sought and obtained permission of the Bankruptcy Court
to consummate the proposed sales. Later, ABI sought and obtained permission of
the Bankruptcy Court to sell the balance of its equipment and furniture provided
that the total sales price for such property was at least fifty percent (50%) of
its value as estimated by Evaluation Counselors, a professional appraisal
company.
I. DEBTOR FINANCING.
By order entered September 21, 1994, the Bankruptcy Court authorized ABI to
obtain up to $4.5 million in credit through the issuance of Debtor's Notes. The
order provides, among other things, that Debtor's Notes carry an interest rate
of 12%, allows superiority over other administrative claims and provides for the
payment of certain finders' fees.
ABI initially attempted to place the Notes through Relco Corporation
("Relco"), an investment banking firm primarily engaged in restructuring and
financing companies in chapter 11. Relco was unable to place the Notes, and ABI
was forced to turn to other sources.
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More recently, ABI has received a best efforts commitment from First
Equity Capital Securities, Inc. ("First Equity") to place $1.2 million in
Debtor's Notes with its clients, which will net approximately $1 million to
ABI, an amount sufficient to fund the Third Amended Plan of Reorganization
described herein. (1) ABI has filed a motion wherein it is seeking an order of
the Bankruptcy Court modifying some of the terms of the Debtor's Notes.
Copies of the commitment letter and the firm resume of First Equity are
attached hereto collectively as Exhibit "B".
J. MOTION FOR RELIEF FROM STAY BY CVD.
Prior to the commencement of the within cases CVD entered into a financial
transaction with ABI wherein CVD granted ABI a line of credit and term loan
secured by a first priority lien against the accounts receivable, inventory and
equipment of ABI, AVRE and Binary. Additionally, the CVD line of credit and
term loan were secured by the common shares of AVRE and Binary. On or about
July 7,1995, CVD filed a motion for relief from stay seeking permission to
foreclose on its liens and security interests in the property of the Debtors.
By order of the Bankruptcy Court, CVD's motion was granted effective January 2,
1996.
K. STIPULATION RE ADMINISTRATIVE CLAIM OF DRS. FRISCH AND GOLDING.
In or about October 1995 the Debtors entered into a stipulation with the
Committee and Doctors David M. Frisch and Arthur Golding (the "Doctors") wherein
the Debtors agreed to reimburse the Doctors for all of their expenses incurred
in assisting the Debtors and the Committee in opposing CVD's motion for relief
and in connection with the Doctors' efforts to structure a plan involving the
Doctors' purchase of the Debtors' assets. The stipulation which is subject to
Bankruptcy Court approval provides for an administrative claim in favor of the
Doctors in an amount up to $42,000 for such expenses. The administrative claim
may be increased under certain circumstances but in no event will such claim
exceed $100,000.
L. MISCELLANEOUS.
Pursuant to an order of this Court entered April 19, 1994, June 30, 1994
was set as the last day to file proofs of claims or other interests in these
cases.
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(1) A prior plan contemplated a national buildout of up to 42 centers,
utilizing the major portion of the proceeds from the $4.5 million in Debtor's
Notes authorized by the Court for the buildout. The current Plan does not
incorporate a national buildout in its projections thereby substantially
decreasing the cash needs of the Debtor. However, the Reorganized Debtor
intends to expand post-confirmation by purchasing additional centers through the
use of warrants, a secondary offering, or other financial devices available at
the discretion of the Board of Directors.
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VII.
SUMMARY OF PLAN
The Plan is attached as Exhibit "A" to this Disclosure Statement. The
Plan, if confirmed, will constitute a legally binding agreement between the
Debtor and the holders of claims, and it is therefore important for you to
understand its provisions. Holders of claims are urged to discuss any
questions they may have with their respective counsel and/or accountants.
The Reorganized Debtors will consist of ABI, AVRE and Binary. AVRE and
Binary will continue to operate as wholly owned subsidiaries of ABI. ABI will
continue in business under a single new name SeraCare, Inc. ("SeraCare").
SeraCare ("Reorganized ABI") will be involved in the business of owning and
operating plasma collection centers. The Plan thereby contemplates
preservation of ABI's net operating loss carry forward, which exceeds
$6,000,000.
For purposes of the plan, the Debtors have divided their creditors into
different classes of claims and interests. Essentially, the Plan proposes to
treat creditors as follow:
1. ADMINISTRATIVE PRIORITY CLAIMS.
All professionals who have been rendering services to the Debtors or the
Committee in these cases will be paid in full in cash as and when allowed by
the Court. The Debtors estimate these costs and expenses at $195,000,
including the claim of Doctors Frisch and Golding (SEE Article VI.K
hereinabove). All unpaid expenses of operation of the Debtors post-petition
will be paid pursuant to normal business terms. Additional Administrative
Claims include Debtor's Notes issued or to be issued in the face amount of
$1,200,000; compensation to management consisting of 189,495 shares of
Reorganized ABI and 126,300 options to purchase shares of Reorganized ABI
to Alfred Jay Moran, Jr., Jerry L. Burdick and Brian Olson; investment
banker fees to First Equity of $90,000 plus reimbursement of expenses
including legal fees; finder's fees to Anthony J.A. Bryan, Sr. Of $60,000;
and finder's fees to Stuart Sundlun of $30,000. Additionally, First Equity
will receive 94,748 shares of common stock of Reorganized ABI, Anthony J.A.
Bryan, Sr. 84,220 shares of common stock of Reorganized ABI and Stuart
Sundlun 21,055 shares of common stock of Reorganized ABI.
Debtors' Notes shall be payable in accordance with their terms, and may be
converted to up to 1,610,708 shares of Reorganized ABI on or after the
Effective Date.
Upon confirmation of the Plan, as a bonus and for compensation for
management services rendered by Alfred Jay Moran, Jr., Jerry L. Burdick and
Brian Olson during the course of the Chapter 11 case Mr. Moran shall be issued
84,220 shares of Reorganized ABI's common stock and 56,147 options to purchase
common stock of Reorganized ABI. Mr. Burdick shall be issued 63,165 shares of
Reorganized ABI's common stock and 42,110 options to purchase common stock of
Reorganized ABI., and Mr. Olson shall be issued 42,110 shares of Reorganized
ABI's common stock and 28,073 options to purchase common stock
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of ABI. The exercise terms of the options are described in detail in Exhibit
"B" attached hereto. The vesting date of the options will be the anniversary
date of the Effective Date. The options will vest at the rate of one-third per
year and are contingent upon Reorganized ABI achieving certain projected
operating results. Messrs. Moran, Burdick and Olson have filed Insider
Compensation Request forms with the United States Trustee's Office requesting
the stock and options as bonuses payable upon the successful confirmation of
the Plan. As set forth in those notices it is too speculative for the
Debtors to estimate the value of the securities to be issued to management.
2. TAX CLAIMS.
The Plan proposes to pay pre-petition priority taxes in cash, in full on
the Effective Date or as soon thereafter as is practicable. The Debtors
estimate that the total pre-petition Tax Claims are approximately $5,000.
3. PRIORITY CLAIMS, CLASS 1.
With the exception of pre-petition priority taxes and administrative
claims, all Claims entitled to priority under Bankruptcy Code section 507
will be paid in cash, in full on the Effective date. The Debtors estimate
that the total Priority Claims are approximately $11,500.
4. THE SECURED CLAIM OF CVD - CLASS 2.
The secured claim of CVD, estimated by the Debtor to be approximately
$1,600,000, shall be paid down by $600,000 on the Effective Date.(1) CVD shall
receive a replacement note for the balance of its claims payable over four
years from the Effective Date, interest to accrue at the rate of 14% per
annum on the unpaid balance. The replacement note may be pre-paid at any
time without penalty. CVD shall maintain its present secured position,
unless eliminated or altered by order of the Bankruptcy Court.
__________________
1/ The CVD claim is estimated by the Debtors not to exceed $1.6
Million. CVD filed a claim for $1,813,234.85 in June 1994, but it does not
take into account certain payments made by the Debtors on account of assets
liquidated by the Debtors or adequate protection payments made after the
claim was filed. The claim also includes a default rate of interest and
certain other charges to which the Debtors intend to object. Among other
things, the Debtors contend that CVD is not entitled to a default rate of
interest, attorneys' fees or other costs; CVD received preferential and
fraudulent transfers; CVD received avoidable post-petition transfers;
CVD's claim should be equitably subordinated as a capital contribution
disguised as a loan; CVD wrongfully instituted foreclosure proceedings;
and CVD breached the covenant of good faith and fair dealing. The Debtors
intend to pursue these and other claims and defenses against CVD
post-confirmation. The Debtors have requested a current accounting from CVD,
but as of the date hereof have not yet received a response. If, after
objection to CVD's claim such claim exceeds the sum of $1,600,000, the
replacement note given to CVD shall equal the difference between the Allowed
Secured Claim amount and the sum of $600,000.
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5. UNSECURED CREDITORS OF ABI - CLASS 3.
Class 3 Claimants shall receive a pro rata distribution of the balance
remaining from the sum of $200,000 after payment of all Class 5 and Class 6
Claimants, up to a maximum of $.10 cash for each Claim dollar, payable as soon
as practicable after the Effective Date. The Debtors estimate that Class 3
Claimants should receive a distribution of approximately 9-10% on their
Claims. Class 3 Claimants also shall receive 10,000 shares of common stock of
Reorganized ABI to be distributed on a pro rata basis as soon as practicable
after the Effective Date. In addition, Class 3 Claimants shall receive for pro
rata distribution fifty percent (50%) of any "net affirmative recovery"
received by the Debtors against recipients of avoidable transfers. "Net
affirmative recovery" means any cash consideration actually received by the
Debtors on account of an action brought against a creditor for an avoidable
transfer, less costs and attorneys' fees incurred in obtaining such recovery.
The Debtors estimate that Class 3 Claims total approximately $1,960,000 without
consideration of certain Claims which were filed as contingent or unliquidated.
6. UNSECURED NOTE HOLDERS - CLASS 4.
Holders of Unsecured Notes totalling approximately $420,000 shall be
converted into 105,275 shares of Common Stock or Reorganized ABI. All
distributions shall be made on a pro rata basis.
7. UNSECURED CREDITORS OF AVRE - CLASS 5.
Unsecured Creditors of AVRE holding unsecured claims totalling
approximately $5,000 shall receive eighty cents on the dollar in cash as
soon as practicable after the Effective Date.
8. UNSECURED CREDITORS OF BINARY - CLASS 6.
Unsecured Creditors of Binary holding unsecured claims totalling
approximately $9,500 shall receive eighty cents on the dollar in cash as
soon as practicable after the Effective Date.
9. PREFERRED AND COMMON EQUITY INTERESTS OF ABI - CLASS 7.
On the Effective Date all Preferred and Common Equity Interests of ABI
shall be deemed cancelled, annulled and terminated, and Holders of preferred
equity Interests consisting of approximately 139,700 shares and common stock
consisting of 4,350,912 shares shall not be entitled to any distribution.
All outstanding warrants shall be cancelled and the holders of warrants or
other equity claims not described above shall not be entitled to any
distribution.
10. COMMON EQUITY INTEREST HOLDER OF AVRE AND BINARY - CLASS 8.
All of the issued and outstanding shares of AVRE and Binary are held by
ABI. ABI shall retain its interests unimpaired.
-15-
EXHIBIT B PAGE 107
<PAGE>
VIII.
ANALYSIS OF CLAIMS BY CLASS
<TABLE>
<CAPTION>
CLASS DESCRIPTION EST. EST. AMT. IMPAIRMENT
OF CLASS NO. OF OF CLAIMS
CLAIMS
- ------------ --------------------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Unclassified Administrative $195,000 Unimpaired
Claims
Unclassified Tax Claims 10 $5,000 Unimpaired
1 Priority Claims 7 $11,500 Unimpaired
other than
unclassified claims
2 Secured claim of 1 $1,600,000 Impaired
CVD Financial Corp.
3 Unsecured Creditors 220 $1,960,000 Impaired
of ABI
4 Unsecured Note 6 $420,000 Impaired
Holders
5 Unsecured Creditors 20 $5,000 Impaired
of AVRE
6 Unsecured Creditors 20 $9,500 Impaired
of Binary
7 Preferred and 20 N/A Impaired
Common Equity
Interest of ABI
8 Common Equity 1 N/A Unimpaired
Interests of AVRE
and Binary
____________________
1/ Professional fees and unpaid expenses of Drs. Frisch and Golding only.
It is anticipated that Holders of certain Administrative Claims will be paid
in stock of Reorganized ABI. Those Holders of Administrative Claims not
receiving cash on Confirmation must consent to that treatment. Accounts
payable of the Debtors incurred during the Chapter 11 cases will be paid in
the ordinary course on the Debtors' business.
</TABLE>
-16-
EXHIBIT B PAGE 108
<PAGE>
IX.
MANAGEMENT OF REORGANIZED DEBTOR
A. EXECUTIVE COMPENSATION.
The executive officers of the Debtors are set forth in Paragraph 6.1 of
Article III, SUPRA, together with a brief statement of the background and
qualifications of each such officer. The following table sets forth the key
officers and employees of Reorganized ABI and the annual salary to be paid on
confirmation of the Plan:
Name Position Salary
- ---- -------- ------
Alfred Jay Moran, Jr. Chairman, President $150,000
and CEO
Jerry L Brudick Executive Vice President $125,000
and CEO
Brian Olson Vice President $ 90,000
There will be a quarterly salary adjustment whereby any pretax earnings over
$100,000 per quarter shall be paid to the officers up to an annual maximum of
$25,000 to Mr. Moran, $10,000 to Mr. Burdick and $10,000 to Mr. Olson.
The officers of the Reorganized Debtors shall receive three year
standard renewable contracts, copies of which are collectively attached
hereto as Exhibit "C". Also, a Management Bonus Plan will be established for
the above-listed officers by the board of directors of Reorganized ABI
whereby the Company will allocate ten percent of Pre-Tax Earnings which are
in excess of $920,549 in year one after confirmation, $2,590,160 in year two,
$4,384,187 in year three, $6,244,536 in year four and $8,166,636 in year five
to a bonus pool to be paid to management pro rata based on salary level. No
bonuses will be paid to management if the Debtors are in default under
the Plan. Based upon the four-year projections attached hereto as Exhibit
"D" management would not be eligible for any bonuses.
X.
POST-REORGANIZATION OPERATION OF REORGANIZED DEBTORS
Four (4) year financial projections have been prepared by management and
are attached as Exhibit "D". The projections have been prepared in accordance
with generally accepted accounting principles and utilize the accrual method.
Assumptions used in calculating the projections are as set forth below.
-17-
EXHIBIT B PAGE 109
<PAGE>
These financial projections represent an estimate of future events that
may or may not occur. It is probable that some of the assumptions on which
the financial projections are based will not materialize and that
unanticipated events and circumstances will occur which will affect these
projections. Therefore, there can be no assurance, and no representation or
implication is made, that the financial projections or related assumptions
will constitute an accurate reflection of the actual operating cash flow of
the Reorganized Debtors during the periods indicated and the financial
projections should not be relied upon as assurances of the actual results
that will be obtained.
Attached hereto and collectively marked Exhibit "E" are income statements
for the Debtors' operating entities, AVRE and Binary, for the year ending
1994 and for the nine (9) months ending September 30, 1995. These income
statements have been prepared by the Debtors and are unaudited. Since ABI
discontinued its operations prior to the Chapter 11 filing, no historical
financial information is provided. The income statements for "SeraCare"
reflect the combined operation of AVRE and Binary.
The Debtors believe that its business operations have sufficiently
changed over the past two years that reliance upon historical financial data
to project future operations is misleading. For example, commencing January
1, 1996, the Debtors have entered into a new contract with Alpha Therapeutic
which provides for a $2.00 per unit higher pricing than the previous contract
with Octafarma. In addition, 1994 was a transition year wherein the Debtors:
(1) obtained QPP certification for all six plasma centers, (2) cancelled
subpar contracts with existing customers at non-QPP pricing, (3) negotiated
new contracts for QPP production with Alpha Therapeutics and Octafarma, (4)
initiated advertising programs at all centers to increase donors, (5)
replaced 4 of the 6 center managers and substantially upgraded the other
personnel through newly established training programs, (6) initiated the CMV
hyperimmune program which generates an $8.00 premium over standard source
plasma, and (7) initiated the tetanus hyperimmune program.
Attached hereto and marked Exhibit "F" is a chart showing the proposed
equity ownership of Reorganized ABI.
XI.
COMPARISON OF THE DEBTORS' PLAN TO ALTERNATIVES
In chapter 11 proceedings such as these, there are usually only three plan
scenarios. First, there is a scenario under which substantially all of the
assets of the debtor are sold as a going concern. This type of sale usually
preserves going concern values and provides to creditors an enhanced
distribution over that which they would receive in a piece meal liquidation.
The second scenario involves liquidation of a debtor's assets either by the
debtor or by professionals such as an auctioneer. In light of the presence of
secured debt, as in the present case, and because of the failure to
-18-
EXHIBIT B PAGE 110
<PAGE>
exploit going concern values, this process usually results in the smallest
distribution to creditors. The third scenario involves a reorganization
based upon a debtor's continuing operations. That is the type of plan that
the Debtors are proposing herein.
The Debtors do not believe that a liquidation of their assets would be in
the best interest of Creditors. By virtue of the existence of a large
Secured Claim and the forefeiture of going concern values, there would be no
distribution to Unsecured Creditors in a liquidation (SEE liquidation
analysis, INFRA, Article XIII).
With regard to the second scenario, i.e., the sale of the Debtors' business
as a going concern, the Debtors have not received any offers for the purchase of
the entire business better than the Plan proposal, nor are they aware of any
interest in such an acquisition by any third parties.
The Debtors have thus proposed a Plan which is based upon the continued
operation of the business by the Debtors. The Debtors have already divested
themselves of the unprofitable whole blood collection business and are now
engaged solely in the operation of plasma collection centers, which have
historically generated a profit.
The Debtors believe that the Reorganized Debtors will have the capability
of generating sufficient earnings to satisfy the obligations in connection
with the Plan. Under the Debtors' Plan , Unsecured Creditors will receive
cash payment totaling approximately 10% of the Allowed amount of their
Claims, a cash distribution on the Effective Date of $200,000. In addition,
Unsecured Creditors shall received 10,000 shares of common stock of
Reorganized ABI for pro rata distribution. Holders of Unsecured Notes will
receive 105,275 shares of common stock in Reorganized ABI.
The foregoing demonstrated that the total "package" to Creditors under
the proposed Plan is far more valuable than the distribution which Unsecured
Creditors would receive in a liquidation. Accordingly, the consideration
being given to Creditors under the Plan is far more valuable than the
distribution they could expect to receive in a liquidation.
-19-
EXHIBIT B PAGE 111
<PAGE>
XIII.
LIQUIDATION ANALYSIS
AMERICAN BLOOD INSTITUTE, INC.
LIQUIDATION ANALYSIS 6/
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
ASSETS BOOK VALUE EST. % LIQUID. ENCOM. AMT.
REALIZ. VALUE AND/OR AVAIL. IN
COSTS OF CHAPTER
SALES 7
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hospital -0- N/A -0- N/A 0
Receivables (7)
- -------------------------------------------------------------------------------------
Patient -0- N/A -0- N/A 0
Receivables
- -------------------------------------------------------------------------------------
1991 -0- N/A -0- N/A 0
Bloodline,
Inc. loan
- -------------------------------------------------------------------------------------
Equipment -0- N/A -0- N/A 0
- -------------------------------------------------------------------------------------
AVRE, Inc. $1,103,876 (8) 100% $2,000,000 (9) $2,000,000 (10) 0
and Binary
Associates,
Inc. stock
- -------------------------------------------------------------------------------------
Total available to Unsecured Creditors in Chapter 7 Liquidation -0-
</TABLE>
______________________
6/ All figures are as of August 31, 1995.
7/ All scheduled assets of ABI except stock of AVRE and Binary were
liquidated during the course of these chapter 11 proceedings. Net proceeds
of such liquidation totaling $385,746 were turned over to CVD, which claims
to be secured by the liquidated assets.
8/ Represents acquisition cost in October 1993.
9/ $2,000,000 valuation is based on the projected operating results of
AVRE and Binary for calendar year 1996.
10/ Secured claims of CVD estimated at $1,600,000 plus unpaid chapter
11 administrative costs, costs of sale and chapter 7 administrative costs.
-20-
EXHIBIT B PAGE 112
<PAGE>
BINARY ASSOCIATES, INC.
LIQUIDATION ANALYSIS 11/
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
ASSETS BOOK VALUE EST. % LIQUID. ENCOM. AMT.
REALIZ. VALUE AND/OR AVAIL. IN
COSTS OF CHAPTER
SALE 7
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 20,609 100% $ 20,609 N/A $ 20,609
- -------------------------------------------------------------------------------------
Accounts $346,395 80% $277,116 -0- $277,116
Receivable
- -------------------------------------------------------------------------------------
Equipment $ 98,900 (12) 20% (13) $ 19,780 -0- $ 19,780
- -------------------------------------------------------------------------------------
Inventory $502,984 25% $251,492 -0- $251,492
- -------------------------------------------------------------------------------------
Prepaid $ 66,194 -0- -0- N/A -0-
Expenses
- -------------------------------------------------------------------------------------
---------
TOTAL $568,997
Less unpaid chapter 11 costs of administration $915,073 14/
---------
Total available to 0
Unsecured Creditors
in Chapter 7 Liquidation
</TABLE>
________________________
11/ All figures are as of August 31,1995.
12/ Net after subtracting accumulated depreciation.
13/ Equipment is obsolete.
14/ Includes post-petition trade payables of $815,073. All trade
payables are being satisfied out of current cash flow on terms that are
satisfactory to the trade creditors.
-21-
EXHIBIT B PAGE 113
<PAGE>
AVRE, INC.
LIQUIDATION ANALYSIS 15/
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
ASSETS BOOK VALUE EST. % LIQUID. ENCOM. AMT.
REALIZ. VALUE AND/OR AVAIL. IN
COSTS OF CHAPTER
SALE 7
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 42,686 100% $ 42,686 -0- $42,686
- -------------------------------------------------------------------------------------
Accounts $ 75,126 80% $ 60,100 -0- $60,100
Receivable
- -------------------------------------------------------------------------------------
Equipment $ 18,377 (16) 20% (17) $ 3,675 -0- $ 3,675
- -------------------------------------------------------------------------------------
Inventory $136,931 50% $ 68,465 -0- $68,465
- -------------------------------------------------------------------------------------
Prepaid $ 13,748 0% -0- -0- -0-
Expenses
- -------------------------------------------------------------------------------------
---------
TOTAL $174,926
Less unpaid chapter 11 costs of administration $175,588 18/
---------
Total available to 0
Unsecured Creditors
in Chapter 7 Liquidation
</TABLE>
XIII.
RISK FACTORS
The Debtors' abilities to implement the Plan, to assure,
insofar as is possible, the feasibility of the Plan and to achieve
Confirmation of the Plan is subject to certain matters which
constitute important risk factors. As yet, each of these matters
continues to be a risk. Although the Debtors expect to resolve
successfully each of these matters, they cannot warrant that each,
or all, of these will be successfully resolved or how long
resolution of these matters will take.
_________________
15/ All figures are as of August 31, 1995.
16/ Net after subtracting accumulated depreciation.
17/ Equipment is obsolete.
18/ Includes post-petition trade payable of $125,588. All trade
payables are being satisfied our of current cash flow on terms that are
satisfactory to the trade creditors.
-22-
EXHIBIT B PAGE 114
<PAGE>
1. FINANCIAL PROJECTIONS.
The feasibility of the Plan and the Reorganized Debtors' ability to meet
their obligations in the future are premised upon the Reorganized Debtors'
performance after they emerge from Chapter 11. The Reorganized Debtors'
future performance is predicated in terms of financial projections which rest
upon a number of overall economic assumptions and assumptions made by the
Debtors about their future business and the markets in which they function.
Such information is necessarily forward looking and is provided herein to
demonstrate the feasibility of the Plan. Although the Debtors believe that
the projections and assumptions are reasonable, no assurance can be given
that they are correct. In particular, it should be understood that the
Debtors face severe competition in all the markets in which they compete.
Furthermore, unanticipated events and circumstances such as economic
recession may affect the actual financial results.
2. NATIONAL RESTRICTIONS ON THE IMPORT OF PLASMA.
A significant portion of plasma collected in the United States (around
40%) is exported to Europe where it is fractionated. Recent events in
Germany have provided motivation for the government to declare its intention
to make Germany independent of foreign source plasma. It is estimated that
Germany currently imports around 1 million liters from the U.S. annually.
Observers of the industry believe, however, that despite the rhetoric, there
is no practical plan being considered within Germany which would allow this
goal to be achieved or even seriously attempted. To further ensure the
continuation of the German market for U.S. plasma, the U.S. plasma industry
has been adopting voluntary quality standards (QPP standards) which would
further minimize any legitimate German concern over the quality of U.S.
source plasma.
3. DEVELOPMENT OF RECOMBINANT PRODUCTS.
Significant amounts of plasma are used in the production of Factor VIII.
Recently, a genetically engineered Factor VIII has been approved by the FDA
and is available in the market. The advantage of this recombinant product is
an increased margin of safety from contamination by Hepatitis or HIV. On the
other hand, recombinant Factor VIII will sell for approximately three times
the price of plasma derived from Factor VIII. While patients have been able
to get reimbursement for the new Factor VIII, many are finding that they are
reaching the lifetime limits of their policies at an unacceptably high rate.
Offsetting revenues which will be lost due to recombinant Factor VIII is
the significant increase in the use of plasma in the manufacture of IV immune
globulins.
While research is continuing on genetically engineered substances, it is
unlikely that other recombinant substitutes for plasma derived products will
be available for at least ten years.
-23-
EXHIBIT B PAGE 115
<PAGE>
XIV.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Under the Internal Revenue Code of 1986 (the "Internal Revenue Code"),
there are significant federal income tax consequences associated with the
Plan described in this Disclosure Statement. However, it is not practicable
to present a detailed explanation of all of the federal income tax aspects of
the Plan and the following is only a summary discussion of certain of the
significant consequences.
The tax consequences of the implementation of the Plan to a creditor
receiving ABI securities will depend in part on whether that Creditor's
present debt Claim constitutes a "security" for federal income tax purposes.
The determination as to whether the Claim of any particular Creditor
constitutes a "security" for federal income tax purposes is complex, and
depends on the facts and circumstances surrounding the origin and nature of
the Claim. Generally, Claims arising out of the extension of trade credit
have been held not to be securities, while corporate debt obligations
evidenced by written instruments with maturities when issued, of 10 years or
more, have generally been held to be securities. The Debtors express no
views with respect to whether the Claim of any particular Creditor
constitutes a "security" for federal income tax purposes and urges each
Creditor to consult its tax advisor.
A Creditor which exchanges its existing Claim for securities of ABI may
recognize income or loss with regard to consideration received in respect of
accrued interest attributable to its existing Claim, and gain or loss on the
exchange of the principal of the Claim for securities.
Under present law, there is substantial uncertainty surrounding many of
the tax consequences. Uncertainty is created, in part, by the changes made
by the Bankruptcy Tax Act of 1980, the Tax Reform Act of 1984, the Tax Reform
Act of 1986 and the Revenue Reconciliation Act of 1990, certain provisions of
which call for the promulgation of regulations by the Treasury Department
which have not yet been promulgated in final form. In addition, there are
differences in the nature of the Claims of various Creditors, their methods
of tax accounting and prior actions taken by Creditors with respect to their
Claims. Further, the federal income tax consequences to any particular
Creditor may be affected by a variety of matters. For example, certain types
of Creditors (including non-resident aliens and tax exempt organizations) may
be subject to special rules. The transactions contemplated herein may also
have significant state and local tax consequences. Neither a ruling from the
Internal Revenue Service (the "IRS") nor an opinion of counsel has been
requested with respect to the federal income tax consequences of the Plan.
ACCORDINGLY, HOLDERS OF CLAIMS AND INTEREST ARE URGED TO CONSULT THEIR
TAX ADVISORS WITH SPECIFIC REFERENCE TO THE FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF THE PLAN WITH RESPECT TO THEIR CLAIM OR INTEREST.
-24-
EXHIBIT B PAGE 116
<PAGE>
IV.
STATUS AND RESALE OF SECURITIES TO BE ISSUED PURSUANT TO PLAN
Under Bankruptcy Code section 1145, the original issuance of the
Reorganized Debtor's securities (hereinafter "Securities") under the Plan
will be exempt from the registration on requirements of the Securities Act of
1933 and applicable state laws requiring registration of securities. Resale
of Securities by a Creditor receiving them directly under the Plan will also
be exempt provided the Creditor is not an underwriter. Generally, a Creditor
will not be deemed to be an underwriter if it: (1) has not become a Creditor
of the Debtor with a view to distribution of any Securities to be received in
exchange for claims under the Plan; (2) has not offered to sell the
securities for others; (3) has not offered to buy the securities from others
where that offer is with a view to their distribution, and under an agreement
made in connection with the Plan; (4) is not an issuer as that term is used
in the Securities Act of 1933. The determination of whether a particular
Creditor would be deemed to be an underwriter is necessarily an individual
one, and any Creditor considering reselling Securities under the Plan should
consult with its securities advisor to determine whether it would be an
underwriter, and therefor, ineligible for the exemption described above.
A Creditor who is deemed to be an underwriter may be able to sell
Securities without registration pursuant to the provisions of Rule 144 under
the Securities Act of 1933, which fact may permit the public sale of
Securities received pursuant to the Plan by underwriters subject to volume
limitations and certain other conditions. Creditors who believe they may be
underwriters are advised to consult their own counsel with respect to the
availability of the exemptions provided by Rule 144.
THE ABOVE DISCUSSION IS INTENDED AS GENERAL INFORMATION ONLY, AND ANY
ENTITY DESIRING TO RESELL ANY SECURITIES RECEIVED BY IT PURSUANT TO THE PLAN
IS URGED TO CONSULT ITS SECURITIES ADVISOR REGARDING THE AVAILABILITY OF ANY
REGISTRATION EXEMPTION.
XVI.
ACCEPTANCE AND CONFIRMATION
A. ACCEPTANCE.
As a condition to Confirmation, the Bankruptcy Code requires that each
impaired class of claims or interests accepts the Plan, with the exceptions
described in the following section. The Bankruptcy Code defines acceptance
of a plan by a class of claims as acceptance by holders of two-thirds in
dollar amount and a majority in number of claims of that class, but for this
purpose counts only those who actually vote to accept or to reject the plan.
The Bankruptcy Code defines acceptance of a plan by a class of interests
(equity securities) as acceptance by two-third of the number of shares, but for
this purpose counts only shares actually
-25-
EXHIBIT B PAGE 117
<PAGE>
two-thirds voted. Holders of claims or interests who fail to vote are not
counted as either accepting or rejecting the Plan.
Classes of claims and interest that are not "impaired" under a plan are
deemed to have accepted the plan. Acceptances of the Plan are being
solicited only from those persons who hold claims or interests in impaired
classes. A class is "impaired" if the legal, equitable, or contractual
rights attaching to the classes or interests of that class are modified,
other than by curing defaults and reinstating maturities or by payment in
full in cash. Classes 2, 3, 4, 5 and 6 Claims and Class 7 Interests are
impaired under the Plan.
B. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES.
The Bankruptcy Code contains provisions for confirmation of a plan even
if the plan is not accepted by all impaired classes, provided at least one
impaired class of claims has accepted it. These "cramdown" provisions for
confirmation of a plan despite the nonacceptance of one or more impaired
classes of claims or interests are set forth in Section 1129(b) of the
Bankruptcy Code.
If a class of unsecured claims rejects the Plan, it may still be
confirmed so long as the Plan provides that (i) each holder of a claim
included in the rejecting class receives or retains on account of that claim
property which has a value, as of the Effective Date, equal to the allowed
amount of such claim; or that (ii) the holder of any claim or interest that
is junior to the claims of such class will not receive or retain on account of
such junior claim or interest any property at all. The Debtors believe that
the Plan does meet this test with regard to ABI and therefore the Plan may be
confirmed if it is rejected by Class 3 or 4 claimants. With regard to AVRE
and Binary, the Debtors believe that the Plan does not meet this test and
therefore the Plan cannot be confirmed if it is rejected by Class 5 or Class
6 claimants.
If a class of equity security interest rejects the Plan, the Plan may
still be confirmed so long as the plan provides that (i) each holder of an
interest included in the rejecting class receives or retains on account of
that claim property which has a value, as of the Effective date, equal to the
greatest of the allowed amount of any fixed liquidation preference to which
such holder is entitled, any fixed redemption price to which such holder is
entitled, and the value of such interest; (ii) the holder of any interest
that is junior to the interests of such class will not receive or retain
under the plan on account of such junior interest any property at all. The
Debtors believe that the plan meet this test with respect to Classes 7 and 8
Interests, and, therefore, the Plan can be confirmed even if it is rejected
by the holders of Classes 7 and 8 Interests.
-26-
EXHIBIT B PAGE 118
<PAGE>
XVII.
CONCLUSION
The Bankruptcy Court, after notice and hearing, approved this Disclosure
Statement as containing information adequate to permit holders of Allowed
Claims and Allowed Interests that are impaired under the Plan to make an
informed judgment as to whether or not to accept the Plan. The Debtors
believe that the Plan is feasible and in the best interests of all persons
holding Allowed Claims and Allowed Interests, and recommend acceptance of the
Plan.
DATED: November 27, 1995 AMERICAN BLOOD INSTITUTE, INC.
A Delaware corporation
By: /s/
------------------------------------
ALFRED JAY MORAN, JR.
President
DATED: November 27, 1995 AVRE, INC.
A Nevada corporation
By: /s/
------------------------------------
ALFRED JAY MORAN, JR.
President
DATED: November 27, 1995 BINARY ASSOCIATES, INC.
A Colorado corporation
By: /s/
------------------------------------
ALFRED JAY MORAN, JR.
President
PRESENTED BY:
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: /s/
------------------------------------
MARTIN J. BRILL
Attorneys for Debtors American Blood
Institute, Inc., AVRE, Inc. and
Binary Associates, Inc.
-27-
EXHIBIT B PAGE 119
<PAGE>
DECLARATION OF ALFRED JAY MORAN, JR.
I, Alfred Jay Moran, Jr. Declare as follows:
1. I am the President and Chief Executive Officer of American Blood
Institute, Inc., AVRE, Inc., and Binary Associates, Inc., the chapter 11
Debtors herein. I make this Declaration in support of the Debtors'
Disclosure Statement For Amended Joint Plan Of Reorganization attached
hereto. I am over the age of 18 and competent to testify in a court of law.
2. I have personal knowledge of the facts set forth below, and if
called as a witness, I could and would competently testify to the facts set
forth below.
3. At my direction and with my assistance, Robinson, Diamant, Brill &
Klausner, A Professional Corporation, prepared the attached disclosure
statement.
4. All facts and representations in the plan and disclosure statement
are true to the best of my knowledge.
5. The financial information used to support the disclosure statement
was, at my direction, provided by Jerry Burdick, the Debtors' chief financial
officer. The accounting method used to prepare the cash flow projections and
the other financial documents is an accrual basis.
6. To the best of my knowledge, no fact material to a claimant or
equity security holder in voting to accept or reject the proposed plan has
been omitted.
I declare under penalty of perjury under the laws of the United States
of America that the foregoing is true and correct and that this declaration
was executed this 27th day of November, 1995, at Los Angeles, California.
/s/
----------------------------
ALFRED JAY MORAN, JR.
-28-
EXHIBIT B PAGE 120
<PAGE>
EXHIBIT "A"
EXHIBIT B PAGE 121
<PAGE>
MARTIN J. BRILL (State Bar No.53220)
DOUGLAS D. KAPPLER (State bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone:(310) 277-7400
Telecopier:(310) 277-7584
Attorneys for Debtors in Possession
UNITED STATES BANCRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
)
)
)Bk. No. LA 94-11730-AA
In re )Chapter 11
)
AMERICAN BLOOD INSTITUTE, INC., a ) (Joint Administration of Case Nos.
Delaware corporation; AVRE, INC., a ) LA 94-11730-AA, LA 94-11736-AA, and
Nevada corporation; and BINARY ) LA 94-11738-AA)
ASSOCIATES, INC., a Colorado )
corporation, ) [Cases Not Consolidated]
)
Debtors. ) THIRD AMENDED JOINT PLAN OF
) REORGANIZATION OF AMERICAN BLOOD
) INSTITUTE, INC.; AVRE, INC.; AND
) BINARY ASSOCIATES, INC.
EXHIBIT A PAGE 29
EXHIBIT B PAGE 122
<PAGE>
TABLE OF CONTENTS
PAGE
-----
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . iv
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 "Administrative Claim" . . . . . . . . . . . . . . . . 1
Section 1.2 "ABI" . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 "Allowed Claim" . . . . . . . . . . . . . . . . . . . 1
Section 1.4 "AVRE" . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 "Bankruptcy Code" . . . . . . . . . . . . . . . . . . 2
Section 1.6 "Bankruptcy Court" . . . . . . . . . . . . . . . . . . 2
Section 1.7 "Bankruptcy Rules" . . . . . . . . . . . . . . . . . . 2
Section 1.8 "Binary" . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.9 "Claim" . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.10 "Committee". . . . . . . . . . . . . . . . . . . . . . 2
Section 1.11 "Confirmation or "Confirmation Date" . . . . . . . . . 2
Section 1.12 "Confirmation Order" . . . . . . . . . . . . . . . . . 3
Section 1.13 "Creditor" . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.14 "CVD" . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.15 "Debtor" . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.17 "Effective Date" . . . . . . . . . . . . . . . . . . . 3
Section 1.18 "Executory Contract" . . . . . . . . . . . . . . . . . 3
Section 1.19 "Filing Date" . . . . . . . . . . . . . . . . . . . . 3
Section 1.20 "Final Order" . . . . . . . . . . . . . . . . . . . . 3
Section 1.21 "Holder" . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.22 "Interest" . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.23 "Plan" or "Reorganization Plan" . . . . . . . . . . . 3
Section 1.24 "Priority Claim" . . . . . . . . . . . . . . . . . . . 3
Section 1.25 "Reorganization Case" . . . . . . . . . . . . . . . . 4
Section 1.26 "Reorganized Debtors" . . . . . . . . . . . . . . . . 4
Section 1.27 "Reorganized ABI" . . . . . . . . . . . . . . . . . . 4
Section 1.28 "Reorganized AVRE" . . . . . . . . . . . . . . . . . . 4
Section 1.29 "Reorganized Binary" . . . . . . . . . . . . . . . . . 4
Section 1.30 "Secured Claim" . . . . . . . . . . . . . . . . . . . 4
Section 1.31 "Secured Creditor" . . . . . . . . . . . . . . . . . . 4
Section 1.32 "Tax Claim" . . . . . . . . . . . . . . . . . . . . . 4
Section 1.33 "Unsecured Claim" . . . . . . . . . . . . . . . . . . 4
Section 1.34 "Unsecured Creditor" . . . . . . . . . . . . . . . . . 4
Section 1.35 "Unsecured Notes" . . . . . . . . . . . . . . . . . . 4
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS . . . . . . . . . . 4
Section 2.1 Classification . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Classes of Claims and Interests . . . . . . . . . . . 5
ARTICLE III TREATMENT OF ADMINISTRATIVE AND TAX CLAIMS . . . . . . . . 5
Section 3.1 Administrative Claims . . . . . . . . . . . . . . . . 5
Section 3.2 Tax Claims . . . . . . . . . . . . . . . . . . . . . . 6
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<PAGE>
TABLE OF CONTENTS (Continued)
PAGE(S)
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ARTICLE IV TREATMENT OF CLASSES UNDER THE REORGANIZATION PLAN . . . . 6
Section 4.1 Satisfaction of Claims . . . . . . . . . . . . . . . . 6
Section 4.2 Class 1 - Priority Claims . . . . . . . . . . . . . . 7
Section 4.3 Class 2 - The Secured Claim of CVD . . . . . . . . . . 7
Section 4.4 Unsecured Creditors of ABI - Class 3 . . . . . . . . . 7
Section 4.5 Unsecured Note Holders - Class 4 . . . . . . . . . . . 8
Section 4.6 Unsecured Creditors of AVRE - Class 5 . . . . . . . . 8
Section 4.7 Unsecured Creditors of Binary - Class 6 . . . . . . . 8
Section 4.8 Preferred and Common Equity Interests of ABI Class 7 . 8
Section 4.9 Common Shareholder of AVRE and Binary - Class 8 . . . 8
ARTICLE V IMPAIRMENT OR UNIMPAIRMENT OF CLASSES . . . . . . . . . . 8
Section 5.1 Unclassified Claims . . . . . . . . . . . . . . . . . 8
Section 5.2 Classes Not Impaired Under the Reorganization Plan . . 8
Section 5.3 Classes Impaired Under the Reorganization Plan . . . . 8
ARTICLE VI POTENTIAL CRAMDOWN OF NON-ACCEPTING CLASSES . . . . . . . 8
Section 6.1 Cramdown . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII MEANS FOR IMPLEMENTATION OF THE REORGANIZATION PLAN . . . 9
Section 7.1 Continued Business Operations of the Debtors . . . . . 9
Section 7.2 Distribution of Cash and Securities . . . . . . . . . 9
Section 7.3 Funding of Plan . . . . . . . . . . . . . . . . . . . 9
Section 7.4 Executive Compensation . . . . . . . . . . . . . . . . 9
Section 7.5 Revesting of Property . . . . . . . . . . . . . . . . 9
Section 7.6 Provisions for Objections to and Treatment of
Disputed Claims . . . . . . . . . . . . . . . . . . . 10
Section 7.7 Estimation of Disputed Claims . . . . . . . . . . . . 10
Section 7.8 Manner of Payments Under the Reorganization Plan . . . 10
Section 7.9 Unclaimed Distributions . . . . . . . . . . . . . . . 10
Section 7.10 No De Minimis Distributions . . . . . . . . . . . . . 10
Section 7.11 Disbursing Agent . . . . . . . . . . . . . . . . . . . 11
Section 7.12 Fractional Shares . . . . . . . . . . . . . . . . . . 11
Section 7.13 Designation of Nominee . . . . . . . . . . . . . . . . 11
ARTICLE VIII EFFECT OF CONFIRMATION . . . . . . . . . . . . . . . . . . 11
Section 8.1 Discharge . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IX EXECUTORY CONTRACTS . . . . . . . . . . . . . . . . . . . 12
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<PAGE>
TABLE OF CONTENTS (Continued)
PAGE(S)
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ARTICLE X AMENDMENT TO CHARTER DOCUMENTS OF DEBTORS AND OTHER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 10.1 Cancellation of Outstanding Securities of ABI . . . . 12
Section 10.2 Amendments to Articles of Incorporation . . . . . . . 12
ARTICLE XI STATUS OF SECURITIES TO BE ISSUED PURSUANT TO PLAN . . . 13
ARTICLE XII RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . 14
ARTICLE XIII AMENDMENT TO PLAN . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XIV EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . 14
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<PAGE>
TABLE OF AUTHORITIES
STATUTES PAGE(S)
- -------- --------
11 U.S.C. Section 101 . . . . . . . . . . . . . . . . . . . . . . . . . . 2
11 U.S.C. Section 101(49) . . . . . . . . . . . . . . . . . . . . . . . . 3
11 U.S.C. Section 503(b) . . . . . . . . . . . . . . . . . . . . . . . . 1
11 U.S.C. Section 507(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 1
11 U.S.C. Section 1122(a) . . . . . . . . . . . . . . . . . . . . . . . . 5
11 U.S.C. Section 1123(a)(1) . . . . . . . . . . . . . . . . . . . 3, 5, 8
11 U.S.C. Section 1124 . . . . . . . . . . . . . . . . . . . . . . . . . 8
11 U.S.C. Section 1125 . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 U.S.C. Section 1126 . . . . . . . . . . . . . . . . . . . . . . . . . 8
11 U.S.C. Section 1126(f) . . . . . . . . . . . . . . . . . . . . . . . . 8
11 U.S.C. Section 1127 . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 U.S.C. Section 1129(b) . . . . . . . . . . . . . . . . . . . . . . . . 9
11 U.S.C. Section 1141(d)(1) . . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. Section 1141(d)(1)(A) . . . . . . . . . . . . . . . . . . . . . 11
11 U.S.C. Section 1145 . . . . . . . . . . . . . . . . . . . . . . . . . 13
28 U.S.C. Section 157 . . . . . . . . . . . . . . . . . . . . . . . . . . 2
28 U.S.C. Section 1930 . . . . . . . . . . . . . . . . . . . . . . . . . 1
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<PAGE>
American Blood Institute, Inc. ("ABI"); AVRE, Inc. ("AVRE") and Binary
Associates, Inc. ("Binary"), Debtors in Possession herein (collectively the
"Debtors") submit the following Third Amended Joint Plan of Reorganization
(herein "Plan" or "Reorganization Plan"):
INTRODUCTION
The Plan herein provides for the continued operation of the Debtors
under the new name SeraCare, Inc. Having divested its unprofitable whole
blood collection business, SeraCare, Inc. will concentrate on operation and
development of its plasma collection centers.
Under the Plan, each unsecured creditor of ABI will receive a cash
payment of approximately 10% of the allowed amount of its Claim, a pro rata
distribution of 10,000 shares of Reorganized ABI's common stock and fifty
percent of any net affirmative recovery received by the Debtors against
recipients of avoidable transfers. Holders of Unsecured Notes will receive
securities in Reorganized ABI. Equity interests in ABI are wiped out.
General unsecured creditors of AVRE and Binary will be paid in cash 80% of
their claims as soon as practicable after the Effective Date.
ARTICLE I
DEFINITIONS
Unless otherwise provided in the Reorganization Plan, all terms used
herein shall have the meanings assigned to such terms in Title 11 of the
United States Code. For purposes of the Plan the following terms shall have
the meanings set forth below:
SECTION 1.1 "ADMINISTRATIVE CLAIM". Administrative Claim means and
refers to any cost and/or expense of administration of the Reorganization
Case pursuant to Bankruptcy Code Section 503(b) that is entitled to priority
pursuant to Bankruptcy Code Section 507(a)(1) including, without limitation,
any actual and necessary costs and expenses of preserving the estate of the
Debtor(s) and operating the business of the Debtor(s), any fees and expenses
of professionals as allowed and awarded pursuant to order of the Bankruptcy
Court and any indebtedness or obligation incurred or assumed by the Debtor(s)
from and after the Filing Date and any fees or charges assessed against the
estates of the Debtors under 28 U.S.C. Section 1930.
SECTION 1.2 "ABI" means American Blood Institute, Inc., a Delaware
corporation, one of the Debtors and Debtors in Possession herein.
SECTION 1.3 "ALLOWED CLAIM" means an Allowed Claim against a Debtor to
the extend that:
(a) the Claim has been scheduled by the Debtor as other than
contingent, unliquidated or disputed if no proof of claim has been timely
filed; or
(b) a proof of claim has been timely filed and either
(i) the Claim is not a disputed Claim, or
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<PAGE>
(ii) the Claim has been allowed by a Final Order but only to
the extent so allowed; or
(iii) the Claim is a Tax Claim and the amount of such Claim has
been agreed to by the Debtor or allowed by a Final Order
of the Bankruptcy Court; or
(c) the Claim is an Administrative Claim for compensation pursuant
to any of Section 330, 331 and 503(b) of the Bankruptcy Code that has been
allowed by the Bankruptcy Court; or
(d) the Claim is a Claim that is allowed by the Court.
SECTION 1.4 "AVRE" means AVRE, Inc., a Nevada corporation, one of the
Debtors and Debtors in Possession herein.
SECTION 1.5 "BANKRUPTCY CODE" means Title 11 of the United States Code,
11 U.S.C. Section 101 ET SEQ., as applicable to the Reorganization Case,
together with all amendments, modifications and replacements as the same
exist upon any relevant date. Unless otherwise expressly stated herein, all
references to code sections will be deemed to be references to the Bankruptcy
Code.
SECTION 1.6 "BANKRUPTCY COURT" means the United States District Court
for the Central District of California with the jurisdiction over the
Reorganization Case and, to the extent of any reference made pursuant to 28
U.S.C. Section 157, the United States Bankruptcy Court for the Central
District of California or any Court having competent jurisdiction to enter a
Confirmation Order.
SECTION 1.7 "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure, as amended, and the Local Rules of the Bankruptcy Court, as
applicable to the Reorganization Case.
SECTION 1.8 "BINARY" means Binary Associates, Inc., a Colorado
corporation, one of the Debtors and Debtors in Possession herein.
SECTION 1.9 "CLAIM" means with reference to a Debtor,
(a) a right to payment (including, without limitation, a
guarantee), whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed or contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or
(b) a right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
SECTION 1.10 "COMMITTEE" means the Official Committee of Unsecured
Creditors for ABI appointed by the Office of the United States Trustee.
SECTION 1.1 "CONFIRMATION OR "CONFIRMATION DATE" means or refers
to the date on which the Clerk of the Bankruptcy Court enters the
Confirmation Order on the docket.
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SECTION 1.12 "CONFIRMATION ORDER" means the order of the Bankruptcy
Court confirming the Reorganization Plan.
SECTION 1.13 "CREDITOR" means any person or entity which holds a Claim
against a Debtor that arose or is deemed to have arisen on or before the
Filing Date including, without limitation, Claims of the kind specified in
Section 502(f), 502(g), 502(h) or 502(i).
SECTION 1.14 "CVD" means CVD Financial Corporation.
SECTION 1.15 "DEBTOR" means ABI, AVRE and/or Binary either collectively
or separately in their capacities as Debtors in the Reorganization Case.
SECTION 1.16 "DEBTORS NOTES" means and refers to up to $1,175,000 in
notes issued or to be issued by ABI pursuant to Bankruptcy Court order to
finance the Plan.
SECTION 1.17 "EFFECTIVE DATE" means the first business day: (a) that
is at least ten days after the Confirmation Date; and (b) on which no stay of
the Confirmation Order is in effect.
SECTION 1.18 "EXECUTORY CONTRACT" means any executory contract or
unexpired lease, subject to Section 365 of the Bankruptcy Code, between a
Debtor and any other person or persons in effect as of the Filing Date.
SECTION 1.19 "FILING DATE" means January 7, 1994.
SECTION 1.20 "FINAL ORDER" means an order or judgment of any court of
competent jurisdiction that has not been reversed, stayed, modified or
amended and as to which the time to appeal, petition for certiorari, or seek
reargument or rehearing has expired and as to which no appeal, reargument,
petition for certiorari, or rehearing is pending, or as to which any right to
appeal, reargue, petition for certiorari or seek rehearing has been waived in
writing or, if on appeal, reargument, petition for certiorari, or a hearing
theron has been denied, the time to take any further appeal or seek
certiorari or further reargument or rehearing has expired. Notwithstanding,
and in lieu of the foregoing, insofar, as the Confirmation Order is
concerned, Final Order means an order or judgment of the Bankruptcy Court
with respect to which no stay is in effect.
SECTION 1.21 "HOLDER" means the owner or holder of any Claim or
Interest.
SECTION 1.22 "INTEREST" means, any equity security of the Debtors as
defined in Section 101(49) of the Bankruptcy Code.
SECTION 1.23 "PLAN" or "REORGANIZATION PLAN" means this Third Amended
Joint Plan of Reorganization of American Blood Institute, Inc.; AVRE, Inc.;
and Binary Associates, Inc.
SECTION 1.24 "PRIORITY CLAIM" means all Claims that are entitles to
priority pursuant to Section 507(a) of the Bankruptcy Code and that are not
Administrative Claims, other than Claims that are not classified pursuant to
Section 1123(a)(1) of the Bankruptcy Code or Tax Claims.
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<PAGE>
SECTION 1.25 "REORGANIZATION CASE" means the Chapter 11 cases of ABI,
pending as Case No. LA 94-11730-AA in the Bankruptcy Court; AVRE, pending as
Case No. 94-11736-AA in the Bankruptcy Court; and/or Binary, pending as Case
No. 94-11738-AA in the Bankruptcy Court, either collectively or separately.
SECTION 1.26 "REORGANIZED DEBTORS" means ABI, AVRE and Binary as of the
Effective Date.
SECTION 1.27 "REORGANIZED ABI" means ABI as of the Effective Date, to
be known as SeraCare, Inc.
SECTION 1.28 "REORGANIZED AVRE" means AVRE as of the Effective Date.
SECTION 1.29 "REORGANIZED BINARY" means Binary as of the Effective Date.
SECTION 1.30 "SECURED CLAIM" means (a) a Claim secured by a lien on any
asset, which lien is valid, perfected and enforceable and is not subject to
avoidance under the Bankruptcy Code or other applicable non-bankruptcy law,
but only to the extent that such Claim does not exceed the value of the
asset(s) securing such Claim, or (b) a Claim allowed under the Reorganization
Plan as a Secured Claim.
SECTION 1.31 "SECURED CREDITOR" means a Creditor of a Debtor who holds
a Secured Claim.
SECTION 1.32 "TAX CLAIM" means a Claim of the kind specified in Section
507(a)(7) of the Bankruptcy Code.
SECTION 1.33 "UNSECURED CLAIM" means a Claim which is neither a Secured
Claim as specified herein nor entitled to priority under the Bankruptcy Code
or the orders of the Bankruptcy Court.
SECTION 1.34 "UNSECURED CREDITOR" means a Creditor of a Debtor who
holds an Unsecured Claim.
SECTION 1.35 "UNSECURED NOTES" means unsecured notes of ABI issued in
October, 1993 in the total principal sum of $420,000.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
SECTION 2.1 CLASSIFICATION.
(a) Section 2.2 sets forth a designation of classes of Claims and
Interests. A Claim or Interest is classified in particular class only to the
extent that the Claim or Interest qualifies within the description of the
class and is classified in a different class to the extent the claim or
interest qualifies within the description of that different class.
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<PAGE>
(b) In accordance with Section 1123(a)(1) of the Bankruptcy Code,
claims arising under Sections 507(a)(1), 507(a)(2) and 507(a)(7) of the
Bankruptcy Code have not been classified and are excluded from the following
classes.
SECTION 2.2 CLASSES OF CLAIMS AND INTERESTS. For the purposes of the
Reorganization Plan, those persons holding Claims against, or Interests in a
Debtor are grouped as follows in accordance with Section 1122(a) of the
Bankruptcy Code:
(a) CLASS 1: PRIORITY CLAIMS. Class 1 consists of all Allowed
Claims against any Debtor that are not Claims of the type referred to in
Section 2.1(b) hereof and are entitled to priority pursuant to Section 507(a)
of the Bankruptcy Code.
(b) CLASS 2: CVD. Class 2 consists of the Allowed Secured Claims
of CVD.
(c) CLASS 3: UNSECURED CREDITORS OF ABI. Class 3 consists of the
Allowed Unsecured Claims of Creditors of ABI.
(d) CLASS 4: UNSECURED NOTE HOLDERS. This class consists of the
Claims of Holders of Unsecured Notes of ABI.
(e) CLASS 5: UNSECURED CREDITORS OF AVRE. Class 5 consists of
the Allowed Unsecured Claims of Creditors of AVRE.
(f) CLASS 6: UNSECURED CREDITORS OF BINARY. Class 6 consists of
the Allowed Unsecured Claims of Creditors of Binary.
(g) CLASS 7: PREFERRED EQUITY INTERESTS OF ABI. This class
consists of Holders of preferred and common equity Interests of ABI.
(h) CLASS 8: COMMON EQUITY INTEREST OF AVRE AND BINARY. This
class consists of the Holder of common stock of AVRE and Binary.
ARTICLE III
TREATMENT OF ADMINISTRATIVE AND TAX CLAIMS
SECTION 3.1 ADMINISTRATIVE CLAIMS. Except as otherwise provided in the
Plan, each Holder of an Allowed Administrative Claim shall receive in full
satisfaction of such Claim in cash equal to the amount of such Claim on the
Effective Date, or as soon thereafter as is practicable, unless such Holder
shall have agreed to payment at a later date; in the event that an
Administrative Claim is a disputed Claim, or is otherwise not allowed as of
the Effective Date, such Claim shall be paid within ten (10) days after such
becomes an Allowed Claim as agreed upon between the Holder of such Claim and
the relevant Debtor or determined by Final Order, unless the Holder of such a
Claim agrees to a different treatment. All professional fees incurred by any
professional employed pursuant to Bankruptcy Court order are subject to
Bankruptcy Court approval and will only be paid after entry of an appropriate
order.
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<PAGE>
All applications for final compensation of professional persons for
services rendered and for reimbursement of expenses incurred on or before the
Effective Date, and all other requests for payment of an Administrative Claim
incurred before the Effective Date shall be filed no later than sixty (60)
days after the Effective Date. Any such Claim not filed within this deadline
shall be forever barred and the Holder of an Administrative Claim who is
required to file a request by the applicable bar date shall be forever barred
from asserting such Claims against the Debtors, their estates, or any of
their respective property.
Holders of Debtor's Notes totalling up to $1,200,000 issued during the
course of this Reorganization Case shall have the option to exchange those
Notes for up to 1,610,708 shares of Reorganized ABI's securities. If any
Noteholder declines to make this election, the Note will be paid pursuant to
its terms. In addition, on the Effective Date, First Equity Capital
Securities, Inc., Anthony J.A. Bryan, Sr. and Stuart Sundlun shall receive
94,748 shares of Reorganized ABI's stock, $90,000 cash and reimbursement of
expenses, including legal fees, 84,220 shares of Reorganized ABI's stock and
$60,000 cash and 21,055 shares of Reorganized ABI's stock and $30,000 cash
respectively, for consulting and finders' fees incurred in connection with
funding the Debtor's Notes.
Upon confirmation of the Plan, in addition to other compensation to be
paid for management services rendered by Alfred Jay Moran, Jr., Jerry L.
Burdick and Brian Olson during the course of the Chapter 11 case, including,
but not limited to creating the restructured company, giving up prior company
benefits and equity, acquisition and funding of the initial six plasma
centers, profit enhancement to the centers, bankruptcy administration,
arranging financing, and developing and executing the chapter 11 plan, and as
an incentive, Mr. Moran shall be issued 84,220 shares of Reorganized ABI's
stock and stock options to acquire 56,147 shares over a three year period,
Mr. Burdick shall be issued 63,165 shares of Reorganized ABI's stock and
stock options to acquire 42,110 shares over a three year period, and Mr.
Olson shall be issued 42,110 shares of Reorganized ABI's stock and stock
options to acquire 28,073 shares over a three year period.
Ordinary administrative expenses incurred in the normal course of
business of a Debtor may be paid by that Debtor without further order of the
Bankruptcy Court.
SECTION 3.2 TAX CLAIMS. Tax Claims against the Debtors shall be paid
in full in cash on the Effective Date or as soon thereafter as is practicable.
ARTICLE IV
TREATMENT OF CLASSES UNDER THE REORGANIZATION PLAN
SECTION 4.1 SATISFACTION OF CLAIMS. The treatment of and consideration
to be received by Holders of Allowed Claims or Interests pursuant to this
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<PAGE>
Article IV of the Reorganization Plan shall be in full settlement,
satisfaction, release and discharge of their respective Claims against or
Interests in the Debtors.
SECTION 4.2 CLASS 1 - PRIORITY CLAIMS. Each Holder of a Class 1 Claim
which is an Allowed Claim shall receive cash equal to the amount of such
Claim on the Effective Date, unless such Holder shall have agreed to a
different treatment. In the event that a Priority Claim is a disputed Claim,
or has not become an Allowed Claim prior to the Effective Date, such Claim
shall be paid within ten days after such Claim becomes an Allowed Claim as
agreed upon between the relevant Debtor and the Holder of such Claim or
determined by Final Order.
SECTION 4.3 CLASS 2 - THE SECURED CLAIM OF CVD. The Secured Claim of
CVD, estimated to not exceed the sum of $1,600,000 shall be satisfied as
follows: The Reorganized Debtors shall pay CVD the sum of $600,000 cash on
the Effective Date. CVD shall receive a replacement non-negotiable
promissory note made by the Reorganized Debtors in an amount equal to the
balance of CVD's Secured Claim as ultimately determined by the
Bankruptcy Court or agreed to by CVD and the Debtors. The promissory note
shall be fully amortized over four (4) years, with interest payable monthly
at an interest rate of 14% per annum and with principal payable quarterly.
CVD shall retain its lien upon the Debtor's assets to secure the Reorganized
Debtors' obligations under the promissory note until paid in full. The
Reorganized Debtors intend to challenge the amount of CVD's Claim and the
extent and validity of its liens upon the Debtors' assets prior or subsequent
to Confirmation. To the extent that CVD's Claim is reduced as a result of
any challenge to CVD's Claim, the face amount of the promissory note shall be
reduced accordingly and the reduced amount shall be fully amortized and paid
over a period of four years after the Effective Date as set forth above. The
first payment to CVD under the promissory note shall commence on the first
day of the month, one full month after the Effective Date.
Except as set forth below, in the event of a challenge to CVD's Claim,
the Reorganized Debtors will continue making payments of interest and
principal based upon a promissory note with a face amount of not more than
$1,000,000 until the Bankruptcy Court renders a decision on the challenge to
CVD's Claim. If the Bankruptcy Court sustains the challenge, the Bankruptcy
Court shall determine how the payments made prior to the rendering of its
decision shall be credited.
SECTION 4.4 UNSECURED CREDITORS OF ABI - CLASS 3. Class 3 Claimants
shall receive a pro rata distribution of the balance remaining from the sum
of $200,000 after payment of all Class 5 and Class 6 Claimants, up to a
maximum of $.10 cash for each Claim dollar, payable as soon as practicable
after the Effective Date. Class 3 Claimants also shall receive 10,000 shares
of common stock of Reorganized ABI to be distributed on a pro rata basis as
soon as practicable after the Effective Date. In addition, Class 3 Claimants
shall receive for pro rata distribution fifty percent (50%) of any "net
affirmative recovery" received by the Debtors against recipients of avoidable
transfers. "Net affirmative recovery" means any cash consideration actually
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<PAGE>
received by the Debtors on account of an action brought against a creditor
for an avoidable transfer, less costs and attorneys' fees incurred in
obtaining such recovery.
SECTION 4.5 UNSECURED NOTE HOLDERS - CLASS 4. Holders of Unsecured
Notes shall receive in exchange for their Claims, including accrued interest
to the Filing Date, 105,275 shares of common stock of Reorganized ABI for pro
rata distribution.
SECTION 4.6 UNSECURED CREDITORS OF AVRE - CLASS 5. Creditors of AVRE
holding unsecured Claims shall receive eighty cents on the dollar in cash as
soon as practicable after the Effective Date.
SECTION 4.7 UNSECURED CREDITORS OF BINARY - CLASS 6. Creditors of
Binary holding unsecured Claims shall receive eighty cents on the dollar in
cash as soon as practicable after the Effective Date.
SECTION 4.8 PREFERRED AND COMMON EQUITY INTERESTS OF ABI - CLASS 7. On
the Effective Date all Preferred and Common Equity Interests of ABI shall be
deemed cancelled, annulled and terminated, and the Holders of such Interests
shall receive no distribution under the Plan on account of their Interest in
such Class.
SECTION 4.9 COMMON SHAREHOLDER OF AVRE AND BINARY - CLASS 8. The
Holder of the issued and outstanding common stock of AVRE and Binary shall
retain all such Interests.
ARTICLE V
IMPAIRMENT OR UNIMPAIRMENT OF CLASSES
SECTION 5.1 UNCLASSIFIED CLAIMS. In accordance with Section 1123(a)(1)
of the Bankruptcy Code, Administrative Claims, Tax Claims and Claims arising
under Section 502(f) or Section 502(b) of the Bankruptcy Code are not
classified under the Reorganization Plan and the Holders of such Claims are
not entitled to vote on the Reorganization Plan.
SECTION 5.2 CLASSES NOT IMPAIRED UNDER THE REORGANIZATION PLAN.
Classes 1 and 8 are not impaired under the Reorganization Plan and pursuant
to Section 1126(f) are conclusively deemed to have accepted the
Reorganization Plan and are not entitled to vote on the Reorganization Plan.
SECTION 5.3 CLASSES IMPAIRED UNDER THE REORGANIZATION PLAN. Classes 2,
3, 4, 5, 6, and 7 are impaired within the meaning of Section 1124 and Holders
of Claims or Interests in such classes shall be entitled to vote on the
Reorganization Plan.
ARTICLE VI
POTENTIAL CRAMDOWN OF NON-ACCEPTING CLASSES
SECTION 6.1 CRAMDOWN. If any impaired class fails to accept the
Reorganization Plan by the requisite majorities in number and amount as
required by Section 1126 of the Bankruptcy Code, the provisions of Section
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<PAGE>
1129(b) of the Bankruptcy Code may be invoked by the proponents of the Plan.
If the proponents of the Plan invoke the so-called "cramdown" provisions of
Section 1129(b), they will be required to show that the Reorganization Plan
does not discriminate unfairly and that it is fair and equitable as to each
class that is impaired and has not accepted the Reorganization Plan.
ARTICLE VII
MEANS FOR IMPLEMENTATION OF THE REORGANIZATION PLAN
SECTION 7.1 CONTINUED BUSINESS OPERATIONS OF THE DEBTORS. The Debtors
will continue to develop and operate plasma collection centers.
SECTION 7.2 DISTRIBUTION OF CASH AND SECURITIES. On the Effective
Date, or as soon as practicable thereafter, the Disbursing Agent will make
the cash and securities distributions which the Reorganization Plan requires
to be made on or after the Effective Date.
SECTION 7.3 FUNDING OF PLAN. The funding of the Plan will be
accomplished by:
1) continued business operation of the Debtor entities,
2) borrowing of up to $1,200,000 by means of the Debtor's Notes,
3) the Debtor's cash and other assets as of the Effective Date,
4) an equity contribution by the holders of the Debtor's Notes in
conjunction with the Debtor's Notes, up to a total of $1,200,000, and
5) the common stock of Reorganized ABI.
SECTION 7.4 EXECUTIVE COMPENSATION. The officers of the Reorganized
Debtors shall receive three year contracts with noncompete language. The
officers of the Reorganized Debtors shall be: Alfred Jay Moran, Jr. with an
annual salary of $150,000 as Chairman, President and CEO; Jerry L. Burdick
with an annual salary of $125,000 as Executive Vice President and Chief
Financial Officer; and Brian Olson with an annual salary of $90,000 as Vice
President. There shall be a quarterly salary adjustment whereby any pre-tax
earnings over $100,000 per quarter shall be paid to the officers of the
Reorganized Debtor up to an annual maximum of $25,000 for Alfred Jay Moran,
Jr. and $10,000 each for Jerry L. Burdick and Brian Olson. There shall also
be a Management Bonus Pool which will allocate ten percent (10%) of pre-tax
earnings which are in excess of $920,549 in year one following the Effective
Date, in excess of $2,590,160 in year two, in excess of $4,384,187 in year
three, in excess of $6,244,536 in year four, and in excess of $8,166,636 in
year five, to a bonus pool to be paid pro rata to management on the basis of
salaries.
SECTION 7.5 REVESTING OF PROPERTY. Except as otherwise specifically
provided herein, upon the Effective Date of the Plan, all property of each of
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<PAGE>
the bankruptcy estates, including but not limited to claims for relief under
11 U.S.C. Sections 544, 545, 546, 548, 549, 550 and 551, shall be revested
in the Reorganized Debtor of that estate and each such Reorganized Debtor
shall retain such property free and clear of all Claims and Interests of
creditors, other than the liens expressly to be assumed herein by the
respective Debtors.
SECTION 7.6 PROVISIONS FOR OBJECTIONS TO AND TREATMENT OF DISPUTED
CLAIMS. The Reorganized Debtors shall object to the allowance of Claims
filed with the Bankruptcy Court with respect to which liability in whole or
in part is disputed. Such objections, if not previously filed, shall be
filed before or within sixty days after the Effective Date, unless such date
is extended by order of Court. All objections shall be litigated to Final
Order; provided, however, that the Reorganized Debtors, after the Effective
Date, may compromise and settle any such objection with the approval of the
Bankruptcy Court. Upon the allowance of a disputed Claim or Interest by
either compromise and settlement or by Final Order, the Reorganized Debtors
shall distribute to the Holder of such Allowed Claim the distribution to
which such Holder shall be then entitled on equal status with its class had
such Claim not been disputed.
SECTION 7.7 ESTIMATION OF DISPUTED CLAIMS. Subject to Section 7.6
hereof, any disputed Claim may be estimated by the Bankruptcy Court at any
time regardless of whether such Claim has been allowed by the Bankruptcy
Court or another court and regardless of whether any judgment or order with
respect to such Claim is on appeal, for purposes of making distributions,
voting or holding funds in reserve under the Reorganization Plan.
SECTION 7.8 MANNER OF PAYMENTS UNDER THE REORGANIZATION PLAN. Any cash
payment to be made on behalf of the Reorganized Debtors by the Disbursing
Agent or pursuant to the Reorganization Plan may be by check or wire transfer
or as otherwise required or provided in applicable agreements.
SECTION 7.9 UNCLAIMED DISTRIBUTIONS. All distributions shall be made
by mail to (1) the latest mailing address filed of record with the Bankruptcy
Court for the party entitled thereto or (2) if no such mailing address has
been so filed, the mailing address reflected on the Schedules of Assets and
Liabilities filed by the Debtors, as amended, unless the Claim or Claim
Holder notifies the Debtor of the change of address at the address shown
below:
1875 Century Park East, Suite 2130
Los Angeles, California 90067
If a distribution has not cleared the relevant bank account of
Reorganized ABI within two months of the date of mailing, or if the
distribution is returned to Reorganized ABI because of an inaccurate mailing
address and Reorganized ABI are unable to discover the proper mailing
address, the distribution shall be forfeited and shall be deposited into a
bank account in the name of Reorganized ABI.
SECTION 7.10 NO DE MINIMIS DISTRIBUTIONS. No distributions totalling
less than $15.00 or less than two (2) shares of Reorganized ABI's common
stock shall be required to be distributed by Reorganized ABI to the Holder of
any Claim entitled to receive distributions under the Reorganization Plan
unless specifically requested in writing by such Holder. Any undistributed
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<PAGE>
cash amount shall be deposited into a bank account in the name of Reorganized
ABI.
SECTION 7.11 DISBURSING AGENT. Reorganized ABI shall act as the
disbursing agent and shall make all distributions required by this
Reorganization Plan.
SECTION 7.12 FRACTIONAL SHARES. No fractional shares shall be issued
by Reorganized ABI. Any fractional shares shall be rounded up to the next
whole share.
SECTION 7.13 DESIGNATION OF NOMINEE. Any person or entity entitled to
receive consideration or stock of Reorganized ABI may designate a nominee or
designee to receive the consideration or stock to be issued pursuant to this
Plan.
ARTICLE VIII
EFFECT OF CONFIRMATION
SECTION 8.1 DISCHARGE. Except as otherwise provided in this
Reorganization Plan or in the Confirmation Order, Confirmation shall operate
as a discharge pursuant to Bankruptcy Code Section 1141(d)(1), of any and all
debts or Claims against each Debtor that arose at any time before
Confirmation, including but not limited to all principal and interest,
whether accrued before, on or after the filing date. The discharge shall
become effective after the Effective Date and when the initial distribution
to creditors holding uncontested Claims of the cash and securities has been
made. The Debtors will apply for an order of discharge upon providing a
declaration to the Court setting forth that such initial distribution has
been made. As to every discharged debt and Claim, the creditor that held
such debt or Claim shall be precluded from asserting against any Debtor
herein or against a Debtor's assets or a Reorganized Debtor or any assets of
a Reorganized Debtor, any or further Claim based upon any document,
instrument or act, omission, transaction or any other activity of any kind or
nature that occurred prior to the Confirmation Date, including, without
limitation, Claims in the nature of successor liability. Without limiting
the generality of the foregoing, on the Effective Date the Debtor shall be
discharged from any debt that arose before the date of Confirmation and any
debt of the kind specified in Sections 502(g), 502(h) or 502(i) of the
Bankruptcy Code to the full extent permitted by Section 1141 (d)(1)(A) of the
Bankruptcy Code. Furthermore, all Claims and debts against each Debtor which
are so discharged may not be asserted against any Reorganized Debtor under
any circumstances unless pursuant to the provisions of the Reorganization
Plan.
The Order of Confirmation shall operate as an injunction against the
commencement or continuation of any act relating to the collection or
enforcement of any Claim governed by the discharge provisions hereof.
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<PAGE>
ARTICLE IX
EXECUTORY CONTRACTS
Except those contracts which have been specifically assumed under the
Reorganization Plan, or by order entered by the Bankruptcy Court, or in
writing executed by the Reorganized Debtors before sixty days after the
Effective Date, the Debtors reject any and all executory contracts,
including, but not limited to, leases, warrants to purchase stock of the
Debtors, employee's stock option or profit sharing plans, and all other stock
options outstanding, which were, or which are claimed to be, or to have been
existence at any time before these cases were filed. Any Claims arising out
of the rejection of executory contracts or leases under Article IX must be
filed with the Court within thirty (30) days after Confirmation or be forever
barred. A separate notice will be sent by the Debtors upon Confirmation to
the holders of contracts to be rejected advising them of this deadline for
filing Claims.
The Debtors specifically assume the following executory contracts:
(1) Leases of real property for the following locations:
a) 611 North Las Vegas Boulevard, Las Vegas, Nevada;
b) 1174 Fort Campbell Boulevard, Clarksville, Tennessee;
c) 129 and 141 North Spruce, Colorado Springs, Colorado; and
d) 411 and 413 West 4th Street, Pueblo, Colorado
(2) Contracts for sale of source plasma with Alpha Therapeutics, Inc.
ARTICLE X
AMENDMENT TO CHARTER DOCUMENTS
OF DEBTORS AND OTHER MATTERS
SECTION 10.1 CANCELLATION OF OUTSTANDING SECURITIES OF ABI. On the
Effective Date, except as otherwise provided herein, all outstanding
instruments and securities representing Interests in ABI and any rights to
acquire Interests in ABI shall be deemed canceled and of no further force or
effect, without any further action on the part of the Bankruptcy Court or any
person. The holders of such canceled instruments, securities, and other
documents shall have no rights arising from or relating to such instruments,
securities or other documents or the cancellation thereof, except the rights
provided pursuant to the Plan.
SECTION 10.2 AMENDMENTS TO ARTICLES OF INCORPORATION. On the Effective
date, the board of directors of Reorganized ABI shall be authorized to amend
the Articles of Incorporation and Bylaws to accomplish the following:
10.2.1 Change ABI's name to SeraCare, Inc. or such other name as the
board of directors determines.
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<PAGE>
10.2.2 Change the place of incorporation of the Reorganized ABI to
any State or Territory of the United States or to any foreign jurisdiction.
10.2.3 Authorize the issuance of 25,000,000 shares of common stock
of ABI.
10.2.4 Authorize the issuance of 25,000,000 shares of preferred
stock. The board of directors shall determine in their discretion the par
value, rights, preferences, privileges, and restrictions granted to or
imposed on such shares.
10.2.5 Carry out a stock split or reverse stock split, which may
provide that the shares of odd lot shareholders (those holding less than 100
shares after a reverse stock split) may be rounded pursuant to a board of
directors resolution and which stock split may be discriminatory as compared
to non-odd lot shareholders, or may be paid in cash.
10.2.6 Establish an employee stock option and/or stock bonus plan.
10.2.7 Effect a quasi-reorganization for accounting purposes.
10.2.8 Change Reorganized ABI's fiscal year end.
10.2.9 Issue shares, warrants or other securities to carry out any
transaction contemplated in the Plan without solicitation of or notice to
shareholders.
10.2.10 Take all action necessary and appropriate to carry out the
terms of the Plan.
10.2.11 Amend the Debtor's Articles of Incorporation and/or Bylaws
to provide the maximum indemnification or other protections to Reorganized
ABI's officers and directors that is allowed under applicable law.
10.2.12 Without shareholder approval, take any and all action
necessary or appropriate to effectuate any amendments to its Certificate of
Incorporation and/or Bylaws called for under the Plan and the board of
directors and officers of Reorganized ABI shall be authorized to execute,
verify, acknowledge, file and publish any and all instruments or documents
that may be required to accomplish same.
ARTICLE XI
STATUS OF SECURITIES TO BE ISSUED PURSUANT TO PLAN
All securities of Reorganized ABI to be issued in accordance with this
Plan to creditors or equity interest holders will not be registered under the
Securities Act of 1933, as amended, or under any state or local securities
laws and will be issued under an exemption from registration provided by
section 1145 of the Bankruptcy Code (11 U.S.C. Section 1145).
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<PAGE>
ARTICLE XII
RETENTION OF JURISDICTION
The Bankruptcy Court will retain jurisdiction of each of the
Reorganization Cases until the entry of a final decree closing the bankruptcy
cases.
ARTICLE XIII
AMENDMENT TO PLAN
The proponents of the Plan, with the approval of the Court, may
insofar as it does not materially or adversely effect the interest of
Creditors, supply any details, correct any omissions or reconcile any
inconsistencies in this Reorganization Plan or the Order of Confirmation, in
such manner as may be necessary to carry out the purposes of this
Reorganization Plan, without further notice to Creditors as provided by law.
The Reorganization Plan may be amended, modified or supplemented by the
proponents of the Plan before or after the Confirmation Date, in the manner
provided for by Section 1127 of the Bankruptcy Code or as otherwise permitted
by law without additional disclosure pursuant to Section 1125 of the
Bankruptcy Code, except as the Bankruptcy Court may otherwise order.
ARTICLE XIV
EVENTS OF DEFAULT AND REMEDIES
The failure of the Reorganized Debtors to make timely payment of any of
their monetary obligations or to timely perform any of their non-monetary
obligations under and pursuant to the terms and conditions herein set forth
shall constitute an event of default. The Committee or any party in interest
adversely affected by an event of default shall have standing to initiate and
pursue any remedy provided for herein or pursuant to any other applicable law
which remedies shall include, but shall not necessarily be limited to the
following:
a. The Committee or any party in interest may declare a default
under the Plan. Such action shall be taken by the filing of a motion seeking
an order directing such remedy to be afforded with notice to all parties in
interest and supported by factual declarations and memorandum of applicable
law in support thereof. Following the entry of such an order and the same
becoming a final order, any party affected thereby may initiate an action in
any court of competent jurisdiction to recover the balance due to such party.
b. The Committee or any party in interest may seek to convert the
case to one under Chapter 7 of the Bankruptcy Code or seek the entry of an
order dismissing the case pursuant to the provisions of 11 U.S.C. Section
1112(b).
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<PAGE>
c. The Committee or any party in interest may seek the revocation
of the order confirming the Plan pursuant to 11 U.S.C. Section 1144.
DATED: November 27, 1995 AMERICAN BLOOD INSTITUTE, INC.
A Delaware corporation
By: /s/
--------------------------------
ALFRED JAY MORAN, JR.
President
DATED: November 27, 1995 AVRE, INC.
A Nevada corporation
By: /s/
--------------------------------
ALFRED JAY MORAN, JR.
President
DATED: November 27, 1995 BINARY ASSOCIATES, INC.
A Colorado corporation
By: /s/
--------------------------------
ALFRED JAY MORAN, JR.
President
SUBMITTED BY:
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: /S/
---------------------------
MARTIN J. BRILL
Attorneys for Debtors
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EXHIBIT A PAGE 48
EXHIBIT B PAGE 141
<PAGE>
EXHIBIT "B"
EXHIBIT B PAGE 142
<PAGE>
FIRST EQUITY CAPITAL SECURITIES, INC.
317 MADISON AVENUE - SUITE 1700
NEW YORK, NY 10017
(212) 922-0004
FAX (212) 557-9711
October 18, 1995
Mr. Alfred Jay Moran, Jr.
American Blood Institute, Inc.
A.K.A. SeraCare
1875 Century Park East
Suite 2130
Los Angeles, CA 90067
Dear Mr. Moran:
First Equity Capital Securities, Inc. ("First Equity") is interested in and
intends to procure financing for American Blood Institute, Inc. A.K.A.
SeraCare (the "Company"). First Equity agrees to raise, on behalf of the
Company proceeds to purchase 10% Promissory Note ("Debtor Certificates") in a
net amount of at least $1,175,000. The holders of the Debtor Certificates
shall receive 76.1% of the common stock of the Company.
Private Placement
The Company will appoint First Equity as the exclusive Selling Agent
assisting in the selling of the Debtor Certificates in connection with this
private placement. The private placement will take place on a "best efforts"
basis.
No funds shall leave escrow without the written approval of First Equity.
The closing of this offering shall be contingent upon approval by the
Bankruptcy Court of the plan to be submitted by the debtor in possession
(such plan to be approved by First Equity) and upon the successful emergence
of the Company from Bankruptcy.
The terms and conditions of this private placement shall be as set forth on
the Term Sheet attached hereto.
Compensation due on Emergence/Closing
The Company shall be obligated to pay First Equity the compensation as set
forth on the Term Sheet only upon (i) the closing of the offering and (ii)
successful emergence of the Company from bankruptcy.
Expenses
Upon closing and emergence, the Company will bear all reasonable costs and
expenses incident to the issuance, offer, sales and delivery of the units,
including reasonable legal expenses of First Equity's counsel and any other
reasonable expenses incurring by First Equity in connection with this private
placement.
EXHIBIT B PAGE 49
EXHIBIT B PAGE 143
<PAGE>
Bridge Loan
First Equity shall procure for the Company a bridge loan in the amount of not
less than $50,000 or more than $50,000 on or before November 3, 1995 (unless
such date is extended by the Company). Such funds shall be used to pay
expenses of the Company related to this offering and the bankruptcy. The
bridge lender(s) shall receive the right to convert such bridge loan interests
into the private placement on favorable terms. Such premium shall not
increase the gross amount of shares to be issued to the investors.
Intention to be a Public Company
First Equity and the Company each acknowledge that it is the intention of all
parties that the Common Stock of the Company be free trading and that the
Company be a publicly traded company as soon as possible, although the
Company intends that it be public and that its common stock will be freely
tradable concurrent with its emergence from bankruptcy, all parties agree
that the issuance of additional shares may be necessary in order to achieve
this end (i.e., 300 shareholders). Both parties also acknowledge that, if
this scenario is not achievable or if the parties otherwise desire, a
reverse merger into a public shell may be necessary. Under these of
other scenarios, all parties acknowledge that additional shares (above
2,000,000) may be issued and that all parties shall be diluted thereby.
Indemnification
First Equity and the Company will each agree to indemnify and hold harmless
the other against any and all claims, etc., with respect to any information
provided by the indemnifying party for inclusion in any private placement
memorandum or offering circular.
Very truly yours,
FIRST EQUITY CAPTIAL SECURITIES, INC.
By: /s/ Kenneth R. Levine
-------------------------------
Kenneth R. Levine
CEO
Agreed to an Accepted the day
and year first above written:
AMERICAN BLOOD INSTITUTE, INC.
A.K.A. SeraCare
By: /s/ Alfred Jay Moran, Jr.
-------------------------------
Alfred Jay Moran, Jr.
Chairman, President and
Chief Executive Officer
EXHIBIT B PAGE 50
EXHIBIT B PAGE 144
<PAGE>
SeraCare
Term Sheet for Financing and Plan of Reorganization
This Term Sheet assumes a gross raise of $1,175,000.00 of which $50,000.00
will be deposited with SeraCare on or before November 3, 1995. The balance
of $1,125,000 will be deposited into escrow on or before December 30, 1995
and will be used to purchase Debtor Certificates on or about the effective
date of the Plan of Reorganization.
Use of Funds is anticipated as follows:
General Unsecured Creditors $ 200,000
Downpayment to Secured Creditors 600,000
Administrative costs (mainly legal) 195,000
Investment Banker Fees - First Equity Capital (1) 90,000
Investment Banker Fees - Anthony Bryant (1) 60,000
Investment Banker Fees - Sundlund Capital (1) 30,000
-------------
$1,175,000
-------------
-------------
(1) All Investment Banker fees are contingent upon the emergence from
bankruptcy.
The Debtor Certificates representing the $1,175,000.00 shall convert into
1,610,708 shares of SeraCare on emergence. SeraCare contemplates utilizing
warrants or a secondary offering to provide for the secondary financing
necessary for the purchase of additional centers.
Management will receive 189,495 shares of common stock of SeraCare plus
options to purchase 126,330 shares of common stock of SeraCare at a
calculated price which is the mean average between $.74 per share and the
weighted average of the closing bid price for the company's stock for the
thirty trading days prior to the vesting date. The vesting date is defined
as the anniversary date of the effective date of the Reorganization Plan as
herein defined. The options will vest at the rate of one-third per year and
are contingent upon the company achieving the projected operating results
reflected in the Confidential Memorandum except that if the indicated funding
is not provided in timely fashion for acquisition of the indicated centers
reflected in that Confidential Memorandum then a calculation will be made
utilizing the projected results of the base six centers (which includes
corporate overhead) plus a pro rated calculation of the projected operating
results of the acquisition centers based upon the percentage of the secondary
acquisition financing actually received by SeraCare. For example, the
projections contemplate the acquisition of twelve centers during the first
year after emergence. Accordingly, at the rate of $200,000 per center this
acquisition program would require $2,400,000. If $1,200,000 or 50% is
actually funded, then a calculation will be made utilizing 100% of the First
Year projected operating results which include corporate overhead ($365,556)
plus 50% of the First Year projected operating results from the acquisition
centers (50% X $450,198 = $225,009) with the summation of the two being
($365,556 + 225,099 = $590,655). Accordingly, $590,655 will be the objective
criteria for vesting of one third of the options
EXHIBIT B PAGE 51
EXHIBIT B PAGE 145
<PAGE>
if $1,200,000 of secondary financing is actually funded in Year One. If
SeraCare is sold, merged, or consolidated with another company, at which time
the options will become immediately vested and exercisable.
Anthony Bryant will receive 78,956 shares of common stock of SeraCare.
First Equity will receive 94,748 shares of common stock of SeraCare.
Sundlund Capital will receive 26,319 shares of common stock of SeraCare.
The Unsecured Note Holders shall receive 105,275 shares of SeraCare.
Agreed Upon Plan of Reorganization:
Class I - Certain administrative claimants will be paid in cash:
Mainly Bankruptcy Counsel $195,000
The invested funds of $1,175,000 will purchase Debtor
Certificates which will convert into 1,610,708 shares
of common stock of SeraCare on the effective date.
Class II - The tax claims of about $5,000 will paid in cash.
Class III - The Secured claim of CVD Financial estimated to be
$1,600,000 will be paid in full ($600,000 upon
emergence and $1,000,000 over four years with interest).
Class IV - Unsecured Note Holders totaling approximately $440,000
will be converted into 105,275 shares of common stock.
Class V - Unsecured trade creditors totaling approximately
$2,000,000 will receive $.10 for each claim dollar up to
a maximum of $200,000 and a prorata allocation of 10,000
shares of common stock in SeraCare on the effective date of
the plan.
Class VI - Other claims and interests shall receive zero value.
Class VII - Existing preferred equity holders will receive zero.
Class VIII - Current common stock holders will receive zero.
Class IX - Warrant holders and other equity claims consisting of
approximately 1,021,818 warrants shall be canceled and
the claimants shall receive nothing.
EXHIBIT B PAGE 52
EXHIBIT B PAGE 146
<PAGE>
OTHER ISSUES
A deposit of $50,000.00 will be made on or before November 3, 1995 which will
be available for use by SeraCare to pay expenses of the bankruptcy and the
debt offering. The depositor of the $50,000 shall receive debtor
certificates convertible into common stock and the deposit will be refundable
if the plan fails to be confirmed through no fault of First Equity Capital
Securities, Inc.
Management Issues:
The officers of the new public company shall be Alfred Jay Moran, Jr.
as President Chairman and CEO; Jerry L. Burdick as Executive Vice
President and Chief Financial Officer; and Brian Olson as Vice President.
The Directors are proposed to be Alfred Jay Moran, Jr. and
Samual Anderson, with three directors being selected by the
Investor Group, for a total of Board of five.
Salaries of the key officers will be:
Alfred Jay Moran, Jr. $150,000
Jerry L. Burdick $125,000
Brian Olson $90,000
There shall be a quarterly salary adjustment whereby any pre tax earnings
over $100,000 per quarter shall be paid to the officers up to an annual
maximum of the following:
Alfred Jay Moran, Jr. $25,000
Jerry L. Burdick $10,000
Brian Olson $10,000
Officers will receive three year contracts with non-compete language. The
non-compete term shall extend two years beyond the basic three years or a
total of five years.
There shall be a Management Bonus Plan which will allocate ten percent of Pre
Tax Earnings which are in excess of $920,549 in year one, $2,590,160 in year
two, $4,384,187 in year three $6,244,536 in year four, and $8,166,636 to a
bonus pool to be paid to management on a pro-rata basis of salaries.
EXHIBIT B PAGE 53
EXHIBIT B PAGE 147
<PAGE>
EXHIBIT "C"
EXHIBIT B PAGE 148
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is intended to be the operative
agreement by and between American Blood Institute, Inc., AVRE, Inc., and
Binary Associates, Inc. AKA SeraCare (referred to collectively herein as the
"Corporation") and Alfred J. Moran, Jr. ("Moran"). This Agreement is
conditional upon confirmation of a Plan of Reorganization for the Corporation
and approval of such Plan of Reorganization by the Federal Bankruptcy Court.
The effective date of this Agreement shall be the Effective Date of the Plan
of Reorganization.
1. EMPLOYMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER. The
Corporation hereby agrees to retain Moran and Moran hereby agrees to be
employed as President and Chief Executive Officer of the Plasma Operations to
be acquired by the Corporation via the Plan of Reorganization regarding
American Blood Institute, Inc., AVRE, Inc. and Binary Associates, Inc. In
such capacities, Moran shall perform all of the normal duties and
responsibilities of a President, Chief Executive Officer and Chairman of the
Board of Directors. In the performance of his duties and responsibilities,
Moran shall at all times be under the direction of the Board of Directors of
the Corporation. Moran shall perform his duties and responsibilities in
accordance with all reasonable rules, regulations and policies adopted by the
Board of Directors of the Corporation.
2. INDEMNIFICATION ; INSURANCE AGREEMENT. The Corporation warrants
and assures Moran that the Charter of the Corporation contains a provision
which provides for indemnification of officers by the corporation to the
maximum extent permissible under the laws of the jurisdiction in which the
Corporation is incorporated. Further, the Corporation agrees to either or
both of the following: (A) Enter into an Indemnification Agreement provided
that such Indemnification Agreement shall be modified if necessary to conform
with the laws of the jurisdiction in which the Corporation is incorporated;
(B) Obtain and maintain in full force and effect at Corporation's sole
expense, such director's and officer's liability insurance for errors and
omissions of such type and in such amount as is customary for similarly
situated companies, if available at reasonable cost.
3. EXTENT OF SERVICES. Moran agrees to devote all of his efforts on
behalf of the business of the Corporation. Without limiting the foregoing,
during the term of this Agreement, Moran shall make written request to the
Board of Directors and must obtain written approval from such Board if Moran
wishes to devote any of his time to any other business effort, whether or not
such business effort is in direct competition with the Corporation.
4. COMPENSATION. On the effective date of this contract, Moran shall
be paid at the rate of $150,000 per year payable bi-weekly. There shall be a
quarterly salary adjustment whereby any pre-tax earnings over $100,000 per
quarter shall be paid to the officers of the Reorganized Debtor (SeraCare) up
to a maximum annual amount of $25,000 to Alfred J. Moran, Jr. and $10,000
each for Jerry L. Burdick and Brian Olson. The distribution of the quarterly
salary adjustment shall be on a pro rata basis.
EXHIBIT C PAGE 54
EXHIBIT B PAGE 149
<PAGE>
5. PERFORMANCE BONUS. There shall also be a Management Bonus Pool
which will allocate ten percent (10%) of pre-tax earnings which are in excess
of $920,549 in year one following the Effective Date of the Reorganization
Plan, $2,590,160 in year two, $4,384,187 in year three, $6,244,536 in year
four, and $8,166,626 in year five to a bonus pool to be paid pro rata to
management on the basis of salaries. Moran shall be a participant in this
Management Bonus Pool during the term of this agreement.
6. FRINGE BENEFITS. Moran shall receive four (4) weeks paid vacation
per year during the course of this Agreement. Moran will also receive
company paid: sick pay, group health insurance, dental care, vision care,
disability insurance, life insurance and such other benefits in the amounts
and as may be provided in the ordinary course to the Corporation's other
senior executives.
7. STOCK AND WARRANT GRANT. Moran shall be granted 84,220 shares of
common stock of SeraCare (SeraCare is herein defined as AVRE, Inc., Binary
Associates, Inc., American Blood Institute, Inc. and any post emergence
replacement or successor corporation or entity into which the Plasma
Operations of Avre, Inc. and Binary Associates, Inc. are transferred, placed,
controlled, merged or which are acquired by) and stock options to purchase
56,147 shares of common stock in SeraCare for a calculated price which is the
mean average between $.74 and the weighted average of the closing bid price
for the Company's stock for the thirty trading days prior to the vesting
date. The vesting date is defined as the anniversary date of the Effective
date of the Reorganization Plan for SeraCare. The options will vest at the
rate of one-third per year and are contingent upon the company achieving the
projected operating results reflected in the Confidential Memorandum attached
herewith except that if the indicated funding is not provided in timely
fashion for the acquisition of the indicated centers reflected in the
Confidential Memorandum, then a calculation will be made utilizing the
projected results of the base six centers (which includes corporate overhead)
plus a pro rated calculation of the projected operating results of the
acquisition centers based upon the percentage of the secondary financing
actually received by SeraCare. For example, the projections contemplate the
acquisition of twelve centers during year one. Accordingly, at the rate of
$200,000 per center this acquisition program would require $2,400,000. If
$1,200,000 or 50% is actually funded, then a calculation will be made
utilizing 100% of the year one operating results projected for the base six
centers ($365,099) plus 50% of the year one projected operating results for
the acquisition centers (50% X $450,198 = $225,099) with the summation of two
being ($365,556 + $225,198 = $590,655). Accordingly, $590,655 will be the
objective criteria for vesting of one third of the options if $1,200,000 of
secondary financing is actually received by SeraCare in year one. If
SeraCare is sold, merged, consolidated with another company or reorganized to
the extent that there is a 50% or more change in ownership, the options will
become immediately vested and exercisable.
8. TERM. This Agreement is condition upon confirmation of the Plan of
Reorganization for American Blood Institute, Inc., AVRE, Inc. and Binary
Associates, Inc. and approval by the Federal Bankruptcy Court. The term
shall be for the three year period beginning on the "Effective Date" of the
Confirmed Plan of Reorganization and ending thirty six months after the
"Effective Date" unless this Agreement is terminated at an earlier date as
provided in Section 9 below.
EXHIBIT C PAGE 55
EXHIBIT B PAGE 150
<PAGE>
9. TERMINATION.
A. FOR "CAUSE". The Corporation may terminate this Agreement
upon thirty days notice for cause. "Cause" is defined for the purpose of
this agreement as: death; dishonesty; theft; conviction of a felony; alcohol
or drug abuse; unethical business conduct; and a material breach of this
Agreement by Moran. If Moran is terminated for "Cause" as herein defined,
Moran shall receive thirty days notice with pay, and no other compensation
other than the receipt of any options which have already vested.
B. FOR "ACTIONS DEEMED NOT IN THE BEST INTERESTS". The
Corporation may also terminate this Agreement if Moran fails for any reason,
within ten days after receipt by Moran of written notice thereof from the
Board of Directors, to correct, disassociate, cease or otherwise alter any
actions, associations, insubordination, failure to comply with instructions,
failure or other action or omission to act which, in the opinion of the Board
of Directors, materially affects or may materially affect the Corporations'
business operations. "Actions Deemed Not in the Best Interests" shall also
include the association by Moran with individuals, companies, organizations
or activities which in the opinion of the Board of Directors does or could
have a material negative affect on the Corporations operations, it's market
price per share, or the Corporation's ability to raise additional capital.
If Moran is terminated for "Actions Deemed Not in the Best Interests" as
herein defined, Moran shall receive twelve months severance pay and no other
compensation other than the receipt of any options which have already vested
as of the termination date.
C. OTHER EVENTS. Other events which will result in the
termination of this contract are:
1. The date on which Moran agrees to terminate this Agreement.
2. The disability of Moran. Disability herein is defined as being
unable to perform the duties hereunder due to a physical and/or
mental condition or impairment for one hundred eighty (180)
consecutive days during the term of this Agreement or
120 consecutive days in any 365 day period during the term.
3. The date on which Moran voluntarily ceases to perform his duties
hereunder, other than by reason of a physical or mental condition
prior to the time that a disability occurs.
In the event that the Corporation shall be sold, merged, devolved,
consolidated or materially reorganized (within the term of this Agreement and
Moran's position is eliminated, the Company will pay to Moran within Thirty
(30) days of such event the balance of the compensation which would be due to
complete the term of this agreement. In addition, all then unvested stock
options shall become immediately vested and exercisable.
EXHIBIT C PAGE 56
EXHIBIT B PAGE 151
<PAGE>
Any unilateral termination of Moran by the Corporation other than for
"Cause", "Actions Deemed Not in the Best Interests", or the reasons indicated
in 9.(C)(1) through 9.(C)(3) above shall be considered a material breach of
this agreement, the pre-agreed remedy for which is the payment in cash within
thirty (30) days of such termination, the full compensation which would be
due to complete the three year term of this agreement, including any and all
compensation, warrants, options or bonus compensation, plus the continuation
of benefits for a period of twelve months from the date of termination.
10. NO SOLICITATION OF EMPLOYEES. During the period of this Agreement
and for two (2) years following termination of this Agreement, Moran shall
not, for any reason either directly or indirectly, solicit for employment or
employ for any other entity any employee of the Corporation.
11. AGREEMENT NOT TO COMPETE. During the period of this Agreement and
for two (2) full years following termination of this Agreement (a total of
five years), Moran shall not, for any reason either directly or indirectly,
compete with SeraCare either directly through owning and operating a plasma
center, or by being a significant investor, officer or key employee of any
company which competes with the Corporation. On a geographic basis, compete
is defined to mean being in the plasma collection business within a fifty
mile radius of an existing SeraCare collection center.
12. WITHHOLDING. Moran authorizes the Corporation to withhold and/or
deduct from his compensation (including, without limitation, salary and
wages), deductions to recover any amounts loaned by the Corporation to Moran
or paid on Moran's behalf which, under the terms of said loan or payment,
must be repaid to the Corporation including, without limitation, loans of
money and the value of any of the Corporations property taken but not
returned by Moran. Corporation shall also have the expressed right to deduct
all sums required for federal, state, or local income, Social Security or
other taxes now applicable or that may be enacted in the future.
13. NOTICE. Any notice provided to be given pursuant to this Agreement
shall be in writing and shall be deemed duly given three days after deposited
in the mail, certified mail, return receipt requested, to the party to
receive such notice at the address specified below:
The Corporation: American Blood Institute, Inc.
DBA - SeraCare
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
For Moran: Alfred J. Moran, Jr.
8811 Burton Way
Los Angeles, California 90048
14. GOVERNING LAW. The validity of this Agreement and the
interpretation and performance of all of its terms shall be controlled
exclusively by the substantive law of California, including California law
concerning the interpretation and performance of contracts.
EXHIBIT C PAGE 57
EXHIBIT B PAGE 152
<PAGE>
15. ENFORCEABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable shall be ineffective only to the extent of such
invalidity, illegality, or unenforceability, without affecting in any way the
remaining provisions hereof or rendering the remaining provisions hereof
invalid, illegal, or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon strict
compliance with any of the terms, convenants or conditions of this Agreement
by the other party shall not be deemed a waiver of that or any other term,
covenant, or condition, nor shall any waiver or relinquishment of any right
or power at any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
17. ARBITRATION. Any controversy between the Corporation and Moran
involving the construction, application or breach of any of the terms,
provisions, or conditions of this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association then in
effect (the AAA Rules). Such arbitration shall take place in Los Angeles,
California and shall be conducted by three arbitrators, one of which shall be
selected by each party, and the third of which shall be selected by the two
arbitrators within the time limits established in the AAA Rules. The
decision of the arbitrators may be enforced in any court having jurisdiction
over the party against which enforcement is sought or its assets. The cost
of such arbitration including the associated attorney fees, arbitrator fees,
filing fees, AAA fees and other legal costs shall be borne by the losing
party.
18. TRADE SECRETS, CONFIDENTIAL, AND PROPRIETARY INFORMATION.
A. Moran and Corporation acknowledge and agree that during the
term of this Agreement and in the course of the discharge of his duties
hereunder, Moran shall have access to and become acquainted with information
owned by the Corporation concerning its operation, which information derives
independent economic value from not being generally known to the public or
competitors, and which includes, without limitation: (1) manufacturing
processes, research, and engineering, (2) marketing data and techniques, (3)
trademarks, tradenames, and servicemarks, (4) customer and client bases and
lists, and (5) financial and personnel information. Said information
constitutes Employer's trade secret, confidential and proprietary information.
B. Moran agrees that he shall not at any time (during the period
of this agreement or any future time) disclose any such trade secret,
confidential, or proprietary information, directly or indirectly, to any
other person or use it in any way other than as required in the ordinary
course of his employment under this agreement.
C. Moran further agrees that all files, records, documents,
equipment, and similar items relating the Corporation's business (including,
without limitation, items containing trade secret, confidential or
proprietary information), whether prepared by Moran or others, including all
originals and copies, are and shall be returned to the Corporation upon
Moran's termination.
EXHIBIT C PAGE 58
EXHIBIT B PAGE 153
<PAGE>
D. Moran further agrees that during the period of his employment
by the Corporation and after termination thereof, he will not disrupt,
damage, disparage, impair, or interfere with the Corporation's business or
its reputation, whether by way of interfering with or soliciting its
employees, disrupting its relationships with or soliciting clients or
customers, agents, representatives, or vendors, aiding competitors, or by way
of any other conduct.
19. NON-ASSIGNABILITY. Moran may not assign any of his rights or
responsibilities under this Agreement.
20. ENTIRE AGREEMENT. This Amended Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Moran by the Corporation and contains all of the
covenants and agreements between the parties with respect to that employment
in any manner whatsoever. Each party to this Agreement acknowledges that no
representation, inducements, promises, or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this Agreement shall be valid or binding on either party.
21. MODIFICATIONS. Any modification of this Agreement shall be
effective only if it is in writing and signed by both parties to this
Agreement.
22. LEGAL ACTION. In the event of any litigation or arbitration
between or among the parties hereto respecting or arising out of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees incurred after a judgement has been rendered by a
court of competent jurisdiction. Any judgement shall include an attorneys'
fees clause which shall entitle the judgement creditor to recover attorneys'
fees incurred to enforce a judgement hereon, which attorneys' fees shall be an
element of post-judgement costs; the parties agree that this attorneys' fee
provision shall not merge into any judgement.
IN WITNESS WHEREOF, the parties hereto, effective as of November 14,
1995 do hereby authorize and acknowledge that this Agreement be the effective
agreement between the parties. It is understood that this Agreement will be
filed as an amendment to the Reorganization Plan for the Corporation and will
become effective on the Effective Date of such Plan of Reorganization.
Accepted By:
---------------------------------
Kenneth R. Levine
First Equity Capital Securities, Inc.
On behalf of the investment group
/s/ Alfred J. Moran, Jr. /s/ Alfred J. Moran, Jr.
- ------------------------ ------------------------------------
Alfred J. Moran, Jr. Alfred J. Moran, Jr.
An individual President & Chairman
American Blood Institute, Inc.
EXHIBIT C PAGE 59
EXHIBIT B PAGE 154
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is intended to be the operative
agreement by and between American Blood Institute, Inc., AVRE, Inc., and
Binary Associates, Inc. AKA SeraCare (referred to collectively herein as the
"Corporation") and Brain Olson ("Olson"). This Agreement is conditional upon
confirmation of a Plan of Reorganization for the Corporation and approval of
such Plan of Reorganization by the Federal Bankruptcy Court. The effective
date of this Agreement shall be the Effective Date of the Plan of
Reorganization.
1. EMPLOYMENT AS VICE PRESIDENT. The Corporation hereby agrees to
retain Olson and Olson hereby agrees to be employed as Vice President for the
Plasma Operations to be acquired by the Corporation via the Plan of
Reorganization regarding American Blood Institute, Inc., AVRE, Inc. and
Binary Associates, Inc. In such capacities, Olson shall perform all of the
normal duties and responsibilities of a Vice President of Operations. In
the performance of his duties and responsibilities, Olson shall at all times
be under the direction of the President and the Board of Directors of the
Corporation. Olson shall perform his duties and responsibilities in
accordance with all reasonable rules, regulations and policies adopted by the
Board of Directors of the Corporation.
2. INDEMNIFICATION ; INSURANCE AGREEMENT. The Corporation warrants
and assures Olson that the Charter of the Corporation contains a provision
which provides for indemnification of officers by the corporation to the
maximum extent permissible under the laws of the jurisdiction in which the
Corporation is incorporated. Further, the Corporation agrees to either or
both of the following: (A) Enter into an Indemnification Agreement provided
that such Indemnification Agreement shall be modified if necessary to conform
with the laws of the jurisdiction in which the Corporation is incorporated;
(B) Obtain and maintain in full force and effect at Corporation's sole
expense, such director's and officer's liability insurance for errors and
omissions of such type and in such amount as is customary for similarly
situated companies, if available at reasonable cost.
3. EXTEND OF SERVICES. Olson agrees to devote all of his efforts on
behalf of the business of the Corporation. Without limiting the foregoing,
during the term of this Agreement, Olson shall make written request to the
Board of Directors and must obtain written approval from such Board if Olson
wishes to devote any of his time to any other business effort, whether or not
such business effort is in direct competition with the Corporation.
4. COMPENSATION. On the effective date of this contract, Olson shall
be paid at the rate of $90,000 per year payable bi-weekly. There shall be a
quarterly salary adjustment whereby any pre-tax earnings over $100,000 per
quarter shall be paid to the officers of the Reorganized Debtor (SeraCare) up
to a maximum annual amount of $25,000 to Alfred J. Moran, Jr. And $10,000
each for Jerry L. Burdick and Brian Olson. The distribution of the quarterly
salary adjustment shall be on a pro rata basis.
EXHIBIT C PAGE 60
EXHIBIT B PAGE 155
<PAGE>
5. PERFORMANCE BONUS. There shall also be a Management Bonus Pool
which will allocate ten percent (10%) of pre-tax earnings which are in excess
of $920,549 in year one following the Effective Date of the Reorganization
Plan, $2,590,160 in year two, $4,384,187 in year three, $6,244,536 in year
four, and $8,166,626 in year five to a bonus pool to paid pro rata to
management on the basis of salaries. Olson shall be a participant in this
Management Bonus Pool during the term of this agreement.
6. FRINGE BENEFITS. Olson shall receive four (4) weeks paid vacation
per year during the course of this Agreement. Olson will also receive
company paid: sick pay, group health insurance, dental care, vision care,
disability insurance, life insurance and such other benefits in the amounts
and as may be provided in the ordinary course to the Corporation's other
senior executives.
7. STOCK AND WARRANT GRANT. Olson shall be granted 42,110 shares of
common stock of SeraCare (SeraCare is herein defined as AVRE, Inc., Binary
Associates, Inc., American Blood Institute, Inc. and any post emergence
replacement or successor corporation or entity into which the Plasma
Operations of Avre, Inc. and Binary Associates, Inc. are transferred, placed,
controlled, merged or which are acquired by) and stock options to purchase
28,073 shares of common stock in SeraCare for a calculated price which is the
mean average between $.74 and the weighted average of the closing bid price
for the Company's stock for the thirty trading days prior to the vesting
date. The vesting date is defined as the anniversary date of the Effective
date of the Reorganization Plan for SeraCare. The options will vest at the
rate of one-third per year and are contingent upon the company achieving the
projected operating results reflected in the Confidential Memorandum attached
herewith except that if the indicated funding is not provided in timely
fashion for the acquisition of the indicated centers reflected in the
Confidential Memorandum, then a calculation will be made utilizing the
projected results of the base six centers (which includes corporate overhead)
plus a pro rated calculation of the projected operating results of the
acquisition centers based upon the percentage of the secondary financing
actually received by SeraCare. For example, the projections contemplate the
acquisition of twelve centers during year one. Accordingly, at the rate of
$200,000 per center this acquisition program would require $2,400,000. If
$1,200,000 or 50% is actually funded, then a calculation will be made
utilizing 100% of the year one operating results projected for the base six
centers ($365,556) plus 50% of the year one projected operating results for
the acquisition centers (50% X $450,198 = $225,099) with the summation of two
being ($365,556 + $225,198 = $590,655). Accordingly, $590,655 will be the
objective criteria for vesting of one third of the options if $1,200,000 of
secondary financing is actually received by SeraCare in year one. If
SeraCare is sold, merged, consolidated with another company or reorganized to
the extent that there is a 50% or more change in ownership, the options will
become immediately vested and exercisable.
8. TERM. This Agreement is condition upon confirmation of the Plan of
Reorganization for American Blood Institute, Inc., AVRE, Inc. and Binary
Associates, Inc. and approval by the Federal Bankruptcy Court. The term
shall be for the three year period beginning on the "Effective Date" of the
Confirmed Plan of Reorganization and ending thirty six month after the
"Effective Date" unless this Agreement is terminated at an earlier date as
provided in Section 9 below.
EXHIBIT C PAGE 61
EXHIBIT B PAGE 156
<PAGE>
9. TERMINATION.
A. FOR "CAUSE". The Corporation may terminate this Agreement
upon thirty days notice for cause. "Cause" is defined for the purpose of
this agreement as: death; dishonesty; theft; conviction of a felony; alcohol
or drug abuse; unethical business conduct; and a material breach of this
Agreement by Olson. If Olson is terminated for "Cause" as herein defined,
Olson shall receive thirty days notice with pay, and no other compensation
other than the receipt of any options which have already vested.
B. FOR "ACTIONS DEEMED NOT IN THE BEST INTERESTS". The
Corporation may also terminate this Agreement if Olson fails for any reason,
within ten days after receipt by Olson of written notice thereof from the
Board of Directors, to correct, disassociate, cease or otherwise alter any
actions, associations, insubordination, failure to comply with instructions,
failure or other action or omission to act which, in the opinion of the Board
of Directors, materially affects or may materially affect the Corporations'
business operations. "Actions Deemed Not in the Best Interests" shall also
include the association by Olson with individuals, companies, organizations
or activities which in the opinion of the Board of Directors does or could
have a material negative affect on the Corporations operations, it's market
price per share, or the Corporation's ability to raise additional capital.
If Olson is terminated for "Actions Deemed Not in the Best Interests" as
herein defined, Olson shall receive twelve months severance pay and no other
compensation other than the receipt of any options which have already vested
as of the termination date.
C. OTHER EVENTS. Other events which will result in the
termination of this contract are:
1. The date on which Olson agrees to terminate this Agreement.
2. The disability of Olson. Disability herein is defined as being
unable to perform the duties hereunder due to a physical and/or
mental condition or impairment for one hundred eighty (180)
consecutive days during the term of this Agreement or
120 consecutive days in any 365 day period during the term.
3. The date on which Olson voluntarily ceases to perform his duties
hereunder, other than by reason of physical or mental condition
prior to the time that a disability occurs.
In the event that the Corporation shall be sold, merged, devolved,
consolidated or materially reorganized (within the term of this Agreement and
Olson's position is eliminated, the Company will pay to Olson within Thirty
(30) days of such event the balance of the compensation which would be due to
complete the term of this agreement. In addition, all then unvested stock
options shall become immediately vested and exercisable.
EXHIBIT C PAGE 62
EXHIBIT B PAGE 157
<PAGE>
Any unilateral termination of Moran by the Corporation other than for
"Cause", "Actions Deemed Not in the Best Interests", or the reasons indicated
in 9.(C)(1) through 9.(C)(3) above shall be considered a material breach of
this agreement, the pre-agreed remedy for which is the payment in cash within
thirty (30) days of such termination, the full compensation which would be
due to complete the three year term of this agreement, including any and all
compensation, warrants, options or bonus compensation, plus the continuation
of benefits for a period of twelve months. If terminated for "Actions Deemed
Not in the Best Interests", the Corporation must show that it has a
reasonable basis for believing that the actions or associations are or could
be materially detrimental to the Corporation.
10. NO SOLICITATION OF EMPLOYEES. During the period of this Agreement
and for two (2) full years following termination of this Agreement, Olson shall
not, for any reason either directly or indirectly, solicit for employment or
employ for any other entity any employee of the Corporation.
11. AGREEMENT NOT TO COMPETE. During the period of this Agreement and
for two (2) full years following termination of this Agreement (a total of
five years), Olson shall not, for any reason either directly or indirectly,
compete with SeraCare either directly through owning and operating a plasma
center, or by being a significant investor, officer or key employee of any
company which competes with the Corporation. On a geographic basis, compete
is defined to mean being in the plasma collection business within a fifty
mile radius of an existing SeraCare collection center.
12. WITHHOLDING. Olson authorizes the Corporation to withhold and/or
deduct from his compensation (including, without limitation, salary and
wages), deductions to recover any amounts loaned by the Corporation to Olson
or paid on Olson's behalf which, under the terms of said loan or payment,
must be repaid to the Corporation including, without limitation, loans of
money and the value of any of the Corporations property taken but not
returned by Olson. Corporation shall also have the expressed right to deduct
all sums required for federal, state, or local income, Social Security or
other taxes now applicable or that may be enacted in the future.
13. NOTICE. Any notice provided to be given pursuant to this Agreement
shall be in writing and shall be deemed duly given three days after deposited
in the mail, certified mail, return receipt requested, to the party to
receive such notice at the address specified below:
The Corporation: American Blood Institute, Inc.
DBA - SeraCare
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
For Olson: Brain Olson
3249 Brookridge Road
Duarte, California 91010
14. GOVERNING LAW. The validity of this Agreement and the
interpretation and performance of all of its terms shall be controlled
exclusively by the substantive law of California, including California law
concerning the interpretation and performance of contracts.
EXHIBIT C PAGE 63
EXHIBIT B PAGE 158
<PAGE>
15. ENFORCEABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable shall be ineffective only to the extent of such
invalidity, illegality, or unenforceability, without affecting in any way the
remaining provisions hereof or rendering the remaining provisions hereof
invalid, illegal, or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon strict
compliance with any of the terms, convenants or conditions of this Agreement
by the other party shall not be deemed a waiver of that or any other term,
covenant, or condition, nor shall any waiver or relinquishment of any right
or power at any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
17. ARBITRATION. Any controversy between the Corporation and Olson
involving the construction, application or breach of any of the terms,
provisions, or conditions of this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association then in
effect (the AAA Rules). Such arbitration shall take place in Los Angeles,
California and shall be conducted by three arbitrators, one of which shall be
selected by each party, and the third of which shall be selected by the two
arbitrators within the time limits established in the AAA Rules. The
decision of the arbitrators may be enforced in any court having jurisdiction
over the party against which enforcement is sought or its assets. The cost
of such arbitration including the associated attorney fees, arbitrator fees,
filing fees, AAA fees and other legal costs shall be borne by the losing
party.
18. TRADE SECRETS, CONFIDENTIAL, AND PROPRIETARY INFORMATION.
A. Olson and Corporation acknowledge and agree that during the
term of this Agreement and in the course of the discharge of his duties
hereunder, Olson shall have access to and become acquainted with information
owned by the Corporation concerning its operation, which information derives
independent economic value from not being generally known to the public or
competitors, and which includes, without limitation: (1) manufacturing
processes, research, and engineering, (2) marketing data and techniques, (3)
trademarks, tradenames, and servicemarks, (4) customer and client bases and
lists, and (5) financial and personnel information. Said information
constitutes Employer's trade secret, confidential and proprietary information.
B. Olson agrees that he shall not at any time (during the period
of this agreement or any future time) disclose any such trade secret,
confidential, or proprietary information, directly or indirectly, to any
other person or use it in any way other than as required in the ordinary
course of his employment under this agreement.
C. Olson further agrees that all files, records, documents,
equipment, and similar items relating the Corporation's business (including,
without limitation, items containing trade secret, confidential or
proprietary information), whether prepared by Moran or others, including all
originals and copies, are and shall be returned to the Corporation upon
Olson's termination.
EXHIBIT C PAGE 64
EXHIBIT B PAGE 159
<PAGE>
D. Olson further agrees that during the period of his employment
by the Corporation and after termination thereof, he will not disrupt,
damage, disparage, impair, or interfere with the Corporation's business or
its reputation, whether by way of interfering with or soliciting its
employees, disrupting its relationships with or soliciting clients or
customers, agents, representatives, or vendors, aiding competitors, or by way
of any other conduct.
19. NON-ASSIGNABILITY. Olson may not assign any of his rights or
responsibilities under this Agreement.
20. ENTIRE AGREEMENT. This Amended Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Olson by the Corporation and contains all of the
covenants and agreements between the parties with respect to that employment
in any manner whatsoever. Each party to this Agreement acknowledges that no
representation, inducements, promises, or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this Agreement shall be valid or binding on either party.
21. MODIFICATIONS. Any modification of this Agreement shall be
effective only if it is in writing and signed by both parties to this
Agreement.
22. LEGAL ACTION. In the event of any litigation or arbitration
between or among the parties hereto respecting or arising out of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees incurred after a judgement has been rendered by a
court of competent jurisdiction. Any judgement shall include an attorneys'
fees clause which shall entitle the judgement creditor to recover attorneys'
fees incurred to enforce a judgement hereon, which attorneys' fees shall be an
element of post-judgement costs; the parties agree that this attorneys' fee
provision shall not merge into any judgement.
IN WITNESS WHEREOF, the parties hereto, effective as of November 14,
1995 do hereby authorize and acknowledge that this Agreement be the effective
agreement between the parties. It is understood that this Agreement will be
filed as an amendment to the Reorganization Plan for the Corporation and will
become effective on the Effective Date of such Plan of Reorganization.
Accepted By:
---------------------------------
Kenneth R. Levine
First Equity Capital Securities, Inc.
On behalf of the investment group
/s/ Brian L. Olson /s/ Alfred J. Moran, Jr.
- ------------------------ ------------------------------------
Brian L. Olson Alfred J. Moran, Jr.
An individual President & Chairman
American Blood Institute, Inc.
EXHIBIT C PAGE 65
EXHIBIT B PAGE 160
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is intended to be the operative
agreement by and between American Blood Institute, Inc., AVRE, Inc., and
Binary Associates, Inc. AKA SeraCare (referred to collectively herein as the
"Corporation") and Jerry L. Burdick ("Burdick"). This Agreement is
conditional upon confirmation of a Plan of Reorganization for the Corporation
and approval of such Plan of Reorganization by the Federal Bankruptcy Court.
The effective date of this Agreement shall be the Effective Date of the Plan
of Reorganization.
1. EMPLOYMENT AS VICE PRESIDENT OF FINANCE. The Corporation hereby
agrees to retain Burdick and Burdick hereby agrees to be employed as Vice
President and of Finance for the Plasma Operations to be acquired by the
Corporation via the Plan of Reorganization regarding American Blood
Institute, Inc., AVRE, Inc. and Binary Associates, Inc. In such capacities,
Burdick shall perform all of the normal duties and responsibilities of a
Vice President of Finance. In the performance of his duties and
responsibilities, Burdick shall at all times be under the direction of the
President and the Board of Directors of the Corporation. Burdick shall
perform his duties and responsibilities in accordance with all reasonable
rules, regulations and policies adopted by the Board of Directors of the
Corporation.
2. INDEMNIFICATION ; INSURANCE AGREEMENT. The Corporation warrants
and assures Burdick that the Charter of the Corporation contains a provision
which provides for indemnification of officers by the corporation to the
maximum extent permissible under the laws of the jurisdiction in which the
Corporation is incorporated. Further, the Corporation agrees to either or
both of the following: (A) Enter into an Indemnification Agreement provided
that such Indemnification Agreement shall be modified if necessary to conform
with the laws of the jurisdiction in which the Corporation is incorporated;
(B) Obtain and maintain in full force and effect at Corporation's sole
expense, such director's and officer's liability insurance for errors and
omissions of such type and in such amount as is customary for similarly
situated companies, if available at reasonable cost.
3. EXTENT OF SERVICES. Burdick agrees to devote all of his efforts on
behalf of the business of the Corporation. Without limiting the foregoing,
during the term of this Agreement, Burdick shall make written request to the
Board of Directors and must obtain written approval from such Board if Moran
wishes to devote any of his time to any other business effort, whether or not
such business effort is in direct competition with the Corporation.
4. COMPENSATION. On the effective date of this contract, Burdick shall
be paid at the rate of $125,000 per year payable bi-weekly. There shall be a
quarterly salary adjustment whereby any pre-tax earnings over $100,000 per
quarter shall be paid to the officers of the Reorganized Debtor (SeraCare) up
to a maximum annual amount of $25,000 to Alfred J. Moran, Jr. And $10,000
each for Jerry L. Burdick and Brian Olson. The distribution of the quarterly
salary adjustment shall be on a pro rata basis.
EXHIBIT C PAGE 66
EXHIBIT B PAGE 161
<PAGE>
5. PERFORMANCE BONUS. There shall also be a Management Bonus Pool
which will allocate ten percent (10%) of pre-tax earnings which are in excess
of $920,549 in year one following the Effective Date of the Reorganization
Plan, $2,590,160 in year two, $4,384,187 in year three, $6,244,536 in year
four, and $8,166,626 in year five to a bonus pool to paid pro rata to
management on the basis of salaries. Burdick shall be a participant in this
Management Bonus Pool during the term of this agreement.
6. FRINGE BENEFITS. Burdick shall receive four (4) weeks paid vacation
per year during the course of this Agreement. Burdick will also receive
company paid: sick pay, group health insurance, dental care, vision care,
disability insurance, life insurance and such other benefits in the amounts
and as may be provided in the ordinary course to the Corporation's other
senior executives.
7. STOCK AND WARRANT GRANT. Burdick shall be granted 63,165 shares of
common stock of SeraCare (SeraCare is herein defined as AVRE, Inc., Binary
Associates, Inc., American Blood Institute, Inc. and any post emergence
replacement or successor corporation or entity into which the Plasma
Operations of Avre, Inc. and Binary Associates, Inc. are transferred, placed,
controlled, merged or which are acquired by) and stock options to purchase
42,110 shares of common stock in SeraCare for a calculated price which is the
mean average between $.74 and the weighted average of the closing bid price
for the Company's stock for the thirty trading days prior to the vesting
date. The vesting date is defined as the anniversary date of the Effective
date of the Reorganization Plan for SeraCare. The options will vest at the
rate of one-third per year and are contingent upon the company achieving the
projected operating results reflected in the Confidential Memorandum attached
herewith except that if the indicated funding is not provided in timely
fashion for the acquisition of the indicated centers reflected in the
Confidential Memorandum, then a calculation will be made utilizing the
projected results of the base six centers (which includes corporate overhead)
plus a pro rated calculation of the projected operating results of the
acquisition centers based upon the percentage of the secondary financing
actually received by SeraCare. For example, the projections contemplate the
acquisition of twelve centers during year one. Accordingly, at the rate of
$200,000 per center this acquisition program would require $2,400,000. If
$1,200,000 or 50% is actually funded, then a calculation will be made
utilizing 100% of the year one operating results projected for the base six
centers ($365,556) plus 50% of the year one projected operating results for
the acquisition centers (50% X $450,198 = $225,099) with the summation of two
being ($365,556 + $225,099 = $590,655). Accordingly, $590,655 will be the
objective criteria for vesting of one third of the options if $1,200,000 of
secondary financing is actually received by SeraCare in year one. If
SeraCare is sold, merged, consolidated with another company or reorganized to
the extent that there is a 50% or more change in ownership, the options will
become immediately vested and exercisable.
8. TERM. This Agreement is conditional upon confirmation of the Plan of
Reorganization for American Blood Institute, Inc., AVRE, Inc. and Binary
Associates, Inc. and approval by the Federal Bankruptcy Court. The term
shall be for the three year period beginning on the "Effective Date" of the
Confirmed Plan of Reorganization and ending thirty six month after the
"Effective Date" unless this Agreement is terminated at an earlier date as
provided in Section 9 below.
EXHIBIT C PAGE 67
EXHIBIT B PAGE 162
<PAGE>
9. TERMINATION.
A. FOR "CAUSE". The Corporation may terminate this Agreement
upon thirty days notice for cause. "Cause" is defined for the purpose of
this agreement as: death; dishonesty; theft; conviction of a felony; alcohol
or drug abuse; unethical business conduct; and a material breach of this
Agreement by Burdick. If Burdick is terminated for "Cause" as herein defined,
Burdick shall receive thirty days notice with pay, and no other compensation
other than the receipt of any options which have already vested.
B. FOR "ACTIONS DEEMED NOT IN THE BEST INTERESTS". The
Corporation may also terminate this Agreement if Burdick fails for any
reason, within ten days after receipt by Burdick of written notice thereof
from the Board of Directors, to correct, disassociate, cease or otherwise
alter any actions, associations, insubordination, failure to comply with
instructions, failure or other action or omission to act which, in the
opinion of the Board of Directors, materially affects or may materially
affect the Corporations' business operations. "Actions Deemed Not in the
Best Interests" shall also include the association by Burdick with
individuals, companies, organizations or activities which the Board of
Directors has a reasonable basis for believing does or could have a material
negative affect on the Corporations operations, it's market price per share,
or the Corporation's ability to raise additional capital. If Burdick is
terminated for "Actions Deemed Not in the Best Interests" as herein defined,
Burdick shall receive twelve months severance pay and no other compensation
other than the receipt of any options which have already vested as of the
termination date.
C. OTHER EVENTS. Other events which will result in the
termination of this contract are:
1. The date on which Burdick agrees to terminate this Agreement.
2. The disability of Burdick. Disability herein is defined as being
unable to perform the duties hereunder due to a physical and/or
mental condition or impairment for one hundred eighty (180)
consecutive days during the term of this Agreement or
120 consecutive days in any 365 day period during the term.
3. The date on which Burdick voluntarily ceases to perform his
duties hereunder, other than by reason of physical or mental
condition prior to the time that a disability occurs.
In the event that the Corporation shall be sold, merged, devolved,
consolidated or materially reorganized (within the term of this Agreement and
Burdick's position is eliminated, the Company will pay to Burdick within Thirty
(30) days of such event the balance of the compensation which would be due to
complete the term of this agreement. In addition, all then unvested stock
options shall become immediately vested and exercisable.
EXHIBIT C PAGE 68
EXHIBIT B PAGE 163
<PAGE>
Any unilateral termination of Burdick by the Corporation other than for
"Cause", "Actions Deemed Not in the Best Interests", or the reasons indicated
in 9.(C)(1) through 9.(C)(3) above shall be considered a material breach of
this agreement, the pre-agreed remedy for which is the payment in cash within
thirty (30) days of such termination, the full compensation which would be
due to complete the three year term of this agreement, including any and all
compensation, warrants, options or bonus compensation, plus the continuation
of benefits for a period of twelve months. If terminated for "Actions Deemed
Not in the Best Interests", the Corporation must show that it has a
reasonable basis for believing that the actions or associations are or could
be materially detrimental to the Corporation.
10. NO SOLICITATION OF EMPLOYEES. During the period of this Agreement
and for two (2) full years following termination of this Agreement, Burdick
shall not, for any reason either directly or indirectly, solicit for
employment or employ for any other entity any employee of the Corporation.
11. AGREEMENT NOT TO COMPETE. During the period of this Agreement and
for two (2) full years following termination of this Agreement (a total of
five years), Burdick shall not, for any reason either directly or indirectly,
compete with SeraCare either directly through owning and operating a plasma
center, or by being a significant investor, officer or key employee of any
company which competes with the Corporation. On a geographic basis, compete
is defined to mean being in the plasma collection business within a fifty
mile radius of an existing SeraCare collection center.
12. WITHHOLDING. Burdick authorizes the Corporation to withhold and/or
deduct from his compensation (including, without limitation, salary and
wages), deductions to recover any amounts loaned by the Corporation to Burdick
or paid on Burdick's behalf which, under the terms of said loan or payment,
must be repaid to the Corporation including, without limitation, loans of
money and the value of any of the Corporations property taken but not
returned by Burdick. Corporation shall also have the expressed right to deduct
all sums required for federal, state, or local income, Social Security or
other taxes now applicable or that may be enacted in the future.
13. NOTICE. Any notice provided to be given pursuant to this Agreement
shall be in writing and shall be deemed duly given three days after deposited
in the mail, certified mail, return receipt requested, to the party to
receive such notice at the address specified below:
The Corporation: American Blood Institute, Inc.
DBA - SeraCare
1875 Century Park East, Suite 2130
Los Angeles, CA 90067
Attn: Board of Directors
For Burdick: Jerry L. Burdick
1106 First Street
Hermosa Beach, California 90254
14. GOVERNING LAW. The validity of this Agreement and the
interpretation and performance of all of its terms shall be controlled
exclusively by the substantive law of California, including California law
concerning the interpretation and performance of contracts.
EXHIBIT C PAGE 69
EXHIBIT B PAGE 164
<PAGE>
15. ENFORCEABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable shall be ineffective only to the extent of such
invalidity, illegality, or unenforceability, without affecting in any way the
remaining provisions hereof or rendering the remaining provisions hereof
invalid, illegal, or unenforceable.
16. WAIVER. The failure of either party hereto to insist upon strict
compliance with any of the terms, covenants or conditions of this Agreement
by the other party shall not be deemed a waiver of that or any other term,
covenant, or condition, nor shall any waiver or relinquishment of any right
or power at any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
17. ARBITRATION. Any controversy between the Corporation and Burdick
involving the construction, application or breach of any of the terms,
provisions, or conditions of this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association then in
effect (the AAA Rules). Such arbitration shall take place in Los Angeles,
California and shall be conducted by three arbitrators, one of which shall be
selected by each party, and the third of which shall be selected by the two
arbitrators within the time limits established in the AAA Rules. The
decision of the arbitrators may be enforced in any court having jurisdiction
over the party against which enforcement is sought or its assets. The cost
of such arbitration including the associated attorney fees, arbitrator fees,
filing fees, AAA fees and other legal costs shall be borne by the losing
party.
18. TRADE SECRETS, CONFIDENTIAL, AND PROPRIETARY INFORMATION.
A. Burdick and Corporation acknowledge and agree that during the
term of this Agreement and in the course of the discharge of his duties
hereunder, Burdick shall have access to and become acquainted with information
owned by the Corporation concerning its operation, which information derives
independent economic value from not being generally known to the public or
competitors, and which includes, without limitation: (1) manufacturing
processes, research, and engineering, (2) marketing data and techniques, (3)
trademarks, tradenames, and servicemarks, (4) customer and client bases and
lists, and (5) financial and personnel information. Said information
constitutes Employer's trade secret, confidential and proprietary information.
B. Burdick agrees that he shall not at any time (during the period
of this agreement or any future time) disclose any such trade secret,
confidential, or proprietary information, directly or indirectly, to any
other person or use it in any way other than as required in the ordinary
course of his employment under this agreement.
C. Burdick further agrees that all files, records, documents,
equipment, and similar items relating the Corporation's business (including,
without limitation, items containing trade secret, confidential or
proprietary information), whether prepared by Burdick or others, including all
originals and copies, are and shall be returned to the Corporation upon
Burdick's termination.
EXHIBIT C PAGE 70
EXHIBIT B PAGE 165
<PAGE>
D. Burdick further agrees that during the period of his employment
by the Corporation and after termination thereof, he will not disrupt,
damage, disparage, impair, or interfere with the Corporation's business or
its reputation, whether by way of interfering with or soliciting its
employees, disrupting its relationships with or soliciting clients or
customers, agents, representatives, or vendors, aiding competitors, or by way
of any other conduct.
19. NON-ASSIGNABILITY. Moran may not assign any of his rights or
responsibilities under this Agreement.
20. ENTIRE AGREEMENT. This Amended Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Burdick by the Corporation and contains all of the
covenants and agreements between the parties with respect to that employment
in any manner whatsoever. Each party to this Agreement acknowledges that no
representation, inducements, promises, or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this Agreement shall be valid or binding on either party.
21. MODIFICATIONS. Any modification of this Agreement shall be
effective only if it is in writing and signed by both parties to this
Agreement.
22. LEGAL ACTION. In the event of any litigation or arbitration
between or among the parties hereto respecting or arising out of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees incurred after a judgement has been rendered by a
court of competent jurisdiction. Any judgement shall include an attorneys'
fees clause which shall entitle the judgement creditor to recover attorneys'
fees incurred to enforce a judgement hereon, which attorneys' fees shall be an
element of post-judgement costs; the parties agree that this attorneys' fee
provision shall not merge into any judgement.
IN WITNESS WHEREOF, the parties hereto, effective as of November 14,
1995 do hereby authorize and acknowledge that this Agreement be the effective
agreement between the parties. It is understood that this Agreement will be
filed as an amendment to the Reorganization Plan for the Corporation and will
become effective on the Effective Date of such Plan of Reorganization.
Accepted By:
---------------------------------
Kenneth R. Levine
First Equity Capital Securities, Inc.
On behalf of the investment group
/s/ Jerry L. Burdick /s/ Alfred J. Moran, Jr.
- ------------------------ ------------------------------------
Jerry L. Burdick Alfred J. Moran, Jr.
An individual President & Chairman
American Blood Institute, Inc.
EXHIBIT C PAGE 71
EXHIBIT B PAGE 166
<PAGE>
EXHIBIT "D"
EXHIBIT B PAGE 167
<PAGE>
SeraCare
Assumptions Underlying Four Year Forecast
The attached financial forecasts were prepared by management of SeraCare
and are based upon assumptions which management believes are reasonable.
Nevertheless, the attached financial forecasts are based upon assumptions
which may or may not prove to be accurate or appropriate. No assurances
can be given that any of the results or events described herein will occur,
or that if they do occur, they will occur at the predicted times.
Actual results may vary widely from projected results. Accordingly, the
financial forecasts should not be replied upon to indicate the actual
results which will be attained by SeraCare during the forecasted periods.
The four years forecasted herein have been predicated on meeting the
Company's strategic objective of expanding the business through the
internally generated cash flow. To this end, the forecast illustrates
how additional plasma centers can be acquired during the four year
period. While there is no particular reason why such acquisitions can not
be made, there can be no guarantees that they will be made or that the
results will be presented herein.
Other assumptions areas follows:
1. The assumed rate of acquisition is reflected on the projected
Statements of Income attached herewith.
2. The attached forecasts assume that production from acquired
centers will be sold domestically at approximately the same
prices as currently being received.
EXHIBIT D PAGE 72
EXHIBIT B PAGE 168
<PAGE>
3. It is expected that by January 1996, 25% of the plasma
collected (approximately 25,000 annually) will be hyperimmune
and will yield a $3.00 to $8.00 premium per liter over source
plasma.
4. The cost of acquired centers is assumed to be $200,000 each
with fixed assets of $90,000, goodwill of $60,000, and net
current assets of $50,000. It has been assumed that all
acquisitions will be made for cash with no financing.
5. Goodwill has been amortized over 17 years consistent with the
AICPA pronouncement .
6. After considering the impact of the "1986 tax act", taxes
have been calculated based upon the assumption that the current
loss carry-forward of approximately $6.5 million will be
available to SeraCare at the rate of $150,000 per year for 15
years. Under the provisions of the 1986 tax act, such an
assumption may or may not be valid depending upon the ultimate
determination of ownership, control and business activity.
7. The basic framework of this presentation is that a net of
$.995 million is received by SeraCare and used as follows:
To pay down secured lender $600,000
To pay Unsecured Creditors 200,000
Administrative legal fees 195,000
--------
$995,000
--------
--------
EXHIBIT D PAGE 73
EXHIBIT B PAGE 169
<PAGE>
8. In preparation of the four year forecast for SeraCare, the
following Monthly Acquisition Model was used to reflect the
impact of acquisitions:
Revenue(1) 63,000
------
Direct Expenses:
Donor fees 20,790
Salaries & related exp (2) 17,063
Testing & softgoods 0
Rent 3,000
Other direct expenses 10,560
------
Total expenses 51,413
------
Gross Profit 11,587
Indirect Expenses 3,000
------
Net income before taxes 8,587
------
(1) Represents 1,810 donors; 1,448 liters per month or 337
liters per week.
(2) Staffing includes: one manager @$2,500; one nurse @$2,500;
10 technicians/receptionists/phlebotomists @$8,000; and one
regional manager for each ten new centers.
(3) An average plasma center has been defined herein as one
collecting approximately 15,000 liters of plasma per year.
EXHIBIT D PAGE 74
EXHIBIT B PAGE 170
<PAGE>
SeraCare
Post Emergence Forecast
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12 Total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 476,988 426,118 464,352 428,345 452,746 475,704 487,263 518,733 510,273 513,326 527,044 561,085 5,841,977
---------------------------------------------------------------------------------------------------------------------
Direct
Expenses
Donor Fees 226,219 201,095 221,818 202,367 214,998 222,000 227,408 242,999 239,014 241,869 250,404 265,773 2,755,924
Salaries
and related
expenses 98,438 88,433 100,133 89,479 98,108 101,623 99,453 107,102 101,558 104,843 106,871 108,577 1,204,638
Testing 0 0 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0 0 0
Rent 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 14,565 174,700
Other Direct
Expenses 48,629 44,814 45,638 44,845 45,184 45,697 47,710 49,686 48,068 47,662 48,415 49,950 566,298
---------------------------------------------------------------------------------------------------------------------
Total 387,851 348,927 382,154 351,256 372,855 383,855 389,136 414,312 403,205 408,939 420,255 438,865 4,701,640
---------------------------------------------------------------------------------------------------------------------
Gross Profit 89,137 77,191 82,198 77,009 79,891 91,819 98,127 104,421 107,068 104,387 106,789 122,220 1,140,337
Indirect
Administrative
Expenses 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,145 55,260 55,260 55,260 662,085
Interest Income (169) (322) (264) (322) (225) (167) (204) (400) (342) (513) (717) (725) (4,370)
Interest
expenses 11,667 11,667 10,938 10,938 10,938 10,208 10,208 10,208 9,479 9,479 9,479 8,750 123,958
Amortization
of Goodwill 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 104,016
---------------------------------------------------------------------------------------------------------------------
Net Profit from
Operations 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
Taxes on Income 0 0 0 0 0 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------------------------
Net Income 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Number of
Locations 6 6 6 6 6 6 6 6 6 6 6 6
</TABLE>
EXHIBIT D PAGE 75
EXHIBIT B PAGE 171
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month
1 2 3 4 5 6
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 40,827 77,528 63,408 75,737 54,770 39,903
Accounts receivable-trade 456,000 426,000 400,000 375,000 375,000 350,000
Inventory 466,000 446,000 426,000 406,000 406,000 406,000
Prepaid expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
--------------------------------------------------------------
Total Current Assets 1,052,827 1,039,528 979,408 946,737 925,770 885,903
--------------------------------------------------------------
Fixed Assets(at cost) 515,000 515,000 515,000 515,000 515,000 515,000
Accumulated depreciation (395,000) (401,000) (407,000) (413,000) (419,000) (425,000)
--------------------------------------------------------------
Net Fixed Assets 120,000 114,000 108,000 102,000 96,000 90,000
--------------------------------------------------------------
Fresh Start Goodwill 1,700,000 1,691,332 1,682,664 1,673,996 1,665,328 1,656,660
--------------------------------------------------------------
Total Assets 2,872,827 2,844,860 2,770,072 2,722,733 2,687,098 2,632,563
--------------------------------------------------------------
--------------------------------------------------------------
LIABILITIES
Accounts payable 529,000 499,000 479,000 459,000 418,000 408,000
Accrued liabilities 155,000 155,000 155,000 125,000 125,000 125,000
Notes payable - Secured Creditor 1,000,000 1,000,000 937,500 937,500 937,500 875,000
-------------------------------------------------------------
Total Liabilities 1,684,000 1,654,000 1,571,500 1,521,500 1,480,500 1,408,000
-------------------------------------------------------------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 0 0 0 0 0 0
Current year earnings 13,827 15,860 23,572 26,233 31,598 49,563
-------------------------------------------------------------
Total Shareholders Equity 1,188,827 1,190,860 1,198,572 1,201,233 1,206,598 1,224,563
-------------------------------------------------------------
Total Liabilities and
Shareholders Equity 2,872,827 2,844,860 2,770,072 2,722,733 2,687,096 2,632,563
-------------------------------------------------------------
-------------------------------------------------------------
Month Month Month Month Month Month
7 8 9 10 11 12
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and investments 48,880 96,348 82,634 123,794 172,560 174,995
Accounts receivable-trade 350,000 325,000 325,000 300,000 300,000 300,000
Inventory 406,000 406,000 406,000 406,000 406,000 406,000
Prepaid expenses 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000
-------------------------------------------------------------
Total Current Assets 894,880 917,348 903,634 919,794 968,560 970,995
-------------------------------------------------------------
Fixed Assets(at cost) 515,000 515,000 515,000 515,000 515,000 515,000
Accumulated depreciation (431,000) (437,000) (443,000) (449,000) (455,000) (461,000)
-------------------------------------------------------------
Net Fixed Assets 84,000 78,000 72,000 66,000 60,000 54,000
-------------------------------------------------------------
Fresh Start Goodwill 1,647,992 1,639,324 1,630,656 1,621,988 1,613,320 1,604,652
-------------------------------------------------------------
Total Assets 2,626,872 2,634,672 2,606,290 2,607,782 2,641,880 2,629,647
-------------------------------------------------------------
-------------------------------------------------------------
LIABILITIES
Accounts payable 378,000 355,000 355,000 325,000 325,000 325,000
Accrued liabilities 125,000 125,000 125,000 125,000 125,000 125,000
Notes payable - Secured Creditor 875,000 875,000 812,500 812,500 812,500 750,000
-------------------------------------------------------------
Total Liabilities 1,378,000 1,355,000 1,292,500 1,262,500 1,262,500 1,200,000
-------------------------------------------------------------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common stock @ $.001 per share 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated earnings 0 0 0 0 0 0
Current year earnings 73,872 104,672 138,790 170,282 204,380 254,647
-------------------------------------------------------------
Total Shareholders Equity 1,248,872 1,279,672 1,313,790 1,345,282 1,379,380 1,429,647
-------------------------------------------------------------
Total Liabilities and
Shareholders Equity 2,626,872 2,634,672 2,006,290 2,007,782 2,641,880 2,629,647
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
EXHIBIT D PAGE 76
EXHIBIT B PAGE 172
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
First Twelve Months
<TABLE>
<CAPTION>
Month Month Month Month Month Month Month Month Month Month Month Month TOTAL
1 2 3 4 5 6 7 8 9 10 11 12
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income after
taxes 13,827 2,034 7,711 2,661 5,366 17,964 24,310 30,800 34,118 31,492 34,099 50,267 254,647
Add Amortization 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,668 104,016
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000
--------------------------------------------------------------------------------------------------------
Cash Flow From
Operations 28,495 16,702 22,379 17,329 20,034 32,632 38,978 45,468 48,786 46,160 48,767 64,935 430,663
--------------------------------------------------------------------------------------------------------
Decr (Incr) in Current
Assets
Accounts Receivable 15,000 30,000 26,000 25,000 0 25,000 0 25,000 0 25,000 0 0 171,000
Inventory 10,000 20,000 20,000 20,000 0 0 0 0 0 0 0 0 70,000
Prepaid expenses 0 0 0 0 0 0 0 0 0 0 0 0 0
Deposits 0 0 0 0 0 0 0 0 0 0 0 0 0
Incr (Decr) in
liabilities:
Accounts Payable (20,000)(30,000)(20,000)(20,000)(41,000)(10,000)(30,000)(23,000) 0 (30,000) 0 0 (224,000)
Accrued liabilities (5,000) 0 0 (30,000) 0 0 0 0 0 0 0 0 (35,000)
Note payable -
Secured Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0 0 (62,500)(250,000)
--------------------------------------------------------------------------------------------------------
Net Cash Flow 28,495 36,702 (14,121) 12,329 (20,967)(14,868) 8,978 47,468 (13,715) 41,160 48,767 2,435 162,663
Beginning cash balance 12,332 40,827 77,529 63,408 75,737 54,770 39,903 48,881 96,348 82,634 123,794 172,561 12,332
--------------------------------------------------------------------------------------------------------
Ending cash balance 40,827 77,529 63,408 75,737 54,770 39,903 48,881 96,348 82,634 123,794 172,561 174,996 174,996
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT D PAGE 77
EXHIBIT B PAGE 173
<PAGE>
SeraCare
POST EMERGENCE FORECAST
Second Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 476,988 426,118 464,352 428,345 452,746 475,704 487,263 581,733 573,273 576,326 590,044
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Direct Expenses
Donor Fees 226,219 201,095 221,818 202,367 214,998 222,000 227,408 263,749 259,804 262,659 271,194
Salaries and related
expenses 98,438 88,453 100,133 89,479 98,108 101,623 99,453 124,165 118,621 121,906 123,934
Testing 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0
Rent 14,565 14,565 14,565 14,565 14,565 14,565 14,565 17,565 17,565 17,565 17,565
Other Direct Expenses 48,629 44,814 45,638 44,845 45,184 45,697 47,710 60,246 58,628 58,222 58,975
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total 387,851 348,927 382,154 351,256 372,855 383,855 389,136 465,725 454,618 460,352 471,668
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Green Profit 89,137 77,191 82,198 77,089 79,891 91,819 98,127 116,008 118,655 115,974 118,376
Indirect Administrative
Expenses 55,145 55,145 55,145 55,145 55,145 55,145 55,145 58,145 58,145 58,260 58,260
Interest Income (863) (1,050) (896) (896) (1,000) (896) (983) (1,192) (1,150) (1,275) (1,492)
Interest expenses 8,750 8,750 8,021 8,021 8,021 7,292 7,292 7,292 6,563 6,563 6,563
Amortization of Goodwill 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,918 8,918 8,918 8,918
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Profit from Operations 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,845 46,180 43,509 46,127
Taxes on Income 0 0 0 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,845 46,180 43,509 46,127
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Number of Locations 6 6 6 6 6 6 6 7 7 7 7
<CAPTION>
MONTH
12 TOTAL
------- ---------
<S> <C> <C>
Revenue 624,085 6,156,977
------- ---------
Direct Expenses
Donor Fees 286,563 2,859,874
Salaries and related
expenses 125,640 1,289,953
Testing 0 0
Softgoods 0 0
Rent 17,565 189,780
Other Direct Expenses 60,510 619,098
------- ---------
Total 490,278 4,958,705
------- ---------
Green Profit 133,807 1,198,272
Indirect Administrative
Expenses 58,260 677,085
Interest Income (1,517) (13,208)
Interest expenses 5,833 88,958
Amortization of Goodwill 8,918 105,266
------- ---------
Net Profit from Operations 62,312 340,171
Taxes on Income 0 0
------- ---------
Net Income 62,312 340,171
------- ---------
------- ---------
Number of Locations 7
</TABLE>
EXHIBIT D PAGE 78
EXHIBIT B PAGE 174
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
Second Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
Investments 207,100 252,446 215,874 216,693 240,418 215,196 236,870 125,633 124,230 162,657
Accounts
Receivable --
trade 300,000 275,000 275,000 275,000 275,000 275,000 275,000 300,000 300,000 300,000
Inventory 406,000 406,000 406,000 406,000 406,000 405,000 406,000 425,000 425,000 425,000
Prepaid Expenses 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Current
Assets 1,003,100 1,023,446 986,874 987,693 1,011,418 985,196 1,007,870 940,633 939,230 977,657
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fixed Assets (at
cost) 515,000 515,000 515,000 535,000 535,000 535,000 555,000 645,000 645,000 665,000
Accumulated
depreciation (467,000) (473,000) (479,000) (485,000) (491,000) (497,000) (503,000) (509,000) (515,000) (521,000)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net Fixed Assets 48,000 42,000 36,000 50,000 44,000 38,000 52,000 136,000 130,000 144,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fresh Start
Goodwill 1,595,984 1,587,316 1,578,648 1,569,980 1,561,312 1,552,644 1,543,976 1,595,058 1,586,140 1,577,222
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Assets 2,647,084 2,652,762 2,601,522 2,607,673 2,616,730 2,575,840 2,603,846 2,671,691 2,655,370 2,698,879
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts Payable 325,000 325,000 325,000 325,000 325,000 325,000 325,000 345,000 345,000 345,000
Accrued
Liabilities 125,000 125,000 125,000 125,000 125,000 125,000 125,000 130,000 130,000 130,000
Notes Payable
Secured Creditor 750,000 750,000 687,500 687,500 687,500 625,000 625,000 625,000 562,500 562,500
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities 1,200,000 1,200,000 1,137,500 1,137,500 1,137,500 1,075,000 1,075,000 1,100,000 1,037,500 1,037,500
SHAREHOLDERS EQUITY
Paid in Surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 254,647 254,647 254,647 254,647 254,647 254,647 254,647 254,647 254,647 254,647
Current year
earnings 17,437 23,115 34,375 40,526 49,583 71,193 99,199 142,044 188,223 231,732
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Shareholders
Equity 1,447,084 1,452,762 1,464,022 1,470,173 1,479,230 1,500,840 1,528,846 1,571,691 1,617,870 1,661,379
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities and
Shareholders
Equity 2,647,084 2,652,762 2,601,522 2,607,673 2,616,730 2,575,840 2,603,846 2,671,691 2,655,370 2,698,879
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
MONTH MONTH
11 12
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and
Investments 223,702 238,432
Accounts
Receivable --
trade 300,000 300,000
Inventory 425,000 425,000
Prepaid Expenses 75,000 75,000
Deposits 15,000 15,000
--------- ---------
Total Current
Assets 1,038,702 1,053,432
--------- ---------
Fixed Assets (at
cost) 665,000 665,000
Accumulated
depreciation (527,000) (533,000)
--------- ---------
Net Fixed Assets 138,000 132,000
--------- ---------
Fresh Start
Goodwill 1,568,304 1,559,386
--------- ---------
Total Assets 2,745,006 2,744,818
--------- ---------
--------- ---------
LIABILITIES
Accounts Payable 345,000 345,000
Accrued
Liabilities 130,000 130,000
Notes Payable
Secured Creditor 562,500 500,000
--------- ---------
Total
Liabilities 1,037,500 975,000
SHAREHOLDERS EQUITY
Paid in Surplus 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115
Accumulated
earnings 254,647 254,647
Current year
earnings 277,859 340,171
--------- ---------
Total
Shareholders
Equity 1,707,506 1,769,818
--------- ---------
Total
Liabilities and
Shareholders
Equity 2,745,006 2,744,818
--------- ---------
--------- ---------
</TABLE>
EXHIBIT D PAGE 79
EXHIBIT B PAGE 175
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
Second Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income after taxes 17,437 5,678 11,260 6,151 9,057 21,610 28,006 42,845 46,180 43,509 46,127
Add: Amortization 8,668 8,668 8,668 8,668 8,668 8,668 8,668 8,918 8,918 8,918 8,918
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Cash Flow From Operations 32,105 20,346 25,928 20,819 23,725 36,278 42,674 57,763 61,098 58,427 61,045
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Decr (Incr) in current
assets
Accounts Receivable 0 25,000 0 0 0 0 0 (25,000) 0 0 0 0
Inventory 0 0 0 0 0 1,000 (1,000) (19,000) 0 0 0 0
Prepaid expenses 0 0 0 0 0 0 0 0 0 0 0 0
Goodwill 0 0 0 0 0 0 0 (60,000) 0 0 0 0
Fiscal Assets 0 0 0 (20,000) 0 0 (20,000) (90,000) 0 (20,000) 0 0
Incr (Decr) in liabilities:
Accounts payable 0 0 0 0 0 0 0 20,000 0 0 0 0
Accrued liabilities 0 0 0 0 0 0 0 5,000 0 0 0 0
Note payable-Secured
Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0 0
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Net Cash Flow 32,105 45,346 (36,572) 819 23,725 (25,222) 21,674 (111,237) (1,403) 38,427 61,045
Beginning cash balance 174,995 207,100 252,446 215,874 216,693 240,418 215,196 236,870 125,633 124,230 162,657
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Ending cash balance 207,100 252,446 215,874 216,693 240,418 215,196 236,870 125,633 124,230 162,657 223,702
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
<CAPTION>
MONTH
12 TOTAL
-------- ---------
<S> <C> <C>
Net income after taxes 62,312 340,171
Add: Amortization 8,918 105,266
Depreciation 6,000 72,000
-------- ---------
Cash Flow From Operations 77,230 517,437
-------- ---------
Decr (Incr) in current
assets
Accounts Receivable 0 0
Inventory 0 (19,000)
Prepaid expenses 0 0
Goodwill 0 (60,000)
Fiscal Assets 0 (150,000)
Incr (Decr) in liabilities:
Accounts payable 0 20,000
Accrued liabilities 0 5,000
Note payable-Secured
Creditors (62,500) (250,000)
-------- ---------
Net Cash Flow 14,730 63,437
Beginning cash balance 223,702 174,995
-------- ---------
Ending Cash Balance 238,432 238,432
-------- ---------
-------- ---------
</TABLE>
EXHIBIT D PAGE 80
EXHIBIT B PAGE 176
<PAGE>
SeraCare
POST EMERGENCE FORECAST
Third Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 539,988 489,118 527,352 491,345 515,746 538,704 550,263 644,733 636,273 702,326 716,044
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Direct Expenses
Donor Fees 247,009 221,885 242,608 223,157 235,788 242,790 248,198 284,539 280,594 304,239 312,774
Salaries and related
expenses 115,501 105,516 117,196 106,542 115,171 118,686 116,516 141,228 135,684 156,032 158,060
Testing 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0
Rent 17,565 17,565 17,565 17,565 17,565 17,565 17,565 20,565 20,565 23,565 23,565
Other Direct Expenses 59,189 55,374 56,198 55,405 55,744 56,257 58,270 70,806 69,188 79,342 80,095
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Total 439,264 400,340 433,567 402,669 424,268 435,298 440,549 517,138 506,031 563,178 574,494
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Gross Profit 100,724 88,778 93,785 88,676 91,478 103,406 109,714 127,595 130,242 139,148 141,550
Indirect Administrative
Expenses 58,145 58,145 58,145 58,145 58,145 58,145 58,145 61,145 61,145 64,260 64,260
Interest Income (1,163) (1,296) (1,192) (1,242) (1,392) (1,333) (1,479) (1,079) (1,121) (675) (1,008)
Interest expense 5,833 5,833 5,104 5,104 5,104 4,375 4,375 4,375 3,646 3,646 3,646
Amortization of Goodwill 8,918 8,918 8,918 8,918 8,918 8,918 8,918 9,168 9,168 9,418 9,418
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Net Profit from Operations 28,990 17,178 22,810 17,751 20,703 33,301 39,755 53,986 57,404 62,499 65,235
Taxes on Income (904) (5,629) (3,376) (5,400) (4,219) 821 3,402 9,094 10,462 12,500 13,594
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Net Income 29,894 22,807 26,186 23,150 24,922 32,481 36,353 44,892 46,942 50,000 51,641
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
Number of locations 7 7 7 7 7 7 7 8 8 9 9
<CAPTION>
MONTH
12 TOTAL
------- ---------
<S> <C> <C>
Revenue 750,085 7,101,977
------- ---------
Direct Expenses
Donor Fees 328,143 3,171,724
Salaries and related
expenses 159,766 1,545,898
Testing 0 0
Softgoods 0 0
Rent 23,565 234,780
Other Direct Expenses 81,630 777,498
------- ---------
Total 593,104 5,729,900
------- ---------
Gross Profit 156,981 1,372,077
Indirect Administrative
Expenses 64,260 722,085
Interest Income (1,154) (14,133)
Interest expense 2,917 53,958
Amortization of Goodwill 9,418 109,016
------- ---------
Net Profit from Operations 81,541 501,151
Taxes on Income 20,116 50,460
------- ---------
Net Income 61,424 450,691
------- ---------
------- ---------
Number of locations 9
</TABLE>
EXHIBIT D PAGE 81
EXHIBIT B PAGE 177
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
Third Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
Investments 280,232 317,957 296,560 314,629 354,468 339,367 370,638 265,698 265,308 145,726
Accounts
receivable --
trade 300,000 300,000 300,000 300,000 300,000 300,000 300,000 325,000 325,000 350,000
Inventory 425,000 425,000 425,000 425,000 425,000 425,000 425,000 440,000 440,000 455,000
Prepaid expenses 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Current
Assets 1,095,232 1,132,957 1,111,560 1,129,629 1,169,468 1,154,367 1,185,638 1,120,698 1,120,308 1,040,726
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fixed Assets (at
cost) 665,000 665,000 665,000 685,000 685,000 685,000 705,000 795,000 795,000 905,000
Accumulated
depreciation (539,000) (545,000) (551,000) (557,000) (563,000) (569,000) (575,000) (581,000) (587,000) (593,000)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net Fixed Assets 126,000 120,000 114,000 128,000 122,000 116,000 130,000 214,000 208,000 312,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fresh Start
Goodwill 1,550,468 1,541,550 1,532,632 1,523,714 1,514,796 1,505,878 1,496,960 1,547,792 1,538,624 1,589,206
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Assets 2,771,700 2,794,507 2,758,192 2,781,343 2,806,264 2,776,245 2,812,598 2,882,490 2,866,932 2,941,932
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts payable 345,000 345,000 345,000 345,000 345,000 345,000 345,000 365,000 365,000 385,000
Accrued
liabilities 130,000 130,000 130,000 130,000 130,000 130,000 130,000 135,000 135,000 140,000
Notes payable -
Secured Creditor 500,000 500,000 437,500 437,500 437,500 375,000 375,000 375,000 312,500 312,500
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities 975,000 975,000 912,500 912,500 912,500 850,000 850,000 875,000 812,500 837,500
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 591,806 591,806 591,806 591,806 591,806 591,806 591,806 591,806 591,806 591,806
Current year
earnings 29,894 52,701 78,886 102,037 126,958 159,439 195,792 240,684 287,626 337,626
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Shareholders
Equity 1,796,700 1,819,507 1,845,692 1,868,843 1,893,764 1,926,245 1,962,598 2,007,490 2,054,432 2,104,432
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities
and
Shareholders
Equity 2,771,700 2,794,507 2,758,192 2,781,343 2,806,264 2,776,245 2,812,598 2,882,490 2,866,932 2,941,932
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
MONTH MONTH
11 12
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and
Investments 212,784 227,127
Accounts
receivable --
trade 350,000 350,000
Inventory 455,000 455,000
Prepaid expenses 75,000 75,000
Deposits 15,000 15,000
--------- ---------
Total Current
Assets 1,107,784 1,122,127
--------- ---------
Fixed Assets (at
cost) 905,000 905,000
Accumulated
depreciation (599,000) (605,000)
--------- ---------
Net Fixed Assets 306,000 300,000
--------- ---------
Fresh Start
Goodwill 1,579,788 1,570,370
--------- ---------
Total Assets 2,993,572 2,992,497
--------- ---------
--------- ---------
LIABILITIES
Accounts payable 385,000 385,000
Accrued
liabilities 140,000 140,000
Notes Payable
Secured Creditor 312,500 250,000
--------- ---------
Total
Liabilities 837,500 775,000
--------- ---------
SHAREHOLDERS EQUITY
Paid in surplus 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115
Accumulated
earnings 591,806 591,806
Current year
earnings 389,266 450,691
--------- ---------
Total
Shareholders
Equity 2,156,072 2,217,497
--------- ---------
Total
Liabilities
and
Shareholders
Equity 2,993,572 2,992,497
--------- ---------
--------- ---------
</TABLE>
EXHIBIT D PAGE 82
EXHIBIT B PAGE 178
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
Third Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Income after
taxes 29,894 22,807 26,186 23,150 24,922 32,481 36,353 44,892 46,942 50,000 51,641
Add: Amortization 8,918 8,918 8,918 8,918 8,918 8,918 8,918 9,168 9,168 9,418 9,418
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Cash Flow From
Operations 44,812 37,725 41,104 38,068 39,840 47,399 51,271 60,060 62,110 65,418 67,059
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Decr (Incr) in
current assets:
Accounts
Receivable 0 0 0 0 0 0 0 (25,000) 0 (25,000) 0
Inventory 0 0 0 0 0 0 0 (15,000) 0 (15,000) 0
Prepaid expenses 0 0 0 0 0 0 0 0 0 0 0
Goodwill 0 0 0 0 0 0 0 (60,000) 0 (60,000) 0
Fixed Assets 0 0 0 (20,000) 0 0 (20,000) (90,000) 0 (110,000) 0
Incr (Decr) in
liabilities:
Accounts payable 0 0 0 0 0 0 0 20,000 0 20,000 0
Accrued
liabilities 0 0 0 0 0 0 0 5,000 0 5,000 0
Note payable --
Secured Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0 0
------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------
Net Cash Flow 44,812 37,725 (21,396) 18,068 39,840 (15,101) 31,271 104,940 (390)(119,583) 67,059
Beginning cash
balance 235,420 200,232 317,957 296,560 314,629 354,468 339,367 370,638 265,698 265,368 145,726
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ending cash balance 200,232 317,957 296,560 314,629 354,468 339,367 370,638 265,698 265,300 145,726 212,784
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<CAPTION>
MONTH
12 TOTAL
-------- ---------
<S> <C> <C>
Net Income after
taxes 61,424 450,691
Add: Amortization 9,418 109,016
Depreciation 6,000 72,000
-------- ---------
Cash Flow From
Operations 76,842 631,707
-------- ---------
Decr (Incr) in
current assets:
Accounts
Receivable 0 (50,000)
Inventory 0 (30,000)
Prepaid expenses 0 0
Goodwill 0 (120,000)
Fixed Assets 0 (240,000)
Incr (Decr) in
liabilities:
Accounts payable 0 40,000
Accrued
liabilities 0 10,000
Note payable --
Secured Creditors (62,500) (250,000)
-------- ---------
Net Cash Flow 14,342 (8,293)
Beginning cash
balance 212,784 235,420
-------- ---------
Ending cash balance 227,127 227,127
-------- ---------
-------- ---------
</TABLE>
EXHIBIT D PAGE 83
EXHIBIT B PAGE 179
<PAGE>
SeraCare
POST EMERGENCE FORECAST
Fourth Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 728,988 678,110 716,352 680,345 704,746 727,704 802,263 833,733 825,273 891,326 905,044
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Direct Expenses
Donor Fees 309,379 284,255 304,978 285,527 290,158 305,160 331,358 346,909 342,964 366,609 375,144
Salaries and
related expenses 166,690 156,705 168,385 157,731 166,360 169,875 184,768 192,417 186,873 207,221 209,249
Testing 0 0 0 0 0 0 0 0 0 0 0
Softgoods 0 0 0 0 0 0 0 0 0 0 0
Rent 26,565 26,565 26,565 26,565 26,565 26,565 29,565 29,565 29,565 32,565 32,565
Other Direct
Expenses 90,869 87,054 87,878 87,085 87,424 87,937 100,510 102,486 100,868 111,022 111,775
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total 593,503 554,579 587,806 556,908 578,507 589,537 646,201 671,377 660,270 717,417 728,733
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Green Profit 135,485 123,539 128,546 123,437 126,239 138,167 156,062 162,356 165,003 173,909 176,311
Indirect
Administrative
Expenses 67,145 67,145 67,145 67,145 67,145 67,145 70,145 70,145 70,145 73,260 73,260
Interest Income (1,163) (1,296) (1,192) (1,242) (1,392) (1,333) (675) (1,008) (1,154) (675) (1,008)
Interest expense 2,917 2,917 2,188 2,188 2,188 1,458 1,458 1,458 729 729 729
Amortization of
Goodwill 9,668 9,668 9,668 9,668 9,668 9,668 9,918 9,918 9,918 10,168 10,168
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Profit From
Operations 56,918 45,105 50,737 45,678 48,630 61,229 75,216 81,843 85,365 90,427 93,162
Taxes on Income 10,267 5,542 7,795 5,771 6,952 11,992 17,586 20,237 21,646 23,671 24,765
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income 46,651 39,563 42,942 39,907 41,678 49,237 57,629 61,606 63,719 66,756 68,397
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Number of Locations 10 10 10 10 10 10 11 11 11 12 12
<CAPTION>
MONTH
12 TOTAL
------- ---------
<S> <C> <C>
Revenue 939,085 9,432,977
------- ---------
Direct Expenses
Donor Fees 390,513 3,940,954
Salaries and
related expenses 210,955 2,177,229
Testing 0 0
Softgoods 0 0
Rent 32,565 345,780
Other Direct
Expenses 113,310 1,168,218
------- ---------
Total 747,343 7,632,181
------- ---------
Green Profit 191,742 1,800,796
Indirect
Administrative
Expenses 73,260 833,005
Interest Income (1,154) (13,292)
Interest expenses 0 18,958
Amortization of
Goodwill 10,168 118,266
------- ---------
Net Profit from
Operations 109,468 843,778
Taxes on Income 31,287 187,511
------- ---------
Net Income 78,181 656,267
------- ---------
------- ---------
Number of Locations 12
</TABLE>
EXHIBIT D PAGE 84
EXHIBIT B PAGE 180
<PAGE>
SeraCare
POST EMERGENCE BALANCE SHEET
Fourth Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and
Investments 124,446 179,677 175,787 211,362 268,708 271,114 154,661 232,185 249,322 147,246
Accounts
Receivable --
trade 375,000 375,000 375,000 375,000 375,000 375,000 400,000 400,000 400,000 425,000
Inventory 470,000 470,000 470,000 470,000 470,000 470,000 485,000 485,000 485,000 500,000
Prepaid Expenses 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Deposits 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Current
Assets 1,059,446 1,114,677 1,110,787 1,146,362 1,203,708 1,206,114 1,129,661 1,207,185 1,224,322 1,162,246
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fixed Assets (at
cost) 995,000 995,000 995,000 1,015,000 1,015,000 1,015,000 1,125,000 1,125,000 1,125,000 1,235,000
Accumulated
depreciation (611,000) (617,000) (623,000) (629,000) (635,000) (641,000) (647,000) (653,000) (659,000) (665,000)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net Fixed Assets 384,000 378,000 372,000 386,000 380,000 374,000 478,000 472,000 466,000 570,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Fresh Start
Goodwill 1,620,702 1,611,034 1,601,366 1,591,698 1,582,030 1,572,362 1,622,444 1,612,526 1,602,608 1,652,440
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Assets 3,064,148 3,103,711 3,004,153 3,124,060 3,165,738 3,152,476 3,230,105 3,291,711 3,292,930 3,384,686
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LIABILITIES
Accounts Payable 405,000 405,000 405,000 405,000 405,000 405,000 420,000 420,000 420,000 435,000
Accrued
Liabilities 145,000 145,000 145,000 145,000 145,000 145,000 150,000 150,000 150,000 160,000
Notes Payable-
Secured Creditor 250,000 250,000 187,500 187,500 187,500 125,000 125,000 125,000 62,500 62,500
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities 800,000 800,000 737,500 737,500 737,500 675,000 695,000 695,000 632,500 657,500
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
SHAREHOLDERS EQUITY
Paid in Surplus 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115 2,115
Accumulated
earnings 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497 1,042,497
Current year
earnings 46,651 86,214 129,156 169,063 210,741 259,979 317,608 379,214 442,933 509,689
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Shareholders
Equity 2,264,148 2,303,711 2,346,653 2,386,560 2,428,238 2,477,476 2,535,105 2,596,711 2,660,430 2,727,186
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
Liabilities and
Shareholders
Equity 3,064,148 3,103,711 3,064,153 3,124,060 3,165,738 3,152,476 3,230,105 3,291,711 3,292,930 3,384,686
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
MONTH MONTH
11 12
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and
Investments 231,011 263,660
Accounts
Receivable --
trade 425,000 425,000
Inventory 500,000 500,000
Prepaid Expenses 75,000 75,000
Deposits 15,000 15,000
--------- ---------
Total Current
Assets 1,246,811 1,278,660
--------- ---------
Fixed Assets (at
cost) 1,235,000 1,235,000
Accumulated
depreciation (671,000) (677,000)
--------- ---------
Net Fixed Assets 564,000 558,000
--------- ---------
Fresh Start
Goodwill 1,642,272 1,632,104
--------- ---------
Total Assets 3,453,083 3,468,764
--------- ---------
--------- ---------
LIABILITIES
Accounts Payable 435,000 435,000
Accrued
Liabilities 160,000 160,000
Notes Payable
Secured Creditor 62,500 0
--------- ---------
Total
Liabilities 657,500 595,000
--------- ---------
SHAREHOLDERS EQUITY
Paid in Surplus 1,172,885 1,172,885
Common Stock @
$.001 per share 2,115 2,115
Accumulated
earnings 1,042,497 1,042,497
Current year
earnings 578,086 656,267
--------- ---------
Total
Shareholders
Equity 2,795,583 2,873,764
--------- ---------
Total
Liabilities and
Shareholders
Equity 3,453,083 3,468,764
--------- ---------
--------- ---------
</TABLE>
EXHIBIT D PAGE 85
EXHIBIT B PAGE 181
<PAGE>
SeraCare
POST EMERGENCE FUNDS FLOW
Fourth Twelve Months
<TABLE>
<CAPTION>
MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH MONTH
1 2 3 4 5 6 7 8 9 10 11
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income after
taxes 46,651 39,563 42,942 39,907 41,678 49,237 57,629 61,606 63,719 66,756 68,397
Add: Amortization 9,668 9,668 9,668 9,668 9,668 9,668 9,918 9,918 9,918 10,168 10,168
Depreciation 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
Cash Flow From
Operations 62,319 55,231 58,610 55,575 57,346 64,905 73,547 77,524 79,637 82,924 84,565
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
Decr (Incr) in
current assets:
Accounts
Receivable (25,000) 0 0 0 0 0 (25,000) 0 0 (25,000) 0
Inventory (15,000) 0 0 0 0 0 (15,000) 0 0 (15,000) 0
Prepaid expenses 0 0 0 0 0 0 0 0 0 0 0
Goodwill (60,000) 0 0 0 0 0 (60,000) 0 0 (60,000) 0
Fixed Assets (90,000) 0 0 (20,000) 0 0 (110,000) 0 0 (110,000) 0
Incr (Decr) in
liabilities:
Accounts Payable 20,000 0 0 0 0 0 15,000 0 0 15,000 0
Accrued
liabilities 5,000 0 0 0 0 0 5,000 0 0 10,000 0
Note payable-
Secured Creditors 0 0 (62,500) 0 0 (62,500) 0 0 (62,500) 0 0
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
Net Cash Flow (102,681) 55,231 (3,890) 35,575 57,346 2,405 (116,453) 77,524 17,137 (102,076) 84,565
Beginning cash
balance 227,127 124,446 179,677 175,787 211,362 268,700 271,114 154,661 232,185 249,322 147,246
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
Ending cash balance 124,446 179,677 175,787 211,362 268,700 271,114 154,661 232,185 249,322 147,246 231,811
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
-------- ------- ------- ------- ------- ------- -------- ------- ------- -------- -------
<CAPTION>
MONTH
12 TOTAL
------- ---------
<S> <C> <C>
Net income after
taxes 78,181 656,267
Add: Amortization 10,168 118,266
Depreciation 6,000 72,000
------- ---------
Cash Flow From
Operations 94,394 846,533
------- ---------
Decr (Incr) in
current assets:
Accounts
Receivable 0 (75,000)
Inventory 0 (45,000)
Prepaid expenses 0 0
Goodwill 0 (180,000)
Fixed Assets 0 (330,000)
Incr (Decr) in
liabilities
Accounts Payable 0 50,000
Accrued
liabilities 0 20,000
Note payable
secured creditors (62,500) (250,000)
------- ---------
Net cash flow 31,849 36,533
Beginning cash
balance 231,811 227,127
------- ---------
Ending Cash Balance 263,660 263,660
------- ---------
------- ---------
</TABLE>
EXHIBIT D PAGE 86
EXHIBIT B PAGE 182
<PAGE>
EXHIBIT "E"
EXHIBIT B PAGE 183
<PAGE>
SERACARE
FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31,1994
EXHIBIT E PAGE 87
EXHIBIT B PAGE 184
<PAGE>
SERACARE
INCOME STATEMENT
FOR THE MONTH AND TWELVE MONTHS ENDING DECEMBER 31, 1994
MONTH OF YEAR TO
DECEMBER DATE
--------- ---------
Revenue $591,411 $4,969,862
--------- ----------
Direct Expenses
Donor Fees 173,437 1,498,526
Salaries and related 100,338 1,026,494
Testing 77,927 495,076
Softgoods 108,800 805,103
Rent 14,272 168,523
Other Direct Expenses 35,405 343,547
--------- ---------
510,179 4,337,269
--------- ---------
GROSS PROFIT 81,232 632,593
INDIRECT EXPENSES 53,222 633,322
--------- ---------
NET PROFIT (LOSS) FROM OPERATIONS $28,010 $(729)
--------- ---------
--------- ---------
BANKRUPTCY EXPENSES 15,208 182,409
--------- ---------
NET INCOME (LOSS) $12,802 $(183,138)
--------- ---------
--------- ---------
EXHIBIT E PAGE 88
EXHIBIT B PAGE 185
<PAGE>
BINARY ASSOCIATES, INC
INCOME STATEMENT
FOR THE TWELVE MONTHS ENDING DECEMBER 31, 1994
CURRENT MONTH % YEAR TO DATE %
Revenue
Plasma Sales $501,824 100.00 3,769,693 100.00
-------- ---------
Total Revenues 501,824 100.00 3,769,693 100.00
-------- ---------
Cost of Sales
Donor's Fees 131,211 26.15 1,067,156 28.31
Soft Goods 108,800 21.68 693,479 18.40
Testing 77,927 15.53 438,621 11.64
Payroll 60,221 12.00 554,164 14.70
Payroll Taxes 4,917 0.98 47,050 1.25
Donors Supplies 10,042 2.00 74,652 1.98
Rent 9,259 1.85 109,015 2.89
Depreciation 75 0.01 825 0.02
Freight-in 0 0.00 120 0.00
General Insurance 1,027 0.20 9,320 0.25
Group Health Insurance 1,178 0.23 18,738 0.50
Worker's Comp Insurance 1,631 0.33 16,643 0.44
Janitorial 525 0.10 7,516 0.20
Donor Recruitment 433 0.09 5,474 0.15
Miscellaneous (78) (0.02) 11 0.00
Payroll Service 0 0.00 91 0.00
Repairs & Maintenance 2,105 0.42 25,733 0.68
Shipping 363 0.07 4,608 0.12
Security 0 0.00 0 0.00
Shrinkage 0 0.00 0 0.00
Taxes & Licenses 2,053 0.41 10,668 0.28
Telephone 715 0.14 8,152 0.22
Uniforms 0 0.00 0 0.00
Utilities 4,575 0.91 55,620 1.48
Waste Management 0 0.00 0 0.00
Inventory Adjustment 7,857 1.57 (5,163) (0.14)
-------- ---------
Total Cost of Sales 424,836 84.66 3,142,493 83.36
-------- ---------
Gross Profit 76,988 15.34 627,200 16.64
-------- ---------
Indirect Expenses
Depreciation 25 0.00 275 0.01
Advertising 0 0.00 100 0.00
Auto Expenses 1,053 0.21 5,345 0.14
Workers' Comp. Ins. 0 0.00 1,173 0.03
Bank Charges 173 0.03 1,148 0.03
Entertainment & Meals 108 0.02 1,400 0.04
Entertainment & Meals 436 0.09 1,610 0.04
Group Health Insurance 1,286 0.26 16,822 0.45
Legal & Accounting (300) (0.06) 7,102 0.19
Miscellaneous 82 0.02 1,211 0.03
Meetings & Seminars 748 0.15 4,416 0.12
Office Expense 1,794 0.36 25,736 0.68
Outside Contractors 230 0.05 11,766 0.31
For Management Purposes Only
EXHIBIT E PAGE 89
EXHIBIT B PAGE 186
<PAGE>
Binary Associates, Inc.
Income Statement
For the Twelve Months Ending December 31, 1994
Current Month % Year to Date %
Payroll 35,460 7.07 413,122 10.96
Payroll Taxes 2,282 0.45 26,762 0.71
Payroll Services 373 0.07 3,477 0.09
Postage & Shipping 824 0.16 11,293 0.30
Rent 5,301 1.06 27,131 0.72
Telephone 1,509 0.30 12,776 0.34
Travel 2,473 0.49 33,433 0.89
Utilities (1,300) (0.26) 230 0.01
--------- --------
Total Indirect Expenses 52,557 10.47 606,328 16.08
--------- --------
Income Before Other
Income & Taxes 24,431 4.87 20,872 0.55
--------- --------
Other Income & Expenses
Interest Income 1 0.00 334 0.01
Income From Operations 24,432 4.87 21,206 0.56
--------- --------
Bankruptcy Expenses
Bankruptcy Expenses - Legal 11,338 2.26 75,792 2.01
Bankruptcy Exp. - Consultants 0 0.00 13,680 0.36
--------- --------
Total Bankruptcy Expenses 11,338 2.26 89.472 2.37
--------- --------
Net Income $13.094 2.61 (68,266) (1.81)
--------- --------
--------- --------
EXHIBIT E PAGE 90
EXHIBIT B PAGE 187
<PAGE>
Avre, Inc.
Income Statement
For the Twelve Months Ending December 31, 1994
Current Month % Year to Date %
Revenue
Plasma Sales $ 89,587 100.00 1,200,169 100.00
-------- ----------
Total Revenues 89,587 100.00 1,200,169 100.00
-------- ----------
Cost of Sales
Donor's Fees 42,226 47.13 431,371 35.94
Soft Goods 0 0.00 111,624 9.30
Testing 0 0.00 56,454 4.70
Payroll 28,727 32.07 339,715 28.31
Payroll Taxes 2,573 2.87 32,352 2.70
Donor Supplies 1,994 2.23 27,131 2.26
Rent 5,013 5.60 59,512 4.96
Depreciation 75 0.08 825 0.07
Freight-in 0 0.00 0 0.00
General Insurance 1,027 1.15 14,129 1.18
Group Health Insurance 1,991 2.22 17,245 1.44
Workers Comp. Insurance (900) (1.00) 588 0.05
Janitorial 1,003 1.12 10,306 0.86
Donor Recruitment 637 0.71 7,925 0.66
Miscellaneous 1,898 2.12 8,625 0.72
Payroll Service 0 0.00 0 0.00
Repair & Maintenance 1,773 1.98 18,726 1.56
Shipping 1,021 1.14 1,021 0.09
Taxes & Licenses 291 0.32 7,539 0.63
Telephone 468 0.52 6,516 0.54
Utilities 3,505 3.91 42,973 3.58
Inventory Adjustment (7,979) (8.91) 199 0.02
-------- ----------
Total Cost of Sales 85,343 95.26 1,194,776 99.55
-------- ----------
Gross Profit 4,244 4.74 5,393 0.45
-------- ----------
Indirect Expenses
Depreciation 0 0.00 0 0.00
Advertising 0 0.00 227 0.02
Auto Expenses 78 0.09 803 0.07
Bank Charges 64 0.07 818 0.07
Dues and Subscriptions 0 0.00 868 0.07
Entertainment & Meals 0 0.00 91 0.01
Group Health Insurance 0 0.00 0 0.00
Legal & Accounting 0 0.00 690 0.06
Miscellaneous 0 0.00 71 0.01
Meetings & Seminars 0 0.00 0 0.00
Office Expense 260 0.29 12,139 1.01
Outside Contractors 0 0.00 1,743 0.15
Payroll 0 0.00 0 0.00
Payroll Taxes 0 0.00 0 0.00
Payroll Services 261 0.29 2,614 0.22
Postage & Shipping 43 0.05 993 0.08
Administration Charge 0 0.00 0 0.00
Rent 0 0.00 0 0.00
EXHIBIT E PAGE 91
EXHIBIT B PAGE 188
<PAGE>
AVRE, INC.
INCOME STATEMENT
FOR THE TWELVE MONTHS ENDING DECEMBER 31, 1994
Current Month % Year to Date %
Telephone $ 0 0.00 0 0.00
Travel 0 0.00 7,029 0.59
Utilities 0 0.00 0 0.00
------ ------
Total Indirect Expenses 705 0.79 28,086 2.34
------ ------
Income Before Other Income & Taxes 3,538 3.95 (22,693) (1.89)
------ ------
Other Income & Expenses
Interest Income 40 0.04 558 0.05
Other Income & Expenses 0 0.00 200 0.02
Income From Operations 3,578 3.99 (21,935) (1.83)
------ ------
Bankruptcy Expenses
Bankruptcy Expenses-Legal 3,870 4.32 70,339 5.86
Bankruptcy Exp.-Consultants 0 0.00 2,598 0.22
------ ------
Total Bankruptcy Expenses 3,870 4.32 72,937 6.08
------ ------
Net Income $ (292) (0.33) (94,872) (7.90)
------ ------
------ ------
EXHIBIT E PAGE 92
EXHIBIT B PAGE 189
<PAGE>
SERACARE
FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1995
EXHIBIT E PAGE 93
EXHIBIT B PAGE 190
<PAGE>
SERACARE
INCOME STATEMENTS
FOR THE MONTH AND NINE MONTHS ENDING SEPTEMBER 30, 1995
PRIOR
MONTH OF YEAR TO YEAR TO
SEPTEMBER DATE DATE
----------------------- ----------
Revenue $671,922 4,126,616 $4,796,538
---------------------- ----------
Direct Expenses
Donor Fees 198,357 1,242,671 1,441,028
Salaries and related 95,617 717,838 813,455
Testing 98,603 527,783 626,386
SOFT GOODS 149,987 767,131 917,118
Rent 14,544 115,935 130,479
Other Direct Expenses 21,667 136,397 158,064
---------------------- ----------
Total Direct Expenses 578,775 3,507,755 4,086,530
---------------------- ----------
GROSS PROFIT 93,147 618,861 712,008
INDIRECT EXPENSES 63,597 470,708 534,305
---------------------- ----------
NET PROFIT (LOSS) FROM
OPERATIONS $ 29,550 148,153 $ 177,703
---------------------- ----------
---------------------- ----------
BANKRUPTCY & DISCONTINUED
OPERATIONS 0 49,969 49,969
---------------------- ----------
NET INCOME $ 29,550 98,184 $ 127,734
---------------------- ----------
---------------------- ----------
EXHIBIT E PAGE 94
EXHIBIT B PAGE 191
<PAGE>
AVRE, INC.
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995
YEAR TO
DATE
ACTUAL
----------
Revenue
Plasma Sales $1,137,503
----------
Total Revenues 1,137,503
----------
----------
1st of Sales 426,313
Donor's Fees, Std. 18,038
Donor Fees, Misc. 89,499
Soft Goods 66,622
Testing 117,527
Payroll Technicians 144,839
Payroll Mgr. & Medical 9,459
Payroll Taxes, Tech 11,609
Payroll Taxes, Mgr. & Med 18,950
Donors Supplies 45,415
Rent 675
Depreciation 6,207
General Insurance 10,453
Group Health Insurance 1,108
Workers Comp Insurance 5,437
Janitorial 1,994
Donor Recruitment 80
Miscellaneous 8,095
Plasma Destroyed 8,283
Repairs and Maintenance 14,133
Security 7,352
Shipping 512
Shrinkage 8,513
Taxes and Licenses 4,649
Telephone 20,774
Utilities 4,375
Uniforms 10,693
Waste Management (39,159)
----------
Inventory Adjustment
Total Cost of Sales 1,022,445
----------
Gross Profit 115,058
----------
~~~~~~~~~~ Expenses 60
Advertising 574
Auto Expenses 122
Bank Charges 110
Dues and Subscriptions 419
Entertainment and Meals 591
Workers Comp. Ins. 9,950
Group Health Insurance 0
Legal and Accounting 92
Miscellaneous 420
Meetings and Seminars 3,899
Office Expenses 0
Outside Contractors
EXHIBIT E PAGE 95
EXHIBIT B PAGE 192
<PAGE>
AVRE, INC.
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995
YEAR TO
DATE
ACTUAL
PAYROLL 0
PAYROLL TAXES 0
PAYROLL SERVICES 1,968
POSTAGE & SHIPPING 4,181
RENT 0
TELEPHONE 0
TRAVEL 0
--------
TOTAL INDIRECT EXPENSES 22,386
--------
INCOME BEFORE OTHER INCOME 92,672
--------
OTHER INCOME & EXPENSES
INCOME FROM OPERATIONS 92,672
--------
BANKRUPTCY EXPENSES
BANKRUPTCY EXPENSES - LEG. 6,821
BANKRUPTCY EXP. - OTHER 7,500
--------
TOTAL BANKRUPTCY EXPENSES 14,321
--------
NET INCOME $78,351
--------
--------
EXHIBIT E PAGE 96
EXHIBIT B PAGE 193
<PAGE>
BINARY ASSOCIATES, INC.
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30,1995
YEAR TO
DATE
ACTUAL
REVENUE
PLASMA SALES $3,661,033
-----------
TOTAL REVENUES 3,661,033
-----------
DIRECT COSTS
DONOR'S FEES 998,496
SOFT GOODS 827,620
TESTING 559,765
PAYROLL TECHNICIANS 268,628
PAYROLL MGR. & MEDICAL 192,103
PAYROLL TAXES, TECH. 21,178
PAYROLL TAXES, MGR. & MED. 15,508
DONOR SUPPLIES 45,573
RENT 85,073
DEPRECIATION 10,614
FREIGHT-IN 3,046
GENERAL INSURANCE 0
GROUP HEALTH INSURANCE 12,310
WORKER'S COMP INSURANCE 8,627
JANITORIAL 5,973
DONOR RECRUITMENT 1,397
MISCELLANEOUS 52
PAYROLL SERVICES 0
PLASMA DESTROYED 25,152
REPAIRS & MAINTENANCE 13,423
SECURITY 10,021
SHIPPING 2,971
SHRINKAGE 183
TAXES & LICENSES 15,838
TELEPHONE 5,114
UTILITIES 19,319
UNIFORMS 9,016
WASTE MANAGEMENT 20,596
INVENTORY ADJUSTMENT (115,526)
-----------
TOTAL COST OF SALES 3,062,070
-----------
INDIRECT COSTS
DEPRECIATION 225
ADVERTISING 159
AUTO EXPENSES 10,880
WORKERS' COMP. INS. 6,752
BANK CHARGES 158
DUES AND SUBSCRIPTIONS 1,439
ENTERTAINMENT & MEALS 1,806
GROUP HEALTH INSURANCE 18,546
LEGAL & ACCOUNTING 2,563
MISCELLANEOUS 2,452
MEETINGS & SEMINARS 3,284
OFFICE EXPENSE 17,127
EXHIBIT E PAGE 97
EXHIBIT B PAGE 194
<PAGE>
BINARY ASSOCIATES, INC.
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995
YEAR TO
DATE
ACTUAL
OUTSIDE CONTRACTORS 3,986
PAYROLL 331,584
PAYROLL TAXES 21,583
PAYROLL SERVICES 2,697
POSTAGE & SHIPPING 9,676
RENT 48,341
TELEPHONE 11,785
TRAVEL 16,344
UTILITIES 0
--------
TOTAL INDIRECT COSTS 511,387
--------
TOTAL COSTS 3,573,457
--------
INCOME BEFORE OTHER INCOME & TAXES 87,576
--------
OTHER INCOME & EXPENSES
INTEREST INCOME 1,477
OTHER INCOME & EXPENSES 2,219
INCOME FROM OPERATIONS 91,272
--------
BANKRUPTCY EXPENSES
BANKRUPTCY EXPENSES - LEGAL 22,405
BANKRUPTCY EXP. - CONSULTANTS 62
BANKRUPTCY EXP. OTHER 7,500
--------
TOTAL BANKRUPTCY EXPENSES 29,967
--------
NET INCOME $61,305
--------
--------
EXHIBIT E PAGE 98
EXHIBIT B PAGE 195
<PAGE>
EXHIBIT "F"
EXHIBIT B PAGE 196
<PAGE>
SERACARE
PROPOSED EQUITY DISTRIBUTION
PLAN EFFECTIVE DATE
---------------------
COMMON STOCK
GROUP SHARES % OPTIONS
- ----------------------------------------- ----------- ----- ----------
INVESTOR GROUP 1,610,708 76.1%
UNSECURED CREDITORS - NOTES 105,275 5.0%
INVESTMENT BANKERS - FIRST EQUITY CAPITAL 94,748 4.5%
INVESTMENT BANKERS - ANTHONY BRYANT 78,956 3.7%
INVESTMENT BANKERS - SUNDLAND GROUP 26,319 1.2%
MANAGEMENT - A J MORAN 84,220 4.0% 56,147
MANAGEMENT - J L BURDICK 63,165 3.0% 42,110
MANAGEMENT - BRIAN OLSON 42,110 2.0% 28,073
UNSECURED CREDITORS 10,000 0.5%
---------- ------ -------
2,115,500 100.0% 126,330
---------- ------ -------
---------- ------ -------
(1) VEST 1/3 EACH YEAR
EXHIBIT F PAGE 99
EXHIBIT B PAGE 197
<PAGE>
ORIGINAL NOTE
PRINCIPAL AMOUNT: 1,100,000 DATE:_________________, 1996
(Or amount determined by the Bankruptcy Court)
THIS ORIGINAL NOTE IS THE PROMISSORY NOTE ("NOTE") ISSUED BY
AMERICAN BLOOD INSTITUTE, INC., AVRE, INC. AND BINARY ASSOCIATES, INC.
TO CVD FINANCIAL CORPORATION, A DELAWARE CORPORATION, EFFECTIVE AS OF THE
EFFECTIVE DATE OF THE THIRD AMENDED JOINT PLAN OF REORGANIZATION (THE
"JOINT PLAN") IN ACCORDANCE WITH THE ORDER OF THE UNITED STATES BANKRUPTCY
COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA CONFIRMING THE JOINT PLAN (THE
"ORDER").
In accordance with the Order of the Bankruptcy Court, the undersigned,
American Blood Institute, Inc., a Delaware corporation, AVRE, Inc., and
Binary Associates, Inc. ("Debtors") hereby promise to pay to CVD Financial
Corporation, a Delaware corporation ("Lender"), in lawful money of the United
States of America, at the office of the Lender or at such bank or other
location as may be designated in writing by Lender, the sum of the
following amounts as provided in the Joint Plan: (a) the principal amount
of ONE MILLION, ONE HUNDRED THOUSAND DOLLARS ($1,100,000) (or the amount
determined by the Bankruptcy Court) such principal amount to be paid in equal
quarterly installments over four years commencing on the first day of the
first month 90 days after the Effective Date ( as defined in the Joint
Plan), and (b) accrued interest on the unpaid principal amount at the
rate of 14% per annum to be paid commencing on the first day of the
first full month after the Effective Date.
This Note is secured by the Collateral as defined in the Restated Loan
Agreement.
The Restated Loan Agreement, among other things, contains provisions for
the acceleration of the maturity hereof prior to the Maturity Date subject
to the terms and conditions specified in the Restated Loan Agreement.
In the event any action or proceeding is brought to enforce this Note,
the prevailing party shall be entitled to recover its actual attorneys' fees
and legal costs, including court costs and expert witness fees incurred
therein.
This Note may be prepaid at any time without penalty by the Debtors.
This Note shall be governed by and constructed in accordance with the
Laws of the State of California.
AMERICAN BLOOD INSTITUTE, INC., CVD FINANCIAL CORPORATION,
a Delaware Corporation a Delaware Corporation
By:________________________ By: ________________________
Name:______________________ Name: ______________________
Title:_____________________ Title: _____________________
AVRE, INC.
By: _______________________
Name:______________________
Title:_____________________
BINARY ASSOCIATES, INC.
By:________________________
Name:______________________
Title:_____________________
EXHIBIT C PAGE 198
<PAGE>
MARTIN J. BRILL (State Bar No. 53220)
DOUGLAS D. KAPPLER (State Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Telecopier: (310) 277-7584
Attorneys for Debtors in Possession
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA 94-11730-AA
) Chapter 11
)
AMERICAN BLOOD INSTITUTE, INC., )
a Delaware corporation; AVRE, ) (Joint Administration of Case
INC., a Nevada corporation; and ) Nos. LA 94-11730-AA, LA 94-
BINARY ASSOCIATES, INC., a ) 11736-AA, and LA 94-11738- AA)
Colorado corporation, )
) [Cases Not Consolidated]
Debtors. )
)
) AMENDMENT TO THIRD AMENDED
) JOINT PLAN OF REORGANIZATION
) OF AMERICAN BLOOD INSTITUTE,
) INC., AVRE, INC., AND BINARY
) ASSOCIATES, INC.
)
) Date: January 24, 1996
) Time: 10:30 a.m.
) Place: Courtroom "1375"
) Roybal Federal Building
) 255 East Temple Street
) Los Angeles, CA 90012
)
- ---------------------------------------
TO THE UNITED STATES TRUSTEE, CREDITORS OF THE ABOVE-NAMED
DEBTORS AND ALL OTHER INTERESTED PARTIES:
COMES NOW, American Blood Institute, Inc., Avre, Inc. and Binary
Associates, Inc. and amend the Third Amended Joint Plan of
Reorganization of American Blood Institute, Inc., Avre, Inc. and
Binary Associates, Inc. (the "Plan") as follows:
///
EXHIBIT D PAGE 199
<PAGE>
The fourth paragraph of Section 3.1 of the Plan is amended to read as
follows:
"Upon confirmation of the Plan, in
addition to other compensation to be paid for
management services rendered by Alfred Jay
Moran, Jr., Jerry L. Burdick and Brian Olson
during the course of the Chapter 11 case,
including, but not limited to creating the
restructured company, giving up prior company
benefits and equity, acquisition and funding
of the initial six plasma centers, profit
enhancement to the centers, bankruptcy
administration, arranging financing, and
developing and executing the chapter 11 plan,
and as an incentive, Mr. Moran shall be
issued 84,220 shares of Reorganized ABI's
stock, Mr. Burdick shall be issued 63,165
shares of Reorganized ABI's stock and stock
options to acquire 42,110 shares over a three
year period, and Mr. Olson shall be issued
42,110 shares of Reorganized ABI's stock and
stock options to acquire 28,073 shares over a
three year period."
Section 7.4 of the Plan is amended to read as follows:
"SECTION 7.4 EXECUTIVE COMPENSATION.
The officers of the Reorganized Debtors shall receive
three year contracts with noncompete language. The officers
of the Reorganized
-2-
EXHIBIT D PAGE 200
<PAGE>
Debtors shall be: Barry D. Plost, with an annual salary to be
negotiated, as Chairman, President and CEO; Jerry L. Burdick with an
annual salary of $125,000 as Executive Vice President and Chief
Financial Officer; and Brian Olson with an annual salary of $90,000
as Vice President. There shall be a quarterly salary adjustment
whereby any pre-tax earnings over $100,000 per quarter shall
be paid to the officers of the Reorganized Debtor up to an
annual maximum of $25,000 for Barry D. Plost and $10,000 each for
Jerry L. Burdick and Brian Olson. There shall also be a
Management Bonus Pool which will allocate ten percent (10%) of
pre-tax earnings which are in excess of $920,549 in year one
following the Effective Date, in excess of $2,590,160 in year
two, in excess of $4,384,187 in year three, in excess of
$6,244,536 in year four, and in excess of $8,166,636 in year five,
to a bonus pool to be paid pro rata to management on the basis of
salaries."
On the Effective Date, Alfred Jay Moran, Jr. will resign as
Chairman, President and Chief Executive Officer, and Barry D. Plost will become
Chairman, President and Chief Executive Officer. The above amendments reflect
that change.
-3-
EXHIBIT D PAGE 201
<PAGE>
Barry D. Plost is a Management Consultant with David Barrett, Inc. and will
continue as such until the Effective Date. Mr. Plost was President and
Chief Executive Officer of Countrywide Transport Services, Inc. from 1991
through 1994, and President and the Chief Operating Officer of Fray Miller
Trucking, Inc. from 1979 through 1991.
Article X shall be amended to add new paragraph 10.3 as
follows:
"On the Effective Date, in accordance with Section 1123(a) (6)
of the Bankruptcy Code, the Reorganized Debtor shall adopt an
amendment to its Articles of Incorporation that shall contain
provisions that prohibit the issuance of nonvoting equity
securities."
DATED: January 3, 1996 AMERICAN BLOOD INSTITUTE, INC.,
AVRE, INC. AND BINARY ASSOCIATES, INC.
By: /s/ ALFRED JAY MORAN, JR.
-----------------------------------
ALFRED JAY MORAN, JR.,
Their President
DATED: January 3, 1996 ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: /s/ MARTIN J. BRILL
-----------------------------------
MARTIN J. BRILL
Attorneys for Debtors in Possession
-4-
EXHIBIT D PAGE 202
<PAGE>
MARTIN J. BRILL (Bar No. 53220)
DOUGLAS D. KAPPLER (Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East
Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Attorneys for Debtors
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re ) Bk. No. LA 94-11730-AA
)
AMERICAN BLOOD INSTITUTE, INC., ) Chapter 11
AVRE INCORPORATED )
and BINARY ASSOCIATES, INC. ) (Joint Administration of
) Case Nos.
) LA-94-11730-AA;
) LA-94-11736-AA and
) LA-94-11738-AA)
Debtors. )
)
) ANALYSIS OF BALLOTS FOR
) ACCEPTING OR REJECTING
) DEBTORS' THIRD AMENDED
) JOINT PLAN OF REORGANIZATION
)
) Date: January 24, 1996
) Time: 10:30 a.m.
) Place: Courtroom 1375
- ---------------------------------------)
COME NOW, AMERICAN BLOOD INSTITUTE, INC., AVRE, INC., and BINARY
ASSOCIATES, INC., Debtors in the above-captioned Chapter 11 cases, and herewith
files the Ballots For Accepting or Rejecting the Debtors' Third Amended Joint
Plan of Reorganization herein, indicating the acceptances or rejections received
thereto:
///
///
EXHIBIT E PAGE 203
<PAGE>
I. CLASS 2 CLAIMS
0 Vote Accepting Plan; Totalling -0-
------
1 Vote Rejecting Plan; Totalling $1,913,954.00
------
0 Votes Rejecting Plan; Totalling -0-
------
0 % in Number
-------
0 % in Amount
-------
II. CLASS 3 CLAIMS
42 Votes Accepting Plan; Totalling $1,753,627.07
------
1 Votes Rejecting Plan; Totalling $2,000.00
------
97.67 % in Number
-------
99.89 % in Amount
-------
III. CLASS 4 CLAIMS
1 Vote Accepting Plan; Totalling $150,000.00
------
0 Votes Rejecting Plan; Totalling $-0-
------
100 % in Number
-------
100 % in Amount
-------
IV. CLASS 5 CLAIMS
2 Votes Accepting Plan; Totalling $872.17
------
0 Votes Rejecting Plan; Totalling $-0-
------
100 % in Number
-------
100 % in Amount
-------
V. CLASS 6 CLAIMS
6 Votes Accepting Plan; Totalling $3,890.16
------
0 Votes Rejecting Plan; Totalling $-0-
------
100 % in Number
-------
100 % in Amount
-------
-2-
EXHIBIT E PAGE 204
<PAGE>
VI. CLASS 7 CLAIMS
2 Votes Accepting Plan
-----
0 Votes Rejecting Plan
-----
100% in Number
-------
DATED: January 3,1996
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By:_______________________________
MARTIN J. BRILL
Attorneys for Debtors
-3-
EXHIBIT E PAGE 205
<PAGE>
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California. I am
over the age of 18 and not a party to the within action; my business address is:
1888 Century Park East, Suite 1500, Los Angeles, California 90067.
On January 3, 1996 I served the foregoing document described as:
MOTION FOR ORDER CONFIRMING THIRD AMENDED JOINT PLAN OF REORGANIZATION OF
AMERICAN BLOOD INSTITUTE, INC., AVRE, INC., AND BINARY ASSOCIATES, INC.
on the interested parties in this action by placing a true copy thereof enclosed
in a sealed envelope addressed as follows:
See attached
(x) (By Mail) I caused such envelope with postage thereon fully prepaid to
be placed in the United States mail at Los Angeles, California.
( ) (By personal service) I caused the foregoing document to be hand-delivered
to the above.
Executed on January 3, 1996 at Los Angeles, California.
(x) (Federal) I declare that I am employed in the office of a member of the
bar of this court at whose direction the service was made.
/s/ MARGUERITE HARDIN
--------------------------
Marguerite Hardin
<PAGE>
<TABLE>
<S> <C> <C>
MOTION FOR ORDER CONFIRMING THIRD Russell Clementson, Esq. Benjamin S. Seigel, Esq.
AMENDED JOINT PLAN OF REORGANIZATION Office of the United States Trustee Katz, Hoyt, Seigel & Kapor
OF AMERICAN BLOOD INSTITUTE, INC., 221 N. Figueroa St., Suite 800 11111 Santa Monica Blvd., Suite 820
AVRE, INC., AND BINARY ASSOCIATES, INC. Los Angeles, CA 90012 Los Angeles, CA 90025-3342
Michael D. Fort, Esq. Kiran A. Phansalkar, Esq. Howard E. King Esq
Comm. Employment Security The Hastie Law Firm King, Purtich & Holmes
12th Floor, Legal Dept 3000 Oklahoma Tower 2121 Avenue of the Stars
500 James Robertson Pkway 210 Park Avenue 22nd Floor
Nashville, TN 37245-0100 Oklahoma City, OK 73102 Los Angeles, CA 90067
Richard L. Wynne, Esq. Dale V. Gallinetti Larry A. Cary
Wynne Spiegel Itkin 119 Calle La Mesa 32 Woodbridge
1901 Avenue of the Stars Moraga, CA 94556 Colorado Springs CO 80906
Suite. 1600
Los Angeles, CA 90067-6080
Mould Bijou Center Ltd 4th & Grand Partnership Moss Family Trust
4067 Hardwick St., #168 c/o The Leach Co. 6971 Monte Ross Ave
Lakewood CA 90712 P.O. Box 833 Las Vegas, NV 89120-3018
Pueblo CO 81002
</TABLE>
<PAGE>
MARTIN J. BRILL (State Bar No. 53220)
DOUGLAS D. KAPPLER (State Bar No. 48979)
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
1888 Century Park East, Suite 1500
Los Angeles, California 90067
Telephone: (310) 277-7400
Telecopier: (310) 277-7584
Attorneys for Debtors
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re
AMERICAN BLOOD INSTITUTE, INC., a Delaware corporation; AVRE, INC., a Nevada
corporation; and BINARY ASSOCIATES, INC., a Colorado corporation,
Debtors.
Bk. No. LA 94-11730-AA
Chapter 11
(Joint Administration of Case Nos. LA 94-11730-AA, LA 94-11736-AA, and
LA 94-11738-AA)
ORDER CONFIRMING THIRD AMENDED JOINT PLAN OF REORGANIZATION OF AMERICAN BLOOD
INSTITUTE, INC., AVRE, INC. AND BINARY ASSOCIATES, INC.
Date: January 24, 1996
Time: 10:30 a.m.
Place: Courtroom "1375"
Roybal Federal Building
255 E. Temple Street
Los Angeles, CA 90012
The hearing on confirmation of the Third Amended Joint Plan of
Reorganization ("Joint Plan") filed by American Blood Institute, Inc. ("ABI"),
AVRE, Inc. ( AVRE"), Binary Associates, Inc. ("Binary") (collectively,
"Debtors") came on regularly for hearing after due and proper notice on January
24, 1996 at 10:30 a.m., the Honorable Alan Ahart, United States Bankruptcy Judge
presiding. The Debtors appeared through their counsel of record
<PAGE>
Robinson, Diamant, Brill & Klausner, A Professional Corporation by Martin J.
Brill. Other appearances were made as reflected on the record.
Based upon the pleadings and records on file in this case, the
amendments to the Joint Plan, the settlement with CVD Financial Corporation
("CVD") previously approved by the Court, the arguments of counsel and other
evidence presented at the hearing, the Court finds as follows:
1. Notice of the confirmation hearing was appropriate under
Bankruptcy Code section 102, Federal Rule of Bankruptcy Procedure 2002, and the
order approving the Disclosure Statement regarding the Joint Plan;
2. This matter is a core proceeding under 28 U.S.C. Section 157;
3. The Joint Plan was filed on November 27, 1995, and copies of
the Joint Plan, Disclosure Statement, notice of hearing to consider
confirmation, and ballots were transmitted to all creditors, equity security
holders of the Debtors and other parties in interest on December 8, 1995 in
accordance with the Order approving the Disclosure Statement;
4. The Joint Plan was modified by Amendment to Third Amended Joint
Plan of Reorganization of American Blood Institute, Inc., AVRE, Inc., and Binary
Associates, Inc. filed on January 3, 1996 (the "First Amendment");
5. The Joint Plan was further modified by Second Amendment to Third
Amended Joint Plan of Reorganization of American Blood Institute, Inc., AVRE,
Inc., and Binary
-2-
<PAGE>
Associates, Inc. filed on January 19, 1996 (the "Second Amendment");
6. The Debtors have solicited consents to the Joint Plan consistent
with Bankruptcy Code section 1125, Federal Rule of Bankruptcy Procedure 2002 and
this Court's order approving the Disclosure Statement regarding the Joint Plan;
7. The Joint Plan complies with all the requirements of Bankruptcy
Code section 1129;
8. The Debtors have complied with all of the provisions of Title 11
of the United States Code;
9. The Joint Plan complies with all of the provisions of Title 11
of the United States Code;
10. The Joint Plan has been proposed by the Debtors in good faith
and not by any means forbidden by law;
11. The Joint Plan has been accepted in writing by all creditors and
equity security holders whose acceptances are required by law;
12. At least one class of claims that is impaired under the Joint
Plan has accepted the Joint Plan, determined without including any acceptance of
the Joint Plan by any insider;
13. Each holder of a Claim or Interest has accepted the Joint Plan
or will receive or retain under the Joint Plan property of a value, as of the
Effective Date of the Joint Plan, that is not less than the amount that such
holder would receive or retain if the Debtors' assets were liquidated under
chapter 7 of the Bankruptcy Code on that date;
-3-
<PAGE>
14. The Joint Plan does not discriminate unfairly and is fair and
equitable with respect to each class of Claims or Interests that is impaired
under the Joint Plan;
15. All payments made or promised by the Debtors for services or
costs and expenses in, or in connection with the Joint Plan and incident to this
chapter 11 case, have been fully disclosed to the Court and are reasonable, or,
if to be fixed after confirmation of the Joint Plan will be subject to the
approval of the Court;
16. The identities, qualifications, and affiliations of the persons
who are to be directors or officers of the Debtors after the Effective Date have
been fully disclosed, and the appointment of such persons to such offices, or
their continuance therein, is equitable and consistent with the interest of
creditors and equity security holders and with public policies;
17. Confirmation of the Joint Plan is not likely to be followed by
any liquidation, or the need for further financial reorganization, of the
Debtors; and
18. The Joint Plan complies with the requirements of Bankruptcy Code
section 1123.
NOW, THEREFORE, for the foregoing reasons and good cause, it is
hereby
ORDERED that:
A. The Joint Plan as modified by the First Amendment and the Second
Amendment is hereby confirmed pursuant to Bankruptcy Code section 1129(a);
-4-
<PAGE>
B. The Debtors are authorized to take all steps and to enter into
any transaction reasonably necessary to implement the Joint Plan;
C. In accordance with Bankruptcy Code section 1141(a), the
provisions of the Joint Plan shall bind the Debtors, any entity acquiring
property under the Joint Plan, and any creditor or equity security holder,
whether or not the Claim or Interest of such creditor or equity security holder
is impaired under the Joint Plan and whether or not such creditor or equity
security holder has accepted the Joint Plan;
D. The Debtors may apply for a discharge in accordance with and to
the fullest extent allowed by Bankruptcy Code section 1141 once the initial
distribution of the cash and securities has been made to creditors holding
uncontested Claims;
E. Pursuant to Article IX of the Joint Plan, the Debtors assume the
following executory contracts:
1. Leases of real property for the following locations:
a. 611 North Las Vegas Boulevard, Las Vegas, Nevada;
b. 1174 Fort Campbell Boulevard, Clarksville, Tennessee;
c. 129 and 141 North Spruce, Colorado Springs, Colorado;
and
d. 411 and 413 West 4th Street, Pueblo, Colorado.
2. Contracts for sale of source plasma with Alpha Therapeutics,
Inc.
-5-
<PAGE>
F. In accordance with Article IX of the Joint Plan, each
executory contract or unexpired lease of the Debtors that is or was not
assumed by order of the Bankruptcy Court and that is not assumed by the
Debtors pursuant to Article IX of the Joint Plan, is rejected. Within thirty
(30) days following entry of this Order, the holder of any Claim arising from
rejection of an executory contract or unexpired lease shall file with the
Clerk and serve upon the Debtors and its counsel a proof of claim for damages
resulting from rejection or be barred from asserting such Claim or receiving
any dividend or payment on account of such Claim;
G. All applications for final compensation of professional persons
for services rendered and for reimbursement of expenses incurred on or before
the Effective Date (including, without limitation, any compensation requested by
any professional or other entity for making a substantial contribution to these
cases), and all other requests for payment of administrative costs and expenses
incurred before the Effective Date, shall be filed no later than 60 days after
the Effective Date unless otherwise extended by the Court. Holders of
Administrative Claims who fail to timely file such requests shall be barred from
asserting such Claims against the Debtors;
H. The Court shall retain jurisdiction as provided in the Joint Plan
and in accordance with the Joint Plan and applicable law;
I. All securities of Reorganized ABI to be issued in accordance with
the Plan to creditors or equity interest holders will not be registered under
the Securities Act of 1933, as
-6-
<PAGE>
amended, or under any state or local securities laws and will be issued under an
exemption from registration provided by section 1145 of the Bankruptcy Code (11
U.S.C. Section 1145);
J. The Reorganized Debtors are authorized to enter into the
employment agreements with Jerry L. Burdick and Brian Olson attached to the
Disclosure Statement as Exhibit "C", which agreements are approved and made
binding upon the Reorganized Debtors;
R. On the Effective Date, the rights afforded in the Joint Plan, and
the treatment of all Claims and Interests therein, shall be in exchange for, and
in complete satisfaction, discharge and release of all Claims, including without
limitation, all Administrative Claims, Secured Claims, Priority Tax Claims,
other Priority Claims and Unsecured Claims, including any interest accrued on
such Claims from and after the Petition Date, against the Debtors;
L. Except as to those Claims and Interests which are assumed,
preserved or treated under the Joint Plan, on the Effective Date, all persons
shall be permanently enjoined by Bankruptcy Code section 524 from asserting
against the Debtors, their successors or their assets or properties, any other
or future Claims, Administrative Claims, or Interests based upon any act or
omission, transaction, or other activity of any kind or nature that occurred
prior to the Confirmation Date;
M. Subject to paragraphs 1.11.10, 1.11.11 and 4.7(a), (c) and (d) of
the Amended and Restated Loan Agreement ("the Loan Agreement"), and analogous
provisions of the Security Agreement, both incorporated into the Joint Plan
through the Second
-7-
<PAGE>
Amendment, and excepting the Vacant Parcels as defined in the Loan Agreement and
Security Agreement, this Order shall provide CVD with a valid and perfected
first priority security interest in all of the collateral defined in the Loan
Agreement and Security Agreement ("the Collateral"), including without
limitation all now owned or hereafter acquired Accounts, Chattel Paper,
Contracts, Equipment, Fixtures, General Intangibles, Goods, Instruments,
Inventory and Proceeds of each of the Reorganized Debtors as those terms are
used in the California Commercial Code and all of ABI's shares of stock in AVRE
and Binary;
N. This Order shall supersede the perfection requirements of any
state law such that CVD will have no obligation to record any documents with any
state or county office or take any other steps to perfect CVD's liens and
security interests in the Collateral;
0. Within 120 days of the entry of this Order, the Debtors shall
file a status report ("Report") explaining what progress has been made toward
consummation of the confirmed Plan. The initial Report must be served on the
United States Trustee, the twenty largest unsecured creditors, and those parties
who have requested special notice. Further Reports shall be filed every 180
days thereafter and served on the same entities, unless otherwise ordered by the
Court; and
-8-
<PAGE>
P. The Debtors shall serve a copy of this Order upon all interested
parties upon entry of this Order by the Clerk of the Court.
DATED: JAN 24 1996
ALAN M. AHART
---------------------------------
ALAN AHART
United States Bankruptcy Judge
PRESENTED BY:
ROBINSON, DIAMANT, BRILL & KLAUSNER
A Professional Corporation
By: /s/ Martin J. Brill
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MARTIN J. BRILL
Attorneys for Debtors
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<PAGE>
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
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255 East Temple Street, Los Angeles, CA 90012
NOTICE OF ORDER CONFIRMING CHAPTER 11 PLAN
DEBTOR(S) INFORMATION: AMERICAN BLOOD INSTITUTE, INC.
BANKRUPTCY NO. LA94-11730-AA
SSN:
EIN: 95-4343492 CHAPTER 11
SSN:
1875 CENTURY PK E STE 2130
LOS ANGELES, CA 90067
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Notice is hereby given of the entry of an order of this Court confirming a Plan
of Reorganization. A copy of the order and the plan itself are contained in the
Court file located at the address listed herein.
ORDER CONFIRMING THIRD AMENDED JOINT PLAN OF REORGANIZATION OF DEBTORS.
For The Court,
JON D. CERETTO
Clerk of Court
Dated: January 24, 1996
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EXHIBIT 10.1
SUBSIDIARIES OF THE REGISTRANT
Name of State or Other Percent
Subsidiary Jurisdiction of Interest
as Specified Incorporation or in each
in its Charter Organization Subsidiary
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Avre, Incorporated Nevada 100%
Binary Associates, Incorporated Colorado 100%
SeraCare Acquisitions, Inc. Nevada 100%
BHM Labs, Inc. Arkansas 100%
