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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 0-15223
HEMACARE CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of I.R.S. Employer I.D.
incorporation or organization: California Number: 95-3280412
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
(Address of principal executive offices) (Zip Code)
___________________
Registrant's telephone number, including area code: (818)986-3883
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: YES X NO ___
As of May 8, 1995, 5,633,452 shares of Common Stock of the Registrant were
issued and outstanding.
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<PAGE>
INDEX
HEMACARE CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets--March 31, 1995 and December
31, 1994
Consolidated statements of operations--Three months ended
March 31, 1995 and 1994
Consolidated statements of cash flows--Three months ended
March 31, 1995 and 1994
Notes to consolidated financial statements--March 31, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
HEMACARE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited)
------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.............................. $ 911,200 $ 786,334
Short-term investments................................. 299,424 295,434
Accounts receivable, net of allowance for doubtful
accounts - $157,331 (1995) and $141,243 (1994)........ 1,319,617 1,606,566
Product inventories.................................... 102,327 117,683
Supplies............................................... 363,222 324,047
Prepaid expenses....................................... 187,113 109,972
Note receivable from officer........................... 101,623 90,470
------------- ------------
Total Current Assets.............................. 3,284,526 3,330,506
Plant and equipment, net of accumulated depreciation
and amortization of $2,006,701 (1995) and
$1,895,863 (1994)........................................ 1,544,799 1,463,261
Licenses.................................................. 1,377,069 1,394,337
Other assets.............................................. 108,005 100,805
------------- ------------
$ 6,314,399 $ 6,288,909
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable....................................... $ 691,206 $ 967,545
Accrued payroll and payroll taxes...................... 203,494 324,408
Other accrued expenses................................. 236,256 267,062
Current obligations under capital leases............... 159,001 221,555
Line of credit payable to bank......................... 200,000 200,000
------------- ------------
Total Current Liabilities.......................... 1,489,957 1,980,570
Obligations under capital leases, net of current portion.. 483,578 286,998
Other accrued employee benefits........................... 77,429 121,406
------------- ------------
Total Liabilities.................................. 2,050,964 2,388,974
Shareholders' Equity
Common stock, without par value - 20,000,000 shares
authorized, 5,633,202 and 5,366,381 issued and
outstanding at March 31, 1995 and December 31,
1994, respectively................................... 11,728,301 11,316,671
Accumulated deficit.................................... (7,464,866) (7,416,736)
------------- ------------
Total shareholders' equity........................ 4,263,435 3,899,935
------------- ------------
$ 6,314,399 $ 6,288,909
============= ============
</TABLE>
Notes to Consolidated Financial Statements
3
<PAGE>
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenues
Blood services...................................... $ 925,340 $ 898,892
Blood products...................................... 1,744,260 1,699,300
Specialty plasma.................................... 87,151 47,991
------------ ------------
Total revenues................................. 2,756,751 2,646,183
Cost of sales and services............................. 2,037,513 2,041,735
------------ ------------
Gross profit................................... 719,238 604,448
General and administrative expense..................... 489,912 557,115
Research and development expense....................... 283,632 732,755
Interest (income) expense
Interest income..................................... (14,522) (11,009)
Interest expense.................................... 8,346 11,701
------------ ------------
Net loss....................................... $ (48,130) $ (686,114)
============ ============
Per share amounts:
Net loss............................................ $ (0.01) $ (0.14)
============ ============
Weighted average common shares outstanding............. 5,455,321 4,792,443
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $ (48,130) $ (686,114)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of plant and
equipment........................................ 110,838 114,288
Amortization of intangible assets.................. 17,448 16,045
Provision for losses on accounts receivable........ 15,963 8,296
Issuance of common stock for employee
401(K) plan...................................... 54,668 --
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable........ 270,987 (35,789)
Increase in inventories, supplies and prepaid
expenses........................................ (100,960) (46,480)
Increase in other assets, net..................... (7,380) (56,796)
Increase (decrease) in accounts payable and
accrued expenses................................ (428,059) 112,908
Increase (decrease) in other accrued employee
benefits........................................ (43,977) 18,508
----------- ------------
Net cash used in operating activities............. (158,602) (555,134)
----------- ------------
Cash flows from investing activities:
Acquisition of licenses............................... -- (100,000)
Advance to officer.................................... (11,153) --
Decrease (increase) in short-term investments......... (3,990) 496,802
Purchase of plant and equipment, net.................. (25,051) (84,135)
----------- ------------
Net cash provided by (used in) investing activities... (40,194) 312,667
----------- ------------
Cash flows from financing activities:
Proceeds from issuance of common stock................ 356,962 90,525
Principal payments on line of credit and capital
leases.............................................. (33,300) (61,509)
----------- ------------
Net cash provided by financing activities............. 323,662 29,016
----------- ------------
Increase (decrease) in cash and cash equivalents...... 124,866 (213,451)
Cash and cash equivalents at beginning of period...... 786,334 1,149,917
----------- ------------
Cash and cash equivalents at end of period............ $ 911,200 $ 936,466
=========== ============
Items not impacting cash flows:
Increase in capital lease obligations................. $ 167,325 $ --
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
HEMACARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Basis of Presentation and General Information
- - -------------------------------------------------------
The accompanying unaudited consolidated financial statements of HemaCare
Corporation (the "Company" or "HemaCare") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months
ended March 31, 1995 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1994.
In 1994 and 1995, HemaCare, through its wholly owned subsidiary,
HemaBiologics, Inc. ("HBI") continued to incur significant losses as a result
of the expenditures related to ImmupathTM, an experimental treatment for
HIV/AIDS, and continuing losses from its specialty plasma blood products
business. HemaCare financed the costs associated with the Immupath project
with existing cash reserves, cash from operations and proceeds from sales of
common stock and stock purchase warrants. Beginning in August 1994 and
continuing through the first quarter of 1995, the Company generally suspended
most of the Immupath development efforts and implemented cost reductions
which included closing two donor centers, curtailing staffing and donor
recruiting activities at the remaining locations and suspending the
construction of its plasma processing facility. The Company may enter into a
corporate partnership, sell equity securities or enter into other financing
or corporate transactions in order to obtain the necessary capital to
continue the project. There can be no assurance, however, that any financing
or corporate transaction will occur or that the Company will obtain sufficient
funds to continue the research and development of Immupath or complete its
plasma processing facility. If necessary, because of lack of funding, the
Company may have to abandon the Immupath research project.
Note 2 - License Agreement
- - ---------------------------
Under the terms of a license agreement ("Agreement") with Medicorp Inc.,
("Medicorp") for the rights to the Immupath technology which applies the
principle of passive hyperimmune therapy to treat HIV/AIDS, the Company began
making monthly payments of $25,000 in January 1994 to Medicorp to be credited
against future royalty payments. In accordance with the agreement, $300,000
was paid in 1994. In January 1995, the Company notified Medicorp that it
would no longer be able to make its monthly $25,000 royalty prepayments
because of a lack of funds. The Company and Medicorp are currently
negotiating the terms of a deferral or abeyance of the prepayments. Also, in
March 1995, Medicorp informed the Company that the patent holder for Immupath
has served Medicorp with a claim that Medicorp is in violation of its license
agreement with the patent holder. The Company believes that an agreement it
has with the patent holder whereby the Company's license rights will remain
in effect in the event that the license between the patent holder and
Medicorp is terminated for any reason will preserve the Company's rights
under the U.S. patent.
6
<PAGE>
Note 3 - Line of Credit
- - ------------------------
Since August 1991, the Company has maintained a line of credit with a
commercial bank secured by its accounts receivable, inventory and equipment.
The line is equivalent to 70% of the Company's eligible accounts receivable
under 90 days old, to a maximum of $700,000, with interest at the lender's
prime rate plus one-half of a percentage point, and matures April 30, 1996.
As of March 31, 1995, the Company was in compliance with respect to all
covenants under the line of credit agreement. The Company is required to
maintain $400,000 in cash and/or short-term securities at all times during
the term of the agreement. As of March 31, 1995, $200,000 was outstanding
under the line of credit.
Note 4 - Sale of Equity Securities
- - -----------------------------------
In April 1994, HemaCare sold 250,000 units of common stock and common stock
purchase warrants (at $4.00 per unit) in an offshore transaction from which
it received net proceeds of approximately $900,000. Each unit consisted of
one share of the Company's common stock and three warrants to purchase
additional shares, which become exercisable and expire at intervals through
April 15, 1996. The first group of warrants were exercised in September 1994
and yielded net proceeds of approximately $500,000. The second group of
250,000 warrants was fully exercised in the first quarter of 1995 and yielded
net proceeds of approximately $350,000. In consideration of this exercise,
which was made 45 days prior to the warrant's termination date, a fourth
group of 250,000 warrants was granted to the purchaser in February 1995. The
third group of 250,000 warrants are exercisable from July 1, 1995 (subject
to acceleration if certain conditions are satisfied) and expire April 15,
1996. The fourth group of 250,000 warrants, which will be exercisable only
if the third group has been exercised in full, expire December 31, 1998. The
exercise price of the third group will be determined in part by reference to
the market price of the Company's common stock from time to time, and the
exercise price of the fourth group is fixed at $3.50 per share. In
connection with the offshore transaction and the subsequent exercise of
related warrants, the Company granted to the finder warrants to purchase
37,500 shares of the Company's common stock. The exercise prices of the
warrants range from $1.45 to $4.00, and the warrants expire five years from
the issue date. In addition, the Company agreed to issue to the finder up to
25,000 additional warrants. The exercise price and the number of additional
warrants to be granted is dependent upon the number and price of warrants to
be exercised in related offshore transactions.
Note 5 - Contingencies
- - -----------------------
On March 11, 1994, the Company was served with a lawsuit filed by a former
employee against the Company and its wholly owned subsidiary, HBI, in the
Superior Court of the State of California, related to the termination of this
employee and seeking relief in excess of $350,000. At this stage in the
proceedings, neither management nor counsel are in a position to evaluate the
probable merits of the claim asserted by this former employee.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
All comparisons within the following discussions are to the
previous year.
REVENUES
Revenues for the three months ended March 31, 1995, increased 4%
($111,000) primarily because the first quarter of 1994 reflected
the lowest volumes of therapeutic hemapheresis procedures and
sales of platelets for the year. The net increase was the result
of increases in all of the Company's businesses except sales of
allogeneic blood products, which decreased 10% ($70,000).
Blood Services (therapeutic hemapheresis-TH) revenue increased
3% ($26,000) for the three months ended March 31, 1995, primarily
as a result of a 12% increase in procedures performed. The
revenue per unit decreased 8%, however, because of a change in
mix of the diagnoses for which the procedure was used for the
quarters being compared. The choice of TH rather than an
alternative treatment for a particular diagnosis often depends on
general acceptance by the medical community. The fact that
particular diseases are being treated with TH over a short term
basis such as a quarter or even from one year to the next is not
necessarily significant to the business. However, because of the
large market share of TH business in southern California enjoyed
by HemaCare, management expects that unless there are additional
medical applications approved for TH or other significant
changes in market factors, future TH revenues will remain flat or
decline.
Blood Products (plateletpheresis and allogeneic) revenue
increased 3% ($45,000) for the first quarter of 1995. Sales of
plateletpheresis products, which are manufactured by the Company,
increased 12% ($116,000) as a result of a 9% increase in units
sold and a 2% overall increase in price per unit. Revenues from
sales of allogeneic products, which are distributed by the
Company, decreased 10% ($70,000), reflecting both a 13% decrease
in units sold and an offsetting 4% increase in the price per
unit. Allogeneic sales for the first quarter of 1994 were
unusually high, averaging 8% more than the remaining three
quarters. Management believes that sales of platelet products
will be flat in the southern California market, and although it
expects demand to increase, sales of allogeneic products may also
be flat because the Company may not be able to obtain products
for its customers at an attractive price due to the overall blood
shortage in the U.S.
Revenues from the Company's specialty plasma operation increased
because of several spot sales of product. (See "Gross Profit and
Expenses" for a discussion of the Company's plans for this
operation).
GROSS PROFIT AND EXPENSES
Gross profit as a percentage of sales increased from 23% in 1994,
to 26% in 1995 primarily because of the decrease in losses from
the Company's specialty plasma business resulting from the
closing of two centers, Torrance and West Hollywood, and scaling
back operations at its two remaining centers, San Diego and San
Francisco.
In May 1995, the Company began operating its Georgia TH business
on a shared basis with an unaffiliated blood services company in
a similar, but non-competing business. Management believes that
the Georgia business can operate at least at break-even under
this arrangement.
8
<PAGE>
General and administrative expenses were 12% ($67,000) lower for
the first quarter of 1995. The decrease in expense reflects
management's continuing control over corporate spending,
including staffing reductions, and is expected to continue for
the remainder of the year.
The Company incurred research and development expenses of
$284,000 for the first quarter of 1995 compared to $783,000 for
the first quarter of 1994. In order to conserve cash and because
of a lack of funding necessary to continue development of
Immupath, beginning in the third quarter of 1994 and continuing
into 1995, certain non-essential activities were eliminated or
decreased, including reducing staff, closing donor centers and
curtailing activities of the plasma processing facility. In
January 1995, the Company decided to focus its efforts on the
intended commercial form of Immupath, a multi-step fractionated
intravenous immunoglobulin (IVIG) preparation consisting of the
same neutralizing antibodies as the first generation whole plasma
product. The next step for the development of the IVIG version
of Immupath is to conduct preclinical animal toxicology, viral
inactivation and product characterization testing. Assuming
satisfactory results of these tests, the next step would be to
file an IND for Phase I testing of the product in a small scale
clinical trial. At this time, the Company is unable to proceed
with the preclinical and Phase I testing because of a lack of
funds to continue the project. (See "Liquidity and Capital
Resources" below). The Company's current activities related to
Immupath consist of maintaining the unfinished plasma processing
facility, retaining the donated anti-HIV plasma (of which the
Company believes it has sufficient supply to conduct future
clinical trials) and continuing to treat the remaining patients
from the Phase I/II clinical trial and following their progress
on a monthly basis. Also, in January 1995, the Company notified
Medicorp, the company with which it has a license agreement for
the U.S. patent for Immupath, that it would no longer be able to
make its monthly $25,000 royalty prepayments because of a lack of
funds. The Company and Medicorp are currently negotiating the
terms of a deferral or abeyance of the prepayments. Also, in
March 1995, Medicorp informed the Company that the patent holder
for Immupath has served Medicorp with a claim that Medicorp is in
violation of its license agreement with the patent holder. The
Company believes that an agreement it has with the patent holder
whereby the Company's license rights remain in effect in the
event that the license between the patent holder and Medicorp is
terminated for any reason will preserve the Company's rights
under the U.S. patent.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had cash and short-term
investments of $1,211,000. In April 1994, the Company completed
a private placement of 250,000 units, consisting of 250,000
shares of common stock and 750,000 warrants for net proceeds of
approximately $900,000. The warrants consisted of three groups
of 250,000 each, the first of which was exercised in full on
September 29, 1994 for net proceeds of approximately $500,000.
The second group of 250,000 warrants was fully exercised in the
first quarter of 1995 and yielded net proceeds of approximately
$350,000. In connection with this exercise, a fourth group of
250,000 warrants was granted to the purchaser in 1995. The third
group of 250,000 warrants are exercisable from July 1, 1995
(subject to acceleration if certain conditions are satisfied) and
expire April 15, 1996. The fourth group of 250,000 warrants,
which will be exercisable only if the third group has been
exercised in full, expire December 31, 1998. If the warrants are
exercised, the resulting proceeds will provide the Company with
additional funding. The Company's $700,000 line of credit with
its commercial bank is in effect until April 30, 1996, with a
provision that the Company maintain cash and/or short-term
security balances of at least $400,000 (excluding borrowings) at
all times, which it has done. At March 31, 1995, $200,000 was
outstanding on the line of credit.
9
<PAGE>
At March 31, 1995, the Company had working capital of
approximately $1,795,000. The Company's core blood products and
services businesses are profitable and cash flow positive. In
addition, the Company has taken the steps described above to
reduce expenses related to the Immupath research project to the
current level of approximately $70,000 per month and to seek to
operate the Georgia TH operation and the specialty plasma
operation at least on a break even basis. The Company
anticipates that positive cash flow from its operations, its cash
and investments on hand and its ability to terminate completely
the Immupath project, if necessary, will be sufficient to meet
its working capital requirements for the next 12 months.
Management believes that growth of the Company's blood products
and services businesses in southern California is constrained
because of its already high market share, the state of the local
economy and the continuing downward pressure on health care
utilization. The Company believes that the current healthcare
environment in the U.S., which is focused to a great extent on
more efficient delivery systems largely through consolidation of
providers, presents a timely opportunity for a national expansion
of its core blood products and services businesses together with
the addition of other blood related businesses. However, the
Company lacks sufficient capital to finance other expansions into
new businesses or new locations at this time. The Company,
together with its financial advisor, is currently discussing
various business arrangements with potential corporate partners
and other sources of capital in order to fund its proposed
expansion. There can be no assurance that the Company will be
able to obtain the funds necessary to finance the proposed
expansion.
In addition, the Company is continuing to seek funding to conduct
the preclinical testing and proposed Phase I trials of IVIG
Immupath and is currently in discussions with several potential
sources of capital. The total amount of funding required is
dependent upon the results of the various steps in the clinical
trials processes, the scope of the studies and the capital
requirements for its plasma processing facility. The Company may
enter into a corporate partnership, sell equity securities or
enter into other financing or corporate transactions in order to
obtain the necessary capital. There can be no assurance,
however, that any financing or corporate transaction will occur
or that the Company will obtain sufficient funds to continue the
research and development of Immupath or complete its plasma
processing facility. If necessary, because of lack of funding,
the Company may have to abandon the Immupath research project.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See disclosure in Form 10-K for the year ended December 31, 1994.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
4.1 Amendment to Warrant Agreement between the Registrant and
Torrey Pines Securities dated April 3, 1995.
10.1 Revolving Credit Agreement between the Registrant and Bank
Leumi Le-Israel, B.M. dated April 30, 1995 and related
security agreements.
10
<PAGE>
27 Financial data schedule for the quarter ending March
31, 1995.
b. The Company did not file any reports on Form 8-K during the
three months ended March 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date May 9, 1995 HEMACARE CORPORATION
---------------------- -------------------------------
(Registrant)
\s\ Devra G. Shapiro
--------------------------------
Devra G. Shapiro, Vice President,
Finance and Chief Financial Officer
11
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT METHOD OF FILING
- - ------- -----------------------------
<S> <C> <C>
4.1 Amendment to Warrant Agreement between the Registrant
and Torrey Pines Securities, Inc., dated April
3, 1995................................................... Filed herewith electronically
10.1 Revolving Credit Agreement between the Registrant and
Bank Leumi Le-Israel, B.M. dated April 30, 1995........... Filed herewith electronically
27 Financial Data Schedule for the quarter ending March
31, 1995.................................................. Filed herewith electronically
</TABLE>
EXHIBIT 4.1
AMENDMENT TO
WARRANT AGREEMENT
---------------------
THIS AMENDMENT TO WARRANT AGREEMENT, dated as of April 3,
1995, amends that certain Warrant Agreement, dated as of April 8,
1994 (the "Agreement"), made and entered into by and between
HEMACARE CORPORATION, a California corporation (the "Company")
and TORREY PINES SECURITIES, INC., a California corporation (the
"Warrantholder"). All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, pursuant to the Agreement, the Company has agreed
to issue and grant the Warrantholder up to 50,000 Warrants, each
Warrant entitling the Warrantholder to purchase one Share of the
Company's Common Stock as partial consideration for the
Warrantholder's services as a finder in connection with the
issuance and sale to Tesoma Overseas, Inc., a corporation
organized under the laws of the British Virgin Islands
("Tesoma"), of 250,000 Units, each Unit to consist of one share
of Common Stock, one Class A Warrant, one Class B Warrant and one
Class C Warrant, each such warrant entitling its holder to
purchase one share of Common Stock;
WHEREAS, pursuant to an Offshore Warrant Agreement, dated as
of February 9, 1995, between the Company and Tesoma, the Company
issued Tesoma a Class D Warrant entitling the holder to purchase
250,000 shares of Common Stock; and
WHEREAS, pursuant to that certain Non-Circumvention and
Finder's Fee Agreement, dated March 8, 1994, and amended March
31, 1994, Warrantholder is entitled to receive up to 12,500
additional Warrants upon exercise of the Class D Warrant.
NOW, THEREFORE, the Company and the Warrantholder, for value
received, hereby agree to amend the Agreement as follows:
1. The term "Transaction Warrant" shall also mean the
Class D Warrants and the term "Transaction Warrants" shall
include the Class D Warrants.
2. The term "Transaction Shares" shall also mean the
shares of Common Stock issuable upon exercise of the Class D
Warrant.
3. Section 1.1 of the Agreement is amended to delete the
number "50,000" and substitute in its place the number "62,500."
4. Except as expressly amended hereby, the terms of the
Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment
to Warrant Agreement to be duly executed, all as of the day and
year first above written.
HEMACARE CORPORATION
By /s/ Hal I. Lieberman
------------------------------
Hal I. Lieberman, President
ATTEST:
/s/ Thomas M. Asher
- - ------------------------------
Thomas M. Asher, Secretary
TORREY PINES SECURITIES, INC.
By /s/ Jack Smith
----------------------------
Jack Smith, President
EXHIBIT 10.1
BANK LEUMI LE ISRAEL, B.M. REVOLVING CREDIT AGREEMENT
CALIFORNIA
OFFICER NO./ INTEREST CREDIT AGR. MATURITY CUSTOMER ACCOUNT
INITIALS RATE LIMIT DATE DATE NUMBER NUMBER
- - -----------------------------------------------------------------
RXB 4/30/95
NOTICE: THIS AGREEMENT CONTAINS A WAIVER OF TRIAL BY JURY
THIS AGREEMENT is entered into on this 30th day of April, 1995,
by and between HEMACARE CORPORATION a CALIFORNIA corporation
("Debtor"), and BANK LEUMI LE ISRAEL, B.M. ("Lender").
1. CERTAIN DEFINITIONS AND INDEX TO DEFINITIONS:
A. Accounting Terms. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting
principles and practices consistently applied.
B. Definitions. As used herein, and unless otherwise
defined herein, the following terms shall have the following
respective meanings except as the context shall otherwise
require:
"Acceptance" shall mean an acceptance created from a draft
drawn upon Lender by Debtor.
"Account Debtor" shall mean the Account Debtor on any
Account Receivable.
"Account Receivable" shall mean an account arising in the
ordinary course of Debtor's business from the performance of
service or sale of goods.
"Advance" -- See paragraph 2.
"Agreement" means this Revolving Credit Agreement.
"Borrowing Base" -- See paragraph 2(A).
"Collateral" shall mean all personal property described in
the annexed "Schedule of Collateral."
"Credit Accommodation" shall refer to any extension of
credit by Lender to Debtor hereunder, including the issuance by
Lender of Letters of Credit or the making of any loan.
"Debtor's Account" shall mean any general deposit account of
Debtor maintained with Lender at its office located at 16530
Ventura Blvd., Encino, CA 91436.
"Documents" shall include this Agreement, any riders,
supplements and amendments thereto, mortgages, security
agreements, assignments, pledges, subordination agreements or
guaranties delivered in connection with this Agreement and all
other documents or instruments heretofore, now or hereafter
executed, pursuant to this Agreement, or any of the aforesaid
Documents.
"Eligible Account" shall mean an Account Receivable
excluding:
(1) Accounts Receivable which remain uncollected more than
90 days from invoice date ("Delinquent Accounts");
(2) Accounts Receivable due from an Account Debtor which has
suffered a business failure or the termination of its existence,
or as to which a dissolution, insolvency or bankruptcy proceeding
has been commenced, any assignment for the benefit of
Subordinating Creditors has been made or a trustee, receiver or
conservator has been appointed for all or any part of the
property of such Account Debtor;
(3) Accounts Receivable due from an Account Debtor
affiliated with Debtor in any manner including without
limitation, as stockholder, owner, officer, director, agent or
employee;
(4) Accounts Receivable with respect to which payment is or
may be conditional;
(5) Accounts Receivable due from an Account Debtor who is
not a resident or citizen of, located in, or subject to service
of process in, the United States of America;
(6) Accounts Receivable due from an Account Debtor who is
any national, federal or state government, including, without
limitation, any instrumentality, division, agency, body or
department thereof;
(7) Accounts Receivable commonly known as "bill and Hold" or
a similar arrangement;
(8) Accounts Receivable due from an Account Debtor as to
which 25.000% or more of the aggregate dollar amount of all
outstanding Accounts Receivable owing from such Account Debtor
are Delinquent Accounts;
(9) That portion of Accounts Receivable due from an Account
Debtor which are in excess of 10.000% of the Debtor's aggregate
dollar amount of all outstanding Accounts Receivable;
(10) Accounts Receivable as to which Debtor is or may become
liable to the Account Debtor for services rendered or sales made
or for any other reason, except to the extent that such Accounts
Receivable exceed the amount of such liability;
(11) Accounts Receivable which are not free of all liens,
encumbrances, charges, rights and interest of any kind, except in
favor of Lender;
(12) Accounts Receivable which are supported or represented
by a promissory note, post-dated check or letter of credit unless
such instrument is actually delivered to Lender;
(13) Accounts Receivable which are unsuitable as collateral,
as determined by Lender in the exercise of its reasonable sole
discretion.
"Eligible Inventory shall mean inventory of Debtor consisting of
- - -----N/A----- held for sale or lease in the ordinary course of
Debtor's business (1) in which Lender has a first, perfected
security interest and which inventory is not subject to a
security interest, lien, or other encumbrance in favor of any
other Person, (2) which inventory is now and at all times shall
be inventory of good and merchantable quality free from defects,
and (3) which inventory is otherwise acceptable to Lender at its
sole discretion.
"Events of Default" -- See paragraph 9.
"Guarantor" ------N/A-----, together with any other
entities which may in the future guaranty the obligations of
Debtor hereunder HEMACARE CORPORATION or any other entity which
guarantees the obligations of Debtor set forth herein.
"Guaranty" -- A continuing guaranty in a form acceptable to
Lender.
"Indebtedness" of any Person shall mean all items of
indebtedness which, in accordance with generally accepted
accounting principles and practices, would be deemed a liability
of such Person as of the date as of which indebtedness is to be
determined and shall also include all indebtedness and
liabilities of others assumed or guaranteed by such Person or in
respect of which such Person is secondarily or contingently
liable (other than by endorsement of instruments in the course of
collection) whether by reason of any agreement to acquire such
indebtedness, to supply or advance sums, or otherwise.
"Interest Rate" shall mean ONE HALF percent (0.500%) per
annum in excess of the rate which Lender publicly announces from
time to time at its offices as its "designated rate" with the
understanding that said designated rate is one of its base rates
and serves as a basis upon which effective rates of interest are
calculated for loans making reference thereto and may not be the
lowest of the base rates offered by Lender. Any change in the
Interest Rate shall be effective as of the date of any change in
such designated rate.
"Lending Office" shall refer to Lender's office at 16530
VENTURA BLVD., ENCINO, CA 91436.
"Letter of Credit" shall mean a commercial or standby letter
of credit issued by Lender for the account of Debtor.
"Maximum Credit Amount" shall be $700,000.
"Minimum Monthly Charge" shall be, for any month, the amount
by which the interest paid by Debtor to Lender hereunder is less
than $0.00.
"Net Face Amount" shall mean, with respect to an Account
Receivable, the gross face amount of such Account less all trade
discounts or other deductions to which the Account Debtor is
entitled.
"Obligations" shall mean and include all loans, advances,
debts, liabilities, obligations, letters of credit, or acceptance
transactions, trust receipt transactions, or any other financial
accommodations, owing by Debtor to Lender of every kind and
description (whether or not evidenced by any note or other
instrument and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now
existing or arising hereafter including, without limitation, all
interest, fees, charges, expenses, attorneys' fees, and
accountants' fees chargeable to Debtor or incurred by Lender in
connection with its dealings with Debtor.
"Outstanding Balance" shall mean the aggregate amount of any
and all advances and expenditures to or on behalf of Debtor
whenever made and any and all other expenditures pursuant to this
Agreement outstanding at any one time, including the aggregate
outstanding face amount of all, if any, Letters of Credit and
Acceptances and the aggregate amount paid by Lender pursuant to
Letters of Credit and Acceptances for which Lender has not been
reimbursed by Debtor.
"Person" shall mean any entity, government, governmental
agency or any other entity and whether acting in an individual,
fiduciary or other capacity.
"Revolving Credit" means the revolving advance facility
described in Section 2(a) of this Agreement.
"Security Agreement" - A security agreement, in form and
substance satisfactory to Lender, granting Lender a security
interest in the Collateral.
"Subordinating Credit" - --N/A---.
"Subordination Agreement" - A subordination agreement in a
form acceptable to Lender.
"Termination Date" means the earlier of APRIL 30, 1996 or
the date on which the Lender elects to terminate this Agreement
pursuant to the terms herein.
2. ADVANCES
A. Borrowing Base. Subject to the terms and conditions of
this Agreement, from the date on which this Agreement becomes
effective until termination, Lender, upon the request of Debtor,
shall from time to time advance to Debtor:
(1) SEVENTY percent (70.000%) of the Net Face Amount of
Debtor's Eligible Accounts, but such advances shall not exceed
$700,000.00 outstanding at any one time.
(2) ---N/A---- percent (0.000%) of the value (determined at the
lower of cost or market) of the Eligible Inventory, but such
advances shall not exceed $0.00 outstanding at any one time.
The aggregate amount available under paragraphs (1) and (2)
shall be the "Borrowing Base."
B. General. All advances by Lender may be made by
crediting the Debtor's Account.
C. Maximum Credit Amount. Despite the foregoing and
notwithstanding the nature or amount of the Collateral, the
Outstanding Balance shall not exceed at any one time the Maximum
Credit Amount.
D. Authorization for Advances. Lender is authorized to
make advances under this Agreement: (1) upon telephonic or other
instructions received from anyone purporting to be an officer,
employee or representative of Debtor; or (2) at the sole
discretion of Lender, and notwithstanding any other provision in
this Agreement, if necessary to meet any Obligations, including
but not limited to any interest not paid when due.
E. Letters of Credit and Acceptances. At the request of
Debtor, Lender may, subject to the terms and conditions of this
Agreement and such additional terms and conditions as Lender may
then require, issue Letters of Credit or create Acceptances, but
the aggregate outstanding face amount of such Letters of Credit
shall not exceed $0.00 at any one time, and the aggregate amount
paid by Lender pursuant to such Letters of Credit for which
Lender has not been reimbursed shall not exceed $0.00 at any one
time.
3. SECURITY FOR OBLIGATIONS; GUARANTY; SUBORDINATION AGREEMENT
A. Security Agreement. As security for the Obligations,
Debtor agrees to execute and deliver to Lender Security
Agreements.
B. Guaranty Agreement. As an additional inducement to
Lender to execute this Agreement, Debtor agrees to cause each
Guarantor to execute and deliver to Lender a Guaranty.
C. Subordination Agreement. As an additional inducement
to Lender to execute this Agreement, Debtor agrees to cause each
Subordinating Creditor to execute and deliver to Lender a
Subordination Agreement.
D. Further Documents. Debtor agrees to execute and
deliver to Lender, from time to time, such documents which are in
Lender's reasonable judgement necessary to obtain for Lender the
benefit of the Collateral or the Security Agreement.
4. PAYMENTS BY DEBTOR.
A. General. All payments hereunder shall be made by
Debtor to Lender at the Lending Office, or at such other place as
Lender may designate in writing.
B. Payments
(1) Debtor shall have the right to make payment at any time
in reduction of the Outstanding Balance, provided, however, any
such payment shall be applied first to past-due interest and
other charges due from Debtor to Lender, irrespective of any
contrary instructions of the Debtor. Any amount so repaid shall
become available for future advances subject to the terms and
conditions of this Agreement.
(2) Debtor shall promptly make payment, from time to time,
without demand or notice, in reduction of the outstanding
Balance, in the amount by which the Outstanding Balance exceeds
the lesser of (i) the Maximum Credit Amount or (ii) the Borrowing
Base.
(3) Upon the Termination Date, the entire Outstanding
Balance shall be due and payable without demand or notice.
C. Interest Payments. Lender is authorized to debit
Debtor's Account on the 30TH day of each month for interest
accrued on the daily Outstanding Balance (including the aggregate
amount advanced against, but excluding the aggregate outstanding
face amounts of, any Letters of Credit and Acceptances) during
the preceding month at the Interest Rate; provided, however, that
the interest rate for any Obligations not paid when due (whether
by acceleration or otherwise, and before as well as after
judgement) shall be the Interest Rate plus 3.000 percent.
Interest shall be computed on the basis of a 360-day year for
actual days elapsed. For the purposes of this calculation,
payments shall be credited to principal THE SAME day after
receipt by Lender.
D. Minimum Monthly Charges. Lender shall debit the
Minimum Monthly Charge to Debtor's Account as of the first day of
each month from the date hereof until the date on which all
Obligations have been fully repaid (whether or not this agreement
has heretofore been terminated), with respect to transactions for
the immediately preceding month.
5. CONDITIONS PRECEDENT.
A. First Credit Accommodation. As conditions precedent to
Lender's obligation to make the first Credit Accommodation
available to Debtor:
(1) Debtor shall deliver, or cause to be delivered, to
Lender:
(a) A duly executed copy of this Agreement;
(b) The Security Agreements and such other documents
as Lender may require to perfect Lender's security interest in
the Collateral;
(c) Duly executed Guaranties;
(d) Duly executed Subordination Agreements;
(e) A listing of all Account Debtors' names and
addresses;
(f) A listing of all locations where Debtor maintains
or expects to maintain inventory;
(g) Irrevocable instructions, in the form of Exhibit
- - ---N/A---- hereto, to Debtor's outside auditors, that said auditors are
to send to Lender copies of all financial statements (whether
preliminary or final), and reports which are prepared as a result
of any audit or other review of the operations, finances or
internal controls of Debtor, specifically including any reports
dealing with improper accounting practices, defalcations,
financial reporting errors or misstatements or fraud.
(2) All acts, conditions, and things (including, without
limitation, the obtaining of any necessary regulatory approvals
and the making of any required filings, recordings or
registrations) required to be done and performed and to have
happened prior to the execution, delivery and performance of the
Documents to constitute the same legal, valid and binding
obligations of Debtor, enforceable in accordance with their
respective terms, shall have been done and performed and shall
have happened in compliance with all applicable laws.
B. All Credit Accommodations. As conditions precedent to
Lender's obligation to make any Credit Accommodation available to
Debtor, including the first Credit Accommodation, on the date
such Credit Accommodation is requested, all representations and
warranties of Debtor to Lender set forth herein or in any of the
Documents shall be accurate and complete in all respects.
By making a request for a Credit Accommodation, Debtor
represents and warrants the accuracy of the matters set forth in
paragraph (b) above on and as of the date of such request.
6. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Debtor represents
and warrants to Lender as follows:
A. Capacity. Debtor is duly organized, validly existing,
and in good standing under the laws of the State of CALIFORNIA,
and is authorized to do business in the jurisdictions in which
its ownership of property or conduct of business legally requires
such authorization, and has full power, authority, and legal
right to own its properties and assets and to conduct its
business as presently conducted or proposed to be conducted.
B. Authority. Debtor has full power, authority and legal
right to execute and deliver, and to perform and observe the
provisions of the Documents to be executed by Debtor. The
execution, delivery and performance of such Documents have been
duly authorized by all necessary action, and when duly executed
and delivered, will be legal, valid, and binding obligations of
Debtor enforceable in accordance with their respective terms.
C. Compliance. The execution and delivery of the
Documents and compliance with their terms will not result in a
breach of any of the terms or conditions of, or result in the
imposition of any lien, charge, or encumbrance upon any
properties of Debtor pursuant to, or constitute a default (with
due notice or lapse of time or both) or result in an occurrence
of an event pursuant to which any holder or holders of
Indebtedness may declare the same due and payable.
D. Financial Statements. Debtor has furnished Lender with
its balance sheet as of DECEMBER 31, 1994 (the "Statement Date"),
and related statements of income and retained earnings for the
TWELVE (12) month period ending on the Statement Date. Such
balance sheet and statements are correct and complete and fairly
present the financial condition and results of operations of
Debtor for such fiscal period.
E. Material Adverse Events. Since the Statement Date,
neither the business, properties, nor financial condition of
Debtor has been materially and adversely affected in any way.
F. Litigation. Except as heretofore disclosed by Debtor
to Lender in writing, there are no actions or proceedings
pending, or to the knowledge of Debtor threatened, against or
affecting Debtor or any Guarantor which, if adversely determined,
could have a material adverse effect on the Debtor. Debtor is
not in default with respect to any applicable laws or regulations
which affect the operations or financial condition of Debtor, nor
is it in default with respect to any other writ, injunction,
demand, or decree or in default under any indenture, agreement
or other instrument to which Debtor is a party or by which Debtor
may be bound.
G. Taxes. Debtor has filed or caused to be filed all tax
returns which are required to be filed by it. Debtor has paid,
or made provision for the payment of, all taxes which have or may
have become due pursuant to said returns or otherwise or pursuant
to an assessment received by Debtor, except such taxes, if any,
as are being contested in good faith and as to which adequate
reserves have been provided. The charges, accruals, and reserves
in respect of income taxes on the books of Debtor are adequate.
Debtor knows of no proposed material tax assessment against it
and no extension of time for the assessment of federal, state, or
local taxes of Debtor is in effect or has been requested, except
as disclosed in the financial statements furnished by Lender.
H. Priority Interest. Immediately following the first
Credit Accommodation hereunder, no Person other than Lender has
(or, in the case of after-acquired Collateral, at the time Debtor
acquires rights therein, will have) any interest (by way of
security interest, other lien or charge, or otherwise) in the
Collateral.
I. Accurate Information. All information supplied to
Lender by or on behalf of Debtor is and shall be true and
correct.
J. Location of Inventory. Exhibit "C" represents a true
and complete list of all locations where debtor maintains or
expects to maintain inventory.
K. Corporate Guarantors' Relationship with Debtor. With
respect to any Guarantors which are corporations, their
relationship with the Debtor, insofar as stock ownership is
concerned is: N/A.
7. AFFIRMATIVE COVENANTS OF THE DEBTOR. Until payment in full
of the Obligations, Debtor agrees that:
A. Financial Statements, Reports and Certifications.
Debtor will furnish to Lender, in form and substance satisfactory
to Lender:
(1) As soon as possible after the end of each fiscal
year of Debtor, and in any event within 90 days thereafter, (i) a
complete copy of its financial statements which shall include the
management letter, if any, the balance sheet of Debtor as of the
close of the fiscal year, an income statement for such year,
together with a statement of cash flows, CERTIFIED by certified
public accountants selected by Debtor and satisfactory to Lender,
and (ii) a statement certified by the chief financial officer of
Debtor that Debtor is in compliance with all the terms,
conditions, covenants and warranties of this Agreement;
(2) No later than 45 days after the close of each
QUARTER (an "Accounting Period"), Debtor's balance sheet as of
the close of such Accounting Period and its income statement for
the portion of the then current fiscal year through the end of
such Accounting Period certified as being complete, correct, and
fairly representing its financial condition and results of
operations by the chief financial officer of Debtor;
(3) A listing of all inventory (and any other
component of the Collateral as Lender shall specify) wherever
located, based upon a physical count taken by Debtor every ---N/A---
months and whenever requested by Lender;
(4) Within fifteen (15) days after the end of each month
and whenever requested by Lender, certified as accurate by an
officer of the Debtor:
(a) A detailed aged trial balance of Accounts
Receivable; and
(b) A detailed trial balance of accounts payable; and
(c) A collateral schedule (the "Collateral Schedule");
(5) Within 10 days after the end of each month, or more
frequently if requested by Lender, a listing shall be certified
as accurate by the Chief Financial Officer of the Debtor; and
(6) Such other information concerning the Collateral as
Lender may reasonably request.
B. Other Information. Debtor will (1) maintain accurate
books and records concerning its business, (2) upon request,
furnish to Lender such information, statements, lists of property
and accounts, budgets, forecasts, or reports as Lender may
reasonably request with respect to the business, affairs, and
financial condition of Debtor, and (3) permit Lender or
representatives thereof, without notice to Debtor, to inspect the
properties of Debtor and to inspect, audit, examine, make copies
of, and make extracts from the books or accounts of Debtor.
C. Expenses. Debtor will pay all reasonable out-of-pocket
expenses of Lender (including, but not limited to, fees and
disbursements of Lender's counsel) incident to (1) preparation
and negotiation of Documents and any amendments, extensions and
renewal thereof, (2) the protection of the rights of Lender under
the Documents, or 93) defense by Lender against all claims
against Lender relating to any of its acts of commission or
omission directly or indirectly relating to the Documents, all
whether by judicial proceedings or otherwise. Debtor will also
pay and save Lender harmless from any and all liability with
respect to any stamp or other taxes (other than transfer or
income taxes) which may be determined to be payable in connection
with the making of the Documents or any action of Lender with
respect to the Collateral, including, without limitation,
transfer of the Collateral to Lender's name or that of its
nominee or the purchaser at a foreclosure sale.
D. Taxes and Expenses Regarding Debtor's Property. Debtor
shall make timely payment or deposit of all federal, state and
local taxes, assessments or contributions required of it. If
Debtor fails to make an such payment or deposit or furnish the
required proof, Lender may, in its sole discretion and without
notice to Debtor, (1) make payment of the same or part thereof,
or (2) set up such reserves in Debtor's Account as Lender deems
necessary to satisfy the liability therefore, or both. Lender
may conclusively rely on the usual statements of the amount owing
or other official statements issued by the appropriate
governmental agency. Any payment made by Lender shall not
constitute (1) an agreement by it to make similar payments in the
future, or (2) a waiver by the Lender of a default under the
Documents. Lender need not inquire as to, or contest the
validity of, any expense, tax, security interest, encumbrance or
lien, and the receipt of the usual official notice requiring the
payment thereof shall be conclusive evidence that the same was
validly due and owing.
E. Notice of Events. Debtor will at once give Lender
written notice of any Event of Default or any event which with
the giving of notice or passage of time, or both, would become an
Event of Default.
F. Notice of Litigation. Debtor will promptly give notice
to Lender in writing of any proceedings against Debtor involving
amounts in excess of $25,000.00 not fully covered by insurance,
any substantial claim or dispute which may exist between Debtor
and any Person, any labor controversy resulting in or threatening
to result in a strike against Debtor, or any proposal by any
public authority to acquire a material portion of the assets or
business of Debtor.
G. Evidence of Ownership. Debtor shall deliver to Lender
at any time or times, upon request of Lender, all invoices, bills
of sale, or other documents, satisfactory to Lender, in its sole
discretion, to evidence Debtor's ownership of any and all
Collateral.
H. Cooperation. Debtor will execute and deliver to Lender
any and all documents, and do or cause to be done any and all
other acts reasonably deemed necessary or desirable by Lender, in
its sole discretion, to effect the provisions and purposes of
this Agreement.
I. Notice of Uninsured Loss. Debtor shall given Lender
written notice of any uninsured loss in excess of $25,000.00 in
each instance.
J. Location of Collateral. Debtor will give Lender
written notice immediately upon forming an intention to change
the location of its chief place of business or any of the
Collateral.
K. Guarantors' Financial Statements. Debtor will cause
each Guarantor to furnish to Lender, by ---N/A---- of each year, such
Guarantor's financial statements and federal and state income tax
returns for the preceding fiscal year.
L. Notice to Guarantors and Subordinating Creditors.
Debtor agrees that Lender shall have the right at any time to
give any Guarantor or Subordinating Creditor notice of any fact
or event relating to this Agreement as Lender may deem necessary
or desirable in Lender's sole discretion, including, without
limitation, Debtor's financial condition. Debtor shall provide
to each Guarantor and Subordinating Creditor a copy of each
notice, statement or report required to be given to Lender under
any of the paragraphs of this section.
M. Notice to Lender or Perceived Breach. Debtor shall
give Lender written notice, within ten days of Debtor becoming
aware thereof, of the occurrence of any action or inaction of
Lender which Debtor believes may (1) be actionable against Lender
or (2) give rise to a defense to payment hereunder for any
reason, including without limitation, commission of a tort or
violation of any contractual duty or duty implied at law. Debtor
agrees that unless such notice is given, Debtor shall waive any
such claim or defense.
8. NEGATIVE COVENANTS OF THE DEBTOR. Until payment in
full of the Obligations, without the prior written consent of
Lender, Debtor will not:
A. Collateral. Except in the ordinary course of business
(1) waive, amend, or vary the terms of any Account Receivable, or
2) waive or consent to a postponement or other than strict
compliance on the part of any Account Debtor.
B. Liens. Suffer to exist any lien of any kind upon any
of its assets, whether now owned or hereafter acquired, except in
favor of Lender.
C. Sale of Assets. Sell, abandon, or otherwise dispose of
its assets except in the ordinary course of business.
D. Consolidation, Merger, etc. Consolidate with, merge
into, or sell (whether in one transaction or in a series of
transactions) all or substantially all of its assets to any
Person.
E. No Indebtedness. Create, incur, assume, suffer to
exist, or otherwise become or be liable in respect of any
indebtedness in excess in the aggregate of $250,000.00 other than
to Lender, except (a) trade debts incurred in the ordinary course
of business, or (b) indebtedness which is fully subordinated to
the Obligations.
F. Capital Expenditures. Directly or indirectly make,
assume, or incur any obligations for capital expenditures in any
twelve month period in the aggregate exceeding $2,000,000.00.
G. Lease Obligations. Directly or indirectly incur,
assume, guarantee, or have outstanding any indebtedness under a
lease (including rent and other periodic payments in respect of
any capitalized lease obligations) payable in any fiscal year in
the aggregate exceeding $1,100,000.00.
H. Compensation, Salary, etc. Pay aggregate compensation,
including salaries, withdrawals, fees, bonuses, commissions,
drawing accounts, and other payments, whether directly or
indirectly, in money or otherwise, to all of Debtor's executives,
officers, directors and stockholders in an aggregate amount in
excess of $0.00 for any fiscal year, as more fully set forth in
detail in Exhibit ---N/A---.
I. Financial Covenants. SEE ADDENDUM ATTACHED HERETO.
(1) Permits its consolidated Tangible Net Worth at any time
to be less than $2,250,000.00*; or
* until December 31, 1995 at which time it will change to
$2,500,000.00
(2) Permit the excess of its current assets (less prepaid
expenses) over its current liabilities at any time to be less
than $750,000.00; or
(3) Permit the ratio of its current assets (less prepaid
expenses) to current liabilities at any time to be less than 1.20
to 1; or
(4) Permit the ratio of its aggregate debt to tangible net
worth at any time to be greater than 1.20 to 1.
(5) Minimum unencumbered cash and securities excluding Bank
advances of $400,000.00.
J. Borrowing Base. Permit the Outstanding Balance, at the
time of preparation or delivery of a Collateral Schedule or at
any other time, to exceed the lessor of (i) the Maximum Credit
Amount or (ii) the Borrowing Base.
K. Transactions with Affiliates. Enter into any
transaction with any Person affiliated with Debtor on terms less
favorable to Debtor than at the time available to Debtor from any
Person not affiliated with Debtor.
9. EVENTS OF DEFAULT; REMEDIES. If one or more of the
following events shall occur ("Events of Default" or an "Event of
Default"):
A. Debtor shall default in the payment of the Obligations
when due, whether at maturity, upon acceleration, or otherwise;
B. Debtor shall be in default with respect to the
Documents;
C. Debtor or any Guarantor shall (i) fail to pay any
Indebtedness for borrowed funds when due (whether by scheduled
maturity, required prepayment, acceleration, demand or
otherwise), or (ii) fail to perform or observe any term,
covenant, or condition under any agreement relating to any such
Indebtedness, if the effect of such failure to perform or observe
is to accelerate the maturity of such Indebtedness, whether or
not such failure shall be waived by the obligee of such
Indebtedness; or any such Indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated
maturity thereof;
D. An order for relief shall be entered against Debtor or
any Guarantor by any United States Bankruptcy Court; or Debtor or
any Guarantor shall generally not pay its debts as they become
due (within the mean of 11 U.S.C. 303(h) as at any time amended
or any successor statue thereto) or make an assignment for the
benefit of Subordinating Creditors; or Debtor or any Guarantor
shall apply for or consent to the appointment of a custodian,
receiver, trustee, or similar officer for it or for all or any
substantial part of its property; or such custodian, receiver,
trustee, or similar officer shall be appointed without the
application or consent of Debtor or any Guarantor and such
appointment shall continue undischarged for a period of thirty
(30)days; or Debtor or any Guarantor shall institute (by
petition, application, answer, consent, or otherwise) any
bankruptcy, insolvency, reorganization, moratorium, arrangement,
readjustment or debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or
any such proceeding shall be instituted (by petition,
application, or otherwise) against Debtor or any Guarantor and
shall remain undismissed for a period of thirty (30) days; or any
judgement, writ, warrant of attachment, execution, or similar
process shall be issued or levied against a substantial part of
the property of Debtor or any Guarantor and such judgement, writ,
or similar process shall not be released, vacated, or fully
bonded within thirty (30) days after its issue or levy; or
E. An adverse change with respect to the financial
condition or operations of Debtor which results in a material
impairment of the prospect of repayment of Debtor's Indebtedness;
or
F. A sale, hypothecation or other disposition shall be
made of twenty percent or more of the beneficial interest in any
class of voting stock of Debtor; or
G. Any Guarantor shall fail to perform or observe any
obligations under any Guaranty, or shall notify Lender of its
intention to rescind, modify, terminate or revoke the Guaranty
with respect to future transactions, or the Guaranty shall cease
to be in full force and effect for any reason whatever;
H. Any Subordinating Creditor shall fail to perform or
observe any of his, her or its obligations under the
Subordination Agreement, or shall notify Lender of the
Subordinating Creditor's intention to rescind, modify, terminate
or revoke the Subordination Agreement with respect to future
transactions, or the Subordination Agreement shall cease to be in
full force and effect for any reason whatsoever.
THEN, automatically at the option of Lender, Lender's
obligation to make any Credit Accommodation available to Debtor
shall terminate and all Obligations shall, without presentment,
demand, protect, or notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, and Lender may,
immediately and without expiration of any period of grace,
enforce payment of all Obligations and exercise any and all other
remedies granted to it at law, in equity, or otherwise.
10. DISCLAIMER FOR NEGLIGENCE. Lender shall not be liable
for any claims, demands, losses or damages made, claimed or
suffered by Debtor, excepting such as may arise through or could
be caused by the Lender's gross negligence or willful misconduct.
11. LIMITATION OF CONSEQUENTIAL DAMAGE.
A. Lender shall not be responsible for any lost profits of
Debtor arising from any breach of contract, tort (excluding the
Lender's gross negligence or willful misconduct), or any other
wrong arising from the establishment, administration or
collection of the obligations evidenced hereby.
B. The Debtor's sole remedy for any breach of contract,
tort (excluding the Lender's gross negligence or willful
misconduct), or any wrong arising from the establishment,
administration or collection of the Obligations shall be limited
to the difference in the interest rate and fees specified herein
and the costs of funds to the Debtor at the time of the alleged
breach.
12. TERMINATION. This Agreement shall terminate on the
Termination Date at which time all Obligations shall be due and
payable without notice.
13. NO LIEN TERMINATION WITHOUT RELEASE. In recognition of
Lender's right to have all its attorneys' fees and expenses
secured by the Collateral, notwithstanding payment in full of all
Obligations by Debtor, Lender shall not be required to record any
terminations or satisfactions of any of its liens on the
Collateral unless and until Debtor and all Guarantors have
executed and delivered to Lender general releases which conform
to California Civil Code 1541-2.
14. INDEMNIFICATION. Debtor will indemnify and hold Lender
and each person, if any, who controls Lender (an "Indemnitee")
within the meaning of the Securities Act of 1933 (the "Act")
harmless against any lawsuits, claims, damages, liabilities or
expenses (including, but not limited to, the reasonable cost of
investigating and defending against any claims therefor and any
counsel fees and expenses incurred in connection therewith),
which may be incurred by or asserted against any Indemnitee in
connection with (a) any proceeding arising in ----N/A----- any such
claim, damage, liability or expense arising from Lender's own
gross negligence or willful misconduct; and (b) any violation of
any environmental law, rule or regulation or the release of any
toxic substance on or near any real property which constitutes
part of the Collateral; provided, however, that in no case shall
Debtor be liable with respect to any claims made against any
Indemnitee unless such Indemnitee shall have timely notified
Debtor in writing after the summons or other legal process first
giving information of the nature of the claim shall have been
served upon Indemnitee.
15. MISCELLANEOUS.
A. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to
the subject matter hereof. No course of prior dealings between
the parties, no usage of the trade, and no parole or extrinsic
evidence of any nature, shall be used or be relevant to
supplement, explain or modify any term used herein;
B. No Waiver. No failure to exercise and no delay in
exercising any right, power, or remedy hereunder or under the
Documents shall impair any right, power, or remedy which the
Lender may have, nor shall any such delay be construed to be a
waiver of any of such rights, powers, or remedies, or any
acquiescence in any breach or default under the Documents; nor
shall any waiver of any breach or default of Debtor hereunder be
deemed a waiver of any default or breach subsequently occurring.
The rights and remedies specified in the Documents are cumulative
and not exclusive of each other or of any rights or remedies
which Lender would otherwise have;
C. Survival. All representations, warranties and
agreements herein contained on the part of Debtor shall survive
the making of advances hereunder and all such representations,
warranties and agreements shall be effective so long as the
Obligations arising pursuant to the terms of this Agreement
remain unpaid or for such longer periods as may be expressly
stated therein;
D. Notices. All notices of any type hereunder shall be
effective as against the Debtor upon the first to occur of (a)
deposit in a receptacle under the control of the United States
Postal Service, (b) transmitted by electronic means to a receiver
under the control of Debtor, or (c) actually received by an
employee or agent of Debtor; all notices required hereunder shall
be effective as against Lender upon actual receipt by a
responsible officer of Lender. For the purposes hereof, the
address (or, with respect to the Debtor, such other address as
advised to the Lender in writing by the Debtor) and (with respect
to Lender) responsible officer is as follows:
DEBTOR LENDER
Address: 4954 Van Nuys Blvd.,#201 Address: 16530 Ventura Blvd.
- - -------------------------------- -----------------------------
Van Nuys, CA 91403 Encino, CA 91436
- - -------------------------------- -----------------------------
Attention: Resp. Officer: Ron Berkowitz
- - -------------------------------- -----------------------------
Fax Number: Fax Number:
- - -------------------------------- -----------------------------
E. Separability of Provisions. In the event that any one
or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired
thereby;
F. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Debtor, Lender, and
their respective successors and assigns, provided, however, that
Debtor may not transfer its rights to borrow under this Agreement
without the prior written consent of Lender;
G. Counterparts. This Agreement may be executed in any
number of counterparts all of which taken together shall
constitute one agreement and any party hereto may execute this
Agreement by signing any such Counterpart;
H. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
I. Amendment and Waiver. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver,
discharge or termination is sought;
J. Set-Off. Debtor agrees that Lender may exercise its
rights of set-off upon the occurrence of any Event of Default
with respect to the Obligations in the same manner as if the
Obligations were unsecured;
K. Retention of Records. Lender shall retain any
documents, schedules, invoices or other papers delivered by
Debtor only for such period as Lender, at its sole discretion,
may determine necessary.
L. Information to Participants. Debtor agrees that Lender
may furnish any financial or other information concerning Debtor
heretofore or hereafter provided by Debtor to Lender, pursuant to
this Agreement or otherwise, to any prospective or actual
purchaser of any participation or other interest in any of the
loans made by Lender to Debtor (whether under this Agreement or
otherwise), or to any prospective purchaser of any securities
issued or to be issued by Lender;
16. VENUE. To induce Lender to enter into this Agreement,
Debtor irrevocable agrees that, subject to Lender's sole
discretion, all actions and proceedings in any way, manner or
respect, arising out of, from or related to this Agreement, the
documents or the Collateral shall be litigated in courts having
situs within the City of Los Angeles, State of California, Debtor
hereby consents and submits to the jurisdiction of any local,
state or federal court located within said City and State.
Debtor hereby irrevocably appoints and designates the Secretary
of State of California whose address is Sacramento, California,
or any other person having or maintaining a place of business
such State, whom Debtor may from time to time hereafter designate
(having given ten days written notice thereof to Lender) as
Debtor's true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Debtor agrees that
service of such process upon such person shall constitute
personal service of such process upon Debtor. Debtor hereby
waives any right it may have to transfer or change the venue of
any litigation brought against Debtor by Lender in accordance
with this paragraph.
17. WAIVER BY TRAIL BY JURY. In recognition of the higher
costs and delay which may result from a jury trial, the parties
hereto waive any right to trial by jury of any claim, demand,
action or cause of action (1) arising hereunder 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 hereto or any of
them with respect hereto 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 each party hereby agrees and consents
that any such claim, demand, action or cause of action shall be
decided by court trial without a jury, and that any party hereto
may file an original counterpart or a copy of this section with
any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
18. ACCOUNT STATED. Lender shall render to Debtor a loan
account statement setting forth the transactions arising
hereunder. Each statement shall be considered correct and
binding upon Debtor as an Account Stated, except to the extent
that Lender receives, within sixty (60) days after the mailing of
such statement, written notice from Debtor of any specific
exceptions by Debtor to that statement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
DEBTOR: HEMACARE CORPORATION
By: Hal I. Lieberman By: Thomas M. Asher
- - ---------------------------- --------------------------
Title: CEO Title: Secretary
- - ---------------------------- --------------------------
LENDER: BANK LEUMI LE-ISRAEL, B.M.
-----------------------------------
By: Ron Berkowitz
-----------------------------------
Title: Vice President
-----------------------------------
<PAGE>
EXHIBIT "A"
SCHEDULE OF COLLATERAL
ALL ACCOUNTS RECEIVABLE, INVENTORY AND EQUIPMENT MORE FULLY
DESCRIBED ON UCC-1 FINANCING STATEMENTS WHICH RECORDED WITH THE
SECRETARY OF STATE OF CALIFORNIA AS FOLLOWS:
1. INSTRUMENT NO. 91189116 FILED ON AUGUST 29, 1991.
2. INSTRUMENT NO. 92079903 FILED ON APRIL 20, 1992.
3. INSTRUMENT NO. 93169294 FILED ON AUGUST 19, 1993.
4. INSTRUMENT NO. 93169295 FILED ON AUGUST 19, 1993.
5. INSTRUMENT NO. 93169296 FILED ON AUGUST 19, 1993.
AND A UCC-1 FINANCING STATEMENT TO BE FILED WITH THE SECRETARY OF
STATE OF GEORGIA.
<PAGE>
ADDENDUM TO THAT CERTAIN REVOLVING CREDIT AGREEMENT
DATED APRIL 30, 1995
EXECUTED BY HEMACARE CORPORATION
Page 6., I. Financial Covenants
The term "Tangible Net Worth" shall mean stockholders' equity
plus debt subordinated to Bank Leumi Le-Israel, B.M. less
investments in affiliates, accounts receivable form related or
affiliated companies or partners, or stockholders or officers,
intangible assets, i.e., good will, customer lists, product
development costs, etc.
DEBTOR: HEMACARE CORPORATION
By: Hal I. Lieberman
- - ----------------------------
Title: President
- - ----------------------------
By: Thomas M. Asher
- - ----------------------------
Title: Secretary
- - ----------------------------
LENDER: BANK LEUMI LE-ISRAEL, B.M.
By: Ron Berkowitz
- - ----------------------------
Title: Vice President
- - ----------------------------
<PAGE>
EXHIBIT "C" TO THAT CERTAIN REVOLVING CREDIT AGREEMENT
DATED APRIL 30, 1995
EXECUTED BY HEMACARE CORPORATION
LOCATION OF INVENTORY
1. 4954 VAN NUYS BLVD., SUITE 201, SHERMAN OAKS, CA 91403
2. 24963 AVENUE TIBBITTS, VALENCIA, CA 91355
3. 450 SUTTER, SUITE 1504, SAN FRANCISCO, CA 94108
4. 1105 SHANA CIRCLE, SUITE C., MARIETTA, GA 30066
5. 3655 LOMITA BLVD., SUITE 400, TORRANCE, CA 90505
6. 3538 30TH STREET, SAN DIEGO, CA 92104
<PAGE>
BANK LEUMI LE ISRAEL, B.M.
CALIFORNIA
SECURITY AGREEMENT (ACCOUNTS RECEIVABLE)
OFFICER NO./ INTEREST CREDIT AGR. MATURITY CUSTOMER ACCOUNT
INITIALS RATE LIMIT DATE DATE NUMBER NUMBER
- - -----------------------------------------------------------------
RXB 4/30/95
AGREEMENT made APRIL 30, 1995, by and between HEMACARE
CORPORATION ("Debtor"), having its principal place of business at
4954 Van Nuys Blvd., #201, Sherman Oaks, CA 91403 and Bank Leumi
Le-Israel, B.M., having a place of business at 16530 Ventura
Blvd., Encino, CA 91436 ("Secured Party").
1. DEFINITIONS. "Collateral" - any collateral described in any
form UCC-1 between Debtor and Secured Party, as well as all
Debtor's present and future accounts, deposit accounts, chattel
paper, instruments, documents, and general intangibles or other
rights to payment, including all securities, guarantees, and all
direct and indirect proceeds thereof, whether arising from a
voluntary or involuntary disposition, in whatever form, including
proceeds of proceeds. All books and records relating to the
Collateral, and all computers and other equipment (and computer
software used in connection therewith) used in connection with
the record-keeping for the Collateral.
"Obligations" - all loans and advances and other extensions of
credit from time to time made by Secured Party to Debtor whether
absolute or contingent, joint or several, matured or unmatured,
direct or indirect, whether primary or secondary, charges and
fees (including attorneys' fees and expenses) incurred by Secured
Party in protecting, maintaining, preserving, enforcing or
foreclosing this security interest either through judicial
proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or relating to Secured
Party's transactions with Debtor.
2. SECURITY INTEREST. As security for the performance of the
Obligations, Debtor hereby grants to Secured Party a continuing
general lien and security interest in the Collateral.
3. WARRANTIES AND REPRESENTATIONS: Debtor warrants and
represents that:
A. It is the owner of the Collateral, free and clear of
all liens, except with respect to any liens listed on the annexed
Exhibit entitled "Schedule of Liens."
B. All Collateral heretofore and hereafter formally or
informally reported by Debtor to Secured party is genuine in all
respects, fee from adverse claims, setoffs, or other defenses and
will be paid as and when due.
C. Debtor shall at all times use its best efforts in the
collection of the Collateral.
4. NOTIFICATION TO ACCOUNT DEBTORS (THE "ACCOUNT DEBTORS"):
Secured Party shall have the right to notify the Account Debtors
at any time in Secured Party's discretion, that the Secured Party
has been granted a security interest in the Collateral, directing
that all payments on account thereof must be paid by the Account
Debtors to the Secured Party and not to the Debtor.
5. FUTURE EVENTS; NOTICE TO SECURED PARTY: Debtor will
immediately report to Secured Party:
A. All material factors affecting the Collateral and
Debtor's interest therein;
B. Any change in the location of the Debtor's chief
executive officer or location where its books and records
relating to the Collateral are maintained.
6. MAINTENANCE OF SECURED PARTY'S SECURITY INTEREST: Debtor
shall take any and all steps as Secured Party may request to
create and maintain Secured Party's valid, perfected security
interest in the Collateral.
7. APPOINTMENT OF SECURED PARTY AS ATTORNEY-IN-FACT: Debtor
hereby appoints Secured Party as Debtor's attorney-in-fact and at
Debtors' cost and expense to:
A. Receive, take, endorse, assign and deliver to Secured
Party's name or Debtor's any and all checks, notes, drafts and
other instruments relating to Collateral;
B. Take or bring in the name of Debtor or Secured Party
all steps, actions and suits deemed by Secured Party necessary or
desirable to effect collection of Collateral;
C. Settle, compromise, or release in whole or in part, any
amounts due Debtor from the Account Debtors;
D. Extend the time payment of any sums due to Debtor by
the Account Debtors;
E. Execute and deliver to appropriate regulatory offices
any fees, tax returns or other documents necessary for Debtor to
qualify to do business in any jurisdiction where any Account
Debtor may be located, so that Secured Party may enforce its
rights with respect to the Collateral;
F. Do all other things necessary to carry out this
Agreement.
Neither Secured Party nor the attorney will be liable for any
acts of commission or omission nor for any error of judgement or
mistake of fact or law. This power, being coupled with interest,
is irrevocable so long as any Obligation remains unpaid.
8. NAMES AND ADDRESSES OF ACCOUNT DEBTORS: Debtor shall take
all steps necessary to provide Secured Party with a then
completely current list of the names and addresses of all Account
Debtors then indebted to Debtor.
9. ACCESS TO BOOKS AND RECORDS Secured Party shall be
permitted access to all Debtor's books and records relating to
the Collateral during normal working hours, on such notice as
Secured Party may deem appropriate.
10. APPLICATION OF PROCEEDS: The proceeds from any sale or
other disposition of Collateral shall be applied to the
Obligations as determined by the Secured Party in its sole
discretion, despite any contrary instructions received from
Debtor or any third party.
11. ELECTION OF REMEDIES: To the extent that any Obligations
are now or hereafter secured by property other than the
Collateral, Secured Party shall have the right to proceed against
such other property, and Secured Party shall have the right in
Secured Party's sole discretion to determine which rights,
security, liens, security interest or remedies Security Party
shall at any time pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way
modifying or affecting any of them or any of Secured Party's
rights or Debtor's obligations hereunder.
12. SEGREGATION OF DEPOSIT ACCOUNTS: Secured Party shall have
the right at any time to segregate any deposit accounts, regular
or special, at any time maintained by Debtor with Secured Party,
and hold same as cash collateral securing the obligations. In
furtherance of such right, Secured Party may disregard any
request from Debtor or any other entity to honor checks or other
demands for disbursement of funds from such accounts.
13. NEGATIVE PLEDGE: Subsequent to the date hereof, none of the
Collateral will be pledged, assigned or granted as security to
any other party.
14. MAINTENANCE OF PERFECTION: Debtor hereby authorizes Secured
Party to sign Debtor's name to any Uniform Commercial Code
Financing Statements or other documents reasonably deemed
necessary by Secured Party to obtain or maintain perfection by
Secured Party of its security interest granted herein.
15. RIGHTS AGAINST THIRD PARTIES: To the extent that any
Obligations are now or hereafter secured by property other than
the Collateral, or by a guarantee, endorsement or property of any
other entity, then Secured Party shall have the right to proceed
against such other property, guarantee or endorsement upon
Debtor's default, and Secured Party shall have the right in
Secured Party's sole discretion to determine which rights,
security, liens, security interest or remedies Secured Party
shall at any time pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way
modifying or affecting any of them or any of Secured Party's
rights or Debtors obligations hereunder.
16. MISCELLANEOUS:
A. The rights granted to Secured Party herein are to
continue in full force and effect, notwithstanding the
termination of this Agreement, until the final and indefeasible
payment of Secured Party in full of any Obligations. Secured
Party's delay or omission to exercise any rights shall not be
deemed a waiver thereof or of any other right, unless such waiver
be in writing. A waiver on one occasion shall not be construed
as a bar to or waiver of any rights or remedies on any future
occasion.
B. This Agreement shall be governed and interpreted
according to the laws of the State of California, and shall inure
to the benefit of and be binding upon the parties hereto, their
heirs, personal representatives, successors and assigns and shall
not be modified or altered except in writing, signed by the party
to be charged.
HEMACARE CORPORATION
By: Hal I. Lieberman
- - -------------------------
Title: President
- - -------------------------
By: Thomas M. Asher
- - -------------------------
Title: Secretary
- - -------------------------
<PAGE>
SCHEDULE OF LIENS
NONE
<PAGE>
BANK LEUMI LE ISRAEL, B.M.
CALIFORNIA
SECURITY AGREEMENT (INVENTORY)
OFFICER NO./ INTEREST CREDIT AGR. MATURITY CUSTOMER ACCOUNT
INITIALS RATE LIMIT DATE DATE NUMBER NUMBER
- - -----------------------------------------------------------------
RXB 4/30/95
AGREEMENT made APRIL 30, 1995, by and between HEMACARE
CORPORATION ("Debtor"), having its principal place of business at
4954 Van Nuys Blvd., #201, Sherman Oaks, CA 91403 and Bank Leumi
Le-Israel, B.M., having a place of business at 16530 Ventura
Blvd., Encino, CA 91436 ("Secured Party").
1. DEFINITIONS: "Inventory" - all Debtor's present and future
inventory, including raw materials, work in process and finished
goods wherever located, all such items in transit or in Debtor's
constructive, actual or exclusive possession, or held by others
for Debtor's account and all documents of title relating thereto,
the cash and non-cash proceeds thereof, all claims which Debtor
may now or hereafter have against any vendor of any goods which
constitute Inventory, and all insurance proceeds; all claims and
other rights to payment now or hereafter owned by debtor against
any insurance carrier arising out of any business interruption or
other similar insurance coverage, whether or not such claims
represent the proceeds of any of the foregoing. Proceeds shall
include all leases of Inventory, and the rents which accrue
thereunder.
"Obligations" - all loans and advances and other extensions of
credit from time to time made by Secured Party to Debtor whether
absolute or contingent, joint or several, matured or unmatured,
direct or indirect, whether primary or secondary, charges and
fees (including attorneys' fees and expenses) incurred by Secured
Party in protecting, maintaining, preserving, enforcing or
foreclosing this security interest whether through judicial
proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or relating to Secured
Party's transactions with Debtor.
2. SECURITY INTEREST: As security for the performance of the
Obligations, Debtor hereby grants to Secured Party a continuing
general lien and security interest in the Inventory.
3. DEBTOR'S WARRANTIES AND REPRESENTATIONS. Debtor warrants,
agrees and represents that:
A. It will take all steps as Secured Party may request to
create and maintain in Secured Party's favor a perfected security
interest in all Inventory.
b. The Inventory shall be free and clear of all
encumbrances and Debtor shall be the absolute owner thereof,
except as set forth on the Exhibit entitled "Schedule of Liens."
C. It shall defend Secured Party's security interest in
the Inventory against any claims or demands of third parties.
D. It will promptly pay, when due, all taxes or
assessments levied on account of the Inventory.
E. All Inventory is in its possession and none is or will
be stored with a bailee.
F. All of the Inventory has been and will have been
acquired in the ordinary course of business from sellers in the
business of selling such goods. None of the Inventory has been
or will have been purchased in a bulk sale.
4. PROTECTION OF INVENTORY. Debtor shall perform any and all
steps requested by Secured Party to perfect Secured Party's lien
granted herein. If any Inventory is in the possession or control
of any third party, Debtor shall, at Secured Party's request,
notify such third party of Secured Party's security interest.
Debtor agrees to maintain books and records pertaining to the
Inventory in such detail, form and scope as Secured Party shall
require, and Debtor agrees to notify Secured Party promptly of
any change in Debtor's name, mailing address, principal place of
business or location of the Inventory. Debtor shall promptly
advise Secured Party of any event which could have a material
adverse effect on the value of the Inventory or on the lien and
security interest granted to Secured Party herein. A physical
listing of all Inventory, wherever located, shall be supplied to
Secured Party by Debtor as reasonably requested by Secured Party.
Secured Party may examine and inspect the Inventory at any time.
Debtor will execute and deliver to Secured Party from time to
time, upon demand, such supplemental agreements or documents
relating to Inventory, or instruments of indebtedness, in order
that the full intent and purpose of this Agreement may be carried
into effect.
5. EXPENSES. Debtor shall pay, on demand, all reasonable out-
of-pocket expenses of Secured Party (including, but not limited
to attorneys' fees and expenses) incident to the preparation and
negotiation ore enforcement of this Agreement, as well as any
amendments, extensions and renewals thereof, including expenses
necessary to perfect Secured Party's security interest herein.
6. INSURANCE. Debtor shall have the Inventory insured in
Security Party's name against loss or damage by fire, theft,
burglary, pilferage, loss in transportation and such hazards as
Secured Party shall specify, by insurers approved by Secured
Party, in amounts satisfactory to Secured Party and under
policies containing loss payable clauses to Secured Party as
Secured Party's interest may appear. If Debtor fails to do so,
Secured Party may procure such insurance and the cost of such
insurance shall be secured hereby and will be payable to Secured
Party with interest on demand. Any insurance policies or
certificates will be deposited with Secured Party if Secured
Party so requires. Debtor agrees that the avails of all such
insurance, if any loss should occur, shall be applied to the
payment of any or all of the Obligations as Secured Party in its
sole discretion deems advisable, or to the replacement of any of
the Inventory damages or destroyed, as Secured Party may elect or
direct. Secured Party shall have the right, in Debtor's name, or
in Secured Party's name, to file claims under any insurance
policies, to receive, receipt and give acquittance for any
payment that may be made thereunder, and to execute collection,
compromise or settlement of any claims under any such insurance
policies. Debtor hereby assigns and grants a security interest
to Secured Party in and to all sums which may become payable
under such insurance policies, as additional collateral
hereunder.
7. DEFAULT. If Debtor is in default in the performance of any
obligation now or hereafter owed by Debtor to Secured Party, then
in such event, Secured Party may foreclose its security interest
in the Inventory in any way permitted by law, including as a
secured party under the Uniform Commercial Code. Secured Party
may thereupon enter Debtor's premises without legal process and
without incurring liability to Debtor and remove the same to such
place as Secured Party may deem advisable.
8. APPLICATION OF PROCEEDS UPON SECURED PARTY'S FORECLOSURE.
The proceeds from any sale or other disposition of Inventory by
Secured Party shall first be applied to any costs and expenses
incurred in securing possession of the Inventory, storing,
repairing, and finishing for sale, and to any expenses in
connection with the sale. The net proceeds will be applied
toward the payment of any Obligations including interest,
reasonable attorneys' fees and all other costs and expenses.
Application of the net proceeds as to particular Obligations or
as to principal or interest shall be in Secured Party's absolute
discretion. Any deficiency will be paid to Secured Party
forthwith upon demand any surplus will be paid to Debtor. The
enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any rights shall not preclude the
exercise of any other rights, all of which shall be cumulative.
9. RIGHTS AGAINST THIRD PARTIES. To the extent that any
Obligations are now or hereafter secured by property other than
the Inventory, or by a guarantee, endorsement or property of any
other entity, then Secured Party shall have the right to proceed
against such other property, guarantee or endorsement upon
Debtor's default, and Secured Party shall have the right in
Secured Party's sole discretion to determine which rights,
security, liens, security interest or remedies Secured Party
shall have at any time pursue, relinquish, subordinate, modify or
take any other action with respect thereto, without in any way
modifying or affecting any of them or any of Secured Party's
rights or Debtors obligations hereunder.
10. IRREVOCABILITY: The rights granted to Secured Party herein
are to continue in full force and effect, notwithstanding the
termination of this Agreement until the final and indefeasible
payment in full of all Obligations together with interest
thereon. Secured Party's delay or omission to exercise any
rights shall not be deemed a waiver thereof or of any other
right, unless such waiver be in writing. A waiver on one
occasion shall not be construed as a bar to waiver of any rights
or remedies on any further occasion.
11. NEGATIVE PLEDGE: Subsequent to the date hereof, none of the
Inventory will be pledged, assigned or granted as security to any
other party.
12. MAINTENANCE OF PERFECTION. Debtor hereby authorizes Secured
Party to sign Debtor's name to any Uniform Commercial Code
Financing Statements or other documents reasonably deemed
necessary by Secured Party to obtain or maintain perfection by
Secured Party of its security interest granted herein.
13. INVENTORY LOCATION: All Inventory shall be maintained at
the Debtor's place of business set for above, and at such other
locations as may be listed on the Exhibit entitled "Schedule of
Inventory Locations" annexed hereto and made a part hereof.
Debtor shall notify Secured Party immediately upon Debtor forming
an intention to maintain Inventory at any location other than as set
forth herein.
14. APPLICABLE LAW: This Agreement shall be governed and interpreted
according to the laws of the State of California, and shall incure to the
benefit of and be binding upon the parties hereto, their heirs, personal
representatives, successors and assigns and shall not be modified or
altered except in writing, signed by the party to be charged.
15. ENTIRE AGREEMENT: This Agreement supersedes all prior commitments and
commitment letters heretofore made by Secured Party.
HEMACARE CORPORATION
By: Thomas M. Asher By: Hal I. Lieberman
- - --------------------------- ----------------------------
Title: Secretary Title: President
- - --------------------------- ----------------------------
<PAGE>
SECURITY AGREEMENT (INVENTORY)
SCHEDULE OF LIENS
NONE
<PAGE>
SECURITY AGREEMENT (INVENTORY)
SCHEDULE OF INVENTORY LOCATIONS
1. 4954 Van Nuys Blvd., Suite 201, Sherman Oaks, CA 91403
2. 24963 Avenue Tibbitts, Valencia, CA 91355
3. 450 Sutter, Suite #1504, San Francisco, CA 94108
4. 1105 Shana Circle, Suite C, Marietta, GA 30066
5. 3655 Lomita Blvd., Suite #400, Torrance, CA 90505
6. 3538 30th Street, San Diego, CA 92104
<PAGE>
BANK LEUMI LE ISRAEL, B.M.
CALIFORNIA
SECURITY AGREEMENT (EQUIPMENT)
OFFICER NO./ INTEREST CREDIT AGR. MATURITY CUSTOMER ACCOUNT
INITIALS RATE LIMIT DATE DATE NUMBER NUMBER
- - -----------------------------------------------------------------
RXB 4/30/95
AGREEMENT made APRIL 30, 1995, by and between HEMACARE
CORPORATION ("Debtor"), having its principal place of business at
4954 Van Nuys Blvd., #201, Sherman Oaks, CA 91403 and Bank Leumi
Le-Israel, B.M., having a place of business at 16530 Ventura
Blvd., Encino, CA 91436 ("Secured Party").
1. DEFINITIONS. "Collateral" - any collateral described in any
form UCC-1 between Debtor and Secured Party, as well as all
Debtor's present and future equipment, including but not limited
to the types and items listed on the annexed "Schedule of
Collateral," and all direct and indirect proceeds thereof,
whether arising from a voluntary or involuntary disposition, in
whatever form, including proceeds of proceeds; all claims and
other rights to payment now or hereafter owned by Debtor against
any insurance carrier arising out of any business interruption or
other similar insurance coverage, whether or not such claims
represent the proceeds of any of the foregoing. Proceeds shall
include all leases of Collateral, and the rents which accrue
thereunder.
"Obligations" - all loans and advances and other extensions of
credit from time to time made by Secured Party to Debtor whether
absolute or contingent, joint or several, matured or unmatured,
direct or indirect, whether primary or secondary, charges and
fees (including attorneys' fees and expenses) incurred by Secured
Party in protecting, maintaining, preserving, enforcing or
foreclosing this security interest whether through judicial
proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or relating to Secured
Party's transactions with Debtor.
2. SECURITY INTEREST. As security for the Obligations, Debtor
hereby grants to Secured Party a continuing general lien and
security interest in and to the Collateral.
3. WARRANTIES AND REPRESENTATIONS. Debtor warrants and
represents that:
A. It is the owner of the Collateral, free and clear of
all liens, except with respect to any liens listed on the annexed
Exhibit entitled "Schedule of Liens";
B. All Collateral is and shall remain personal property
and not fixtures, irrespective of the nature and extent of any
affixation of the Collateral to any real property.
C. All Collateral is located at Debtor's premises as ---
SEE EXHIBIT "A" ATTACHED HERETO.
D. All of the Collateral has been and will have been
acquired in the ordinary course of business from sellers in the
business of selling such goods. None of the Collateral has been
or will have been purchased in a bulk sale.
4. FUTURE EVENTS; NOTICE TO SECURED PARTY: Debtor will
immediately report to Secured Party;
A. All material factors affecting the Collateral and
Debtor's interest therein;
B. Any change in location of any portion of the
Collateral;
C. Any material change in the nature or value of all or
any portion of the Collateral.
5. MAINTENANCE OF SECURED PARTY'S SECURITY INTEREST: Debtor
shall take any and all steps as Secured Party may request to
create and maintain Secured Party's valid, perfected security
interest in the Collateral.
6. TRANSFER OF COLLATERAL: Until payment in full of
Obligations, Debtor will not sell or otherwise transfer any
portion of the Collateral without the prior written consent of
the Secured Party in each instance.
7. INSPECTION OF COLLATERAL: Secured Party or its agents may
enter upon Debtor's premises at any time and from time to time
upon such notice as is reasonable in the circumstances for the
purpose of inspecting the Collateral and any and all records
pertaining thereto.
8. INSURANCE: Debtor will keep the Collateral insured against
loss by fire (including extended coverage), theft and other
hazards as the Secured Party may require. Policies shall be in
such from and amount and with such companies as the Secured Party
may designate.
Policies shall be obtained from responsible insurers authorized
to do business in this State. All policies covering the
Collateral shall be made payable to Secured Party, in case of
loss, under a standard non-contributory "Mortgagee" "Lender's" or
"Secured Party" clause and are to contain such other provisions
as Secured Party may require. All policies are to be delivered
to Secured Party, premium prepaid, and shall provide for not less
than ten (10) days prior written notice to Secured Party of the
exercise of any right of cancellation. Secured Party is
authorized, but under no duty, to obtain such insurance, at the
expense of the Debtor, upon failure of the Debtor to do so.
Debtor shall give immediate written notice to the Secured Party
and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with the insurers. Debtor hereby
appoints the Secured Party the attorney-in-fact for the Debtor in
obtaining, adjusting and cancelling any such insurance and
endorsing settlement drafts, and hereby assigns and grants a
security interest to the Secured Party in all sums which may
become payable under such insurance, including return premiums
and dividends, as additional security for the Obligations.
9. APPLICATION OF PROCEEDS. The proceeds from any sale or other
disposition of Collateral shall be applied to the Obligations as
determined by Secured Party in its sole discretion, despite any
contrary instructions received from Debtor or any third party.
10. ELECTION OF REMEDIES: To the extent that any Obligations
are now or hereafter secured by property other than the
Collateral, Secured Party shall have the right to proceed against
such other property, and Secured Party and shall have the right
in Secured Party's sole discretion to determine which rights,
security, liens, security interests or remedies Secured Party
shall at any time pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way
modifying or affecting any of them or any of Secured Party's
rights or Debtor's obligations hereunder.
11. RIGHTS AGAINST THIRD PARTIES: To the extent that any
Obligations are now or hereafter secured by property other than
the Collateral or by a guarantee, endorsement or property of any
other entity, then Secured Party shall have the right to proceed
against such other property, guarantee or endorsement upon
Debtor's default, and Secured Party shall have the right in
Secured Party's sold discretion to determine which rights,
security, liens, security interest or remedies Secured Party
shall at any time pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way
modifying or affecting any of them or any of Secured Party's
rights or Debtors obligations hereunder.
12. IRREVOCABILITY. The rights granted to Secured Party herein
are to continue in full force and effect, notwithstanding the
termination of this Agreement until the final and indefeasible
payment in full of all Obligations together with interest
thereon. Secured Party's delay or omission to exercise any
rights shall not be deemed a waiver thereof or of any other
right, unless such waiver be in writing. A waiver on one
occasion shall not be construed as a bar to or waiver of any
rights or remedies on any further occasion.
13. NEGATIVE PLEDGE: Subsequent to the date hereof, none of the
Collateral will be pledged, assigned or granted as security to
any other party.
14. MAINTENANCE OF PERFECTION: Debtor hereby authorizes Secured
Party to sign Debtor's name to any Uniform Commercial Code
Financing Statements or other documents reasonably deemed
necessary by Secured Party to obtain or maintain perfection by
Secured Party of its security interest granted herein.
15. MISCELLANEOUS:
A. The rights granted to Secured Party herein are to
continue in full force and effect, notwithstanding the
termination of this Agreement, until the final and indefeasible
payment of Secured Party in full of any Obligations. Secured
Party's delay or omission to exercise any rights shall not be
deemed a waiver thereof or of any other right, unless such waiver
be in writing. A waiver on one occasion shall not be construed
as a bar to or waiver of any rights or remedies on any future
occasion.
B. This Agreement shall be governed and interpreted
according to the laws of the State of California, and shall inure
to the benefit of and be binding upon the parties hereto, their
heirs, personal representatives, successors and assigns and shall
not be modified or altered except in writing, signed by the party
to be charged.
HEMACARE CORPORATION
By: Thomas M. Asher By: Hal I. Lieberman
- - --------------------------- ----------------------------
Title: Secretary Title: President
- - --------------------------- ----------------------------
<PAGE>
SECURITY AGREEMENT (EQUIPMENT)
SCHEDULE OF LIENS
NONE
<PAGE>
SECURITY AGREEMENT (EQUIPMENT)
SCHEDULE OF OBLIGATIONS
ALL EQUIPMENT DESCRIBED ON UCC-1 FINANCING STATEMENTS FILED WITH
THE SECRETARY OF STATE OF CALIFORNIA AS INSTRUMENT NUMBERS
91189116, 92079903, 93169294, 93169295, 93169296 AND UCC-1
FINANCING STATEMENT TO BE FILED WITH THE SECRETARY OF STATE OF
GEORGIA.
<PAGE>
EXHIBIT "A' TO THAT CERTAIN SECURITY AGREEMENT (EQUIPMENT)
DATED APRIL 30, 1995
EXECUTED BY HEMACARE CORPORATION
COLLATERAL LOCATIONS
1. 4954 Van Nuys Blvd., Suite 201, Sherman Oaks, CA 91403
2. 24963 Avenue Tibbitts, Valencia, CA 91355
3. 450 Sutter, Suite #1504, San Francisco, CA 94108
4. 1105 Shana Circle, Suite C, Marietta, GA 30066
5. 3655 Lomita Blvd., Suite #400, Torrance, CA 90505
6. 3538 30th Street, San Diego, CA 92104
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR THE QUARTER ENDING MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 911,200
<SECURITIES> 299,424
<RECEIVABLES> 1,476,948
<ALLOWANCES> 157,331
<INVENTORY> 465,549
<CURRENT-ASSETS> 3,284,526
<PP&E> 3,551,500
<DEPRECIATION> 2,006,701
<TOTAL-ASSETS> 6,314,399
<CURRENT-LIABILITIES> 1,489,957
<BONDS> 0
<COMMON> 11,728,301
0
0
<OTHER-SE> (7,464,866)
<TOTAL-LIABILITY-AND-EQUITY> 6,314,399
<SALES> 2,756,751
<TOTAL-REVENUES> 2,756,751
<CGS> 2,037,513
<TOTAL-COSTS> 2,037,513
<OTHER-EXPENSES> 773,544 <F1>
<LOSS-PROVISION> 15,963
<INTEREST-EXPENSE> 8,346
<INCOME-PRETAX> (48,130)
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,130)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,130)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<FN>
<F1> Other Expenses includes $283,632 in research and development expense
and $489,912 in general and administrative expense.
</FN>
</TABLE>
