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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 June 30, 1997
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 August 13, 1997, 7,190,710 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-June 30, 1997 and December 31, 1996
Consolidated statements of operations-Three and six months
ended June 30, 1997 and 1996
Consolidated statements of cash flows-Six months ended June 30,
1997 and 1996
Notes to consolidated financial statements-June 30, 1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits
SIGNATURES
- ----------
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements
- ------- ---------------------
HEMACARE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 1,823,000 $ 1,136,000
Marketable securities............................... 192,000 415,000
Accounts receivable, net of allowance for
doubtful accounts - $57,000 (1997) and
$47,000 (1996).................................... 1,409,000 1,722,000
Product inventories................................. 91,000 74,000
Supplies............................................ 366,000 306,000
Prepaid expenses.................................... 168,000 146,000
Note receivable from officer - current.............. 15,000 15,000
------------- -------------
Total current assets........................... $ 4,064,000 $ 3,814,000
Plant and equipment, net of accumulated
depreciation and amortization of
$2,018,000 (1997) and $1,875,000 (1996)............. 721,000 823,000
Note receivable from officer - non-current............ 77,000 88,000
Other assets.......................................... 47,000 51,000
------------- -------------
$ 4,909,000 $ 4,776,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $ 1,094,000 $ 909,000
Accrued blood purchases............................. 21,000 175,000
Accrued payroll and payroll taxes................... 450,000 335,000
Other accrued expenses.............................. 294,000 284,000
Current obligations under capital leases............ 256,000 241,000
Reserve for discontinued operations - current....... 284,000 306,000
------------- -------------
Total current liabilities..................... 2,399,000 2,250,000
Obligations under capital leases, net
of current portion.................................. 446,000 503,000
Commitments and contingencies.........................
Shareholders' equity:
Common stock, without par value -
20,000,000 shares authorized,
7,190,710 issued and outstanding in 1997
and 7,177,515 in 1996............................. 13,507,000 13,466,000
Accumulated deficit................................. (11,443,000) (11,443,000)
------------- -------------
Total shareholders' equity............................ 2,064,000 2,023,000
------------- -------------
$ 4,909,000 $ 4,776,000
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Blood management programs.... $ 1,111,000 $ 650,000 $ 2,183,000 $ 1,001,000
Regional operations
Blood products............. 626,000 1,213,000 1,344,000 2,599,000
Blood services............. 1,034,000 816,000 2,068,000 1,889,000
------------- ------------ ------------- -------------
Total revenue............. 2,771,000 2,679,000 5,595,000 5,489,000
Operating costs and expenses:
Blood management programs.... $ 1,156,000 $ 940,000 $ 2,280,000 $ 1,771,000
Regional operations
Blood products............. 499,000 925,000 1,025,000 1,988,000
Blood services............. 750,000 611,000 1,435,000 1,385,000
------------- ------------ ------------- -------------
Total operating costs and
expenses................ 2,405,000 2,476,000 4,740,000 5,144,000
Operating profit........... 366,000 203,000 855,000 345,000
General and administrative
expense...................... 457,000 617,000 972,000 1,244,000
Interest expense, net........... - 16,000 3,000 27,000
------------- ------------ ------------- --------------
Loss from continuing operations
before income taxes........... (91,000) (430,000) (120,000) (926,000)
Provision for income taxes...... - - - -
Discontinued operations:
Gain from write off of
reserve.................... - 120,000 -
------------- ------------ ------------- --------------
Net loss..................... $ (91,000) $ (430,000) $ - $ (926,000)
============= ============ ============= ==============
Per share amounts:
Loss from continuing
operations................... $ (0.01) $ (0.07) $ (0.02) $ (0.15)
Discontinued operations:
Gain from write off of
reserve.................... - 0.02
------------- ------------ ------------- --------------
Net loss.................... $ (0.01) $ (0.07) $ - $ (0.15)
============= ============ ============= ==============
Weighted average common and
common equivalent shares
outstanding............... 7,193,303 6,149,905 7,204,041 6,125,751
============= ============ ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss..................................................... $ - $ (926,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Gain on disposal of discontinued operations.............. (120,000)
Depreciation and amortization............................ 147,000 169,000
Changes in operating assets and liabilities:
Decrease in accounts receivable.......................... 313,000 296,000
Increase in inventories, supplies and prepaid expenses... (99,000) (56,000)
Increase in other assets, net............................ - (13,000)
Increase in accounts payable and accrued expenses........ 197,000 142,000
Increase in other accrued expenses - long-term........... - 10,000
Proceeds from (expenditures for) discontinued operations. 98,000 56,000
------------ ------------
Net cash provided by (used in) operating activities.......... 536,000 (322,000)
------------ ------------
Cash flows from investing activities:
Decrease in note receivable from officer................. 11,000 11,000
Decrease in short-term investments....................... 223,000 -
Purchase of plant and equipment, net..................... (7,000) (89,000)
------------ ------------
Net cash provided by (used in) investing activities.......... 227,000 (78,000)
------------ ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock............... - 90,000
Proceeds from line of credit............................. - 300,000
Principal payments on line of credit and capital leases.. (76,000) (91,000)
------------ ------------
Net cash (used in) provided by financing activities...... (76,000) 299,000
------------ ------------
Increase (decrease) in cash and cash equivalents......... 687,000 (101,000)
Cash and cash equivalents at beginning of period......... 1,136,000 997,000
------------ ------------
Cash and cash equivalents at end of period............... $ 1,823,000 $ 896,000
============ ============
Supplemental disclosure:
Interest paid............................................ $ 33,000 $ 41,000
============ ============
Items not impacting cash flows:
Increase in capital lease obligations.................... $ 34,000 $ 91,000
============ ============
Issuance of common stock to employee 401k plan........... $ 41,000 $ 44,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
HemaCare Corporation
Notes to Consolidated Financial Statements
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. 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 and six months
ended June 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
Certain 1996 amounts have been reclassified to conform to the 1997
presentation. 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, 1996.
From 1990 to November 1995, the Company, through its wholly-owned
subsidiary HemaBiologics, Inc. ("HBI"), conducted research and
development of Immupath, an anti-HIV hyperimmune plasma-based
product intended to be used in the treatment of Acquired Immune
Deficiency Syndrome. In November of 1995, the Company discontinued
the operations of HBI. (See Note 2 below.)
In September 1995, the Company formed Gateway Community Blood
Program, Inc. ("Gateway"), a wholly-owned subsidiary incorporated
in Missouri, to provide blood products and services in Missouri
and Illinois. In August 1997, Gateway's operations were sold. (See Note 7
below.)
In the fourth quarter of 1995, the Company began providing blood
management programs to its customers. A blood management program
("Blood Management Program" or "BMP") allows a hospital or
affiliated group of hospitals to outsource many blood-related
operations to HemaCare. HemaCare establishes a local blood donor
center for the BMP hospital and becomes the hospital's primary
provider of blood products and services. HemaCare introduced its
Blood Management Program model at the Gateway Community Blood
Program in St. Louis, Missouri, in December 1995, and established
two Southern California Blood Management Programs with existing
customers in 1996. The University of Southern California Blood
Management Program commenced in February 1996 and the Citrus
Valley Health Partners Blood Management Program commenced in
October 1996. In August 1997, Gateway's operations were sold. (See
Note 7 below.)
Note 2 - Discontinued Operations
- --------------------------------
In November 1995, the Company discontinued the operations of HBI,
including the research and development of Immupath and the
associated specialty plasma business. The reserve established for
estimated HBI operating losses during the period of disposal
included a $600,000 contingent liability related to a dispute with
a licensor.
6
<PAGE> 7
In July 1996, the dispute was settled without any payment by the
Company, and the Company recognized a $600,000 gain on disposal of
discontinued operations. In June 1996, the Company agreed to sell
substantially all the tangible assets of the discontinued
operations and the FDA source plasma licenses. In the first
quarter of 1997, the Company received the final proceeds from the
sale and recognized a $120,000 gain on disposal of discontinued
operations.
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 credit line is in effect through
April 30, 1998. Under the terms of the credit line agreement, the
Company may borrow up to 70% of eligible accounts receivable, up
to a maximum of $700,000, and must maintain certain financial
ratios. The Company was in compliance with all covenants of its
credit line agreement at June 30, 1997. Interest on credit line
borrowings is at the lender's prime rate (8.5% at June 30, 1997)
plus one-half of a percentage point. As of June 30, 1997, there
was no balance outstanding under the line of credit.
Note 4 - Commitments and 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 the employment of this employee and
seeking relief in the amount of $550,000. A trial date has been
set for October 29, 1997; however, at this stage in the
proceedings, neither management nor counsel is in a position to
evaluate the probable merits of the claim asserted by this former
employee. Accordingly, the resolution of this lawsuit could have
a material, adverse impact on the Company's financial condition
and results of operations.
On March 12, 1997, the Company was notified of a lawsuit filed by
an investment banking firm retained by the Company in connection
with the August 1996 private placement of its common stock,
seeking recovery of damages in the amount of approximately
$60,000. The Company intends to vigorously defend this claim,
however, if adversely decided, its ultimate resolution could have
a material impact on the Company's results of operations.
Note 5 - Related Party Information
- ----------------------------------
In 1995 and 1994, the Company made a series of personal loans to
Joshua Levy, then an officer and director of the Company, totaling
$98,000. In January 1996, these individual notes were consolidated
into a promissory note and collateralized by HemaCare stock owned
by Dr. Levy. The note accrues interest at a rate equal to the rate
the Company pays under its line of credit, adjusted quarterly.
Interest accrued for the six months ended June 30, 1997 and 1996
totaled $4,204 and $4,238, respectively. The note requires four
annual installment payments of $15,000 due from 1996 to 1999 and
the balance of the principal and accrued interest is due on
January 31, 2000. The Company received annual installment
payments of $15,000 in January 1996 and January 1997.
7
<PAGE> 8
Note 6 - Recent Auditing Pronouncement
- --------------------------------------
In March 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share" (SFAS 128) and SFAS No. 129,
"Disclosure of Information about Capital Structure" (SFAS 129).
SFAS 128 revises and simplifies the computation of earnings per
share and requires certain additional disclosures. SFAS 129
requires additional disclosures regarding the Company's capital
structure. The Company will adopt both standards in the fourth
quarter of 1997. Management does not expect that the adoption of
theses standards will have a material effect on the Company's
financial position or results of operations.
Note 7 - Sale of Gateway's Operations
- -------------------------------------
On August 1, 1997, Gateway's operations were sold. The purchaser
assumed liability for certain leases related to Gateway's
operations; purchased Gateway's inventories and made a $200,000
non-refundable payment against HemaCare's interest in future
Gateway earnings. Cash proceeds from the sale, net of transaction
costs were approximately $255,000. The Company is entitled to
receive a percentage of Gateway's revenues, as defined, over the
five years subsequent to the date of sale, up to a total maximum
of $422,000. An additional payment of $100,000 is due when Gateway
receives its Food and Drug Administration establishment license.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
HemaCare's operations include blood management programs ("Blood
Management Program" or "BMP") and regional sales of blood products
(Blood Products) and services (Blood Services). The Company's Blood
Management Program allows a hospital or affiliated hospital group to
outsource many of its blood-related operations. Operating under its
Food and Drug Administration license, HemaCare establishes a local
blood donor center to provide collection and other blood banking
services to patients and physicians of the BMP hospital and supplies
the hospital with a wide range of blood products and services. Blood
Products include apheresis platelet products and whole blood components
such as red blood cells and plasma products. Blood Services include
therapeutic apheresis procedures and donor testing. All comparisons
within the following discussions are to the comparable periods of the
previous year.
In December 1995, HemaCare opened the Gateway Community Blood Program
regional BMP ("Gateway") in St. Louis, Missouri, and two southern
California, hospital-based BMPs were established with existing
customers in 1996. The University of Southern California ("USC")
Blood Management Program commenced in February 1996 and the Citrus
Valley Health Partners ("Citrus Valley") Blood Management Program
commenced in October 1996. Both the USC and Citrus Valley BMP
agreements have three-year terms. These BMPs are collectively referred
to as the "Programs" in the following discussions.
Revenues and Operating Profit
- -----------------------------
Total revenues for the three-month and six-periods of 1997 increased 3%
and 2%, respectively. The increases resulted from higher BMP and Blood
Services revenues, offset by a decrease in Blood Products revenues. The
Company's operating profit as a percentage of revenues ("profit
margin") increased to 13% in the second quarter of 1997 from 8% in the
8
<PAGE> 9
comparable quarter of 1996 and to 15% for the first half of 1997 from
6% in the first half of 1996. The increases were due to higher sales
volumes and lower operating costs and expenses at Gateway and higher
therapeutic service sales prices during the 1997 periods. Blood Products
sales and operating profit in both quarters were adversely affected by
pricing practices employed by the American Red Cross. (See Liquidity
and Capital Resources.)
Blood Management Programs
- --------------------------
The 1997 three-month ($461,000) and six-month ($1,182,000) increases in
Program revenue were due to higher sales volumes at Gateway and USC and
the conversion of Citrus Valley to a Blood Management Program customer.
Program profit margins increased by 9% in the 1997 three-month period
and by 12% in the 1997 six-month period as the result of increased
production at the USC Blood Donor Center and a decrease in Gateway's
operating losses.
In June of 1996, the Company evaluated Gateway's operations and
refocused its strategic direction. As a result, apheresis platelet
production and sales were increased and overhead costs for the
operation were reduced. Although these changes significantly reduced
losses, Gateway's operating results did not meet the Company's
financial expectations. Accordingly, in August 1997, Gateway operations
were sold. (See Liquidity and Capital Resources.)
Regional Operations
- -------------------
Blood Products
Blood Products revenues decreased $587,000 and $1,255,000 in the second
quarter and first half of 1997, respectively. The decreases were due to
lower sales volumes for apheresis platelet and whole blood component
products and lower red blood cell prices. Approximately 42% of the
three-month and 51% six-month decrease in Blood Products revenue was
due to the conversion of Citrus Valley blood product and services sales
to a BMP arrangement. The remainder of the decrease in platelet sales volumes
resulted from the loss of customers, primarily due to ARC pricing practices,
while whole blood component sales volumes decreased due to a shortage of red
blood cells available for sale. The price of red blood cells decreased in the
second quarter of 1997 and first half of 1997, due to competitive
pressures. The profit margin on Blood Products sales decreased in the
second quarter of 1997 and was unchanged for the six months ended June
30, 1997. The second quarter 1997 profit margin decrease resulted from
lower sales price for red blood cells and an increase in the cost of
these sales, partially offset by a decrease in the cost of apheresis
platelet sales.
Blood Services
Blood Services revenues increased 27% ($218,000) and 9% ($179,000) in
the three-month and six-month periods of 1997, respectively. Both
increases resulted from a higher volume of therapeutic apheresis
procedures performed in southern California and growth of the Company's
testing services business, partially offset by the elimination of
revenue from the Company's Atlanta-based therapeutic services
operation, which was closed in July 1996.
The profit margin on Blood Services revenues increased in the second
quarter and first half of 1997 due to elimination of losses from the
Atlanta operation and increased testing services operating profits.
9
<PAGE> 10
General and Administrative Expense
- -----------------------------------
General and administrative expense decreased 26% ($160,000) for the
three-month period and 22% ($272,000) for the six-month period of 1997.
Both decreases reflect the effect of spending controls initiated in
mid-1996. In addition, the three-month period includes a $71,000
recovery of previously expensed legal fees related to the ARC lawsuit
which was settled in June 1997.
Discontinued Operations
- -----------------------
In November 1995, the Company discontinued its Immupath related
research and development activities and established a reserve for
operating losses and contingent liabilities related to the disposal of
the research and development and related specialty plasma businesses.
The reserve amount, which included $600,000 for a contingent liability
related to a dispute with a licensor, was net of the proceeds expected
to be realized from the sale of research and development assets.
In July 1996, the dispute with the licensor was settled without any
payment by the Company. As a result of this settlement, the Company
recognized a $600,000 gain on disposal of discontinued operations in
the third quarter of 1996.
In March 1997, the Company completed disposition of the assets of the
discontinued operations and recognized a further $120,000 gain on
disposal. The Company does not expect the discontinued operations to
have a material impact on its future operating performance.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1997, the Company had cash and cash equivalents of $1.8
million and working capital of $1.7 million. The Company's $700,000
line of credit with a commercial bank is in effect through April 30,
1998. Under the terms of the credit line agreement, the Company may
borrow up to 70% of eligible accounts receivable, up to a maximum of
$700,000, and must maintain certain financial ratios including working
capital, as defined, of $500,000 and a tangible net worth of not less
than $1.75 million. The Company was in compliance with all covenants of
its borrowing agreement at June 30 1997, and there were no borrowings
outstanding on the line of credit at that date.
The Company's Blood Management Programs, other than Gateway, and its
regional Blood Products and Blood Services businesses are profitable
and cash flow positive. However, the loss of three significant
apheresis platelet customers during the first quarter of 1997 had a
negative impact on second quarter 1997 Regional Blood Product sales and
profitability which is expected to continue until these sales can be
replaced.
In December 1995, Company filed an antitrust and unfair competition
complaint against ARC with the United States District Court in the
Central District of California to recover damages and secure injunctive
relief. The suit alleged that pricing practices employed by the
American Red Cross ("ARC") may have compelled southern California
area ARC customers to purchase certain blood products from the ARC at
higher prices than those offered by the Company. In June 1997, this
suit was settled. Although the terms of the settlement are confidential
and have not yet been fully implemented, the Company believes that the
settlement may improve its ability to obtain and retain blood product
customers.
10
<PAGE> 11
At June 30, 1997, the Citrus Valley Program Center was operating in
temporary facilities provided by the Citrus Valley hospitals. The
Citrus Valley Blood Donor Center, which the Company is obligated to
equip and operate, opened August 6, 1997. The costs of equipping the
center were financed through a lease.
Gateway sustained a large net loss in 1996, and continued to incur
substantial losses in the first quarter of 1997. In June 1996,
Gateway's strategic direction was refocused to market a more profitable
mix of blood products and services to specific hospital customers.
These changes resulted in increased revenue and significant reductions
in personnel and other costs. However, Gateway's operations were still
unable to meet the Company's financial requirements. On August 1, 1997,
Gateway's operations were sold. The purchaser assumed certain lease
liabilities related to Gateway's operations; purchased Gateway's
inventories and made a $200,000 non-refundable payment against
HemaCare's interest in future Gateway earnings. Cash proceeds from the
sale, net of transaction costs were approximately $255,000. The Company
is entitled to receive a percentage of Gateway's revenues, as defined,
over the five years subsequent to August 1, 1997, up to a total maximum
of $422,000. The terms of the sale also provide for a $100,000 payment
to HemaCare when Gateway receives a Food and Drug Administration blood
establishment license.
Management is evaluating a number of opportunities to develop new
outsourcing models and to implement these models, including its Blood
Management Program, in a variety of healthcare settings. However, the
development and implementation of additional outsourcing models and
Blood Management Programs may require that the Company obtain
additional financing to fund start-up, equipment and marketing costs.
There can be no assurance that the Company will be able to obtain the
necessary funds.
In March 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 the employment of this employee and seeking relief in
the amount of $550,000. The case is still in the discovery stage in
the proceedings and neither management nor counsel are in a position to
evaluate the probable merits of the claim asserted by this former
employee. Accordingly, the resolution of this lawsuit could have a
material, adverse impact on the Company's financial condition and
results of operations.
The Company anticipates that cash flow from profitable operations,
borrowing available from its bank line of credit and its cash and
investments on hand will be sufficient to provide funding for its
existing needs during the next twelve months.
Factors Affecting Forward-Looking Information
- ---------------------------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" from liability for forward-looking statements. Certain
information included in this Form 10-Q and other materials filed or to
be filed by the Company with the Securities and Exchange Commission (as
well as information included in oral statements or other written
statements made or to be made by or on behalf of the Company) are
forward-looking, such as statements relating to operational and
financing plans, competition, demand for the Company's products and
services, and the anticipated outcome of contingent claims against the
Company. Such forward-looking statements involve important risks and
uncertainties, many of which will be beyond the control of the Company.
These risks and uncertainties could significantly affect anticipated
11
<PAGE> 12
results in the future, both short-term and long-term, and accordingly,
such results may differ from those expressed in forward-looking
statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to the
ability of the Company to obtain additional financing, to achieve
profitability in its Blood Management Programs, to improve the
profitability of the Company's other operations, to expand its
operations, to comply with the covenants under its bank line of credit,
to effectively compete against the ARC and other competitors, and to
resolve favorably through negotiation or litigation claims asserted by
or against the Company. Each of these risks and uncertainties as well
as others are discussed in greater detail in the preceding paragraphs
of this Management's Discussion and Analysis of Financial Condition and
Results of Operations and in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
See disclosure in Form 10-K for the year ended December 31,
1996.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
a. The Company's Annual Meeting of Shareholders (the
"Meeting") was held on June 5, 1997.
b. The following table shows the tabulation of votes for
all matters put to vote at the Company's Annual Meeting
of Shareholders held June 5, 1997.
<TABLE>
<CAPTION>
Matters Put to Vote For Against/Withheld
------------------- ----------- ----------------
<S> <C> <C>
Election of Five Directors
Glenn W. Bartlett 6,160,585 65,148
Alan C. Darlington 6,160,585 65,148
Hal I. Lieberman 6,152,515 73,218
Sharon C. Kaiser 6,160,585 65,148
Jon B. Victor 5,681,964 543,769
</TABLE>
12
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
a. Exhibits
2.1 Asset Purchase Agreement between the Registrant,
Gateway Community Blood Program, Inc. (a wholly owned
subsidiary of the Registrant) and Haemonetics
Corporation, dated August 1, 1997. See Also Exhibit
99.1
27 Financial Data Schedule for the Quarter Ending June
30, 1997
99.1 Agreement to Furnish Exhibits and Schedules.
b. The Company did not file any reports on Form 8-K during
the three months ended June 30, 1997.
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 August 14, 1997 HEMACARE CORPORATION
---------------------- (Registrant)
/s/ Sharon C. Kaiser
---------------------------------
Sharon C. Kaiser, Vice President,
Finance and Chief Financial
Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Method of Filing
------------------------
<S> <C> <C>
2.2 Asset Purchase Agreement between the Registrant, Gateway
Community Blood Program, Inc. (a wholly owned subsidiary of the
Registrant) and Haemonetics Corporation, dated August 1, 1997.
See Also Exhibit 99.1.......................................... Filed herewith electronically
27 Financial Data Schedule for the quarter ending June 30, 1997... Filed herewith electronically
99.1 Agreement to Furnish Exhibits and Schedules.................... Filed herewith electronically
14
<PAGE> 15
</TABLE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
HAEMONETICS CORPORATION
(BUYER)
AND
GATEWAY COMMUNITY BLOOD PROGRAM, INC.
(SELLER)
Dated: August 1, 1997
<PAGE> 16
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is dated
August 1 1997, between Haemonetics Corporation, a Massachusetts
corporation ("Buyer"), and Gateway Community Blood Program,
Inc., a Missouri corporation ("Seller") and a wholly-owned
subsidiary of HemaCare Corporation, a California corporation
("Parent").
RECITALS
A. Seller is a blood bank engaged in the preparation and
distribution of human whole blood, human plasma, and other blood
derivatives (collectively "Blood Products") and in related
activities, conducted in the St. Louis, Missouri area as
delineated in Schedule A (the service area herein referred to as
the "Area").
B. Buyer and Seller intentionally limit the scope of this
agreement to the sale of assets as outlined below and no other
assets of Seller unless such limitation would materially affect
or impair Buyer's subsequent operation.
C. Seller intends to obtain required state and federal
approvals, consents, and permits, if any, to enable Seller to
convey substantially all of the assets to Buyer.
D. Buyer desires to purchase from Seller, Seller
desires to sell to Buyer the assets as set forth herein other
than the Excluded Assets (as defined herein).
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows.
1. Purchase And Sale Of Assets
- ------------------------------------
1.1 Assets to be Transferred. Subject to the terms and
conditions of this Agreement, on the Closing Date (as hereinafter
defined) Seller shall sell, transfer, convey, assign, and deliver
to Buyer (or upon Buyer's request, to one or more wholly-owned
subsidiaries of Buyer as designated by Buyer), and Buyer shall
purchase and accept all of the rights, claims and assets (of
every kind, nature, character and description, whether real,
personal or mixed, whether tangible or intangible, whether
accrued, contingent or otherwise, and wherever situated) of the
Seller, other than the Excluded Assets (as hereinafter defined)
(collectively the "Purchased Assets"). The Purchased Assets
shall include, but not be limited to, the following:
(a) Leased Real Property. All of the leases and
subleases of real property with respect to real property leased
by Seller (the "Real Property Leases") described on Schedule
1.1(a) with respect to the real property described thereon (the
"Leased Real Property").
(b) Personal Property Leases. All leases of
equipment, vehicles, , furniture and other personal property
leased by Seller (the "Personal Property Leases") described in
Schedule 1.1(b).
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(c) Equipment and Supplies. All equipment, vehicles,
supplies, spare parts, furniture and all other personal property
not included in inventory (other than personal property leased
pursuant to Personal Property Leases) owned, utilized or held for
use by Seller as described on Schedule 1.1(c).
(d) Inventory. All inventories of blood, blood
products, plasma, or other blood derivatives or other Blood
Products or materials of Seller whether physically stored in the
Leased Real Property or located at a hospital, a blood bank
depository, a transfusion service, a blood collection center, a
vehicle or elsewhere on the Closing Date (collectively the
"Inventory")as described on Schedule 1.1(d).
(e) Trade Rights. All the Seller's interest in any
Trade Rights. As used herein, the term "Trade Rights" shall
mean and include: (i) all United States, state and foreign
trademark rights, business identifiers, trade dress, service
marks, trade names, and brand names, including all claims for
infringement, and all registrations thereof and applications
therefor and all goodwill associated with the foregoing accruing
from the dates of first use thereof; (ii) all United States and
foreign copyrights, copyright registrations and copyright
applications, including all claims for infringement, and all
other rights associated with the foregoing and the underlying
works of authorship; (iii) all United States and foreign patents
and patent applications, including all claims for infringement
and all international proprietary rights associated therewith;
(iv) all contracts or agreements granting any right, title,
license or privilege under the intellectual property rights of
any third party; and (v) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and
agreements respecting intellectual property and non-competition
and all other types of intellectual property. The Trade Rights
are listed on Schedule 1.1(e).
(f) Contracts. All contracts, contractual rights,
agreements, purchase orders and sales orders (hereinafter in this
Section 1.1(f), "Contracts") of Seller listed below:
(i) All Contracts for the provision of supplies,
goods or services to the Seller ("Operating Contracts") listed
in Schedule 1.1(f)(i).
(ii) All Contracts with hospitals, health systems,
third-party payors, blood bank depositories, transfusion
services, or blood collection centers relating to the sale or
distribution of Blood Products by Seller listed in Schedule
1.1(f)(ii) ("Distribution Contracts").
(iii) All Contracts not constituting Employment Contracts
(as defined below) with physicians and surgeons (including the Blood Bank
Director) or with other licensed healthcare professionals which are required
as a condition of state or federal licensure ("Administrative Contracts")
listed in Schedule 1.1(f)(iii).
(iv) Every other Contract to which Seller is a
party which is listed on Schedule 1.1(f)(iv).
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Notwithstanding the provisions of Sections
1.1(f)(i), (ii), (iii) and (iv) above, Buyer shall not assume any
written or oral employment agreements between Seller and any of
its employees.
The Contracts described in Sections 1.1(f)(i),
(ii), (iii) and (iv) above are hereinafter collectively described
as the "Assumed Contracts." To the extent that any Assumed
Contract for which assignment to Buyer is provided herein is not
assignable without the consent of another party or parties, this
Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. Seller and Buyer agree to use
their reasonable best efforts (without any requirement on the
part of Buyer to pay any money or agree to any change in the
terms of any such Contract) to obtain the consent of such other
party to the assignment of any such Assumed Contract to Buyer in
all cases in which such consent is or may be required for such
assignment. If any such consent shall not be obtained, Seller
agrees to cooperate with Buyer in any reasonable arrangement
proposed to Buyer designed to provide for Buyer the benefits
intended to be assigned to Buyer under the relevant Assumed
Contract, including enforcement at the cost and for the account
of Buyer of any and all rights of Seller against the other party
thereto arising out of the breach or cancellation thereof by such
other party or otherwise. If and to the extent that such
arrangement cannot be made, Buyer, upon notice to Seller, shall
have no obligation pursuant to Section 2.1 or otherwise with
respect to any such Assumed Contract and any such Assumed
Contract shall not be deemed to be a Purchased Asset hereunder.
(g) Operational Manuals and Literature. All procedure
manuals (whether or not required as a condition of a Regulatory
Authorization, as defined below), protocols, educational or
promotional literature, instructional materials and similar
materials of Seller; provided, that nothing in this Agreement
shall prevent Parent from using protocols, educational or
promotional literature, instructional materials and similar
materials in its operations which are substantially similar or
identical to those used by Seller on or prior to the Closing
Date.
(h) Records and Files and Associated Systems. All
records, files, lists, specifications, designs, drawings,
business records, operating data and other data of Seller,
including, but not limited to, apheresis and whole blood donor
lists maintained in the Area. Buyer shall have reasonable access
to and the right to copy those records to be retained by Parent.
Regardless of their location, the Buyer shall have access to the
Seller's records for the underlying systems for identification of
human blood and other Blood Products to the donors and
traceability to the recipients and all records and the underlying
systems relating to the identification and notification of donors
and recipients of positive tests for viral hepatitis and/or
antibody tests for probable causative agents for Acquired Immune
Deficiency Syndrome (collectively, "Blood Bank Records").
(i) Licenses; Permits; Other Authorizations. All
state federal or local governmental licenses, registrations,
permits, approvals or similar authorizations either held or
applied for by the Seller ("Regulatory Authorizations") are
listed on Schedule 1.1(i). To the extent Seller may lawfully
transfer such Regulatory Authorizations to Buyer, they shall be
considered Purchased Assets.
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(j) Corporate Name. The name "Gateway Community
Blood Program, Inc." and all of Seller's rights to use or allow
others to use such name.
(k) Deposits and Prepaids. All deposits and prepaid
items listed on Schedule 1.1(k).
1.2 Excluded Assets. The provisions of Section 1.1
notwithstanding, Seller shall not sell, transfer, assign, convey
or deliver to Buyer, and Buyer will not purchase or accept the
following assets of Seller (collectively the "Excluded
Assets"):
(a) Consideration. The consideration delivered by
Buyer to Seller pursuant to this Agreement.
(b) Cash and Securities. All cash and securities of
the Seller.
(c) Accounts Receivables. All accounts receivables of
Seller prior to Closing.
(d) Tax Credits. Franchise tax credits and tax refund
claims (if any).
(e) Tax and Corporate Records. Seller's financial,
corporate and tax records. Prior to Closing, Buyer and its
designated agents shall have reasonable access to such records
and may make excerpts therefrom and copies thereof.
(f) Leased and Owned Personal Property. The personal
property described on Schedule 1.2.(f).
(g) Non-Transferable Regulatory Authorizations. To
the extent any Regulatory Authorization listed on Schedule 1.1(i)
cannot lawfully be sold to Buyer as a Purchased Asset, it shall
be an Excluded Asset but shall be dealt with by Buyer pursuant to
Section 7.1.
(h) Third Party Claims. All claims against third
parties arising prior to Closing.
2. ASSUMPTION OF LIABILITIES
- ---------------------------------
2.1 Liabilities to be Assumed. Subject to the terms and
conditions of this Agreement, on the Closing Date, Buyer assumes
and agrees to perform and discharge to the extent indicated below
the following, and only the following, specific debts,
liabilities and obligations of Seller (collectively the "Assumed
Liabilities"):
(a) Scheduled Liabilities. The accounts payable and
accrued liabilities accruing on and after the Closing.
(b) Contractual Liabilities. Seller's liabilities and
obligations arising on and after the Closing Date under and
pursuant to the Assumed Contracts, provided that Buyer shall not
assume any obligation to deliver products or services with
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respect to which any payment has been made prior to the Closing
Date, unless (i) Seller shall remit the amount of such payments
to Buyer or (ii) a direct credit in such amount shall be provided
to Buyer in the Purchase Price (as hereinafter defined).
(c) Liabilities Under Permits and Licenses. Seller's
obligations arising from and after the Closing Date under any
Regulatory Authorization which are assigned to Buyer at the
Closing pursuant to Section 1.1(i).
2.2 Liabilities Not to be Assumed. Except as and to the
extent specifically set forth in Section 2.1, Buyer is not
assuming any debts, liabilities, obligations or contracts of
Seller and all such debts, liabilities, obligations and contracts
shall be and remain the responsibility of Seller.
Notwithstanding the provisions of Section 2.1 and without
limiting the generality of the foregoing, Buyer is not assuming
and Seller shall not be deemed to have transferred to Buyer the
following debts, liabilities, obligations and contracts of
Seller:
(a) Certain Contracts and Leases. Except as provided
in Section 2.1(b), the obligations of Seller or Parent, on behalf
of Seller, under and pursuant to the contracts and leases listed
in Schedule 2.2(a).
(b) Taxes, Penalties or Assessments Arising from
Transaction. Any United States, foreign, state or other taxes,
penalties or assessments applicable to, imposed upon or arising
out of the sale or transfer of the Purchased Assets to Buyer and
the other transactions contemplated by this Agreement, including
but not limited to any income, unrelated business income,
transfer, sales, use, gross receipts or documentary stamp taxes
or any obligation imposed on Buyer directly or indirectly arising
from the transfer of the Purchased Assets from Seller to Buyer.
Seller and Buyer agree that any applicable sales or transfer
taxes will be borne equally by the parties.
(c) Taxes. Any liability or obligation of Seller for
any state or local franchise taxes, unrelated business income,
inurement or private benefit (and any penalties or interest due
on account thereof).
(d) Blood Product and Related Liability. Any
liability or obligation of Seller arising out of or in any way
relating to or resulting from the operation by Seller prior to
Closing, which is not an Assumed Liability, including but not
limited to liabilities or obligations relating to: (i) any Blood
Product obtained, manufactured, distributed or sold prior to the
Closing Date or (ii) Seller's activities as a blood bank,
including but not limited to, reporting or failing to report
positive results for agents of viral hepatitis or antibodies
which are probable causative agents for Acquired Immune
Deficiency Syndrome. All non-assumed liabilities under this
Section 2.2(d) include any liability or obligation of Seller for
claims made for injury to person, damage to property or other
damage, whether made in product liability, tort, breach of
warranty or otherwise.
(e) Litigation Matters. Any liability or obligation
with respect to any suits, actions, claims or proceedings,
whether or not described in Schedule 2.2(e).
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(f) Infringements. Any liability to a third party
under its intellectual property or other proprietary rights,
including, but not limited to, claims arising out of the
manufacture, use or sale of goods or apparatus, the performance
of services, or the copying, modifying, distributing, performing
or displaying of any work, arising prior to Closing.
(g) Transaction Expenses. All liabilities, costs,
obligations or expenses incurred by Seller in connection with
this Agreement and the transactions contemplated herein.
(h) Liability For Breach. Liabilities and obligations
of Seller for any breach or failure to perform any of Seller's
covenants and agreements contained in, or made pursuant to, this
Agreement, or, prior to the Closing, any other contract or
agreement, whether or not assumed hereunder, including any breach
arising from assignment of contracts hereunder without consent of
third parties.
(i) Liabilities to Affiliates. Liabilities and
obligations of Seller to its present or former Affiliates except
for obligations of Seller to its current employees. For
purposes of this Agreement, the term "Affiliate" shall mean and
include:
(a) any former employee, director or officer of
the Seller;
(b) any current or former spouse of any person
described in clause (i) or any person who is a member of the same
household of the person described in clause (i) or who has
resided with such person for more than 10 days in any calendar
year.
(j) Violation of Law and Regulations. Liabilities and
obligations of Seller for any violation or alleged violation of
or failure or alleged failure to comply with any statute, law,
rule, regulation, order, writ, injunction or decree of any court
or governmental authority.
(k) Employee Liabilities. Any liability of Seller as
employer of Seller's employees, whether such liability arises by
statute, contract or otherwise.
3. PURCHASE PRICE - PAYMENT
- ---------------------------------
3.1 Purchase Price. The purchase price (the "Purchase
Price") for the Purchased Assets shall be:
(a) the assumption of the Assumed Liabilities;
plus
(b) the net book value of the Seller's owned assets,
supplies, inventories, deposits and prepaids as
listed on Schedule 3.1(b) at Closing.
plus (c) Annual Installments, including a non-refundable
advance in the amount of $200,000, subject to Section 3.2(d).
plus (d) the sum of $100,000, subject to section 3.2 (e);
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3.2 Payment of Purchase Price. The Purchase Price shall be
paid by Buyer as follows:
(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Parent, for the benefit of Seller, such
documents and instruments as are reasonably required to evidence
the assumption of the Assumed Liabilities.
(b) Cash to Seller. At the Closing, Buyer shall
deliver to Parent, for the benefit of Seller, the amount required
to be paid in Sections 3.1(b) and (c), subject to any adjustments
contemplated by this Agreement, including Section 3.3.
(c) Method of Payment. Payments under Section 3.1
shall be made in the form of certified or official bank check
payable to the order of the recipient or, at the recipient's
option, by wire transfer of immediately available funds to an
account designated by the recipient not less than 48 hours prior
to the time for payment specified herein.
(d) Annual Installments. Buyer, its Affiliates,
successors, or assigns, agree to pay Parent, for the benefit of
Seller, a percentage of the annual revenue generated in the Area
for either a period of five (5) years after the Closing or until
such payments total six hundred twenty two thousand dollars
($622,000.), whichever occurs first, calculated as follows:
(i) At Closing, Buyer will advance Parent, for the
benefit of Seller, a non-refundable sum of two hundred thousand
dollars ($200,000.) ("Initial Advance").
Within thirty days after the close of Buyer's
fiscal year, Buyer will pay Seller a percentage of total gross
revenues (determined in accordance with Generally Accepted
Accounting Principles) generated in the Area during the prior
twelve months of the Buyer's fiscal year, as calculated below,
provided however that the first payment due hereunder shall be
based upon revenues derived from the Closing until March 31, 1998
(the "Annual Installment"). The final payment will be paid
forty-five (45) days after August 1, not March 31.
(ii) Up to seventy five thousand dollars ($75,000)
of each Annual Installment shall be credited against the Buyer's
Initial Advance, until the cumulative amount of such credits
equals $200,000. Should any Annual Installment exceed seventy
five thousand dollars ($75,000), Buyer will pay Seller the
remaining balance due on the Annual Installment.
<TABLE>
<CAPTION>
Fiscal Year Gross Revenue Ranges | Percentage Payments to Seller For
(millions) | Revenue within Ranges
---------------------------------|-----------------------------------
<S> | <C>
For revenue less than $1.5 | 4.0 %
For revenue between $1.5 - $2.5 | 3.0 %
For revenue between $2.5 - $4.0 | 1.5 %
For revenue of $4 and greater | 0.5 %
</TABLE>
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Below is an example of how the Annual Installment
would be calculated if in year one the fiscal year gross revenue
was $2,850,000:
<TABLE>
<CAPTION>
Annual Installment Revenue Percentage Payment
Payment Amount
----------------------------------- ------------ ----------- -------------
<S> <C> <C> <C>
For revenue less than $1.5 $1,500,000 4.0 % $ 60,000
For revenue between $1.5 - $2.5 $1,000,000 3.0 % $ 30,000
For revenue between $2.5 - $4.0 $ 350,000 1.5 % $ 5,250
---------- ----------- -------------
Gross Amount Due $ 95,250
Credit Towards Initial
Advance $ 75,000
-------------
ANNUAL INSTALLMENT DUE
TO PARENT $ 20,250
========================= =============
</TABLE>
(iii) The Buyer shall provide the Seller with a
statement of revenue generated in the Area, in the form of
Schedule 3.2(d) each quarter until the earlier of five years
after the closing or the receipt by Seller of $622,000 in Annual
Installments. Seller shall have the right of audit and, in the
event that such an audit reveals a discrepancy in Seller's favor
greater than ten percent (10%) for any quarter, as reported by a
statement of revenue provided by Buyer to Seller in accordance
with the terms of this Section, Buyer shall pay to Seller an
amount equal to such discrepancy, together with all reasonable
fees and expenses associated with such audit.
(e) Regulatory Approval. Seller has applied to the
Food and Drug Administration (FDA) for an Establishment License
and Product Licenses so indicated on Schedule 1.1(i). Buyer will
pay Seller the sum of one hundred thousand dollars ($100,000)
upon approval by FDA of all of those licenses ("Regulatory
Approval") or the decision of Buyer not to pursue regulatory
approval.
3.3 Employee Payments and Adjustments. All employees of
Seller as of the date of this Agreement are listed on Schedule
3.3 together with their gross compensation and job title. The
amount of salaries, wages and other remuneration due in respect
of periods to and including the date of Closing to such employees
of Seller and the amount of bonuses, accrued vacation, holiday or
sick pay or other benefits due to such employees for all such
periods shall be paid by Seller directly to such employees on or
before the Closing.
3.4 Allocation of Purchase Price. The aggregate Purchase
Price (including the assumption by Buyer of the Assumed
Liabilities) shall be allocated among the Purchased Assets for
tax purposes in accordance with Schedule 3.4. Seller and Buyer
will follow and use such allocation in all income, sales
registration and other tax returns, filings or other related
reports made by them to any governmental agencies. To the extent
that disclosures of this allocation are required to be made by
the parties to the Internal Revenue Service ("IRS") under the
provisions of Section 1060 of the Internal Revenue Code of 1986,
as amended (the "Code") or any regulations thereunder, Buyer
and Seller will disclose such reports to the other prior to
filing with the IRS.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER
- ------------------------------------------------
Seller and Parent make the following representations and
warranties to Buyer, each of which is true and correct on the
date hereof, to the knowledge of the Seller or Parent's officers,
shall remain true and correct to and including the Closing Date,
shall be unaffected by any investigation heretofore or hereafter
made by Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedules delivered to
Buyer at the time of the execution of this Agreement, and shall
survive for a period of two (2) years following the Closing of
the transactions provided for herein.
4.1 Corporate.
(a) Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Missouri.
(b) Corporate Power. Seller has (i) all requisite
corporate power and authority to own, operate and lease its
properties, as is now being conducted, and (ii) to enter into
this Agreement and the other documents and instruments to be
executed and delivered by Seller pursuant hereto and to carry out
the transactions contemplated hereby and thereby.
(c) No Dissolution or Liquidation. The Board of
Directors of the Seller has not adopted any resolution or taken
any other action with respect to dissolution, liquidation or
winding up of the Seller, no such resolution or other action is
proposed, under consideration or contemplated, and there is no
proceeding or other action pending or, to the knowledge of the
Seller threatened, proposed or contemplated by any court,
administrative or governmental agency, instrumentality,
commission, authority, board or body with respect to any
dissolution, liquidation or winding up of the Seller, nor is
there any basis for any such proceeding or other action.
(d) Insurance Policies. All policies of liability
insurance held by Seller which are within the scope of Section
4.12 are occurrence based policies, with the exception of the
Professional Medical Liability Insurance, which is a claims made
based policy.
4.2 Authority. The execution and delivery of this
Agreement and the other documents and instruments to be executed
and delivered by Seller pursuant hereto and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Seller. No other or
further corporate act or proceeding on the part of Seller or its
Board of Directors is necessary to authorize this Agreement or
the other documents and instruments to be executed and delivered
by Seller pursuant hereto or the consummation of the transactions
contemplated hereby. This Agreement constitutes, and when
executed and delivered, the other documents and instruments to be
executed and delivered by Seller pursuant hereto will constitute,
valid binding agreements of Seller, enforceable in accordance
with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
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4.3 No Violation. Except as set forth on Schedule 4.3
of the Disclosure Schedules, the execution and delivery of this
Agreement and the other documents and instruments to be executed
and delivered by Seller pursuant hereto, and the consummation by
Seller of the transactions contemplated hereby and thereby (a)
will not violate any statute or law or any rule, regulation,
order, writ, injunction or decree of any court or governmental
authority, (b) will not require any authorization, consent,
approval, exemption or other action by or notice to any court,
administrative or governmental agency, instrumentality,
commission, authority, board or body, and (c) subject to
obtaining the consents referred to in Schedule 4.3 of the
Disclosure Schedule, will not violate or conflict with, or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the assets of
Seller.
4.4 Financial Statements. Included as Exhibit 4.4 are
true and complete copies of the financial statements of Seller
consisting of income statements.
4.5 Tax Matters.
(a) Tax Returns Filed. All federal, state, foreign,
county, local and other tax returns required to be filed by or on
behalf of Seller have been timely filed and when filed were true
and correct in all material respects, and the taxes shown as due
thereon were paid or adequately accrued. Seller has duly
withheld and paid all taxes which it is required to withhold and
pay relating to salaries, wages and other compensation,
remuneration or benefits paid to the employees of Seller.
(b) Tax Audits. Seller has not received from the
Internal Revenue Service or from the tax authorities of any
state, county, local or other jurisdiction any notice of
underpayment of taxes or other deficiency which has not been paid
nor any objection to any return or report filed by Seller, or any
claim for tax arising from unrelated business income, or any
claim of inurement or private benefit. There are outstanding no
agreements or waivers extending the statutory period of
limitations applicable to any tax return or report.
(c) Other. Seller has not (i) filed any consent or
agreement under Section 341(f) of the Code, (ii) applied for any
tax ruling, (iii) entered into a closing agreement with any
taxing authority, (iv) been a party to any tax allocation or tax
sharing agreement, or (v) been taxed on unrelated business
income.
4.6 Inventory. All Inventory referred to in Section 1.1(d)
consists of a quality and quantity usable and saleable in the
ordinary course of business. All Inventory is located on
premises owned or leased by Seller as reflected in this
Agreement.
4.7 Absence of Certain Changes. Except as and to the
extent set forth in Schedule 4.7 or to any other Schedule hereto,
since the date of the Letter of Intent, there has not been:
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(a) No Adverse Change. Any adverse change in the
business, prospects or operations of Seller;
(b) No Damage. Any loss, damage or destruction,
whether covered by insurance or not, affecting the Purchased
Assets;
(c) No Increase in Compensation. Any increase in the
salaries, wages or other remuneration or compensation, or in any
benefits payable or to become payable to any employee or agent of
Seller (including, without limitation, any increase or change
pursuant to any bonus, pension, profit sharing, retirement or
other plan or commitment), or any bonus or other employee benefit
granted, made or accrued;
(d) No Labor Disputes. Any labor dispute or
disturbance;
(e) No Amendment of Contracts. Entry into, amendment
or termination by Seller of any contract, or any waiver of
material rights thereunder, other than in the ordinary course of
business;
(f) No Loans and Advances. Any loan or advance (other
than advances to employees in the ordinary course of business for
travel and entertainment in accordance with past practice) to any
person including, but not limited to, any officer, director or
employee of Seller, or any Affiliate;
(g) No Credit. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those
which have been extended to such customer or distributor in the
past, any other change in the terms of any credit heretofore
extended, or any other change of Seller's policies or practices
with respect tothe granting of credit;
(h) Regulatory Approval. Any denial of any Regulatory
Approval or grant of a Regulatory Approval on terms or conditions
not consistent with the relevant terms and conditions of this
Agreement;
(i) No Termination of Contracts. No termination,
notice to terminate, or occurrence of an event which, with the
passage of time or the giving of notice, would cause a
termination of any Real Property Lease, Personal Property Lease,
Operating Contract, Distribution Contract or Administrative
Contract; or
(j) No Unusual Events. Any other event or condition
not in the ordinary course of business of Seller.
4.8 Absence of Undisclosed Liabilities. Seller does not
have any liabilities, commitments or obligations (secured or
unsecured, and whether accrued, absolute, contingent, direct,
indirect or otherwise), other than commercial liabilities and
obligations incurred in the ordinary course of business and
consistent with past practice which in the aggregate have not and
will not have a material adverse effect on the business,
financial condition or results of operations of Seller. Seller or
Parent have no knowledge of any basis for the assertion against
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Seller of any liability and there are no circumstances,
conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to liabilities, except commercial
liabilities and obligations incurred in the ordinary course of
the business and consistent with past practice.
4.9 No Litigation. Except as set forth in Schedule 4.9 ,
to the knowledge of Seller or Parent's officers, there is no
action, suit, arbitration or other proceeding, investigation or
inquiry pending or threatened against Seller, its directors (in
such capacity), or any of its assets, nor does Seller or any
officer or director know, or have grounds to know, of any basis
for any such proceedings, investigations or inquiries. Schedule
4.9 also identifies all such actions, suits, proceedings,
investigations and inquiries to which Seller, any of its
directors have been parties since the Seller's inception in 1995.
Except as set forth in Schedule 4.9 , neither Seller nor its
assets is subject to any judgment, order, writ or injunction of
any court, arbitrator or federal, state, foreign, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality.
4.10 Compliance With Laws.
(a) Compliance. To the best of the knowledge of
Seller and Parent, their officers, except as set forth in
Schedule 4.10(a) , Seller (including each and all of its
operations, practices, properties and assets) is in compliance
with all applicable federal, state, local and foreign laws,
ordinances, orders, rules and regulations (collectively,
"Laws"), including, without limitation, those applicable to
blood banks, and related laws of the states in which the Seller
operates, discrimination in employment, occupational safety and
health, trade practices, competition and pricing, product
warranties, zoning, building and sanitation, employment,
retirement and labor relations, product labeling and advertising
and the Environmental Laws (as defined herein). Except as set
forth in Schedule 4.10(a) , Seller has not received notice of any
violation or alleged violation of, and is subject to no liability
(whether accrued, absolute, contingent, direct or indirect) for
past or continuing violation of, any Laws. All reports and
returns required to be filed by Seller with any governmental
authority have been filed, and were accurate and complete when
filed. Without limiting the generality of the foregoing:
(i) The operation of the business as it is now
conducted does not in any manner constitute a nuisance or other
tortuous interference with the rights of any person or persons in
such a manner as to give rise to or constitute the grounds for a
suit, action, claim or demand by any such person or persons
seeking compensation or damages or seeking to restrain, enjoin or
otherwise prohibit any aspect of the conduct of such business or
the manner in which it is now conducted.
(ii) Seller has made all required payments to its
unemployment compensation reserve accounts with the appropriate
governmental departments of the states where it is required to
maintain such accounts, and each of such accounts has a positive
balance.
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(iii) With respect to employees, Seller has
delivered to Buyer copies of all reports of Seller since its
inception in 1995 required under the federal Occupational Safety
and Health Act of 1970, as amended, and under all other
applicable health and safety laws and regulations. The
deficiencies, if any, noted on such reports have been corrected.
(iv) Seller is in compliance with all
Environmental Laws relating to the operation at the leased Real
Property identified on Schedule 1.1(a).
(b) Licenses and Permits. Except as set forth on
Schedule 4.10(a), to the best of the knowledge of Seller, Parent,
and their officers, Seller has all licenses, permits,
registrations, approvals, authorizations and consents of all
governmental and regulatory authorities and all certification
organizations required for the conduct of the business (as
presently conducted). All such licenses, permits, registrations,
approvals, authorizations and consents are described in Schedule
1.1(i), are in full force and effect, except those applications
which have been applied for, but not yet issued and which are
identified as "Pending" on the schedule, and except as set
forth on Schedule 4.10(b)(i), are assignable to Buyer in
accordance with the terms hereof. Except as set forth in
Schedule 4.10(a), Seller (including its operations, properties
and assets) is and has been in compliance with all such permits,
registrations, approvals, authorizations and consents.
Seller has delivered to Buyer copies of all licenses,
permits, registrations, approvals, authorizations and consents of
all governmental and regulatory authorities, and has delivered
copies of all applications for such licenses, permits,
registrations, approvals, authorizations and consents, and
reports of Seller to the Federal Food and Drug Administration and
the Missouri Health Department. Furthermore, Seller has taken
all steps, including any filings with governmental or regulatory
authorities, necessary to effect transfer all licenses, permits,
registrations, approvals, authorizations and consents to Buyer
and has delivered to Buyer copies of such filings or other
relevant correspondence with the appropriate governmental or
regulatory authorities.
(c) Environmental Matters. The applicable Laws
relating to pollution or protection of the environment, including
Laws relating to emissions, discharges, generation, storage,
releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic, hazardous or petroleum or
petroleum-based substances or wastes ("Waste") into the
environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Medical Waste Tracking Act of 1988
and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local
counterparts, are herein collectively referred to as the
"Environmental Laws". Without limiting the generality of the
foregoing provisions of this Section 4.10(c), to the best of the
knowledge of Seller, Parent, their officers and directors, the
Seller is in full compliance with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or
contained in any regulations, code, plan, order, decree,
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judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. There is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter
pending or threatened against Seller relating in any way to the
Environmental Laws or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. There are no past or present
(or, to the best of Seller's knowledge, future) events,
conditions, circumstances, activities, practices, incidents,
actions, omissions or plans which may interfere with or prevent
compliance or continued compliance with the Environmental Laws or
with any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder, or which may give rise to any liability,
including, without limitation, liability under CERCLA or similar
state or local Laws, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing, notice of violation,
study or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Waste.
4.11 Title to and Condition of Properties.
(a) Marketable Title. Subject only to the provision of
the leases listed in Schedules 1.1(a) and 1.1(b), Seller has good
and marketable title to all the Purchased Assets, free and clear
of all mortgages, liens (statutory or otherwise), security
interests, claims, pledges, licenses, equities, options,
conditional sales contracts, leases, purchase agreements,
financing leases, assessments, levies, easements, covenants,
reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those described in Schedule
4.11(a). Seller has complete and unrestricted power and right to
sell, assign, convey and deliver the Purchased Assets to Buyer as
contemplated hereby except as set forth on Schedule 4.11(a). At
Closing, Buyer will receive good and marketable title to all the
Purchased Assets, free and clear of all Liens of any nature
whatsoever except those described in Schedules 1.1(a), 1.1.(b)
and 4.11(a).
(b) Condition. All tangible assets (real and
personal) constituting Purchased Assets hereunder are in good
operating condition and repair, free from any defects (except
such minor defects as do not interfere with the continuing and
safe use thereof in the conduct of the normal operations of
Seller), have been maintained consistent with the standards
generally followed in the industry and applicable legal standards
and are sufficient to carry on business of Seller as conducted
during the preceding 12 months. All buildings, plants and other
structures utilized by Seller are in good condition and repair
and have no structural defects or defects affecting the plumbing,
electrical, sewerage, or heating, ventilating or air conditioning
systems.
(c) No Condemnation or Expropriation. Neither the
whole nor any portion of the property or any other assets of
Seller to be conveyed to Buyer is subject to any governmental
decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment
of compensation therefore, nor to the best of Seller's, its
officers' and directors' knowledge has any such condemnation,
expropriation or taking been proposed.
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4.12 Insurance. Set forth in Schedule 4.12 is a
complete and accurate list and description of all policies of
fire, casualty, general liability, product liability, healthcare
entity (Blood Bank) liability, workers compensation, health and
other forms of insurance in effect as of the Closing, with
respect to the business of Seller, true and correct copies of
which have heretofore been delivered to Buyer. Schedule 4.12
includes, without limitation, the carrier, the description of
coverage, the limits of coverage, retention or deductible
amounts, amount of annual premiums, date of expiration and the
date through which premiums have been paid with respect to each
such policy, and any pending claims in excess of ten thousand
dollars ($10,000). All such policies are valid, outstanding and
enforceable policies and provide insurance coverage for the
properties, assets and operations of Seller, of the kinds, in the
amounts and against the risks customarily maintained by
organizations similarly situated , and no such policy (nor any
previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing
arrangement or other actual or contingent liability arising
wholly or partially out of events arising prior to the date
hereof. Schedule 4.12 indicates each policy as to which (a) the
coverage limit has been reached or (b) the total incurred losses
to date equal 75% or more of the coverage limit. No notice of
cancellation or termination has been received with respect to any
such policy, and neither Seller nor any officer or director has
knowledge of any act or omission of Seller which could result in
cancellation of any such policy prior to its scheduled expiration
date. Seller has not been refused any insurance with respect to
any aspect of the operations of Seller's business nor has its
coverage been limited by any insurance carrier to which it has
applied for insurance or with which it has carried insurance
during the last three years. Seller has duly and timely made all
claims it has been entitled to make under each policy of
insurance. There is no claim by Seller pending under any such
policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies, and neither Seller
nor any of its officers, directors knows of any basis for denial
of any claim under any such policy. Such policies are sufficient
in all material respects for compliance by Seller with all
requirements of law and with the requirements of all contracts to
which Seller is a party.
4.13 Contracts and Commitments.
(a) Schedules. Schedules 1.1(a) through 1.1(k) are
complete and correct as to the matters they purport to represent.
(b) Contracts. Schedules 1.1(f)(i), (ii), (iii), and
(iv) set forth, collectively, all Contracts of the Seller.
(c) Purchase Commitments. Seller has no purchase
commitments for Inventory (items or supplies) that, together with
amounts on hand, constitute in excess of six (6) months normal
usage, or which are at an excessive price compared with Seller's
past prices.
(d) Sales Commitments. Seller has no contracts or
commitments relating to sales of Blood Products. Seller has no
contracts or commitments except those made in the ordinary course
of the business, at arm's length, and no such contracts or
commitments are for a sales price which would result in a loss to
the Seller.
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(e) Contracts With Affiliates and Certain Others.
Seller has no agreement, understanding, contract or commitment
(written or oral) with any Affiliate or officer, employee,
independent contractor, agent, consultant, distributor, blood
bank depository, transfusion service, blood collection center or
Mobile Unit that is not cancelable by Seller on notice of not
longer than 30 days without cause, liability, penalty or premium
of any nature or kind whatsoever.
(f) Powers of Attorney. The Seller has not given a
power of attorney, which is currently in effect, to any person,
firm or corporation for any purpose whatsoever.
(g) Collective Bargaining Agreements. Seller is not a
party to any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups.
(h) Loan Agreements. Seller is not obligated under any
loan agreement, promissory note, letter of credit, or other
evidence of indebtedness as a signatory, guarantor or otherwise.
(i) Guarantees. Except as disclosed on Schedule
4.13(i), Seller nor Parent, on behalf of Seller, has not
guaranteed the payment or performance of any person, firm or
corporation, agreed to indemnify any person or act as a surety,
or otherwise agreed to be contingently or secondarily liable for
the obligations of any person.
(j) Burdensome or Restrictive Agreements. Seller is
not a party to nor is it bound by any agreement, deed, lease or
other instrument which is so burdensome as to materially affect
or impair the operation of Seller. Without limiting the
generality of the foregoing, Seller is not a party to nor is it
bound by any agreement requiring Seller to assign any interest in
any trade secret or proprietary information, or prohibiting or
restricting Seller from competing in the geographical area or
soliciting customers or otherwise restricting it from carrying on
the business anywhere in the world.
(k) Other Material Contracts or Commitments. Seller
nor Parent, on behalf of Seller, have no lease, contract or
commitment of any nature involving consideration or other
expenditure in excess of $10,000, or involving performance over a
period of more than three months, or which is otherwise
individually material to the operations of Seller, except as
explicitly described in Schedule 4.13(k) or in any other
Schedule.
(l) No Default. Except as disclosed on Schedule
4.13(l), Seller is not in default under any lease, contract or
commitment, nor has any event or omission occurred which through
the passage of time or the giving of notice, or both, would
constitute a default thereunder or cause the acceleration of any
of Seller's obligations or result in the creation of any Lien on
any of the Purchased Assets. No third party is in default under
any lease, contract or commitment to which Seller is a party, nor
has any event or omission occurred which, through the passage of
time or the giving of notice, or both, would constitute a default
thereunder or give rise to an automatic termination, or the right
of discretionary termination, thereof.
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4.14 Labor Matters. Except as set forth in Schedule 4.14,
since its inception in 1995, Seller has not experienced any labor
disputes, union organization attempts or any work stoppage due to
labor disagreements in connection with its business. Except to
the extent set forth in Schedule 4.14, (a) Seller is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice;
(b) there is no unfair labor practice charge or complaint against
Seller pending or threatened; (c) there is no labor strike,
dispute, request for, slowdown or stoppage actually pending or
threatened against or affecting Seller nor any secondary boycott
with respect to products of Seller; (d) no question concerning
representation has been raised or is threatened respecting the
employees of Seller; (e) no grievance and no arbitration
proceeding arising out of or under collective bargaining
agreements, is pending and no such claim therefor exists; and (f)
there are no administrative charges or court complaints against
Seller concerning alleged employment discrimination or other
employment related matters pending or threatened before the U.S.
Equal Employment Opportunity Commission or any state or federal
court or agency.
4.15 Employment Compensation. Schedule 3.3 contains a true
and correct list of all employees to whom the Seller is paying
compensation, including bonuses and incentives for services
rendered or otherwise; and in the case of salaried employees such
list identifies the current annual rate of compensation for each
employee and in the case of hourly or commission employees
identifies certain reasonable ranges of rates and the number of
employees falling within each such range.
4.16 Trade Rights. Schedule 1.1(e) lists all Trade Rights
in which Seller now has any interest, specifying whether such
Trade Rights are owned, controlled, used or held (under license
or otherwise) by Seller, and also indicating which of such Trade
Rights are registered. All Trade Rights have been properly
registered, all pending registrations and applications have been
properly made and filed and all annuity, maintenance, renewal and
other fees relating to registrations or applications are current.
In order to conduct the business of Seller, as such is currently
being conducted or proposed to be conducted, Seller does not
require any Trade Rights that it does not already have. Seller
is not infringing and has not infringed any Trade Rights of
another in the operation of the business of Seller, nor is any
other person infringing the Trade Rights of Seller. Seller has
not granted any license or made any assignment of any Trade Right
listed on Schedule 1.1(e , nor does Seller pay any royalties or
other consideration for the right to use any Trade Rights of
others. There are no inquiries, investigations or claims or
litigation challenging or threatening to challenge Seller's
right, title and interest with respect to its continued use and
right to preclude others from using any Trade Rights of Seller.
All Trade Rights of Seller are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement
based on any act or omission of Seller.
4.17 Major Customers. Schedule 1.1(f)(ii) contains a
list of the customers of Seller, since Seller's inception in
1995 showing the total dollar amount of net sales to each such
customer during each month in such period. Customers include
hospitals, health systems, third-party payors, blood bank
depositories, transfusion services, and blood collection centers.
Seller, Parent nor any of their officers have any knowledge or
information of any facts indicating, nor any other reason to
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believe, that any of the customers listed on Schedule 1.1(f)(ii)
will not continue to be customers of Buyer after the Closing at
substantially the same level of purchases as heretofore except as
disclosed on Schedule 4.17.
4.18 Blood Product or Related Liability. Schedule 4.18
contains a description of all product liability claims and
similar claims, actions, litigation and other proceedings
relating directly or indirectly to Blood Products manufactured,
distributed or sold, or related services rendered, including
operation of the blood bank, donor selection, and screening, and
donor/recipient recordkeeping and notification which are
presently pending or which to Seller, Parent or any of their
officers or directors' knowledge are threatened, or which have
been asserted or commenced against Seller within the last five
(5) years, in which a party thereto either requests injunctive
relief (whether temporary or permanent) or alleges damages
(whether or not covered by insurance). There are no defects in
preparation, storage or manufacture of Blood Products which would
adversely affect performance or create an unusual risk of injury
to persons or property, specifically including Blood Products in
the Inventory. The Blood Products have been processed so as to
meet and comply with all governmental standards and
specifications currently in effect, and have received all
governmental approvals necessary to allow their distribution,
sale and use. The materials furnished with the Blood Products
provide adequate safety instructions and warnings under the
applicable law of all jurisdictions in which the Seller's
products have been sold.
4.19 No Brokers or Finders. Neither Seller nor any of its
directors, officers, employees or agents have retained, employed
or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation
thereof.
4.20 Disclosure. No representation or warranty by Seller in
this Agreement, nor any statement, certificate, schedule or
exhibit hereto furnished or to be furnished by or on behalf of
Seller pursuant to this Agreement, nor any schedule, document or
certificate delivered to Buyer pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or
shall omit a material fact necessary to make the statements
contained therein not misleading. All statements and information
contained in any certificate, instrument, schedule or document
delivered by or on behalf of Seller shall be deemed
representations and warranties by the Seller.
4.21 Hart-Scott-Rodino Act Representation. Parent has no
more than $4,500,000 in assets, as reflected in Parent's most
recent balance sheet, nor more than $11,000,000 in revenues in
its most recently completed full fiscal year.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
- -----------------------------------------------
Buyer makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof,
shall remain true and correct to and including the Closing Date,
shall be unaffected by any investigation heretofore or hereafter
made by Seller or any notice to Seller, and shall survive the
Closing of the transactions provided for herein.
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5.1 Corporate.
(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts.
(b) Corporate Power. Buyer has all requisite
corporate power to enter into this Agreement and the other
documents and instruments to be executed and delivered by Buyer
and to carry out the transactions contemplated hereby and
thereby.
5.2 Authority. The execution and delivery of this
Agreement and the other documents and instruments to be executed
and delivered by Buyer pursuant hereto and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its
Shareholders is necessary to authorize this Agreement or the
other documents and instruments to be executed and delivered by
Buyer pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and
when executed and delivered, the other documents and instruments
to be executed and delivered by Buyer pursuant hereto will
constitute, valid and binding agreements of Buyer, enforceable in
accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
5.3 No Brokers or Finders. Neither Buyer nor any of its
directors, officers, employees or agents have retained, employed
or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation
thereof.
5.4 Securities Laws. Buyer has complied with all state and
federal securities applicable to Buyer by reason of the
transaction contemplated by this Agreement.
5.5 Disclosure. No representation or warranty by Seller in
this Agreement, nor any statement, certificate, schedule or
exhibit hereto furnished or to be furnished by or on behalf of
Seller pursuant to this Agreement, nor any schedule, document or
certificate delivered to Buyer pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or
shall omit a material fact necessary to make the statements
contained therein not misleading. All statements and information
contained in any certificate, instrument, schedule or document
delivered by or on behalf of Seller shall be deemed
representations and warranties by the Seller.
5.6 Absence of Litigation. To the knowledge of Buyer,
there are no claims, actions, suits, proceedings or
investigations pending or threatened against Buyer before any
court, arbitrator or administrative, governmental or regulatory
authority or body which could reasonably be expected to adversely
affect Buyer's ability to perform it obligations under this
Agreement or as contemplated hereby.
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<PAGE> 35
5.7 SEC Reports. As of their respective dates, all reports
or registration statements filed by Buyer with the Securities and
Exchange Commission ("SEC") since 1995, including all exhibits
thereto and items incorporated therein by reference, do not
contain any untrue statements of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, under the circumstances in which
they were made, not misleading.
5.8 No Violation. The execution and delivery of this
Agreement and the other documents and instruments to be executed
and delivered by Buyer pursuant hereto, and the consummation by
Buyer of the transactions contemplated hereby and thereby, (a)
will not violate any statute or law or any rule, regulation,
order, writ, injunction or decree of any court or governmental
authority, (b) will not require any authorization, consent,
approval, exemption or other action by or notice to any court,
administrative or governmental agency, instrumentality,
commission, authority, board or body,, will not violate or
conflict with, or constitute a default (or an event with, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien
upon, any of the assets of Buyer under any term or provisions of
Buyer's Articles of Incorporation, Bylaws or other constituent
documents of Buyer or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to
which Buyer is a party or by which Buyer or any of Buyer's assets
or properties may be bound or affected.
5.9 Operations of Seller. Buyer recognizes that Parent
provides certain services and support to Seller, including
without limitation, financial reporting services and human
resources. Buyer recognizes that such services and support are
necessary for the ongoing operation of Seller's activities and
operations, and that any assets owned by Parent which are
necessary to provide such services and support are not
transferred, sold or assigned to Buyer under the terms and
provision of this Agreement. Buyer recognizes that, in order to
conduct operations in the Area in a manner similar to that
conducted by Seller, Buyer must provide the services and support
currently being provided by Parent.
6. EMPLOYEES - EMPLOYEE BENEFITS
- --------------------------------------
6.1 Employees. Seller shall terminate employment of all
employees of Seller as of Closing. Buyer shall not be
responsible for any compensation or benefits (including sick
leave or vacation pay) due from Seller to Seller's employees.
6.2 Retained Responsibilities. Seller agrees to satisfy,
or cause its insurance carriers to satisfy, all claims for
benefits, whether insured or otherwise (including, but not
limited to, workers' compensation, life insurance, medical and
disability programs), under Seller's employee benefit programs
brought by, or in respect of employees and former employees of
the Seller, which claims arise out of events occurring on or
prior to the Closing Date, in accordance with the terms and
conditions of such programs or applicable workers' compensation
statutes.
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<PAGE> 36
6.3 Payroll Tax. Seller agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to its employees
paying over to the federal, state and city governments those
amounts respectively withheld or required to be withheld for
periods ending on or prior to the Closing. Seller also agrees to
issue, by the date prescribed by IRS Regulations, Forms W-2 for
salaries, wages and other compensation paid through the Closing
Date.
6.4 Termination Benefits. If any action on the part of
Seller prior to the Closing, or if the sale to Buyer of the
assets of Seller pursuant to this Agreement or the transactions
contemplated hereby, shall result in any liability or claim of
liability for severance payments, termination benefits, accrued
vacation pay or other compensation or benefits, or any liability,
forfeiture, fine or other obligation by virtue of any state,
federal or local "plant-closing" or similar law, such liability
or such other liability, forfeiture, fine or other obligation or
claim of liability shall be the sole responsibility of Seller.
7. OTHER MATTERS
- ---------------------
7.1 Surrender of Certain Licenses. At and effective as of
Closing, Seller shall irrevocably cancel, surrender or otherwise
give up all Regulatory Authorizations which are Excluded Assets.
7.2 Use of Seller's Name. Following the Closing, neither
Seller nor any Affiliate shall, without the prior written consent
of Buyer (which may be withheld in Buyer's sole discretion), make
any use of the name "Gateway Community Blood Program, Inc." or
any other name confusingly similar thereto, except as may be
necessary for Seller to pay its liabilities, prepare tax returns
and other reports, and to otherwise wind up and conclude its
business, provided that the parties hereto agree that the use by
Seller or Parent of the name "Community Blood Program, Inc." or
any variation thereof in conjunction with other neighborhoods,
communities, towns or other locales shall not be considered
confusingly similar thereto.. Buyer understands that Parent's
existing corporate brochure identifies the corporate name and
will allow Parent to distribute such materials provided that,
Parent provides an insert to such brochure identifying this
transaction such that there will not be any confusion as to who
owns the assets. After the depletion of the existing supply of
brochures, or December 31, 1997, whichever occurs first, Parent
will remove corporate name from all materials.
7.3 Bulk Sales Compliance. Seller and Buyer waive
compliance with the bulk sales or bulk transfer statutes of all
states having jurisdiction.
7.4 Investigations. The respective representations and
warranties of Seller and Buyer contained herein or in any
certificates or other documents delivered at or prior to the
Closing, shall not be deemed waived or otherwise affected by any
investigation made by any party hereto.
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8. FURTHER COVENANTS OF SELLER
- ------------------------------------
Seller covenants and agrees as follows:
8.1 Access to Information and Records. During the period
prior to the Closing, Seller shall give Buyer, its counsel,
accountants and other representatives (i) access during normal
business hours to all of the properties, books, records,
contracts and documents of Seller for the purpose of such
inspection, investigation and testing as Buyer deems appropriate
(and Seller shall furnish or cause to be furnished to Buyer and
its representatives all information with respect to the business
and affairs of Seller as Buyer may request); (ii) access to
employees, agents and representatives for the purposes of such
meetings and communications as Buyer reasonably desires; and
(iii) with the prior consent of Seller in each instance (which
consent shall not be unreasonably withheld), access to suppliers,
customers and others having business dealings with Seller.
8.2 Consents. Seller will use their best efforts prior to
Closing to obtain all consents necessary for the consummation of
the transactions contemplated hereby, including, without
limitation, the consent of each lessor of real or personal
property leased by Seller under leases being assumed by Buyer
herein to assignment of the lessee's interest under the lease of
such property to Buyer. All such consents shall be in writing
and executed counterparts thereof shall be delivered to Buyer
promptly after Seller's receipt thereof but in no event later
than two business days prior to the Closing.
8.3 Other Action. Seller shall use its best efforts to
cause the fulfillment at the earliest practicable date of all of
the conditions to the parties' obligations to consummate the
transactions contemplated in this Agreement.
8.4 Disclosure. Seller shall have a continuing obligation
to promptly notify Buyer in writing with respect to any matter
hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set
forth or described in any Schedule. Seller shall amend such
Schedules to reflect such matters.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
- ---------------------------------------------------
Each and every obligation of Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior to or at
the Closing of each of the following conditions:
9.1 Representations and Warranties True on the Closing
Date. Each of the representations and warranties made or deemed
made by Seller in this Agreement, and the statements contained in
any Schedule or in any instrument, list, certificate or writing
delivered by Seller pursuant to this Agreement, shall be true and
correct in all material respects when made and shall be true and
correct in all material respects at and as of the Closing Date or
subsequently amended.
Page 22
<PAGE> 38
9.2 Compliance With Agreement. Seller shall have in all
material respects performed and complied with all of their
agreements and obligations under this Agreement which are to be
performed or complied with by them prior to or on the Closing
Date, including the delivery of the closing documents specified
in Section 11.1 and the furnishing of all Schedules in accordance
with Section 13.
9.3 Absence of Suit. No action, suit or proceeding before
any court or any governmental authority shall have been commenced
or threatened, and no investigation by any governmental or
regulating authority shall have been commenced, against Buyer,
Seller or any of the affiliates, officers or directors of any of
them, seeking to restrain, prevent or change the transactions
contemplated hereby, or questioning the validity or legality of
any such transactions, or seeking damages in connection with, or
imposing any condition on, any such transactions.
9.4 Consents and Approvals. All approvals, consents and
waivers that are required to effect the transactions contemplated
hereby shall have been received, and executed counterparts
thereof shall have been delivered to Buyer. After the Closing,
Seller will continue to use their best effects to obtain any such
consents or approvals, and Seller shall not be relieved of any
liability hereunder for failure to perform any of its covenants
or for the inaccuracy of any representation or warranty.
9.5 Estoppel Certificates. Seller shall have delivered to
Buyer on or prior to the Closing Date an estoppel certificate or
status letter from the landlord under each Real Property Lease
which estoppel certificate or status letter will certify (i) the
lease is valid and in full force and effect; (ii) the amounts
payable by Seller under the lease and the date to which the same
have been paid; (iii) whether there are, to the knowledge of said
landlord, any defaults thereunder, and, if so, specifying the
nature thereof; and (iv) a statement that the transactions
contemplated by this Agreement will not constitute default under
the lease and that the landlord consents to the assignment of the
lease to Buyer.
9.6 Seller's Disclosure Schedules. The Schedules referred
to in Section 13 are satisfactory to Buyer, in Buyer's sole
discretion.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
- ----------------------------------------------------
Each and every obligation of Seller to be performed on the
Closing Date shall be subject to the satisfaction prior to or at
the Closing of the following conditions:
10.1 Representations and Warranties True on the Closing
Date. Each of the representations and warranties made by Buyer
in this Agreement shall be true and correct in all material
respects when made and shall be true and correct in all material
respects at and as of the Closing Date as though such
representations and warranties were made or given on and as of
the Closing Date.
Page 23
<PAGE> 39
10.2 Compliance With Agreement. Buyer shall have in all
material respects performed and complied with all of Buyer's
agreements and obligations under this Agreement which are to be
performed or complied with by Buyer prior to or on the Closing
Date, including the delivery of the closing documents specified
in Section 11.2.
10.3 Absence of Suit. No action, suit or proceeding before
any court or any governmental authority shall have been commenced
or threatened, and no investigation by any governmental or
regulating authority shall have been commenced, against Buyer,
Seller or any of the affiliates, officers or directors of any of
them, seeking to restrain, prevent or change the transactions
contemplated hereby, or questioning the validity or legality of
any such transactions, or seeking damages in connection with, or
imposing any condition on, any such transactions.
10.4 Consents and Approvals. All approvals, consents and
waivers that are required to effect the transactions contemplated
hereby shall have been received, and executed counterparts
thereof shall have been delivered to Seller. After the Closing,
Buyer will continue to use their best effects to obtain any such
consents or approvals, and Buyer shall not be relieved of any
liability hereunder for failure to perform any of its covenants
or for the inaccuracy of any representation or warranty.
10.5 Removal of Guaranty. Any Guaranty of Parent used to
secure leased property will be released by the appropriate
Landlord.
11. CLOSING
- ---------------
The closing of this transaction ("the Closing") shall be
deemed to have taken place on August 1, 1997. Such date is
referred to in this Agreement as the "Closing Date".
11.1 Documents to be Delivered by Seller. At the Closing,
Seller shall deliver to Buyer the following documents, in each
case duly executed or otherwise in proper form:
(a) Bills of Sale. General warranty bills of sale and
such other instruments of assignment, transfer, conveyance and
endorsement as will be sufficient in the opinion of Buyer and its
counsel to transfer, assign, convey and deliver to Buyer the
Purchased Assets as contemplated hereby.
(b) Compliance Certificate. A certificate signed by
the chief executive officer of Seller that each of the
representations and warranties made by Seller in this Agreement,
as amended, is true and correct in all material respects on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as
of the Closing Date, and that Seller have performed and complied
with all of Seller's obligations under this Agreement which are
to be performed or complied with on or prior to the Closing Date.
(c) Opinion of Counsel. The written opinions of
counsel to Seller, dated as of the Closing Date, addressed to
Buyer, substantially in the form attached as Exhibit 11.1(c)
hereto.
Page 24
<PAGE> 40
(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Seller authorizing and
approving the transactions contemplated by this Agreement of
Seller approving the form of this Agreement.
(e) Articles; Bylaws. A copy of the By-laws of Seller
certified by the secretary of Seller, and a copy of the Articles
of Incorporation of Seller certified by the Secretary of State of
the state of incorporation of Seller.
(f) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Buyer pursuant to the terms hereof.
(g) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Buyer may reasonably request.
11.2 Documents to be Delivered by Buyer. At the Closing,
Buyer shall deliver to Seller the following documents, in each
case duly executed or otherwise in proper form:
(a) Cash. To Seller a certified or bank cashier's
check (or wire transfer) as required by Sections 3.1(b) and (c)
hereof.
(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Seller and its counsel to evidence the assumption of
Seller debts, liabilities and obligations as provided for in
Article 2.
(c) Compliance Certificate. A certificate signed by
the chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement, as amended, are true
and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given
on and as of the Closing Date, and that Buyer has performed and
complied with all of Buyer's obligations under this Agreement
which are to be performed or complied with on or prior to the
Closing Date.
(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Seller by Buyer pursuant to the terms hereof.
(f) Opinion of Counsel. The written opinion of
counsel to Buyer, dated as of the Closing Date, addressed to
Seller, substantially in the form attached as Exhibit 11.2(c)
hereto.
(g) Other Documents. All other documents, instruments
or writings required to be delivered to Seller at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Seller may reasonably request.
Page 25
<PAGE> 41
12. TERMINATION
- --------------------
12.1 Right of Termination Without Breach. This Agreement
may be terminated without further liability of any party at any
time prior to the Closing:
(a) by mutual written agreement of Buyer and Seller,
or
(b) by either Buyer or Seller if the Closing shall not
have occurred on or before August 4, 1997, provided the
terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring on or
before such date.
12.2 Termination for Breach.
(a) Termination by Buyer. If (i) there has been a
material violation or breach by Seller of any of the agreements,
representations or warranties contained in this Agreement which
has not been waived in writing by Buyer, or (ii) there has been a
failure of satisfaction of a condition to the obligations of
Buyer which has not been so waived, or (iii) Seller shall have
attempted to terminate this Agreement under this Article 12 or
otherwise without grounds to do so, then Buyer may, by written
notice to Seller at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 12.2 hereof.
(b) Termination by Seller. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which
has not been waived in writing by Seller, or (ii) there has been
a failure of satisfaction of a condition to the obligations of
Seller which has not been so waived, or (iii) Buyer shall have
attempted to terminate this Agreement under this Section 12.2 or
otherwise without grounds to do so, then Seller may, by written
notice to Buyer at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 12.2(c) hereof.
(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 12 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or
failed to satisfy any of the representations, warranties,
covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof. In addition to the right
of any party under common law to redress for any such breach or
violation, each party whose breach or violation has occurred
prior to termination shall jointly and severally indemnify each
other party for whose benefit such representation, warranty,
covenant, agreement or other provision was made ("indemnified
party") from and against all losses, damages (including, without
limitation, consequential damages), costs and expenses
(including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs, and
attorneys fees and expenses) asserted against, resulting to,
imposed upon, or incurred by the indemnified party, directly or
indirectly, by reason of, arising out of or resulting from such
breach or violation. Subject to the foregoing, the parties'
obligations under Article 12 of this Agreement shall survive
termination.
Page 26
<PAGE> 42
13. DISCLOSURE SCHEDULE
- ---------------------------
The Schedules have been compiled, dated and delivered to
Buyer at Closing. Information set forth in the Disclosure
Schedule will specifically refer to the article and section of
this Agreement to which such information is responsive and such
information shall be deemed to have been disclosed with respect
to any other article or section of this Agreement or for any
other purpose. The Disclosure Schedule will include a table of
contents and/or index to all of the information and documents
contained therein. The Disclosure Schedule shall not materially
affect the representations and warranties contained in this
Agreement and, to the extent the language in the Disclosure
Schedule does not conform in every respect to the language of
such representations and warranties, such language shall be
disregarded and be of no force or effect.
14. FURTHER ASSURANCE
- -------------------------
From time to time, Buyer or Seller may request without
further consideration, that Buyer or Seller execute and deliver
such documents and take such other action as may reasonably
request in order to consummate more effectively the transactions
contemplated hereby and to vest in Buyer good, valid and
marketable title to the assets being transferred hereunder.
15. ANNOUNCEMENTS
- ---------------------
Announcements concerning the transactions provided for in
this Agreement by either Seller or Buyer shall be subject to the
approval of the other in all essential respects, except that
approval shall not be required as to any statements and other
information which it may submit to the Securities and Exchange
Commission, the Missouri Secretary of State or be required to
make pursuant to any rule or regulation of the Securities and
Exchange Commission or any state or local securities regulatory
board, or otherwise required by law.
16. ASSIGNMENT; PARTIES IN INTEREST
- ---------------------------------------
16.1 Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of
the other parties, which consent shall not be unreasonably
withheld; provided, that, in the event that, following written
notice to Buyer, Seller elects to assign or transfer all or any
part of its rights and obligations hereunder to Parent, such
assignment or transfer shall not require the consent of Buyer.
Notwithstanding the foregoing, Buyer may, without consent of
Seller, cause one or more subsidiaries of Buyer to carry out all
or part of the transactions contemplated hereby; provided,
however, that Buyer shall, nevertheless, remain liable for all of
its obligations, and those of any such subsidiary, to Seller
hereunder.
16.2 Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties
hereto. Nothing contained herein shall be deemed to confer upon
any other person any right or remedy under or by reason of this
Agreement.
Page 27
<PAGE> 43
17. RESOLUTION OF DISPUTES
- ------------------------------
17.1 Arbitration. Any dispute, controversy or claim arising
out of or relating to this Agreement or any contract or agreement
entered into pursuant hereto or the performance by the parties of
its or their terms, or any claim that the execution and delivery
of such agreements constituted a violation of the securities laws
of any state or the United States or any claim for damages or
rescission of this Agreement for fraud, misrepresentation or
violation of any such securities laws, shall be settled by
binding arbitration held in Los Angeles County, California in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically
otherwise provided in this Article 17.
17.2 Arbitrators. If the matter in controversy (exclusive
of attorney fees and expenses) shall appear, as at the time of
the demand for arbitration, to exceed $150,000, then the panel to
be appointed shall consist of three neutral arbitrators;
otherwise, one neutral arbitrator.
17.3 Procedures; No Appeal. The arbitrator(s) shall allow
such discovery as the arbitrator(s) determine appropriate under
the circumstances and shall resolve the dispute as expeditiously
as practicable, and if reasonably practicable, within 120 days
after the selection of the arbitrator(s). The arbitrator(s)
shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to
reconsider and modify such decision if any party so requests
within 10 days after the decision. Thereafter, the decision of
the arbitrator(s) shall be final, binding, and nonappealable with
respect to all persons, including (without limitation) persons
who have failed or refused to participate in the arbitration
process.
17.4 Authority. The arbitrator(s) shall have authority to
award relief under legal or equitable principles, including
interim or preliminary relief, and to allocate responsibility for
the costs of the arbitration and to award recovery of attorneys
fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
17.5 Entry of Judgment. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having in personam
and subject matter jurisdiction. Seller and Buyer hereby submit
to the in personam jurisdiction of the Federal and State courts
in California, for the purpose of confirming any such award and
entering judgment thereon.
17.6 Confidentiality. All proceedings under this Article
17, and all evidence given or discovered pursuant hereto, shall
be maintained in confidence by all parties.
17.7 Continued Performance. The fact that the dispute
resolution procedures specified in this Article 17 shall have
been or may be invoked shall not excuse any party from performing
its obligations under this Agreement and during the pendency of
any such procedure all parties shall continue to perform their
respective obligations in good faith, subject to any rights to
terminate this Agreement that may be available to any party.
17.8 Tolling. All applicable statues of limitation shall be
tolled while the procedures specified in this Article 17 are
pending. The parties will take such action, if any, required to
effectuate such tolling.
Page 28
<PAGE> 44
18. LAW GOVERNING AGREEMENT
- -------------------------------
This Agreement may not be modified or terminated orally, and
shall be construed and interpreted according to the internal laws
of the Commonwealth of Massachusetts, excluding any choice of law
rules that may direct the application of the laws of another
jurisdiction.
19. AMENDMENT AND MODIFICATION
- ----------------------------------
Buyer and Seller may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in
writing.
20. INDEMNIFICATION
- ------------------------
Seller agrees to indemnify and hold harmless Buyer for any
post-closing actions for any events occurring prior to Closing
relating to this transaction and not resulting from the Buyer's
negligence. Buyer agrees to indemnify and hold harmless Seller
for any events occurring after the Closing relating to this
entire transaction or Buyer's operation of business and not
resulting from the Seller's negligence. Seller shall not be
liable hereunder except to the extent that the aggregate claims
and liabilities exceed $5,000, and then only to the extent of
such excess.
21. NOTICE
- ---------------
All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c)
sent to the parties at their respective addresses indicated
herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all
such notices, demands or requests are as follows:
(a) If to Buyer, to:
Haemonetics Corporation
400 Wood Road
Braintree, Massachusetts 02184
Attn: John F. White
President and Chief Executive Officer
(with a copy to):
Haemonetics Corporation
400 Wood Road
Braintree, Massachusetts 02184
Attn: Alicia R. Lopez
Vice President and General Counsel
or to such other person or address as Buyer shall furnish to
Seller in writing.
Page 29
<PAGE> 45
(b) If to Seller, to:
HemaCare Corporation
4954 Van Nuys Boulevard
Sherman Oaks, California 91407
Attn: Hal I. Lieberman
President and Chief Executive Officer
(with a copy to)
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attn: Lawrence Braun, Esquire
or to such other person or address as Seller shall furnish to
Buyer in writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted
pursuant to this paragraph, such communication shall be deemed
delivered the next business day after transmission (and sender
shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this paragraph, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant
to this paragraph, such communication shall be deemed delivered
as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any
party to this Agreement may change its address for the purposes
of this Agreement by giving notice thereof in accordance with
this Section.
22. EXPENSES
- ----------------
Regardless of whether or not the transactions contemplated
hereby are consummated:
22.1 Brokerage. Seller and Buyer each represent and warrant
to each other that there is no broker involved or in any way
connected with the transfer provided for herein. Buyer agrees to
hold Seller harmless from and against all claims for brokerage
commissions or finder's fees incurred through any act of Buyer in
connection with the execution of this Agreement or the
transactions provided for herein. Seller agrees to hold Buyer
harmless from and against all claims for brokerage commissions or
finder's fees incurred through any act of Seller in connection
with the execution of this Agreement or the transactions provided
for herein.
22.2 Expenses to be Paid by Buyer. Buyer shall pay, and
shall indemnify, defend and hold Seller harmless from and
against, each of the following:
(a) Transfer Taxes. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
Page 30
<PAGE> 46
(b) Professional Fees. All fees and expenses of
Buyer's legal, accounting, investment banking and other
professional counsel in connection with the transactions
contemplated hereby.
22.3 Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
22.4 Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of
the arbitrator as set forth in Article 17 the prevailing party in
any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the
other party or parties all reasonable costs and expenses of any
nature whatsoever incurred by the prevailing party in connection
with such action, including without limitation attorneys' fees
and prejudgment interest.
23. NON-COMPETITION
- -----------------------
Seller and Parent agree that for a period ending twelve (12)
months after Buyer has satisfied all payment obligations
hereunder, neither of them shall, directly or indirectly, through
an Affiliate or otherwise, enter into any contract, joint
venture, or other arrangement with any other party to supply
whole blood or blood components to customers in the Area, or to
conduct or aid any party engaged in the business of component
collection in the Area that is similar to or competitive with the
business of Gateway Blood Program, Inc.; provided that,
notwithstanding the foregoing, nothing in this Agreement shall
prevent Parent or Buyer from purchasing blood or blood products
in the Area during the period of their non-competition
obligations as provided herein.
24. ENTIRE AGREEMENT
- -------------------------
This instrument embodies the entire agreement between the
parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements,
representations or warranties between the parties other than
those set forth or provided for herein.
25. COUNTERPARTS
- --------------------
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26. HEADINGS
- -----------------
The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
27. FURTHER DOCUMENTS
- -------------------------
Buyer and Seller each agree to execute all other documents
and to take such other action or corporate proceedings as may be
necessary or desirable to carry out the terms hereof.
Page 31
<PAGE> 47
28. MISCELLANEOUS
- ---------------------
28.1 Books and Records. Buyer agrees that it will cooperate
with and make available to Seller, during normal business hours,
all of Seller's corporate books and records, information and
employees ("Information") (without substantial disruption of
employment) retained and remaining in existence after the Closing
Date which are necessary or useful in connection with any tax
inquiry, audit, investigation or dispute, any litigation or
investigation or any other matter requiring any such corporate
books and records, information or employees for any reasonable
business purpose. Buyer shall (i) provide to Seller such access
to the Information as may reasonably be requested in connection
with the preparation of any return, audit, or other examination
by any taxing authority or judicial or administrative proceedings
relating to liability for taxes, and (ii) retain and provide
Seller with any records or other information that may be relevant
to such return, audit or examination, proceeding, or
determination that affects any amount required to be shown on any
tax returns of Seller for any period.
28.2 No Third Party Beneficiaries. Nothing in this
Agreement is intended or shall be construed to give any third
person or party any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained
herein.
29. SURVIVAL
- ----------------
All provisions of this Agreement shall survive the Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
SELLER BUYER
Gateway Community Blood Program, Inc. Haemonetics Corporation
/s/ Hal I. Lieberman /s/ John F. White
- ------------------------- --------------------------
Hal I. Lieberman John F. White
President and CEO President and CEO
Page 32
<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 June 30, 1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,823,000
<SECURITIES> 192,000
<RECEIVABLES> 1,466,000
<ALLOWANCES> 57,000
<INVENTORY> 91,000
<CURRENT-ASSETS> 4,064,000
<PP&E> 2,739,000
<DEPRECIATION> 2,018,000
<TOTAL-ASSETS> 4,909,000
<CURRENT-LIABILITIES> 2,399,000
<BONDS> 0
0
0
<COMMON> 13,507,000
<OTHER-SE> (11,443,000)
<TOTAL-LIABILITY-AND-EQUITY> 4,909,000
<SALES> 5,595,000
<TOTAL-REVENUES> 5,595,000
<CGS> 4,740,000
<TOTAL-COSTS> 4,740,000
<OTHER-EXPENSES> 972,000
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 30,000
<INCOME-PRETAX> (120,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (120,000)
<DISCONTINUED> 120,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1
AGREEMENT TO FURNISH EXHIBITS AND SCHEDULES
HemaCare Corporation (the "Registrant") hereby agrees to furnish
supplementally to the Securities and Exchange Commission a copy
of any omitted exhibits or schedules to the Asset Purchase
Agreement, dated as of August 1, 1997, among Gateway Community Blood
Program, Inc. (a wholly owned subsidiary of the Registrant), the Registrant
and Haemonetics Corporation (the "Asset Purchase Agreement"), filed with this
Form 10-Q.
