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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 0-15223
HEMACARE CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of I.R.S. Employer I.D.
incorporation or organization: California Number: 95-3280412
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
(Address of principal executive offices) (Zip Code)
___________________
Registrant's telephone number, including area code: (818) 986-3883
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days: YES X_ NO ___
As of May 14, 1999 7,377,582 shares of Common Stock of the Registrant
were issued and outstanding.
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<PAGE>
INDEX
HEMACARE CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - March 31, 1999 (unaudited) and
December 31, 1998
Consolidated statements of operations - Three months ended
March 31, 1999 and 1998 (unaudited)
Consolidated statements of cash flows - Three months ended
March 31, 1999 and 1998 (unaudited)
Notes to consolidated financial statements - March 31, 1999
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 5. Other Information
Item 6. Exhibits
SIGNATURES
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEMACARE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 1,140,000 $ 1,372,000
Marketable securities................................ 576,000 288,000
Accounts receivable, net of allowance for
doubtful accounts - $446,000 (1999) and $596,000
(1998)............................................. 2,640,000 3,038,000
Product inventories.................................. 67,000 87,000
Supplies............................................. 710,000 604,000
Prepaid expenses..................................... 120,000 160,000
Note receivable from related party - current......... 21,000 24,000
------------ ------------
Total current assets..................... 5,274,000 5,573,000
Plant and equipment, net of accumulated
depreciation and amortization of
$1,912,000 (1999) and $1,869,000 (1998).............. 1,259,000 1,289,000
Goodwill, net of amortization of $32,000............... 721,000 742,000
Note receivable from related party - non-current....... 50,000 49,000
Other assets........................................... 10,000 9,000
------------ ------------
$ 7,314,000 $ 7,662,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 1,120,000 $ 1,414,000
Accrued payroll and payroll taxes.................... 706,000 802,000
Accrued professional fees............................ 116,000 173,000
Other accrued expenses............................... 346,000 418,000
Current obligations under capital leases............. 158,000 203,000
Current notes payable................................ 133,000 109,000
Reserve for discontinued operations.................. 110,000 110,000
------------ ------------
Total current liabilities................ 2,689,000 3,229,000
Obligations under capital leases, net
of current portion................................... 609,000 627,000
Notes payable, net of current portion.................. 454,000 491,000
Other long-term liabilities............................ 24,000 24,000
Commitments and contingencies..........................
Shareholders' equity:
Preferred stock no par value 5,000,000 shares
authorized, 450,0000 issued and outstanding........ 75,000 75,000
Common stock, without par value - 20,000,000
shares authorized, 7,281,120 issued and
outstanding in 1999 and 1998........................ 13,588,000 13,584,000
Accumulated deficit.................................. (10,125,000) (10,368,000)
------------ ------------
Total shareholders' equity............... 3,538,000 3,291,000
------------ ------------
$ 7,314,000 $ 7,662,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
3
<PAGE> 4
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTIION>
Three months ended March 31,
1999 1998
------------- -------------
<S> <C> <C>
Revenues:
Blood management programs......................... $ 1,538,000 $ 851,000
Regional operations
Blood products.................................. 1,067,000 582,000
Blood services.................................. 1,848,000 1,484,000
------------ ------------
Total revenue................................. 4,453,000 2,917,000
Operating costs and expenses:
Blood management programs......................... 1,460,000 814,000
Regional operations
Blood products.................................. 737,000 468,000
Blood services.................................. 1,422,000 1,118,000
------------ ------------
Total operating costs and expenses........... 3,619,000 2,400,000
------------ ------------
Operating profit............................. 834,000 517,000
General and administrative expense.................. 686,000 501,000
Gain on sale of Gateway Community Blood Program..... 100,000 -
------------ ------------
Income from continuing operations
before income taxes............................... 248,000 16,000
Provision for income taxes.......................... (5,000) -
------------ ------------
Net income..................................... $ 243,000 $ 16,000
============ ============
Basic and diluted per share amounts:
Net income..................................... $ 0.03 $ 0.00
============ ============
Weighted average shares outstanding - basic......... 7,281,120 7,197,515
============ ============
Weighted average shares outstanding - dilutive...... 7,797,843 7,197,515
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income................................................ $ 243,000 $ 16,000
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 63,000 34,000
Issuance of common stock and options for compensation. 4,000 9,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable............ 398,000 (266,000)
(Increase) decrease in inventories, supplies
and prepaid expenses................................. (46,000) 134,000
Increase in other assets, net......................... (1,000) -
Increase (decrease) in accounts payable, accrued
expenses and other liabilities...................... (519,000) 53,000
Proceeds from discontinued operations................. - 5,000
------------ ------------
Net cash provided by (used in) operating
activities........................................... 142,000 (15,000)
Cash flows from investing activities:
Decrease in note receivable from related parties.......... 2,000 4,000
Increase in marketable securities......................... (288,000) (309,000)
Purchase of plant and equipment, net...................... (12,000) (3,000)
------------ ------------
Net cash used in investing activities..................... (298,000) (308,000)
Cash flows from financing activities:
Principal payments on line of credit, term loan
and capital leases...................................... (76,000) (37,000)
------------ ------------
Net cash used in financing activities..................... (76,000) (37,000)
------------ ------------
Decrease in cash and cash equivalents....................... (232,000) (360,000)
Cash and cash equivalents at beginning of period............ 1,372,000 1,249,000
------------ ------------
Cash and cash equivalents at end of period.................. $ 1,140,000 $ 889,000
============ ============
Supplemental disclosure:
Interest paid............................................. $ 20,000 $ 4,000
============ ============
Items not impacting cash flows:
Increase in capital lease obligations..................... $ - $ 42,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
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 months ended
March 31, 1999, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999.
Certain 1998 amounts have been reclassified to conform to the
1999 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, 1998.
Coral Blood Services, Inc. ("CBS"), a wholly owned subsidiary of
the Company, was formed in October 1998, for the purpose of
purchasing substantially all of the assets of a company which had
been in the business of supplying blood products and services to
hospitals primarily in the eastern United States. (See Note 2.)
Note 2 - Coral Blood Services
- -----------------------------
In October 1998, the Company purchased, through its wholly owned
subsidiary CBS, substantially all of the assets of Coral
Therapeutics, Inc. ("Coral") from Coral's secured lender. Prior
to the acquisition, Coral provided blood services to major
university, teaching and community hospitals in Maine, New
Hampshire, Massachusetts, Connecticut, New York, North Carolina
and other states. HemaCare is in the process of negotiating of
separate agreements with the hospitals previously served by Coral
and is providing services to hospitals that have not signed a new
agreement under interim arrangements.
Note 3 - Line of Credit and Note Payable
- ---------------------------------------
Line of Credit
The Company maintains a line of credit with a commercial bank
secured by its accounts receivable, inventory and equipment. In
February 1999, the commercial bank increased the Company's line
of credit borrowing limit to $1.2 million, from $700,000, and
converted the $600,000 balance then outstanding on the line of
credit to a four-year term loan.
Under the terms of the credit line agreement, which is in effect
until June 1, 1999, the Company may borrow up to 70% of eligible
accounts receivable, up to a maximum of $1.2 million at an
interest rate of prime plus 0.5% and must maintain certain
ratios. The Company was in compliance with all covenants of its
borrowing agreement at March 31,1999, and there was no balance
outstanding under the line of credit. The Company is in the
process of renewing its credit line agreement.
6
<PAGE> 7
Note Payable
The Company has a term note with a bank, payable in 48 monthly
payments of principal and interest of approximately $15,000
through February 2003. The note bears interest at the prime rate
plus one percent (8.75% at March 31, 1999).
Note 4 - Commitments and Contingencies
- --------------------------------------
Since 1976, California law has prohibited the infusion of blood
products into patients if the donors of those products were paid
unless, in the opinion of the recipient's physician, blood from
a non-paid donor was not immediately available. Apheresis
platelet products obtained from paid donors, including the
Company's Sherman Oaks center's paid donors, are exempted from
this law by a state statute which contains a "sunset" provision.
Unless a new exemption is obtained, the existing exemption will
expire under its sunset provision on December 31, 2001. The Company
is evaluating a number of available options with regard to the
expiration of the extension.
The State and federal laws set forth antikickback and self-
referral prohibitions and otherwise regulate financial
relationships between blood banks and hospitals, physicians and
other persons who refer business to them. While the Company
believes its present operations comply with applicable
regulations, there can be no assurance that future legislation or
rule making, or the interpretation of existing laws and
regulations will not prohibit or adversely impact the delivery by
HemaCare of its services and products.
Note 7 - Segment and Related Party Information
- -----------------------------------------------
Business Segments
The Company operates in three business segments, each of which
represents a separate business activity. The segments and a
description of their business activities follows:
- - Blood Management Programs ("BMP"). Outsource programs which
provide all or a major portion of the blood banking functions
to a hospital.
- - Blood Products. Apheresis and whole blood derived products.
- - Blood Services. Therapeutic apheresis and stem cell
collection procedures, autologous interoperative transfusion
and donor testing.
Management uses more than one measure to measure segment
performance. However, the dominant measurements are consistent
with the Company's consolidated financial statements which
present revenue from external customers and pretax income for
each segment.
Related Party Loan
In 1995 and 1994, the Company made a series of personal loans to
Dr. Joshua Levy, then an officer and director of the Company. The
Company received installment payments on these loans in 1997 and
1996. Effective July 31, 1997, the Company entered into an
agreement with Dr. Levy to forgive the remaining balance of Dr.
Levy's loans, including interest accrued at a 10% annual rate,
over a five-year period so long as Dr. Levy remains employed by
the Company.
7
<PAGE> 8
Note 6 - Gain on Disposition
- ----------------------------
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.
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 maximum of $422,000. An additional payment of
$100,000 was due when Gateway received a Food and Drug
Administration establishment license. In the first quarter of
1999, Gateway received this license, and the Company realized an
additional $100,000 gain on the disposition.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
HemaCare's operations include blood management programs ("Blood
Management Programs" or "BMPs") and regional sales of blood products
("Blood Products") and blood services ("Blood Services").
A HemaCare Blood Management Program allows a hospital to outsource
all or a portion of its blood procurement and donor center management
operations and other blood related activities. Blood Products include
apheresis platelets and whole blood components such as red blood
cells and plasma products. Blood Services include therapeutic
apheresis procedures, stem cell collection and cryopreservation and
donor testing.
In October 1998, the Company, through its subsidiary Coral Blood
Services, Inc. ("CBS"), acquired existing blood products and services
operations in the eastern United States. These consist of Blood
Management Programs and other blood services provided to hospitals
and medical centers. Presently, CBS is providing services to some of
its customers under interim arrangements, while negotiating new
contractual agreements.
The Company operates five blood management programs. The University
of Southern California ("USC") program, initiated in 1996, and four
East Coast programs. The East Coast programs are Dartmouth-Hitchcock
Medical Center ("DHMC"), Maine Medical Center ("MMC"), St. Vincent
Hospital ("St. Vincent") and University of North Carolina ("UNC").
Prior to October 1998, Coral Therapeutics, Inc. operated these
programs which are now operated by CBS.
The Gateway Community Blood Program ("Gateway") located in St. Louis,
Missouri, and the Citrus Valley Health Partners ("Citrus Valley")
Blood Management Program, initiated in 1995 and 1996, failed to meet
the Company"s profitability criteria. Gateway was sold in August
1997, and the Citrus Valley contract was terminated in July 1998.
All comparisons within the following discussions are to the
comparable periods of the previous year.
8
<PAGE> 9
Revenues and Operating Profit
- -----------------------------
Total revenues increased 53% ($1,536,000) in the first quarter of
1999. The increase was due to the addition of the CBS operations and
to higher California Blood Products revenue, partially offset by lower
California BMP and Blood Services revenue. The decrease in California
BMP revenue was due to the termination of the Citrus Valley contract.
The Company's operating profit as a percentage of sales ("profit
margin") increased to 19% in the first quarter of 1999 from 18% in the
comparable quarter of 1998. In addition, the Company realized a
$100,000 gain on the sale of Gateway, in the first quarter of 1999.
Blood Management Programs
Revenue increased 81% ($687,000) and operating profit increased 1%
($41,000) in the first quarter of 1999. The revenue increase was due
to the addition of the CBS operations, partially offset by the
termination of the Citrus Valley contact. The increase in operating
profit resulted from both the addition of CBS operations and the
termination of the Citrus Valley contract.
Blood Products
Blood Products revenues increased 83% ($485,000) in the first quarter
of 1999 primarily due to an increase in the volume of apheresis
platelet sales in California. This increase was partially offset by a
decrease in the average price per product sold.
The profit margin on Blood Products sales increased to 31% from 20%
in the first quarter of 1999. The increase resulted primarily from a
decrease in the average cost per product sold in California,
partially offset by a decrease in the average price per products
sold.
Blood Services
Blood Services revenues increased 25% ($364,000) in the first quarter
of 1999. The increase resulted from the addition of CBS operations,
partially offset by decreases in California-based revenue. In
California, albumin sales, the volume of therapeutic procedures and
the average price per procedure all decreased in the first quarter of
1999. Albumin, a protein replacement fluid used in certain therapeutic
procedures, is offered for sale to non-hospital customers only when
the Company is able to obtain an excess supply at a favorable price.
The decrease in the average price per California apheresis procedure
was due primarily to the mix of procedures performed.
The profit margin on Blood Services sales decreased to 23% from 25%
in the first three months of 1999. The decrease was due to CBS
therapeutic apheresis operations, which have lower profit margins.
This decrease was partially offset by increased profit margins in
California therapeutic apheresis services, resulting from a lower
average cost per procedure.
Gain on Disposition
- -------------------
As a part of the terms of the sale of Gateway's operations, the
Company was entitled to receive a payment of $100,000 when Gateway
received a Food and Drug Administration establishment license. In the
first quarter of 1999, Gateway received this license, and the Company
realized an additional $100,000 gain on the disposition.
9
<PAGE> 10
General and Administrative Expense
- ----------------------------------
General and administrative expense increased 37% ($185,000) in the
first quarter of 1999. The increase reflects costs associated with
the addition of the CBS operations.
Liquidity and Capital Resources
- --------------------------------
At March 31, 1999, the Company had cash and cash equivalents and
marketable securities of $1,716,000 and working capital of
$2,586,000. The Company has a $1,200,000 line of credit with a
commercial bank which is in effect through June 1, 1999. Under the
terms of the credit line agreement, which is in the process of
renewal, the Company may borrow up to 70% of eligible accounts
receivable, up to a maximum of $1,200,000, and must maintain certain
financial ratios. The Company was in compliance with all covenants of
its borrowing agreement at March 31, 1999, and there were no
borrowings outstanding on the line of credit at that date.
The Company also has a term note with a bank of $600,000, payable in
48 monthly payments of principal and interest of approximately
$15,000 through February 2003. The note bears interest at the prime
rate plus one percent (8.75% at March 31, 1999). The term note is
cross collateralized with the Company's line of credit.
The Company's blood products and services businesses, other than the
USC Blood Donor Center (the "Center") are profitable and cash flow
positive. The Center operations are expected to continue to be
unprofitable until a higher level of Center blood collections can be
achieved. The operating losses of the Center reduce the overall
profitability of the USC Blood Management Program to the Company. The
Company continues to implement changes intended to increase the level
of Center collections, but there can be no assurance that the Center
will be able to achieve and maintain a breakeven or profitable level
of collections.
The Company is providing services to many of its East Coast customers
under interim arrangements, while negotiating formal contractual
agreements. The Company believes that contractual agreements will be
satisfactorily concluded with most of these customers. However, there
can be no assurance that satisfactory contracts can be negotiated
with all major customers, and the loss of one or more major customers
could have an adverse effect on the Company's revenue and operating
profit.
Since 1976, California law has prohibited the infusion of blood
products into patients if the donors of those products were paid
unless, in the opinion of the recipient's physician, blood from a
non-paid donor was not immediately available. Apheresis platelet
products obtained from paid donors, including the Company's Sherman
Oaks center's paid donors, are exempted from this law by a state
statute which contains a "sunset" provision. Unless a new exemption
is obtained, the existing exemption will expire under its sunset
provision on December 31, 2001, in the event the existing exemption
is not extended. The Company is evaluating a number of alternatives
with regard to continuing its California based apheresis platelet
business after the year 2001. However, there can be no assurance that
these initiatives will be successful. Should the Company be unable to
continue to sell apheresis platelets collected from paid donors, the
Company's revenue and operating profit could be materially adversely
effected.
10
<PAGE> 11
Joshua Levy, M.D., medical director of the Company and a shareholder,
treats patients through his private practice, who require therapeutic
services. Amendments to the Federal self-referral laws and related
regulations which became effective in 1995 could restrict the
Company's ability to provide therapeutic services to Dr. Levy's
patients who are covered by Medicare or MediCal. It is estimated that
revenues from these patients represented approximately 2% ($295,000)
of the Company's 1998 revenues. New regulations which have been
proposed but not yet issued may provide an exemption for therapeutic
apheresis services. If the new regulations do not provide an
exemption for therapeutic apheresis services, the Company could lose
the revenue from its services for Dr. Levy's Medicare and MediCal
patients.
Management is evaluating opportunities to develop and implement new
outsourcing models, including its Blood Management Program. Because
of the increase in the cost of acquiring red blood cells and their
decreasing availability, it is likely that future HemaCare
outsourcing arrangements will either involve fixed price supply
contracts for these products or will focus on providing specialized
donation services, apheresis based products and services, and other
technology based blood therapies. However, development and
introduction of a revised Blood Management Program model or other
outsourcing programs may require that the Company obtain additional
financing or partner with other blood product and service providers.
There can be no assurance that the Company will be successful in
developing and marketing its outsourcing programs, that it will be
able to obtain the funds necessary to finance such programs or that
required partnering relationships can be developed.
The Company anticipates that cash flow from profitable operations,
collection of the accounts receivable purchased from Coral, 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.
Year 2000 Disclosure
- --------------------
The Company has developed and is implementing a comprehensive program
to address year 2000 issues. The program considers the effect of the
Year 2000 on the Company's internal systems, customers, products and
services, production systems, and suppliers and other critical
business partners. Implementation of the Company's plan is
substantially complete, and the Company believes that all identified
potential Year 2000 issues have been effectively resolved. The cost
to identify and resolve Year 2000 issues was not material to the
Company's financial results and has been expensed as incurred.
Management does not believe that there will be a significant
disruption to the Company's business due to Year 2000 issues.
However, the Company has begun contingency planning to address any
situations which may arise in which the planning of the Company or
third parties prove to be inadequate, and where practical
alternatives are available. There can be no assurance that the
Company's Year 2000 program or the programs of critical business
partners will be successful, and failure could have a material
adverse affect on the Company's business and results of operations.
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 months of the Company)
are forward-looking, such as statements relating to operational and
financing plans, competition, the effects of discontinued operations,
11
<PAGE> 12
the effect of state and Federal regulation and demand for the
Company's products and services. 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 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
months of the Company. These risks and uncertainties include, but are
not limited to, those relating to the ability of the Company to expand
its operations, obtain additional financing, to repay existing debt,
to achieve profitability in its USC Center, to retain existing
customers and obtain new customers, to integrate the assets recently
acquired from Coral Therapeutic, Inc.'s secured lender, to retain the
Coral Therapeutic, Inc. customers, to improve the profitability of the
Company's other operations, the effects of the Year 2000 and to comply
with the covenants under its bank line of credit. 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, 1997.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
4.1 Warrant Agreement between the Registrant and
Kibel, Green, Inc., dated March 4, 1999.
4.2 Warrant Agreement between the Registrant and
Stuart Dinney, dated March 4, 1999.
10.1 Services Agreement between the Registrant and
Alan C. Darlington, dated March 10, 1999.
27 Financial Data Schedule for the Quarter
Ending March 31, 1999.
12
<PAGE> 13
b. The Company did not file any reports on Form 8-K
during the three months ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date May 17, 1998 HEMACARE CORPORATION
---------------- (Registrant)
/s/ Sharon C. Kaiser
----------------------------
Sharon C. Kaiser, Senior Vice
President, Finance and
Chief Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Method of Filing
--------------------------
<S> <C> <C>
4.1 Warrant Agreement between the Registrant and
Kibel Green, Inc. dated March 4, 1999 Filed herewith electronically
4.2 Warrant Agreement between the Registrant and
Stuart Dinney, dated March 4, 1999 Filed herewith electronically
10.1 Services Agreement between the Registrant and
Alan C. Darlington, dated March 10, 1999 Filed herewith electronically
27 Financial Data Schedule for the quarter ending
September 30, 1998 Filed herewith electronically
</TABLE>
<PAGE>
EXHIBIT 4.1
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") is made and entered into as of
the 4th day of March, 1999 by and between KIBEL GREEN ISSA, INC. (the
Warrantholder") and HEMACARE CORPORATION, a California corporation (the
"Company").
WHEREAS, the Warrantholder and the Company are parties to that certain
Consulting Agreement dated as of September 4, 1998 (the "Consulting Agreement"),
pursuant to which Warrantholder is to receive a warrant to purchase 35,000
shares of the common stock of the Company ("Common Stock"), without par
value (the "Common Stock"), subject to vesting as provided herein.
NOW, THEREFORE, in consideration of the foregoing, and for the purpose of
defining the terms and provisions of such warrants, and the respective rights
and obligations of the parties with respect thereto, the Company and the
Warrantholder hereby agree as follows:
Section 1. Form of Warrants; Limitations on Transferability.
1.1 Form and Registration. A Warrant certificate in the form as set
forth in Exhibit A attached hereto, shall be issued to the Warrantholder upon
the execution and delivery of this Agreement by the Company and the
Warrantholder. The Warrant certificate shall be executed on behalf of the
Company by its President or by a Vice President, and attested to by its
Secretary or an Assistant Secretary.
A Warrant certificate bearing the signature of an individual who was
at any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office
prior to the delivery of such Warrant certificate or did not hold such office
on the date of this Agreement.
The Warrant certificate shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
Each Warrant certificate shall be numbered and shall be registered on
the books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the books
of the Company maintained at its principal office in Sherman Oaks, California,
or wherever its principal office may then be located, upon delivery thereof
duly endorsed by the Warrantholder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of a valid and proper transfer,
the Company shall execute and deliver a new Warrant certificate to the
person entitled thereto.
1.3 Limitations on Transfer of the Warrants. The Warrantholder
agrees that prior to making any transfer or disposition of the Warrants or
the shares purchasable upon exercise of the Warrants (the "Shares") or any
interest therein, the Warrantholder shall give written notice to the Company
describing briefly the manner in which any such proposed transfer or
disposition is to be made together with an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that: (i) a
registration statement or other notification or post-effective amendment
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thereto (hereinafter collectively a "Registration Statement") under the
Securities Act of 1933, as amended (the "Act") is not required with
respect to such transfer or disposition or that such a Registration Statement
has been filed with, and declared effective, if necessary, by, the Securities
and Exchange Commission (the "Commission"), or (ii) all requirements under
any federal, state or foreign securities laws have been satisfied or
fulfilled such as to permit the proposed transfer or disposition lawfully
pursuant to all such laws. Except as provided in Section 11 hereof, the
Company shall not be required to cause the Warrants or the Shares to be
registered under any securities laws. The Company will, however,
respond to reasonable requests from the Warrantholder for assistance in
connection with the perfection or qualification of any exemption from
registration under applicable securities laws; provided that the
Warrantholder pays or reimburses the Company for its costs and expenses
incurred in connection therewith. Unless the context indicates otherwise,
the term "Warrantholder" shall include any transferee or transferees of the
Warrants, and the term "Warrants" shall include any and all warrants
outstanding pursuant to this Agreement, including those evidenced by
a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to this Agreement.
1.4 Legend on Shares and Warrants. Warrantholder hereby represents
and warrants to the Company that (i) Warrantholder understands that the
offering and sale of the Warrants and the shares purchasable upon exercise
thereof have not been, and will not be, registered under the Act or under any
state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public
offering, and that, as such, the Warrants and the shares purchasable upon
exercise thereof will not be freely transferable, that certificates
representing the Securities will bear restrictive legends under applicable
federal and state securities laws as provided below and shall be subject
to stops on transfer. Each certificate for Warrants or Shares issued upon
exercise of the Warrants shall bear the following legend, unless, at the time
of exercise, such Shares or Warrants are subject to a currently effective
Registration Statement under the Act and, if required, are subject to a
currently effective qualification or registration under any applicable
securities laws of any other jurisdiction:
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR FOREIGN JURISDICTION. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
SUCH TRANSACTION IS DULY REGISTERED UNDER THE ACT AND
ALL OTHER APPLICABLE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM THE REGISTRATION PROVISIONS OF
THE ACT AND ALL OTHER APPLICABLE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER UNDER A WARRANT
AGREEMENT DATED AS OF MARCH 4, 1999, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon
completion of a registered distribution as provided above) shall also bear
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the above legends unless, in the opinion of the Company's counsel, the
securities represented thereby need no longer be subject to such restrictions.
1.5 The Warrantholder hereby represents and warrants that it (i) is
acquiring the Warrants for its own account for investment purposes only and
not with a view to or for sale in connection with a distribution of the
Warrants or the Shares; (ii) has relied on its own business and financial
knowledge and experience in making the decision to invest in the Warrants;
and (iii) has sufficient knowledge and experience in business and financial
matters to enable it to use the information made available to it about the
Company (including the Company's periodic and other filings with the
Securities and Exchange Commission) to evaluate the merits and risks of an
investment in the Warrants and to make an informed investment decision with
respect thereto.
Section 2. Exchange of Warrant Certificate.
Any Warrant certificate may be divided, combined or exchanged for another
certificate or certificates entitling the Warrantholder to purchase a like
aggregate number of Shares as the certificate or certificates surrendered
then entitled such Warrantholder to purchase. Any Warrantholder desiring to
divide, combine or exchange a Warrant certificate shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed,
with signatures guaranteed, the certificate evidencing the Warrant to be
so exchanged. Thereupon, the Company shall execute and deliver to the
person entitled thereto a new Warrant certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants.
Subject to the terms of this Agreement, the Warrantholder shall have the
right, at any time during the period commencing at 9:00 a.m., Pacific time,
on the applicable Vesting Date (as defined in Section 7.1 below), and ending
at 5:00 p.m., Pacific time, on September 4, 2003 (unless earlier terminated
in accordance herewith), to purchase from the Company (and the Company shall
issue and sell to such Warrantholder) any or all of the number of Shares
underlying the Warrants which have vested as provided in Section 7.1 below,
upon surrender to the Company at its principal office, or upon surrender to
any transfer agent designated by the Company for such purposes, of the
certificate evidencing the Warrants to be exercised, together with the
purchase form attached thereto duly filled in and signed, with signatures
guaranteed, and upon payment to the Company of the per share purchase price
of $0.31 (the "Warrant Price"), subject to adjustment as provided in
Section 8, for the number of Shares in respect of which such Warrant is then
exercised, but in no event for less than 500 Shares (unless less than an
aggregate of 500 Shares are then purchasable under all outstanding Warrants
held by a Warrantholder). Payment of the aggregate Warrant Price shall
be made in cash or by cashiers or certified check or bank draft. In lieu
of such payment, Warrantholder shall be entitled to receive, without the
payment by the Warrantholder of any additional consideration, shares of
Common Stock equal to the value of this Warrant or any portion hereof by
the surrender of this Warrant or such portion to the company, with the
net issue election notice attached hereto as Exhibit B duly executed, at
the principal office of the Company. Thereupon, the Company shall issue to
the Warrantholder such number of fully paid and nonassessable shares of
Common Stock as is computed using the following formula:
(A-B)
X=Y ------
A
Where: X= the number of shares of Common Stock to be issued to the
Warrant holder.
Y= the number of shares of Common Stock covered by this
Warrant in respect of which the net issue election is
made.
A= the fair market value of one share of Common stock, as
determined below, as at the time the net issue election
is made.
B= the Exercise Price in effect under this Warrant at the time
the net issue election is made.
For purpose of this Section, fair market value of one share of Common Stock
as of a particular date shall mean the closing price of the Company's Common
Stock on the OTC Bulletin Board or other quotation medium or stock exchange
or which the Common Stock is quoted or listed on the day notice of exercise is
provided to the Company as provided above. If the Common Stock is not so
quoted or listed as provided above, then the fair market value of one share
of Common Stock shall be determined by the Board of Directors of the Company
in good faith, which determination shall be conclusive and binding on the
Warrantholder.
Upon such surrender of the Warrants and payment of such Warrant Price as
aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Warrantholder and
in the name of the Warrantholder a certificate or certificates for the
number of full Shares so purchased upon the exercise of the Warrant, together
with cash, as provided in Section 9 hereof, in respect of any fractional
Shares otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and the Warrantholder shall
be deemed to have become a holder of record of such securities as of the date
of surrender of the Warrants and payment of the Warrant Price, as aforesaid,
notwithstanding that the certificate or certificates representing such
securities shall not actuallyhave been delivered or that the stock transfer
book of the Company shall then be closed. The Warrants shall be exercisable,
at the election of the Warrantholder, either in full or from time to time in
part and, in the event that a certificate evidencing the Warrants is
exercised in respect of less than all of the Shares specified therein at
any time prior to the termination date, a new certificate evidencing the
remaining portion of the Warrants will be issued by the Company.
Upon the exercise of a Warrant at a time when there is not in effect
under the Act a registration statement relating to the Shares issuable
upon exercise thereof and available for delivery to the Warrantholder a
prospectus meeting the requirements of Section 10(a)(3) of the Act, the
Warrantholder shall represent and warrant in writing to the Company that
the Shares purchased are being acquired for investment and not with a
view to the distribution thereof. No Shares shall be issuable upon the
exercise of any Warrant unless and until any then applicable requirements
of the Securities and Exchange Commission, the California Corporations
Commissioner, or other regulatory agencies having jurisdiction, and of
any exchanges upon which common stock of the Company may be listed, shall
have been complied with in full.
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Section 4. Payment of Taxes.
The Company will pay all United States documentary stamp taxes, if any,
attributable to the initial issuance of the Shares issuable upon the exercise
of the Warrants; provided, however, the Company shall not be required to pay
any foreign documentary stamp taxes or tax which may be payable in respect
of any transfer involved in the issuance or delivery of any certificates for
shares of Common Stock in a name other than that of the registered holder of
Warrants in respect of which such shares are issued, and in such case neither
the Company nor the Warrant Agent shall be required to issue or deliver any
certificate for shares of Common Stock or any Warrant certificate until the
person requesting the same has paid to the Company the amount of such tax or
has established to the Company?s satisfaction that such tax has been paid.
Section 5. Mutilated or Missing Warrants.
In case the certificate or certificates evidencing the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may at its discretion, at
the request of the Warrantholder, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated certificate or
certificates, or in lieu of and substitution for the certificate or
certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant certificate and a bond of indemnity,
if requested, also satisfactory in form and amount at the applicant's cost.
Applicants for such substitute Warrant certificates shall also comply with
such other reasonable regulations and pay such other reasonable charges as
the Company may prescribe.
Section 6. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved
so long as the Warrants remain outstanding, out of its authorized Common
Stock, such number of shares of Common Stock as shall be subject to
purchase under the Warrants. Every transfer agent for the Common Stock
issuable upon the exercise of the Warrants will be irrevocably authorized
and directed at all times to reserve such number of authorized and unissued
shares as shall be requisite for such purpose. The Company will keep a
copy of this Agreement on file with every transfer agent for the Common
Stock issuable upon the exercise of the Warrants. The Company will supply
every such transfer agent with duly executed stock and other certificates, as
appropriate, for such purpose and will provide or otherwise make available
any cash which may be payable as provided in Section 9 hereof.
Section 7. Vesting Date; Early Termination.
The applicable "Vesting Date" of the Warrants shall be the earliest to
occur of (i) September 4, 1998, (ii) the sale of all or substantially all
the assets of the Company and (iii) the 15th day prior to the date fixed as
the record date or the date of closing the stock transfer books of the
Company for the determination of the stockholders entitled to any rights
to receive merger consideration or other rights in connection with any
proposed merger or consolidation of the Company with respect to which the
Company would not be the surviving entity.
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7.2 Notwithstanding any other provision of this Agreement to the
contrary, the Warrants shall immediately terminate and shall not be or
become exercisable upon (a) the breach by Warrantholder of any provision
of the Noncompetition Agreement, or (b) the termination of Warrantholder's
employment with the company for Cause (as defined below). Cause shall mean
(i) the conviction of a felony in a court of law, (ii) a material breach
of fiduciary duty owed to the Company, or (iii) gross neglect of duties
by the Warrantholder.
Section 8. Adjustments.
The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
8.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common Stock,
other securities of the Company, the number of Shares purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so
that the Warrantholder shall be entitled to receive the kind and number of
Shares or other securities of the Company which the Warrantholder would have
owned or would have been entitled to receive immediately after the happening
of any of the events described above, had the Warrants been exercised
immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this subsection
8.1(a) shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(b) No adjustment in the number of Shares purchasable pursuant to
the Warrants shall be required unless such adjustment would require an increase
or decrease of at least one percent in the number of Shares then purchasable
upon the exercise of the Warrants; provided, however, that any adjustments
which by reason of this subsection 8.1(b) are not required to be made
immediately shall be carried forward and taken into account in any subsequent
adjustment.
(c) Whenever the number of shares of Common Stock purchasable upon
the exercise of a Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price by a fraction, the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of such Warrant
immediately prior to such adjustment, and the denominator of which shall be
the number of Shares of Common Stock so purchasable immediately thereafter.
(d) Whenever the number of Shares purchasable upon the exercise of
the Warrants is adjusted as herein provided, the Company shall cause to be
promptly mailed to the Warrantholder by certified or registered mail, return
receipt requested, postage prepaid, notice of such adjustment and a
certificate of the chief financial officer of the Company setting forth the
number of Shares purchasable upon the exercise of the Warrants after such
adjustment, a brief statement of the facts requiring such adjustment and the
computation by which such adjustment was made.
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(e) For the purpose of this subsection 8.1, the term "Common
Stock" shall mean the class of stock designated as the Common Stock of
the Company at the date of this Agreement. In the event that at any time,
as a result of an adjustment made pursuant to this Section 8, the
Warrantholder shall become entitled to purchase any securities of the Company
other than Common Stock, (i) if the Warrantholder's right to purchase is on
any other basis than that available to all holders of the Company's Common
Stock, the Company shall obtain an opinion of an independent investment
banking firm valuing such other securities and (ii) thereafter the number of
such other securities so purchasable upon exercise of the Warrants shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Shares
contained in this Section 8.
8.2 No Adjustment for Dividends. Except as provided in subsection
8.1, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of the Warrants or upon the exercise
of the Warrants. Subject to any requirements of California corporate laws
and regulations, applicable federal and state securities laws and regulations
and any securities exchanges or over-the-counter markets upon which the
Common Stock is listed or qualified for trading enacted or adopted after
the date of this Agreement, the record date for the payment of any dividend
or distribution out of earnings made while any of the Warrants are outstanding
shall be not less than thirty (30) days after the public announcement of the
declaration of such dividend or distribution.
8.3 Preservation of Purchase Rights upon Merger or Consolidation. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute with the Warrantholder an
agreement that the Warrantholder shall have the right thereafter upon
payment of the Warrant Price in effect immediately prior to such action to
purchase, upon exercise of the Warrants, the kind and amount of shares and
other securities and property which it would have owned or have been entitled
to receive after the happening of such consolidation, merger, sale or
conveyance had the Warrants been exercised immediately prior to such action.
In the event of a triangular merger in which the Company is the surviving
corporation, the right to purchase Shares under the Warrants shall terminate
on the date of such merger and thereupon the Warrants shall become null and
void, but only if the controlling corporation shall agree to substitute for
the Warrants its warrant which entitles the holder thereof to purchase upon
its exercise the kind and amount of shares and other securities and property
which it would have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to in
this subsection 8.3 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 8
hereof. The provisions of this subsection 8.3 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
8.4 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be
any such firm regularly employed by the Company) to make any computation
required under this Section 8, and a certificate signed by such firm shall
be presumptive evidence of the correctness of any computation made under
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this Section 8.
8.5 Statement on Warrant Certificates. Irrespective of any adjustments
in the number of securities issuable upon exercise of Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may, at
any time in its sole discretion (which shall be conclusive), make any change
in the form of Warrant certificate that it may deem appropriate and that does
not affect the substance thereof; and any Warrant certificate thereafter
issued, whether upon registration of transfer of, or in exchange or
substitution for, an outstanding Warrant certificate, may be in the form so
changed.
Section 9. Fractional Interests.
The Company shall not be required to issue fractional Shares on the
exercise of the Warrants. If any fraction of a Share would, except for
the provisions of this Section 9, be issuable on the exercise of the
Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the then Current Market Price multiplied by such fraction.
For purposes of this Agreement, the term "Current Market Price" shall
mean (i) if the Common Stock is traded in the over-the-counter market and
not in the Nasdaq National Market System nor on any national securities
exchange, the average of the per share closing bid prices of the Common
Stock on the 30 consecutive trading days immediately preceding the date in
question, as reported by Nasdaq or an equivalent generally accepted
reporting service, or (ii) if the Common Stock is traded in the Nasdaq
National Market System or on a national securities exchange, the average
for the 30 consecutive trading days immediately preceding the date in
question of the daily per share closing prices of the Common Stock in the
Nasdaq National Market System or on the principal stock exchange on which
it is listed, as the case may be. For purposes of clause (i) above, if
trading in the Common Stock is not reported by Nasdaq, the bid price
referred to in said clause shall be the lowest bid price as reported in
the "pink sheets" published by National Quotation Bureau, Incorporated.
The closing price referred to in clause (ii) above shall be the last
reported sale price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices,
in either case in the Nasdaq National Market System or on the national
securities exchange on which the Common Stock is then listed.
Section 10. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained in this Agreement or in the Warrants shall be construed
as conferring upon the Warrantholder any rights as a stockholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a stockholder in respect of any meeting of stockholders for the
election of directors of the Company or any other matter. If, however, at
any time following the Vesting Date and prior to the expiration of the
Warrants and prior to their exercise, any one or more of the following
events shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 or 8.3;
(b) the Company shall make a declaration for the payment of
any other dividend or the making of any other distribution upon the Common
Stock;
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(c) the Company shall make an offer to the holders of Common Stock
for the subscription or purchase by them any share of any class or any other
rights;
(d) the capital reorganization of the Company or the reclassification
of the capital stock of the Company; or
(e) the consolidation or merger of the Company with or into
another entity, the sale of all or substantially all of the assets of the
Company or the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then the Company shall give notice in writing of such event to the Warrant-
holder, as provided in Section 12 hereof, at least 20 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be. Failure to mail or receive
such notice or any defect therein shall not affect the validity of any action
taken with respect thereto.
Section 11. Registration Rights.
(a) Whenever the Company proposes to file with the Commission a
Registration Statement (other than a registration statement on Form S-4
or S-8 or any corresponding future forms, or any other form for a
limited purpose which excludes registration of the Shares, or any
registration statement covering only securities proposed to be issued
in exchange for securities or assets of another corporation) in connection
with the registration of its Common Stock, the Company shall, at least
fifteen (15) days prior to each such filing, give written notice of such
proposed filing to the Warrantholder and each holder of the Shares, and
shall use its reasonable efforts to include in such filing any proposed
disposition of the Shares (issued or issuable upon the exercise of
Warrants which are then vested in accordance with Section 7, herein)
upon receipt by the Company of a written request therefor, given within
ten (10) days after such notice is given by the Company, setting forth the
facts with respect to such proposed disposition and all other information
with respect to such person necessary to be included in such Registration
Statement; provided that the Company shall have the right to postpone or
withdraw any registration of its Common Stock (and the corresponding
registration effected pursuant to this Section 11) without obligation to
the Warrantholder or any holder of the Shares.
(b) Notwithstanding the foregoing, the Company shall not be
required to include any Shares in an underwritten public offering unless
the Warrantholder or holder of the Shares accepts the terms of the
underwriting as agreed upon between the Company and the underwriter(s)
selected by it, and then only in such quantity as will not, in the opinion
of the managing underwriter(s), jeopardize or be detrimental to the
success of the offering (including price) by the Company. In the event that
the managing underwriter(s) advise the Company in writing that the
inclusion of all or any portion of the Shares in the offering would jeopardize
or be detrimental to the success of the offering, the number of the Shares
to be included in the offering shall be reduced to the number of Shares, if
any, that the managing underwriter(s) believe may be sold without causing
such adverse effect. In the event that the managing underwriter(s) advise
the Company in writing that the inclusion of a portion of such Shares in
the offering would not jeopardize or be detrimental to the success of the
offering, and such portion is less than the amount requested for inclusion
by all persons having registration rights in respect of the offering, then
the amount to be included shall be prorated among the requesting
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Warrantholder, requesting holders of the Shares and other security holders
of the Company possessing similar registration rights in accordance with
their relative holdings, it being agreed to by the Company that no person
who does not possess such registration rights shall be allowed to participate
in the offering to the exclusion of any Shares requested to be included by
any holder of the Warrants or the Shares, and such Shares shall be offered
and sold on the same terms and conditions as the shares of Common Stock, if
any, being offered by the Company in such offering. In the event that any of
the Shares are registered in connection with the registration of an
underwritten public offering but are not included in such underwritten public
offering, those Shares which are excluded from the offering shall be withheld
from the market by the Warrantholder or the holder(s) of such Shares for a
period, not to exceed 120 days, which the managing underwriter(s) reasonably
determine is necessary in order to effect the underwritten public offering.
The Company shall use its best efforts to keep effective any Registration
Statement covering any of the Shares not subject to or included in an
underwritten public offering for a period of 90 days after the later of
the effective date of such Registration Statement or the date, if any, that
the underwriter(s) specify to be the date upon which such Shares may first be
distributed.
(c) All fees, disbursements and out-of-pocket expenses (other than
brokerage or underwriting fees and commissions and legal fees of counsel to
the Warrantholder or any holder of the Shares, if any) in connection with the
filing of any Registration Statement under this Section 11 and in complying
with applicable securities and Blue Sky laws shall be borne by the Company;
provided, however, that all underwriting discounts and selling commissions
applicable to the Shares covered by registrations effected pursuant to this
Section 11 shall not be borne by the Company but shall be borne by the
Warrantholder and each holder of the Shares benefited thereby.
Notwithstanding the foregoing, the Company shall not be required to register
the Shares or perfect any exemption for the offering and sale of the Shares
under (i) the securities laws of any foreign jurisdiction or (ii) the
securities laws of any State, territory or possession of the United States in
the event that registration or the perfection of an exemption under the law
of any such State, territory or possession would, in the opinion of the
Company, result in the imposition of unreasonable restrictions on the
Company or its shareholders, officers, directors or employees. The Company
at its expense will supply the Warrantholder and any holder of the Shares
with copies of such Registration Statement and the prospectus included
therein and other related documents in such quantities as may be reasonably
requested by the Warrantholder or holder of the Shares. In addition, the
Company shall have no obligation to register the Shares in the event the
Warrantholder is free to sell such securities under Rule 144 under the Act.
Section 12. Notices.
Any notice pursuant to this Agreement by the Company or by a Warrantholder
or a holder of Shares shall be in writing and shall be deemed to have been
duly given if delivered or mailed by certified mail, return receipt
requested:
(a) If to the Warrantholder or a holder of Shares - addressed to
Kibel Green Issa, Inc., 2001 Wilshire Boulevard, Suite 420, Santa Monica, CA
90403-5640, Attention: Steven J. Green, President.
(b) If to the Company - addressed to it at 4954 Van Nuys
Boulevard, Sherman Oaks, California 91403, Attention: William D. Nicely,
Chief Executive Officer, with a copy to Sheppard, Mullin Richter & Hampton,
LLP, 333 South Hope Street, 48th Floor, Los Angeles, California 90071,
Attention: James M. Rene, Esquire.
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Each party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 13. Successors.
All the covenants and provisions of this Agreement by or for the benefit
of the Company, the Warrantholder or the holders of Shares shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 14. Survival of Representations and Warranties.
All statements contained in any schedule, exhibit, certificate or other
instrument delivered by or on behalf of the parties hereto, or in connection
with the transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive.
Section 15. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of
the State of California and for all purposes shall be construed in accordance
with the laws of said State. This Agreement has been executed and delivered
by the parties in the State of California.
Section 16. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrantholder and the holders of
Shares any legal or equitable right, remedy or claim under this Agreement.
This Agreement shall be for the sole and exclusive benefit of the Company,
the Warrantholder and the holders of Shares.
Section 17. Entire Agreement; Amendments.
This Agreement sets forth the entire understanding of the parties
with respect to the subject matter hereof, supersedes any and all prior
agreements with respect to the subject matter hereof,and may be modified
only by a written instrument duly executed by each party affected by any
such modification.
Section 18. Descriptive Headings.
The descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
HEMACARE CORPORATION
(CORPORATE SEAL)
By: /s/ William D. Nicely
________________________
William D. Nicely
Chief Executive Officer
ATTEST:
/s/ JoAnn Stover
____________________________
JoAnn R. Stover, Secretary /s/ Steven J. Green
__________________________
Steven J. Green, President
KIBEL GREEN ISSA, INC.
-12-
<PAGE>
EXHIBIT A
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
FOREIGN JURISDICTION. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSACTION IS DULY
REGISTERED UNDER THE ACT AND ALL OTHER APPLICABLE SECURITIES LAWS OR UNLESS
SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION PROVISIONS OF THE ACT AND ALL
OTHER APPLICABLE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER UNDER A WARRANT AGREEMENT DATED AS OF ______________, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.
WARRANT CERTIFICATE NO. __________
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.,
PACIFIC TIME, ON ___________, 20__
HEMACARE CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA
This certifies that, for value received, _____________________ or
permitted assigns (the"Holder"), is entitled to purchase from HEMACARE
CORPORATION, a California corporation (the "Company"), at any time before
5:00 p.m., Pacific Time, on _______, 200_, at a per share purchase
price of $_____ (the "Warrant Price"), the number of shares of Common
Stock, without par value, of the Company set forth above (the "Shares").
The number of Shares purchasable upon exercise of this Warrant and the
Warrant Price are subject to adjustment from time to time as set forth in
the Warrant Agreement referred to below.
This Warrant may be exercised in whole or in part by presentation
of this certificate with the Purchase Form attached hereto duly executed
(with a signature guarantee as provided on such Purchase Form) and
simultaneous payment of the Warrant Price (subject to adjustment) at the
principal office of the Company or at the office of any stock transfer
agent designated by the Company for such purposes. Payment of such price
shall be made at the option of the Holder in cash or by certified check or
bank draft, all as provided in the Warrant Agreement.
This Warrant is part of a duly authorized issue of Common Stock Purchase
Warrants with rights to purchase an aggregate of up to ________ Shares of
Common Stock of the Company and are issued under and in accordance with a
Warrant Agreement dated as of ________, 19__, between the Company and
_____________ (the "Warrant Agreement") and are subject to the terms and
provisions contained in the Warrant Agreement, to all of which the Holder
of this Warrant certificate by acceptance hereof consents. A copy of the
Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Company. The Warrant Agreement provides for the early
termination of this Warrant upon the occurrence of certain events.
<PAGE>
Upon any partial exercise of this Warrants, there shall be countersigned
and issued to the Holder a new Warrant certificate in respect of the Shares
as to which this Warrant has not been exercised. This Warrant certificate
may be exchanged at the principal office of the Company, or at the office of
any stock transfer agent designated by the Company for such purposes, by
surrender of this Warrant certificate properly endorsed (with a signature
guarantee) either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number
of Shares evidenced by the Warrant or Warrants exchanged. No fractional
Shares will be issued upon the exercise of this Warrant, but the Company
shall pay the cash value of any fractional share otherwise issuable upon
the exercise of this Warrant. This Warrant is transferable at the principal
office of the Company, or at the office of any stock transfer agent
designated by the Company for such purposes, in the manner and subject to
the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant certificate as the absolute owner hereof
for all purposes and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding, and
until such transfer is entered on such books, the Company may treat the
Holder hereof as the owner for all purposes.
This Warrant certificate does not entitle the Holder hereof to any of
the rights of a shareholder of the Company.
Dated as of: ___________ HEMACARE CORPORATION
By:
------------------------
William D. Nicely
Chief Executive Officer
ATTEST:
___________________________
JoAnn R. Stover, Secretary
<PAGE>
HEMACARE CORPORATION
PURCHASE FORM
Mailing Address:
HemaCare Corporation
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant for, and to purchase thereunder,_______
Shares of Common Stock provided for therein, and requests that certificates f
or such Shares be issued in the name of:
________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant certificate for the balance of the Shares
purchasable under the within Warrant certificate be registered in the name
of the undersigned Holder or his Assignee as below indicated and delivered
to the address stated below.
I hereby make the following representations and warranties with respect to
the Shares I am hereby acquiring: (i) I am purchasing the Shares for my
own account, for investment purposes only and not with a view to or for sale
in connection with the distribution of such Shares; (ii) I have relied on
my own business and financial knowledge and experience in making the
decision to invest in the Shares; (iii) I have sufficient knowledge and
experience in business and financial matters to enable me to use the
information made available to me about the Company (including the Company's
periodic and other filings with the Securities and Exchange Commission) to
evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto; and (iv) I have no reason
to anticipate any change in circumstances, financial or otherwise, that
necessitate or require any sale or distribution of the Shares.
Dated: ___________________________________________
Name of Holder or Assignee: ______________________________________________
(Please Print)
Address: __________________________________________________________________
__________________________________________________________________
Signature:_________________________________________________________________
Note: The above signature must correspond with the name as it appears upon the
face of the within Warrant certificate in every particular, without alteration
or enlargement or any change whatever, unless this Warrant has been assigned
Signature Guaranteed:
________________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.
The guarantor of signature must be a participant in the Medallion Stamp
Program.)
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
the within Warrant, hereby irrevocably constituting and
appointing ______________________ Attorney to transfer said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: _____________ __________________________________________________
Signature of Registered Holder
The signature on this assignment must correspond with
the name as it appears upon the face of the within
Warrant certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed:
____________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.
The guarantor of signature must be a participant in the Medallion Stamp
Program.)
<PAGE>
EXHIBIT B
Net Issue Election
HemaCare Corporation
4954 Van Nuys Boulevard
Sherman Oaks, CA 91403
Ladies and Gentlemen:
The undersigned hereby elects under Section __ of the Warrant dated ________
(the "Warrant"), to exercise its right to receive ________ shares of Common
Stock pursuant to the Warrant. The certificate(s) for such shares issuable
upon such net issue election shall be issued in the name of the undersigned
or as otherwise indicated below:
Name for Registration: _________________________________________________
Mailing Address: _________________________________________________
_________________________________________________
Name: _____________________________________
By: _____________________________________
Its: _____________________________________
<PAGE>
EXHIBIT 4.2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") is made and entered
into as of the 4th day of March, 1999 by and between STUART DINNEY (the
"Warrantholder") and HEMACARE CORPORATION, a California corporation (the
"Company").
WHEREAS, the Warrantholder and the Company are parties to that
certain Noncompetition Agreement dated as of December 30, 1998 (the
"Noncompetition Agreement"), pursuant to which Warrantholder is to
receive a warrant to purchase 60,000 shares of the common stock of the
Company ("Common Stock"), without par value (the "Common Stock"),
subject to vesting as provided herein.
NOW, THEREFORE, in consideration of the foregoing, and for the
purpose of defining the terms and provisions of such warrants, and the
respective rights and obligations of the parties with respect thereto,
the Company and the Warrantholder hereby agree as follows:
Section 1. Form of Warrants; Limitations on Transferability.
1.1 Form and Registration. A Warrant certificate in the form
as set forth in Exhibit A attached hereto, shall be issued to the
Warrantholder upon the execution and delivery of this Agreement by the
Company and the Warrantholder. The Warrant certificate shall be
executed on behalf of the Company by its President or by a Vice
President, and attested to by its Secretary or an Assistant Secretary.
A Warrant certificate bearing the signature of an individual
who was at any time the proper officer of the Company shall bind the
Company, notwithstanding that such individual shall have ceased to hold
such office prior to the delivery of such Warrant certificate or did not
hold such office on the date of this Agreement.
The Warrant certificate shall be dated as of the date of
signature thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
Each Warrant certificate shall be numbered and shall be
registered on the books of the Company when issued.
1.2 Transfer. The Warrants shall be transferable only on the
books of the Company maintained at its principal office in Sherman Oaks,
California, or wherever its principal office may then be located, upon
delivery thereof duly endorsed by the Warrantholder or by its duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration
of a valid and proper transfer, the Company shall execute and deliver a
new Warrant certificate to the person entitled thereto.
1.3 Limitations on Transfer of the Warrants. The
Warrantholder agrees that prior to making any transfer or disposition of
the Warrants or the shares purchasable upon exercise of the Warrants
(the "Shares") or any interest therein, the Warrantholder shall give
written notice to the Company describing briefly the manner in which any
such proposed transfer or disposition is to be made together with an
opinion of counsel, in form and substance satisfactory to the Company,
to the effect that:
-1-
<PAGE>
(i) a registration statement or other notification
or post-effective amendment thereto (hereinafter collectively a
"Registration Statement") under the Securities Act of 1933, as amended
(the "Act") is not required with respect to such transfer or disposition
or that such a Registration Statement has been filed with, and declared
effective, if necessary, by, the Securities and Exchange Commission (the
"Commission"), or (ii) all requirements under any federal, state or
foreign securities laws have been satisfied or fulfilled such as to
permit the proposed transfer or disposition lawfully pursuant to all
such laws. Except as provided in Section 11 hereof, the Company shall
not be required to cause the Warrants or the Shares to be registered
under any securities laws. The Company will, however, respond to
reasonable requests from the Warrantholder for assistance in connection
with the perfection or qualification of any exemption from registration
under applicable securities laws; provided that the Warrantholder pays
or reimburses the Company for its costs and expenses incurred in
connection therewith. Unless the context indicates otherwise, the term
"Warrantholder" shall include any transferee or transferees of the
Warrants, and the term "Warrants" shall include any and all warrants
outstanding pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange, substitution
or transfer pursuant to this Agreement.
1.4 Legend on Shares and Warrants. Warrantholder hereby
represents and warrants to the Company that (i) Warrantholder
understands that the offering and sale of the Warrants and the shares
purchasable upon exercise thereof have not been, and will not be,
registered under the Act or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, and that, as such, the
Warrants and the shares purchasable upon exercise thereof will not be
freely transferable, that certificates representing the Securities will
bear restrictive legends under applicable federal and state securities
laws as provided below and shall be subject to stops on transfer. Each
certificate for Warrants or Shares issued upon exercise of the Warrants
shall bear the following legend, unless, at the time of exercise, such
Shares or Warrants are subject to a currently effective Registration
Statement under the Act and, if required, are subject to a currently
effective qualification or registration under any applicable securities
laws of any other jurisdiction:
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR FOREIGN JURISDICTION. THESE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS SUCH TRANSACTION IS DULY REGISTERED UNDER THE ACT
AND ALL OTHER APPLICABLE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM THE REGISTRATION PROVISIONS OF
THE ACT AND ALL OTHER APPLICABLE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER UNDER A WARRANT
AGREEMENT DATED AS OF MARCH 4, 1999, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legends (except a new certificate
-2-
<PAGE>
issued upon completion of a registered distribution as provided above)
shall also bear the above legends unless, in the opinion of the
Company's counsel, the securities represented thereby need no longer be
subject to such restrictions.
1.5 The Warrantholder hereby represents and warrants that it
(i) is acquiring the Warrants for its own account for investment
purposes only and not with a view to or for sale in connection with a
distribution of the Warrants or the Shares; (ii) has relied on its own
business and financial knowledge and experience in making the decision
to invest in the Warrants; and (iii) has sufficient knowledge and
experience in business and financial matters to enable it to use the
information made available to it about the Company (including the
Company's periodic and other filings with the Securities and Exchange
Commission) to evaluate the merits and risks of an investment in the
Warrants and to make an informed investment decision with respect
thereto.
Section 2. Exchange of Warrant Certificate.
Any Warrant certificate may be divided, combined or exchanged
for another certificate or certificates entitling the Warrantholder to
purchase a like aggregate number of Shares as the certificate or
certificates surrendered then entitled such Warrantholder to purchase.
Any Warrantholder desiring to divide, combine or exchange a Warrant
certificate shall make such request in writing delivered to the Company,
and shall surrender, properly endorsed, with signatures guaranteed, the
certificate evidencing the Warrant to be so exchanged. Thereupon, the
Company shall execute and deliver to the person entitled thereto a new
Warrant certificate as so requested.
Section 3. Term of Warrants; Exercise of Warrants.
Subject to the terms of this Agreement, the Warrantholder
shall have the right, at any time during the period commencing at 9:00
a.m., Pacific time, on the applicable Vesting Date (as defined in
Section 7.1 below), and ending at 5:00 p.m., Pacific time, on October
23, 2003 (unless earlier terminated in accordance herewith), to purchase
from the Company (and the Company shall issue and sell to such
Warrantholder) any or all of the number of Shares underlying the
Warrants which have vested as provided in Section 7.1 below, upon
surrender to the Company at its principal office, or upon surrender to
any transfer agent designated by the Company for such purposes, of the
certificate evidencing the Warrants to be exercised, together with the
purchase form attached thereto duly filled in and signed, with
signatures guaranteed, and upon payment to the Company of the per share
purchase price of $0.90 (the "Warrant Price"), subject to adjustment as
provided in Section 8, for the number of Shares in respect of which such
Warrant is then exercised, but in no event for less than 500 Shares
(unless less than an aggregate of 500 Shares are then purchasable under
all outstanding Warrants held by a Warrantholder). Payment of the
aggregate Warrant Price shall be made in cash or by cashiers or
certified check or bank draft. In lieu of such payment, Warrantholder
shall be entitled to receive, without the payment by the Warrantholder
of any additional consideration, shares of Common Stock equal to the
value of this Warrant or any portion hereof by the surrender of this
Warrant or such portion to the company, with the net issue election
notice attached hereto as Exhibit B duly executed, at the principal
office of the Company. Thereupon, the Company shall issue to the
Warrantholder such number of fully paid and nonassessable shares of
Common Stock as is computed using the following formula:
-3-
<PAGE>
(A-B)
X=Y -------
A
Where: X= the number of shares of Common Stock to be
issued to the Warrant holder.
Y= the number of shares of Common Stock covered by
this Warrant in respect of which the net issue
election is made.
A= the fair market value of one share of Common
stock, as determined below, as at the time the
net issue election is made.
B= the Exercise Price in effect under this Warrant
at the time the net issue election is made.
For purpose of this Section, fair market value of one share of
Common Stock as of a particular date shall mean the closing price of the
Company's Common Stock on the OTC Bulletin Board or other quotation
medium or stock exchange or which the Common Stock is quoted or listed
on the day notice of exercise is provided to the Company as provided
above. If the Common Stock is not so quoted or listed as provided
above, then the fair market value of one share of Common Stock shall be
determined by the Board of Directors of the Company in good faith, which
determination shall be conclusive and binding on the Warrantholder.
Upon such surrender of the Warrants and payment of such
Warrant Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of
the Warrantholder and in the name of the Warrantholder a certificate or
certificates for the number of full Shares so purchased upon the
exercise of the Warrant, together with cash, as provided in Section 9
hereof, in respect of any fractional Shares otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have
been issued and the Warrantholder shall be deemed to have become a
holder of record of such securities as of the date of surrender of the
Warrants and payment of the Warrant Price, as aforesaid, notwithstanding
that the certificate or certificates representing such securities shall
not actually have been delivered or that the stock transfer book of the
Company shall then be closed. The Warrants shall be exercisable, at the
election of the Warrantholder, either in full or from time to time in
part and, in the event that a certificate evidencing the Warrants is
exercised in respect of less than all of the Shares specified therein at
any time prior to the termination date, a new certificate evidencing the
remaining portion of the Warrants will be issued by the Company.
Upon the exercise of a Warrant at a time when there is not in
effect under the Act a registration statement relating to the Shares
issuable upon exercise thereof and available for delivery to the
Warrantholder a prospectus meeting the requirements of Section 10(a)(3)
of the Act, the Warrantholder shall represent and warrant in writing to
the Company that the Shares purchased are being acquired for investment
and not with a view to the distribution thereof. No Shares shall be
issuable upon the exercise of any Warrant unless and until any then
applicable requirements of the Securities and Exchange Commission, the
California Corporations Commissioner, or other regulatory agencies
having jurisdiction, and of any exchanges upon which common stock of the
Company may be listed, shall have been complied with in full.
-4-
<PAGE>
Section 4. Payment of Taxes.
The Company will pay all United States documentary stamp
taxes, if any, attributable to the initial issuance of the Shares
issuable upon the exercise of the Warrants; provided, however, the
Company shall not be required to pay any foreign documentary stamp taxes
or tax which may be payable in respect of any transfer involved in the
issuance or delivery of any certificates for shares of Common Stock in
a name other than that of the registered holder of Warrants in respect
of which such shares are issued, and in such case neither the Company
nor the Warrant Agent shall be required to issue or deliver any
certificate for shares of Common Stock or any Warrant certificate until
the person requesting the same has paid to the Company the amount of
such tax or has established to the Company's satisfaction that such tax
has been paid.
Section 5. Mutilated or Missing Warrants.
In case the certificate or certificates evidencing the
Warrants shall be mutilated, lost, stolen or destroyed, the Company may
at its discretion, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution
for the certificate or certificates lost, stolen or destroyed, a new
Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such
Warrant certificate and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for
such substitute Warrant certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
Section 6. Reservation of Shares.
There has been reserved, and the Company shall at all times
keep reserved so long as the Warrants remain outstanding, out of its
authorized Common Stock, such number of shares of Common Stock as shall
be subject to purchase under the Warrants. Every transfer agent for the
Common Stock issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number
of authorized and unissued shares as shall be requisite for such
purpose. The Company will keep a copy of this Agreement on file with
every transfer agent for the Common Stock issuable upon the exercise of
the Warrants. The Company will supply every such transfer agent with
duly executed stock and other certificates, as appropriate, for such
purpose and will provide or otherwise make available any cash which may
be payable as provided in Section 9 hereof.
Section 7. Vesting Date; Early Termination.
7.1 The applicable "Vesting Date" of the Warrants shall be
the earliest to occur of (i) the following vesting dates:
Number of Shares Vesting Date
---------------- -------------
20,000 April 1, 1999
20,000 July 1, 1999
20,000 October 1, 1999
(ii) the sale of all or substantially all the assets of the Company and
(iii) the 15th day prior to the date fixed as the record date or the date
-5-
<PAGE>
of closing the stock transfer books of the Company for the determination
of the stockholders entitled to any rights to receive merger
consideration or other rights in connection with any proposed merger or
consolidation of the Company with respect to which the Company would not
be the surviving entity.
7.2 Notwithstanding any other provision of this Agreement to
the contrary, the Warrants shall immediately terminate and shall not be
or become exercisable upon (a) the breach by Warrantholder of any
provision of the Noncompetition Agreement, or (b) the termination of
Warrantholder's employment with the company for Cause (as defined
below). Cause shall mean (i) the conviction of a felony in a court of
law, (ii) a material breach of fiduciary duty owed to the Company, or
(iii) gross neglect of duties by the Warrantholder.
Section 8. Adjustments.
The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as
follows:
8.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in
Common Stock or make a distribution in Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common
Stock into a smaller number of shares of Common Stock, or (iv)
issue, by reclassification of its Common Stock, other securities of
the Company, the number of Shares purchasable upon exercise of the
Warrants immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of
Shares or other securities of the Company which the Warrantholder
would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the
Warrants been exercised immediately prior to the happening of such
event or any record date with respect thereto. Any adjustment made
pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event retroactive to
the record date, if any, for such event.
(b) No adjustment in the number of Shares purchasable
pursuant to the Warrants shall be required unless such adjustment
would require an increase or decrease of at least one percent in
the number of Shares then purchasable upon the exercise of the
Warrants; provided, however, that any adjustments which by reason
of this subsection 8.1(b) are not required to be made immediately
shall be carried forward and taken into account in any subsequent
adjustment.
(c) Whenever the number of shares of Common Stock
purchasable upon the exercise of a Warrant is adjusted as herein
provided, the Warrant Price payable upon exercise of the Warrant
shall be adjusted by multiplying such Warrant Price by a fraction,
the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of such Warrant immediately
prior to such adjustment, and the denominator of which shall be the
number of Shares of Common Stock so purchasable immediately
thereafter.
-6-
<PAGE>
(d) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by
certified or registered mail, return receipt requested, postage
prepaid, notice of such adjustment and a certificate of the chief
financial officer of the Company setting forth the number of Shares
purchasable upon the exercise of the Warrants after such
adjustment, a brief statement of the facts requiring such
adjustment and the computation by which such adjustment was made.
(e) For the purpose of this subsection 8.1, the term
"Common Stock" shall mean the class of stock designated as the
Common Stock of the Company at the date of this Agreement. In the
event that at any time, as a result of an adjustment made pursuant
to this Section 8, the Warrantholder shall become entitled to
purchase any securities of the Company other than Common Stock, (i)
if the Warrantholder's right to purchase is on any other basis than
that available to all holders of the Company's Common Stock, the
Company shall obtain an opinion of an independent investment
banking firm valuing such other securities and (ii) thereafter the
number of such other securities so purchasable upon exercise of the
Warrants shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in this Section 8.
8.2 No Adjustment for Dividends. Except as provided in
subsection 8.1, no adjustment in respect of any dividends or
distributions out of earnings shall be made during the term of the
Warrants or upon the exercise of the Warrants. Subject to any
requirements of California corporate laws and regulations, applicable
federal and state securities laws and regulations and any securities
exchanges or over-the-counter markets upon which the Common Stock is
listed or qualified for trading enacted or adopted after the date of
this Agreement, the record date for the payment of any dividend or
distribution out of earnings made while any of the Warrants are
outstanding shall be not less than thirty (30) days after the public
announcement of the declaration of such dividend or distribution.
8.3 Preservation of Purchase Rights upon Merger or
Consolidation. In case of any consolidation of the Company with or
merger of the Company into another corporation or in case of any sale or
conveyance to another corporation of the property, assets or business of
the Company as an entirety or substantially as an entirety, the Company
or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholder an agreement that the Warrantholder shall
have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase, upon exercise of the
Warrants, the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive
after the happening of such consolidation, merger, sale or conveyance
had the Warrants been exercised immediately prior to such action. In
the event of a triangular merger in which the Company is the surviving
corporation, the right to purchase Shares under the Warrants shall
terminate on the date of such merger and thereupon the Warrants shall
become null and void, but only if the controlling corporation shall
agree to substitute for the Warrants its warrant which entitles the
holder thereof to purchase upon its exercise the kind and amount of
shares and other securities and property which it would have owned or
been entitled to receive had the Warrants been exercised immediately
prior to such merger. Any such agreements referred to in this
subsection 8.3 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
Section 8 hereof. The provisions of this subsection 8.3 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
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<PAGE>
8.4 Independent Public Accountants. The Company may
retain a firm of independent public accountants of recognized national
standing (which may be any such firm regularly employed by the Company)
to make any computation required under this Section 8, and a certificate
signed by such firm shall be presumptive evidence of the correctness of
any computation made under this Section 8.
8.5 Statement on Warrant Certificates. Irrespective of
any adjustments in the number of securities issuable upon exercise of
Warrants, Warrant certificates theretofore or thereafter issued may
continue to express the same number of securities as are stated in the
similar Warrant certificates initially issuable pursuant to this
Agreement. However, the Company may, at any time in its sole discretion
(which shall be conclusive), make any change in the form of Warrant
certificate that it may deem appropriate and that does not affect the
substance thereof; and any Warrant certificate thereafter issued,
whether upon registration of transfer of, or in exchange or substitution
for, an outstanding Warrant certificate, may be in the form so changed.
Section 9. Fractional Interests.
The Company shall not be required to issue fractional Shares
on the exercise of the Warrants. If any fraction of a Share would,
except for the provisions of this Section 9, be issuable on the exercise
of the Warrants (or specified portion thereof), the Company shall pay an
amount in cash equal to the then Current Market Price multiplied by such
fraction. For purposes of this Agreement, the term "Current Market
Price" shall mean (i) if the Common Stock is traded in the over-the-
counter market and not in the Nasdaq National Market System nor on any
national securities exchange, the average of the per share closing bid
prices of the Common Stock on the 30 consecutive trading days
immediately preceding the date in question, as reported by Nasdaq or an
equivalent generally accepted reporting service, or (ii) if the Common
Stock is traded in the Nasdaq National Market System or on a national
securities exchange, the average for the 30 consecutive trading days
immediately preceding the date in question of the daily per share
closing prices of the Common Stock in the Nasdaq National Market System
or on the principal stock exchange on which it is listed, as the case
may be. For purposes of clause (i) above, if trading in the Common
Stock is not reported by Nasdaq, the bid price referred to in said
clause shall be the lowest bid price as reported in the "pink sheets"
published by National Quotation Bureau, Incorporated. The closing price
referred to in clause (ii) above shall be the last reported sale price
or, in case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case in the
Nasdaq National Market System or on the national securities exchange on
which the Common Stock is then listed.
Section 10. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained in this Agreement or in the Warrants shall
be construed as conferring upon the Warrantholder any rights as a
stockholder of the Company, including the right to vote, receive
dividends, consent or receive notices as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or
any other matter. If, however, at any time following the Vesting Date
and prior to the expiration of the Warrants and prior to their exercise,
any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to Section 8.1
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<PAGE>
or 8.3;
(b) the Company shall make a declaration for the payment
of any other dividend or the making of any other distribution upon
the Common Stock;
(c) the Company shall make an offer to the holders of
Common Stock for the subscription or purchase by them any share of
any class or any other rights;
(d) the capital reorganization of the Company or the
reclassification of the capital stock of the Company; or
(e) the consolidation or merger of the Company with or
into another entity, the sale of all or substantially all of the
assets of the Company or the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 12 hereof, at least 20 days prior
to the date fixed as a record date or the date of closing the transfer
books for the determination of the stockholders entitled to any relevant
dividend, distribution, subscription rights or other rights or for the
determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such
record date or the date of closing the transfer books, as the case may
be. Failure to mail or receive such notice or any defect therein shall
not affect the validity of any action taken with respect thereto.
Section 11. Registration Rights.
(a) Whenever the Company proposes to file with the Commission
a Registration Statement (other than a registration statement on Form
S-4 or S-8 or any corresponding future forms, or any other form for a
limited purpose which excludes registration of the Shares, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation) in connection
with the registration of its Common Stock, the Company shall, at least
fifteen (15) days prior to each such filing, give written notice of such
proposed filing to the Warrantholder and each holder of the Shares, and
shall use its reasonable efforts to include in such filing any proposed
disposition of the Shares (issued or issuable upon the exercise of
Warrants which are then vested in accordance with Section 7, herein)
upon receipt by the Company of a written request therefor, given within
ten (10) days after such notice is given by the Company, setting forth
the facts with respect to such proposed disposition and all other
information with respect to such person necessary to be included in such
Registration Statement; provided that the Company shall have the right
to postpone or withdraw any registration of its Common Stock (and the
corresponding registration effected pursuant to this Section 11) without
obligation to the Warrantholder or any holder of the Shares.
(b) Notwithstanding the foregoing, the Company shall not be
required to include any Shares in an underwritten public offering unless
the Warrantholder or holder of the Shares accepts the terms of the
underwriting as agreed upon between the Company and the underwriter(s)
selected by it, and then only in such quantity as will not, in the
opinion of the managing underwriter(s), jeopardize or be detrimental to
the success of the offering (including price) by the Company. In the
event that the managing underwriter(s) advise the Company in writing
that the inclusion of all or any portion of the Shares in the offering
would jeopardize or be detrimental to the success of the offering, the
number of the Shares to be included in the offering shall be reduced to
the number of Shares, if any, that the managing underwriter(s) believe
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<PAGE>
may be sold without causing such adverse effect. In the event that the
managing underwriter(s) advise the Company in writing that the inclusion
of a portion of such Shares in the offering would not jeopardize or be
detrimental to the success of the offering, and such portion is less
than the amount requested for inclusion by all persons having
registration rights in respect of the offering, then the amount to be
included shall be prorated among the requesting Warrantholder,
requesting holders of the Shares and other security holders of the
Company possessing similar registration rights in accordance with their
relative holdings, it being agreed to by the Company that no person who
does not possess such registration rights shall be allowed to
participate in the offering to the exclusion of any Shares requested to
be included by any holder of the Warrants or the Shares, and such Shares
shall be offered and sold on the same terms and conditions as the shares
of Common Stock, if any, being offered by the Company in such offering.
In the event that any of the Shares are registered in connection with
the registration of an underwritten public offering but are not included
in such underwritten public offering, those Shares which are excluded
from the offering shall be withheld from the market by the Warrantholder
or the holder(s) of such Shares for a period, not to exceed 120 days,
which the managing underwriter(s) reasonably determine is necessary in
order to effect the underwritten public offering. The Company shall use
its best efforts to keep effective any Registration Statement covering
any of the Shares not subject to or included in an underwritten public
offering for a period of 90 days after the later of the effective date
of such Registration Statement or the date, if any, that the
underwriter(s) specify to be the date upon which such Shares may first
be distributed.
(c) All fees, disbursements and out-of-pocket expenses (other
than brokerage or underwriting fees and commissions and legal fees of
counsel to the Warrantholder or any holder of the Shares, if any) in
connection with the filing of any Registration Statement under this
Section 11 and in complying with applicable securities and Blue Sky laws
shall be borne by the Company; provided, however, that all underwriting
discounts and selling commissions applicable to the Shares covered by
registrations effected pursuant to this Section 11 shall not be borne by
the Company but shall be borne by the Warrantholder and each holder of
the Shares benefited thereby. Notwithstanding the foregoing, the
Company shall not be required to register the Shares or perfect any
exemption for the offering and sale of the Shares under (i) the
securities laws of any foreign jurisdiction or (ii) the securities laws
of any State, territory or possession of the United States in the event
that registration or the perfection of an exemption under the law of any
such State, territory or possession would, in the opinion of the
Company, result in the imposition of unreasonable restrictions on the
Company or its shareholders, officers, directors or employees. The
Company at its expense will supply the Warrantholder and any holder of
the Shares with copies of such Registration Statement and the prospectus
included therein and other related documents in such quantities as may
be reasonably requested by the Warrantholder or holder of the Shares.
In addition, the Company shall have no obligation to register the
Shares in the event the Warrantholder is free to sell such securities
under Rule 144 under the Act.
Section 12. Notices.
Any notice pursuant to this Agreement by the Company or by a
Warrantholder or a holder of Shares shall be in writing and shall be
deemed to have been duly given if delivered or mailed by certified mail,
return receipt requested:
(a) If to the Warrantholder or a holder of Shares -
addressed to Stuart Dinney, 13726 Callington Drive, Wellington, FL
33414.
(b) If to the Company - addressed to it at 4954 Van Nuys
Boulevard, Sherman Oaks, California 91403, Attention: William D.
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<PAGE>
Nicely, Chief Executive Officer, with a copy to Sheppard, Mullin
Richter & Hampton, LLP, 333 South Hope Street, 48th Floor, Los
Angeles, California 90071, Attention: James M. Rene, Esquire.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
Section 13. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company, the Warrantholder or the holders of Shares shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 14. Survival of Representations and Warranties.
All statements contained in any schedule, exhibit, certificate or
other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated by this Agreement, shall
be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties
to this Agreement, all representations, warranties and agreements made
by the parties to this Agreement or pursuant hereto shall survive.
Section 15. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws
of the State of California and for all purposes shall be construed in
accordance with the laws of said State. This Agreement has been
executed and delivered by the parties in the State of California.
Section 16. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person
or corporation other than the Company, the Warrantholder and the holders
of Shares any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit
of the Company, the Warrantholder and the holders of Shares.
Section 17. Entire Agreement; Amendments.
This Agreement sets forth the entire understanding of the parties
with respect to the subject matter hereof, supersedes any and all prior
agreements with respect to the subject matter hereof, and may be
modified only by a written instrument duly executed by each party
affected by any such modification.
Section 18. Descriptive Headings.
The descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed, all as of the day and year first above written.
HEMACARE CORPORATION
(CORPORATE SEAL)
By: /s/ William D. Nicely
------------------------
William D. Nicely,
Chief Executive Officer
ATTEST:
/s/ JoAnn Stover
____________________________
JoAnn R. Stover, Secretary
/s/ Stuart Dinney
___________________________
STUART DINNEY
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<PAGE>
EXHIBIT A
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
FOREIGN JURISDICTION. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSACTION IS DULY REGISTERED
UNDER THE ACT AND ALL OTHER APPLICABLE SECURITIES LAWS OR UNLESS SUCH
TRANSFER IS EXEMPT FROM THE REGISTRATION PROVISIONS OF THE ACT AND ALL OTHER
APPLICABLE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER UNDER A WARRANT AGREEMENT DATED AS OF ______________, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER.
WARRANT CERTIFICATE NO. __________
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.,
PACIFIC TIME, ON ___________, 20__
HEMACARE CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA
This certifies that, for value received,_______________ or permitted
assigns (the "Holder"), is entitled to purchase from HEMACARE CORPORATION, a
California corporation (the "Company"), at any time before 5:00 p.m., Pacific
Time, on _______, 200_, at a per share purchase price of $_____ (the "Warrant
Price"), the number of shares of Common Stock, without par value, of the
Company set forth above (the "Shares"). The number of Shares purchasable
upon exercise of this Warrant and the Warrant Price are subject to adjustment
from time to time as set forth in the Warrant Agreement referred to below.
This Warrant may be exercised in whole or in part by presentation
of this certificate with the Purchase Form attached hereto duly executed
(with a signature guarantee as provided on such Purchase Form) and
simultaneous payment of the Warrant Price (subject to adjustment) at the
principal office of the Company or at the office of any stock transfer
agent designated by the Company for such purposes. Payment of such price
shall be made at the option of the Holder in cash or by certified check
or bank draft, all as provided in the Warrant Agreement.
This Warrant is part of a duly authorized issue of Common Stock
Purchase Warrants with rights to purchase an aggregate of up to ________
Shares of Common Stock of the Company and are issued under and in
accordance with a Warrant Agreement dated as of ________, 19__, between
the Company and _____________ (the "Warrant Agreement") and are subject
to the terms and provisions contained in the Warrant Agreement, to all of
which the Holder of this Warrant certificate by acceptance hereof
consents. A copy of the Warrant Agreement may be obtained for inspection
by the Holder hereof upon written request to the Company. The Warrant
Agreement provides for the early termination of this Warrant upon the
occurrence of certain events.
<PAGE>
Upon any partial exercise of this Warrants, there shall be
countersigned and issued to the Holder a new Warrant certificate in
respect of the Shares as to which this Warrant has not been exercised.
This Warrant certificate may be exchanged at the principal office of the
Company, or at the office of any stock transfer agent designated by the
Company for such purposes, by surrender of this Warrant certificate
properly endorsed (with a signature guarantee) either separately or in
combination with one or more other Warrants for one or more new Warrants
to purchase the same aggregate number of Shares evidenced by the Warrant
or Warrants exchanged. No fractional Shares will be issued upon the
exercise of this Warrant, but the Company shall pay the cash value of any
fractional share otherwise issuable upon the exercise of this Warrant.
This Warrant is transferable at the principal office of the Company, or
at the office of any stock transfer agent designated by the Company for
such purposes, in the manner and subject to the limitations set forth in
the Warrant Agreement.
The Holder hereof may be treated by the Company and all other
persons dealing with this Warrant certificate as the absolute owner
hereof for all purposes and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding, and until
such transfer is entered on such books, the Company may treat the Holder
hereof as the owner for all purposes.
This Warrant certificate does not entitle the Holder hereof to
any of the rights of a shareholder of the Company.
Dated as of: ___________ HEMACARE CORPORATION
By: __________________________
William D. Nicely
Chief Executive Officer
ATTEST:
___________________________
JoAnn R. Stover, Secretary
<PAGE>
HEMACARE CORPORATION
PURCHASE FORM
Mailing Address:
HemaCare Corporation
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
______ Shares of Common Stock provided for therein, and requests that
certificates for such Shares be issued in the name of:
________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant certificate for the balance of the Shares
purchasable under the within Warrant certificate be registered in the name
of the undersigned Holder or his Assignee as below indicated and delivered
to the address stated below.
I hereby make the following representations and warranties with respect
tothe Shares I am hereby acquiring: (i) I am purchasing the Shares for my
own account, for investment purposes only and not with a view to or for sale
in connection with the distribution of such Shares; (ii) I have relied on my
own business and financial knowledge and experience in making the decision to
invest in the Shares; (iii) I have sufficient knowledge and experience in
business and financial matters to enable me to use the information made
available to me about the Company (including the Company's periodic and other
filings with the Securities and Exchange Commission) to evaluate the merits
and risks of an investment in the Shares and to make an informed investment
decision with respect thereto; and (iv) I have no reason to anticipate any
change in circumstances, financial or otherwise, that necessitate or require
any sale or distribution of the Shares.
Dated: ___________________________________________
Name of Holder or Assignee: __________________________________________
(Please Print)
Address: _______________________________________________________
_______________________________________________________
Signature: _______________________________________________________
Note: The above signature must correspond with the name as it appears upon
the face of the within Warrant certificate in every particular, without
alteration or enlargement or any change whatever, unless this Warrant has
been assigned
Signature Guaranteed:
________________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.
The guarantor of signature must be a participant in the Medallion Stamp
Program.)
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
_____________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
_____________________________________________________________
the within Warrant, hereby irrevocably constituting and
appointing __________________________ Attorney to transfer said Warrant on
the books of the Company, with full power of substitution in the premises.
Dated: _____________ _____________________________________________
Signature of Registered Holder
The signature on this assignment must correspond with
the name as it appears upon the face of the within
Warrant certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed:
____________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.
The guarantor of signature must be a participant in the Medallion Stamp
Program.)
<PAGE>
EXHIBIT B
Net Issue Election
HemaCare Corporation
4954 Van Nuys Boulevard
Sherman Oaks, CA 91403
Ladies and Gentlemen:
The undersigned hereby elects under Section __ of the Warrant dated
________ (the "Warrant"), to exercise its right to receive ________
shares of Common Stock pursuant to the Warrant. The certificate(s) for
such shares issuable upon such net issue election shall be issued in the
name of the undersigned or as otherwise indicated below:
Name for Registration:____________________________________________
Mailing Address: _________________________________________________
_________________________________________________
Name: ___________________________________
By: _______________________________
Its: ______________________________
<PAGE>
EXHIBIT 10.1
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is entered into
by and between HemaCare Corporation (the "Company"), located at
4954 Van Nuys Boulevard, Sherman Oaks, CA 91403, and Alan C.
Darlington ("Darlington") as of March 10, 1999 (the "Effective
Date").
I. Employment
The Company engages Darlington and Darlington accepts such
engagement (hereinafter, the "Engagement") upon the terms and
conditions of this Agreement.
II. Duties
Darlington shall perform the duties of Executive Chairman
and such other duties consistent with such position as may be
prescribed from time to time by the Board of Directors of the
Company (the "Board"). During the Engagement, Executive shall
report to the Board. During the Engagement, Darlington shall
devote substantially all his time to the business of the Company
but shall be permitted to participate in other business
activities (whether or not such business activity is pursued for
gain, profit or other pecuniary advantage), including without
limitation the business activities in which Darlington heretofore
has participated, to the extent such activities shall not
unreasonably interfere with Darlington's duties hereunder.
III. Compensation
A. Base Pay
The Company shall pay Darlington for all services rendered a
salary of $200,000 per year which may be increased by the Board
of Directors of the Company as recommended by the Board
Compensation Committee (as adjusted, the "Base Pay"), payable in
semi-monthly installments or in such other manner as the Company
shall pay its executives. Such payments shall be deemed to have
commenced hereunder as of December 1, 1998 (it being agreed that
promptly following the execution hereof the Company shall pay all
amounts earned from such date to the Effective Date).
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<PAGE>
B. Incentive Compensation
Annually the Company shall pay to Darlington a bonus (the
"Bonus Payment") in the manner set forth on Exhibit A hereto.
In the event this Agreement terminates on the Initial Termination
Date (as hereinafter defined), Darlington shall be entitled to
receive a Bonus Payment (to the extent a Bonus Payment is earned
as set forth in Exhibit A hereto) for the year ending December
31, 1999.
C. Stock Options
Upon commencement of the Engagement, all prior options held
by Darlington shall be deemed cancelled and of no further force
and effect and Darlington is hereby granted an option to purchase
250,000 shares ("Option Shares") of HemaCare Corporation common
stock ("Common Stock") at an exercise price per share of $0.40.
Such grant is subject to the terms and conditions of the HemaCare
Corporation Incentive Stock Option Plan of 1996 and the form of
Non-Qualified Stock Option Agreement attached hereto as Exhibit
B. Such options shall vest as follows: (i) on the Effective
Date, 62,500 Option Shares shall vest immediately; (ii) on the
date on which the average closing price of Common Stock for the
thirty (30) prior trading days is $1.25 or higher, 62,500 Option
Shares shall vest, (iii) on the date on which the average closing
price of Common Stock for the thirty (30) prior trading days is
$1.50 or higher, 62,500 Option Shares shall vest, and (iii) on
the date on which the average closing price of Common Stock for
the thirty (30) prior trading days is $1.75 or higher, 62,500
Option Shares shall vest; provided, that in the event (a) Option
Shares have not vested as of December 31, 2001, and at such time
this Agreement is still in effect, or (b) Option Shares remain
unvested as of the Termination Date relating to a termination
under paragraph IV(e) or IV(f) below, all Option Shares not then
vested shall immediately vest.
D. Fringe Benefits
Darlington shall receive the following fringe benefits:
1. Health/Dental Insurance on a basis consistent with
such insurance benefits which are from time to time provided to
the Company's senior executives.
2. Long term disability insurance equal to two-thirds
(2/3) of Base Pay.
3. Term Life Insurance: Benefits equal to five (5)
times Darlington's annual Base Pay.
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<PAGE>
IV. Term and Termination
The term of this Agreement shall begin on the Effective Date
and shall continue until December 31, 1999 (the "Initial
Termination Date") and shall automatically be extended for
successive one-year terms (as so extended, the "Term") unless, at
least thirty (30) days prior to an applicable termination date
hereunder, either the Company or Darlington provides the other
party written notice of such party's intention not to extend the
term for an additional one-year period, in which event this
Agreement shall terminate upon the then scheduled termination
date. Notwithstanding the foregoing, Darlington's Engagement
under this Agreement shall terminate on the first to occur (the
"Termination Date") of:
(a) the effective date of Darlington's resignation
determined pursuant to paragraph V below;
(b) Darlington's death;
(c) the inability of Darlington to perform all of his
duties hereunder by reason of illness, physical, mental or
emotional disability or other incapacity, which inability shall
continue for more than three (3) successive months or six (6)
months in the aggregate during any period of twelve (12)
consecutive months ("Incapacity");
(d) the date Darlington's Engagement is terminated by the
Board for "Cause" (it being agreed that termination pursuant to
this subparagraph may only occur after written notice from the
Company to Darlington specifying the grounds for termination and
Darlington fails within ten (10) days after receipt of such
notice to cure such failure). Cause shall mean:
(i) the willful failure of Darlington (other than due
to Incapacity) to substantially perform his duties hereunder. No
act, or failure to act, on Darlington's part shall be considered
"willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission
was in the best interest of the Company;
(ii) conviction of a crime involving a felony,
fraud, embezzlement or the like,
(iii) the engaging by Darlington in conduct, or the
taking by Darlington of any action, which is materially injurious
to the Company,
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<PAGE>
(iv) insobriety or abuse of a controlled substance,
(v) misappropriation of the Company's funds, or
(vi) the failure of Darlington to comply with the
provisions of Paragraph VII below.
(e) the date on which the Company determines, in its sole
discretion, to terminate Darlington's Engagement with the Company
other than for any of the reasons specified in subparagraphs (a),
(b), (c) or (d) above (in which case Darlington will be entitled
to the severance benefits described in paragraph VI below and
such severance benefits shall be Darlington's sole remedy with
respect to such termination); or
(f) the date Darlington terminates the Engagement as a
result of the failure of the Company to observe or comply with
any of the material terms or provisions of this Agreement after
written notice from Darlington to the Company specifying the
grounds for termination and the Company fails within ten (10)
days after receipt of such notice to cure such failure (in which
case Darlington will be entitled to the severance benefits
described in paragraph VI below and such severance benefits shall
be Darlington's sole remedy with respect to such termination).
Upon any termination of this Agreement, Darlington shall be
deemed to have resigned from the Board without any further action
unless the Company and Darlington agree otherwise.
V. Resignation
Darlington agrees to give the Company at least thirty (30)
days prior written notice of Darlington's resignation (which
notice shall not constitute a breach of this Agreement). The
Board may, in its sole discretion, accelerate the effective date
of Darlington's resignation; provided, however, that the Board's
acceleration of the effective date of Darlington's resignation
shall not affect the fact that Darlington's Engagement was
terminated as a result of Darlington's resignation.
VI. Severance
(a) In the event Darlington's Engagement is terminated by
the Board pursuant to subparagraph IV(e) above, or by Darlington
pursuant to subparagraph IV(f) above, the Company will pay to
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<PAGE>
Darlington a severance payment (the "Severance Payment") equal
to:
(i) Two Hundred Thousand Dollars ($200,000.00) (the
"Salary Component"), and
(ii) the greater of (A) fifty percent (50%) of the
amount of the Bonus Payment (defined below), if any, for the most
recent fiscal year ended prior to the Termination Date (unless
the Termination Date occurs prior to December 31, 1999, in which
event this subparagraph (ii) shall not apply), and (B) fifty
percent (50%) of the average of the Bonus Payments, if any, for
the two most recent fiscal years ended prior to the Termination
Date (the "Bonus Component") unless the Termination Date occurs
on or prior to December 31, 2000 (in which event this clause (B)
shall not apply and only clause (A) shall be used in determining
the amount due Darlington under this subparagraph (ii)).
The Severance Payment shall be paid by the Company in twelve (12)
equal monthly installments as follows: (a) with respect to the
Salary Component, commencing on the last business day of the
month in which the Termination Date occurs and continuing on the
last business day of each month thereafter until paid in full,
and (b) with respect to the Bonus Component, on the last business
day of the month in which the anniversary date of the Termination
Date occurs and continuing on the last business day of each month
thereafter until paid in full. After the Termination Date,
Darlington shall be entitled to no further benefits other than as
required under the terms and conditions of the benefit plans
provided under subparagraph III(D) or to the extent mandated by
law.
(b) In the event of a Change of Control which occurs during
the Engagement and within twelve months thereafter the Engagement
is terminated by the Board pursuant to subparagraph IV(e) above,
Darlington shall be entitled to receive two (2) times the amount
of the Severance Payment determined pursuant to subparagraph
VI(a) above.
(c) The Company may, at its option and at any time,
discharge all its obligations to Darlington under this paragraph
in a single payment in an amount equal to the net present value
(at a discount rate equal to the prime rate announced from time
to time by Bank of America NT&SA) of all amounts then payable
hereunder. As of the date of payment of all amounts required to
be paid by the Company under this paragraph, the Company will
have no further obligation to Darlington with respect to the
payment of severance pay.
-5-
<PAGE>
VII. Non-Disclosure; Nonsolicitation; Nondisparagement
A. Darlington shall not during the Term or at any time
thereafter (i) disclose to any person not employed by the Company
or any person, firm or corporation engaged to render services to
Company except during the Term for the benefit of Company, or
(ii) use for the benefit of himself, or others, any Confidential
Information (as defined below) obtained by Darlington prior to
the Effective Date, during the Term or any time thereafter,
including, without limitation, "know-how", trade secrets, details
of the Company's contracts with third parties, pricing policies,
financial data, operational methods, marketing and sales
information or strategies, product development techniques or
plans or any strategies relating thereto, technical processes,
designs and design projects, and other proprietary information of
Company ("Confidential Information"); provided, however, that
this provision shall not preclude Darlington from (x) upon advice
of counsel and after reasonable notice to Company, making any
disclosure required by any applicable law or (y) using or
disclosing information known generally to the public (other than
information known generally to the public as a result of any
violation of this paragraph VII by or on behalf of Darlington).
B. As requested by the Company from time to time and upon
the termination of the Engagement for any reason, Darlington will
promptly deliver to the Company all copies and embodiments, in
whatever form, of all Confidential Information in Darlington's
possession or within Darlington's control (including, but not
limited to, written records, notes, photographs, manuals,
notebooks, documentation, program listings, flow charts, magnetic
media, disks, diskettes, tapes and all other materials containing
any such Confidential Information) regardless of the location or
form of such material and, if requested by the Company, will
provide the Company with written confirmation that all such
materials have been delivered to the Company.
C. Darlington shall not, either directly or indirectly,
call on, solicit or take away or assist to be called on,
solicited or taken away, any of the customers, other employees or
independent contractors of the Company on whom Darlington called
or with whom Darlington became acquainted during Darlington's
Engagement with or hiring by the Company, either for Darlington's
own benefit, or for the benefit of any other person, firm or
corporation. Darlington shall not disclose the name of any
employee, customer, sales representative or other employee of the
Company to any third party, unless the disclosure occurs during
Darlington's Engagement with the Company and is reasonably
required by Darlington's position with the Company. Darlington
shall not now or in the future disrupt, damage, impair or
interfere with the business of the Company in any manner,
including, without limitation, inducing an employee to leave the
employ of the Company or inducing an employee, a consultant, a
sales representative or an independent contractor to sever that
person's relationship with the Company either by interfering with
-6-
<PAGE>
or raiding the Company's employees or sales representatives,
disrupting its relationships with customers, agents, independent
contractors, representatives or vendors, or otherwise.
In the event of a breach or threatened breach by Darlington
of the provisions of this paragraph, the Company will be entitled
to injunctive or other equitable relief restraining Darlington
from any breach or threatened breach of this paragraph VII.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to the Company for such
breach or threatened breach, including the recovery of damages
from Darlington.
VIII. Expenses
Darlington may incur reasonable expenses, in accordance with
Company policies for such expenses, for promoting the Company's
business, including expenses for entertainment, travel and
similar items. The Company will reimburse Darlington for all
such expenses upon Darlington's presentation of an itemized
account of such expenditures and supporting documentation, in
accordance with Company policy.
IX. Waiver of Breach
The waiver by either party of a breach of any provision of
this Agreement by the other shall not operate or be construed as
a waiver of any subsequent breach.
X. Arbitration
Any dispute arising out of or relating to this Agreement or
the transactions contemplated hereby shall be finally resolved
and determined by mandatory, binding arbitration before a single
arbitrator in Los Angeles, California, in accordance with the
then-prevailing commercial arbitration rules of the American
Arbitration Association; provided, however, that no claim for
specific performance or injunctive relief shall be required to be
submitted to arbitration; provided, further, that the arbitrator
shall apply the internal laws of the State of California. Each
of the parties hereto submits to the jurisdiction of the
arbitrator appointed in accordance with such rules and (without
limiting the effect of the foregoing arbitration clause) to the
jurisdiction of any state or federal court sitting in Los Angeles
County, California, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect
of the action or proceeding may be heard and determined in any
such court. Each of the parties hereto waives any defense of
inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that
might be required of any other party with respect thereto.
Nothing in this paragraph X, however, shall affect the right of
-7-
<PAGE>
any party to bring any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby in any other court or to serve legal process in any other
manner permitted by law or at equity, for the purposes of
compelling arbitration, enforcing any award in arbitration, or
seeking specific performance or injunctive relief. Any party
hereto may make service on any other party by sending or
delivering a copy of the process to the party to be served at the
address and in the manner provided for the giving of notices in
paragraph XIV hereof. Each party hereto agrees that a final
award in any such arbitration or final judgment in any such
action or proceeding so brought shall be conclusive and may be
enforced by entry of such award in any court of competent
jurisdiction, suit on the award or judgment, or in any other
manner provided by law or at equity. In the event of legal
action or arbitration to construe or enforce this Agreement, the
prevailing party (as determined by the court or arbitrator, as
applicable) shall be entitled to recover its reasonable
attorneys' fees and costs.
XI. Assignment
The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of the Company, but the rights and
obligations of Darlington are personal and may not be assigned or
delegated without the Company's prior written consent.
XII. Entire Agreement
This Agreement and the Exhibits attached herein, contains
the entire Agreement of the parties and may not be changed
orally, but only by an agreement in writing executed by the party
against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
XIII. Law Applicable
This Agreement shall be governed in all respects, whether as
to validity, construction, capacity, performance or otherwise, by
the laws of the State of California. In the event any provision
of this Agreement shall be held invalid by a court with
jurisdiction over the parties to this Agreement, such provision
shall be deleted from the Agreement, which shall then be
construed to give effect to the remaining provisions thereof.
-8-
<PAGE>
XIV. Notices
Any notice to the Company required or permitted under this
Agreement shall be given in writing to Company, either by
personal service or by registered or certified mail, postage
prepaid, addressed to the Chief Executive Officer of the Company
at its then principal place of business. Any such notice to
Darlington shall be given in a like manner and, if mailed, shall
be addressed to Darlington at his home address then shown in the
Company's files. For the purpose of determining compliance with
any time limit in this Agreement, a notice shall be deemed to
have been duly given (a) on the date of service, if served
personally on the party to whom notice is to be given, or (b) on
the second business day after mailing, if mailed to the party to
whom the notice is to be given in the manner provided in this
paragraph.
IN WITNESS WHEREOF, the parties intending to be legally
bound, have executed this Agreement the day and year first above
stated.
HEMACARE CORPORATION DARLINGTON
/s/ Charles Schwab, Jr. /s/ Alan C. Darlington
__________________________ ________________________
Charles Schwab, Jr. Alan C. Darlington
Chairman, Compensation Committee
May 13, 1999 May 13, 1999
__________________________ _______________________
Date Date
-9-
<PAGE>
EXHIBIT A
Within sixty (60) days following the filing by the Company of
Form 10-K for the year ending December 31, 1999 and for each full
calendar year thereafter in which this Agreement is in effect,
the Company shall pay to Darlington a bonus equal to the lower of
(i) the percentage growth in the Company's net income ("Net
Income Growth") for the year ending December 31, 1999 (the
"Initial Year"), and each full calendar year thereafter while
this Agreement is in effect (the "Applicable Years"), such
comparisons to be made for the Initial Year or the Applicable
Year to the next preceding fiscal year, or (ii) the percentage
growth in the Company's fully diluted earnings per share ("EPS
Growth") for the Initial Year and each Applicable Year, such
comparisons to be made for the Initial Year or the Applicable
Year to the next preceding fiscal year, based on the following
formula:
At the discretion of the Board if the Company achieves less
than 25% Net Income Growth or EPS Growth, as applicable
75% of Base Pay if the Company achieves 25% Net Income
Growth or EPS Growth, as applicable
100% of Base Pay if the Company achieves 30% Net Income
Growth or EPS Growth, as applicable
125% of Base Pay if the Company achieves 35% Net Income
Growth or EPS Growth, as applicable
150% of Base Pay if the Company achieves 40% Net Income
Growth or EPS Growth, as applicable
Proportionate incremental increases based on the foregoing
formula
Examples (and applicable guidelines) for determining bonuses
hereunder are attached hereto.
C-1
<PAGE>
EXHIBIT B
FORM OF STOCK OPTION AGREEMENT
HEMACARE CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
[1996 STOCK INCENTIVE PLAN]
(Non-Qualified Stock Option Agreement Form 96-2)
_______________________________ Date Option Granted: ____________
Name of Optionee
_______________________________ No. of Shares: ____________
Address
_______________________________ Option No.: ____________
City, State, Zip
THIS AGREEMENT is made as of the date set forth above, between
HEMACARE CORPORATION, a California corporation (hereinafter called
the "Company"), and the optionee named above (hereinafter called
the "Optionee").
RECITAL
The Board of Directors of the Company (the "Board"), or the
Compensation Committee of the Board or such other committee of
directors as the Board of Directors of the Company shall designate
in accordance with the HemaCare Corporation 1996 Stock Incentive
Plan (the "Plan"), has determined that it is to the advantage and
interest of the Company and its shareholders to grant the option
provided for herein to the Optionee as an inducement to remain in
the service of the Company (or any corporation, partnership, joint
venture or other entity in which the Company owns, directly or
indirectly, at least a 20% beneficial ownership interest (a
"Related Company")) and as an incentive for increased effort during
such service. Such committee as shall be designated to administer
the Plan (or, if none, the Board) is referred to herein as the
Committee. In consideration of the mutual covenants herein
contained, the parties agree as follows:
1. Grant of Option. The Company hereby grants to the
Optionee the right and option (the "Option") to purchase on the
terms and conditions set forth herein and in the Plan all or any
part of an aggregate of ______ shares (the "Shares") of the Common
Stock of the Company (whether authorized and unissued or treasury
shares) at the purchase price of $______ per Share as the
Optionee may, from time to time, elect. The Option shall vest and
become exercisable on a cumulative basis as follows:
(i) On or after ___________, ______ shares;
(ii) On or after ___________, ______ shares;
(iii) On or after ___________, ______ shares;
(iv) On or after ___________, ______ shares; and
(v) On or after ___________, ______ shares.
<PAGE>
Nothing contained herein shall be construed to limit or
restrict the right of the Company or any Related Company to
terminate the Optionee's employment or other Relationship at any
time, with or without cause, or to increase or decrease the
Optionee's compensation from the rate in existence at the time the
Option is granted. As used herein, the term "Relationship" shall
mean that the Optionee is or has agreed to become an officer,
director, employee, consultant, adviser, independent contractor or
agent of the Company or any Related Company.
The Option is not intended to meet the requirements of an
incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
2. Term of Option. The right to exercise the Option granted
hereunder, to the extent unexercised, shall remain in effect until
__________ unless sooner terminated in accordance with Section 5 hereof
(the "Term").
3. Method of Exercise.
(a) To the extent that the Option has become exercisable
hereunder, the Option may be exercised in whole or in part at any
time during the Term by giving written notice of exercise to the
Company specifying the number of Shares to be purchased,
accompanied by payment of the purchase price therefor. Payment of
the purchase price for such Shares shall be made (i) in cash,
(ii) by certified or cashier's check payable to the order of the
Company, (iii) other cash equivalents acceptable to the Committee
in its sole discretion, (iv) by delivery of shares of the Common
Stock of the Company already owned by the Optionee or subject to
vested stock options under the Plan, subject to such delivery being
permissible under the General Corporation Law of the State of
California, including without limitation Chapter 5 thereof, or
(v) any combination of the foregoing. If requested by the
Committee, prior to the delivery of any Shares, the Optionee, or
any other person entitled to exercise the Option, shall supply the
Committee with a representation that the Shares are not being
acquired with a view to distribution and will be sold or otherwise
disposed of only in accordance with applicable federal and state
statutes, rules and regulations. As soon after the notice of
exercise as the Company is reasonably able to comply, the Company
shall, without transfer or issue tax to the Optionee or other
person entitled to exercise the Option, deliver to the Optionee or
such other person, at the principal office of the Company or such
other place as shall be mutually acceptable, a certificate or
certificates for the Shares being purchased.
(b) If payment is made with shares of Common Stock of
the Company already owned by the Optionee, the Optionee, or other
person entitled to exercise the Option, shall deliver to the
Company with the notice of exercise certificates representing the
number of shares of Common Stock in payment for the Shares, duly
endorsed for transfer to the Company. In addition, prior to the
acceptance of such certificates in payment for the Shares, the
Optionee, or any other person entitled to exercise the Option,
shall supply the Company with a written representation and warranty
that he or she has good and marketable title to the shares
represented by the certificate(s), free and clear of liens and
encumbrances. The value of the shares of Common Stock so tendered
in payment for the Shares being purchased shall be their Fair
Market Value Per Share (as defined below) on the date of the
Optionee's notice of exercise. Any Shares purchased upon exercise
<PAGE>
of the Option which are paid for using Restricted Stock (as defined
in the Plan) shall be restricted in accordance with the original
terms of the award of such Restricted Stock.
(c) If payment is to be made in shares of Common Stock
subject to vested stock options under the Plan, the per share value
attributable to the shares underlying the stock option(s) to be
surrendered or canceled shall be the Fair Market Value Per Share of
such shares less the exercise price per share of such option(s).
The Company and the Optionee or other person entitled to exercise
the Option shall execute and deliver such instruments or
modifications of stock options as shall be necessary to give effect
to such an exercise of the Option.
(d) If for any reason a purported exercise of the Option
providing for payment to be made in whole or in part through the
delivery of shares of Common Stock already owned or underlying
vested stock options is not permitted, such purported exercise
shall not be effective unless, following notice thereof from the
Company, the Optionee or other person entitled to exercise the
Option promptly pays the exercise price in an acceptable form.
(e) If the Optionee or other person entitled to exercise
the Option desires to exercise the Option with funds borrowed from
a broker-dealer in a margin transaction under Regulation T of the
Board of Governors of the Federal Reserve System, the Optionee's
notice of exercise may be delivered to the Company by such broker-
dealer and the Company may deliver the certificate(s) for the
Shares being purchased to such broker-dealer on behalf of the
Optionee or other person entitled to exercise the Option.
(f) For purposes hereof, the "Fair Market Value Per
Share" of the Company's Common Stock shall mean, if the Common
Stock is publicly traded, the closing per share bona fide bid price
of the Common Stock on such date. In any situation not covered by
the preceding sentence, the Fair Market Value Per Share shall be
determined by the Committee in accordance with one of the valuation
methods described in Section 20.2031-2 of the Federal Estate Tax
Regulations (or any successor provision thereto), which
determination shall be final, binding and conclusive.
(g) Notwithstanding the foregoing, the Company shall
have the right to postpone the time of exercise of the Option or
the delivery of the Shares for such period as may be required for
the Company (i) to comply with any applicable listing, registration
or qualification requirements of any national securities exchange
or over-the-counter market or under any federal or state law or
(ii) to obtain the consent or approval of any government regulatory
body. In addition, in connection with any exercise of the Option,
the Committee may require the Optionee to agree not to dispose of
any of the Shares acquired upon exercise thereof except upon the
satisfaction of specified conditions which the Committee, in its
sole discretion, then deems necessary or desirable in connection
with any then existing and effective requirement or interpretation
of any applicable federal or state securities law, rule or
regulation.
(h) The Option may be exercised for less than the total
number of Shares for which the Option is then exercisable, provided
that a partial exercise may not be for less than 100 Shares, except
in the final year of the Term, and shall not, in any event, include
any fractional Shares.
<PAGE>
4. Tax Withholding. The Optionee shall, no later than the
date as of which any value attributed to the Option first becomes
includible in the Optionee's gross income for applicable tax
purposes, pay to the Company, or make arrangements (which may
include delivery of shares of Common Stock already owned by the
Optionee or subject to awards under the Plan subject to and in
accordance with the provisions of Section 3(b) or Section 3(c), as
applicable) regarding payment of, any federal, state, local or
other taxes of any kind required by law to be withheld with respect
thereto. The obligations of the Company hereunder shall be
conditional on such payment or arrangements, and the Company (and,
where applicable, any Related Company), shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Optionee.
5. Termination of Option.
(a) If the Optionee ceases to have a Relationship for
any reason other than his death or Permanent Disability (as defined
in Section 5(d)), the Option shall terminate 90 days from the date
on which such Relationship terminates. During such 90-day period,
the Optionee may exercise the Option but only to the extent the
Option was exercisable on the date of termination of his
Relationship and provided that the Option has not expired in
accordance with Section 2 or otherwise terminated as provided
herein. Notwithstanding the foregoing, if the Relationship is
terminated for cause (as defined in Section 5(d)), the Option shall
terminate upon the termination of the Relationship.
(b) For purposes hereof, termination of Optionee's
Relationship for reasons other than for cause, death or Permanent
Disability shall be deemed to take place upon the earliest to occur
of the following: (i) the date of the Optionee's retirement from
employment under the normal retirement policies of the Company or
any subsidiary of the Company; (ii) the date of the Optionee's
retirement from employment with the approval of the Committee
because of disability other than Permanent Disability; (iii) the
date the Optionee receives notice or advice that his employment or
other Relationship is terminated; (iv) the date the Optionee ceases
to render the services for which the Optionee was employed, engaged
or retained by the Company or any Related Company (absences for
temporary illness, emergencies and vacations or leaves of absence
approved in writing by the Committee excepted); or (v) in the case
of a director of the Company, the date on which such person ceases
to be a director of the Company unless such person has an other
Relationship at such time. The fact that the Optionee may receive
payment from the Company or any Related Company after termination
for vacation pay, for services rendered prior to termination, for
salary in lieu of notice or for other benefits shall not affect the
termination date.
(c) If the Optionee shall die at a time when the
Optionee is in a Relationship or if the Optionee shall cease to
have a Relationship by reason of Permanent Disability, the Option
shall terminate six months from the date of the Optionee's death or
termination of Relationship due to Permanent Disability unless by
its terms it shall expire before such date or otherwise terminate
as provided herein, and shall only be exercisable to the extent
that it would have been exercisable on the date of the Optionee's
death or the Optionee's termination of Relationship due to
Permanent Disability. In the case of death, the Option may be
exercised by the person or persons to whom the Optionee's rights
under the Option shall pass by will or by the laws of descent and
distribution.
(d) As used herein, the term "Permanent Disability"
shall mean termination of a Relationship with the Company or any
Related Company with the consent of the Company or such Related
Company by reason of permanent and total disability within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986,
<PAGE>
as amended. As used herein, the term "for cause" shall mean that
the Relationship is terminated by the Company due to (i) the
commission by the Optionee of a substantial violation, through
intentional conduct or through a pattern of behavior not corrected
within a reasonable period of time after written notice to the
Optionee by the Company of such behavior (in either case, whether
by action or omission), of the Optionee's duties on behalf of the
Company or a Related Company or the workplace policies or rules of
the Company or a Related Company which conduct or behavior actually
results in substantial harm to the Company or a Related Company or
could reasonably be expected to put personnel of the Company or a
Related Company in serious jeopardy of imminent harm to their
safety, health or well-being or to cause substantial harm to the
business of the Company or a Related Company or (ii) the commission
by the Optionee of any act or acts constituting dishonesty, a
felony or fraud. For purposes of the Option, whether a
Relationship is or has been terminated "for cause" shall be finally
determined by the president of the Company, or if the Optionee is
a person subject to Section 16 of the Securities Exchange Act of
1934, as amended, by the Committee.
6. Adjustments. In the event of any merger, reorganization,
consolidation, sale of substantially all assets, recapitalization,
stock dividend, stock split, spin-off, split-up, split-off,
distribution of assets or other change in corporate structure
affecting the Common Stock, a substitution or adjustment, as may be
determined to be appropriate by the Committee in its sole
discretion, shall be made in the aggregate number of Shares then
subject to this Agreement and the purchase price to be paid by the
Optionee hereunder; provided, however, that no such adjustment
shall increase the aggregate value of the Option.
7. Change of Control. This Agreement and the Option
hereunder are subject to the change of control provisions set forth
in the Plan.
8. Provisions Regarding Transferability. The Optionee may
transfer the Option solely for estate planning purposes to the
Optionee's children, grandchildren or spouse ("Immediate Family"),
to one or more trusts for the benefit of the Optionee's Immediate
Family members, or to one or more partnerships in which such
Immediate Family members are the only partners only upon the
express written consent of the Committee, and provided the Optionee
does not receive any consideration in any form whatsoever for such
transfer. Upon any such transfer of the Option, the Option shall
continue to be subject to the terms and conditions as were
applicable to the Option immediately prior to the transfer thereof.
Except as expressly provided in the first sentence of this
Section 8, the Option is not assignable or transferable by the
Optionee, either voluntarily or by operation of law, otherwise than
by will or by the laws of descent and distribution, and is
exercisable, during the Optionee's lifetime, only by the Optionee.
9. No Shareholder Rights. The Optionee or other person
entitled to exercise the Option shall have no rights to dividends
or other rights of a shareholder with respect to any Shares subject
hereto until the Optionee or such person has given written notice
of exercise of the Option with respect to such Shares and has paid
the purchase price for such Shares, and no adjustment (except such
adjustments as may be effected pursuant to the provisions of
Section 6 hereof) shall be made for dividends or distributions of
rights in respect of such Shares if the record date is prior to the
date by which the Optionee or such person has both given such
written notice and paid such purchase price.
10. Investment Representation. The Optionee hereby
represents that the Option and any Shares purchased hereunder are
being acquired for the Optionee's own account and not with a view
to or for sale in connection with any distribution thereof except
as may be permitted by the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
11. Conditions to Issuance of Shares. THE COMPANY'S
OBLIGATION TO ISSUE OR DELIVER SHARES OF ITS COMMON STOCK UPON
EXERCISE OF THE OPTION IS EXPRESSLY CONDITIONED UPON THE COMPLETION
BY THE COMPANY OF ANY REGISTRATION OR OTHER QUALIFICATION OF SUCH
<PAGE>
SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS
OF ANY GOVERNMENT REGULATORY BODY OR THE MAKING OF SUCH INVESTMENT
REPRESENTATIONS OR OTHER REPRESENTATIONS AND AGREEMENTS BY THE
OPTIONEE (OR ANY PERSON ENTITLED TO EXERCISE THE OPTION) IN ORDER
TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
COMMITTEE SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR
ADVISABLE. SUCH REQUIRED REPRESENTATIONS AND AGREEMENTS MAY
INCLUDE REPRESENTATIONS AND AGREEMENTS THAT THE OPTIONEE, OR ANY
OTHER PERSON ENTITLED TO EXERCISE THE OPTION, (A) IS NOT PURCHASING
SUCH SHARES FOR DISTRIBUTION AND (B) AGREES TO HAVE PLACED UPON THE
FACE AND/OR REVERSE OF ANY CERTIFICATES FOR SUCH SHARES A LEGEND
SETTING FORTH ANY REPRESENTATIONS AND AGREEMENTS WHICH HAVE BEEN
GIVEN TO THE COMMITTEE OR A REFERENCE THERETO AND STATING THAT,
PRIOR TO MAKING ANY SALE OR OTHER DISPOSITION OF ANY SUCH SHARES,
THE OPTIONEE, OR ANY OTHER PERSON ENTITLED TO EXERCISE THE OPTION,
WILL GIVE THE COMPANY NOTICE OF INTENTION TO SELL OR DISPOSE OF THE
SHARES NOT LESS THAN FIVE DAYS PRIOR TO SUCH SALE OR DISPOSITION.
12. Method of Acceptance. This Agreement is addressed to the
Optionee in duplicate and shall not be effective until the Optionee
executes the acceptance below and returns one copy to the Company,
thereby acknowledging that he has read and agreed to all the terms
and conditions of this Agreement and the Plan.
13. Plan Terms. The Option shall be subject to and governed
by the terms and provisions of the Plan, which by this reference
are incorporated herein. In the event of any conflict between the
provisions of this Agreement and the Plan, the Plan shall govern.
All determinations and interpretations thereof made by the
Committee shall be conclusive and binding on all parties hereto and
upon their successors and assigns.
Executed as of this ______ day of _______, 1999.
HEMACARE CORPORATION
By: _____________________________
ACCEPTED:
_____________________________ _________________
Signature of Optionee Date
<PAGE>
EXHIBIT C
As used in this Agreement, the phrase "Change in Control" shall
mean:
(a) Except as provided by subparagraph (b) hereof, the
acquisition by any person, entity or "group", within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election
of directors of the Company; or
(b) Approval by the Board of a reorganization, merger or
consolidation of the Company with any other person, entity or
corporation, other than:
(i) a merger or consolidation which would result in
the voting securities of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of another entity) more
than 50% of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company or
such other entity outstanding immediately after such merger or
consolidation; or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company or similar transaction in which
no person, entity or group acquires beneficial ownership of 50%
or more of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company
outstanding immediately after such merger or consolidation; or
(iii) Approval by the Board of a plan of complete
liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the
Company's assets pursuant to which all or substantially all of
the Company's assets continue to be owned by an affiliate of the
Company.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from unaudited financial
statements contained in Form 10-Q for the quarter ended March 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,140,000
<SECURITIES> 576,000
<RECEIVABLES> 3,086,000
<ALLOWANCES> 446,000
<INVENTORY> 777,000
<CURRENT-ASSETS> 5,274,000
<PP&E> 3,171,000
<DEPRECIATION> 1,912,000
<TOTAL-ASSETS> 7,314,000
<CURRENT-LIABILITIES> 2,689,000
<BONDS> 0
0
75,000
<COMMON> 13,588,000
<OTHER-SE> (10,125,000)
<TOTAL-LIABILITY-AND-EQUITY> 7,314,000
<SALES> 4,453,000
<TOTAL-REVENUES> 4,453,000
<CGS> 3,619,000
<TOTAL-COSTS> 3,619,000
<OTHER-EXPENSES> 664,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,000
<INCOME-PRETAX> 248,000
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 248,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248,000
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
