Exhibit 10.7

 

THIRD PARTY SECURITY AGREEMENT:
EQUIPMENT

 

1.              GRANT OF SECURITY INTEREST. In consideration of any credit or
other financial accommodation heretofore, now or hereafter extended or made to
HemaCare Corporation and Coral Blood Services, Inc. (“Borrowers”), or any of
them, by WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), and for other valuable
consideration, as security for the payment of all Indebtedness of Borrowers to
Bank, the undersigned HemaCare Corporation (“Owner”) hereby grants and transfers
to Bank a security interest in all goods, tools, machinery, furnishings,
furniture and other equipment, now or at any time hereafter, and prior to the
termination hereof, owned or acquired by Owner, wherever located, whether in the
possession of Owner or any other person and whether located on Owner’s property
or elsewhere, and all improvements, replacements, accessions and additions
thereto and embedded software included therein (collectively called
“Collateral”), together with whatever is receivable or received when any of the
Collateral or proceeds thereof are sold, leased, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary,
including without limitation, (a) all accounts, contract rights, chattel paper
(whether electronic or tangible), instruments, promissory notes, documents,
general intangibles, payment intangibles and other rights to payment of every
kind now or at any time hereafter arising out of any such sale, lease,
collection, exchange or other disposition of any of the foregoing, (b) all
rights to payment, including returned premiums, with respect to any insurance
relating to any of the foregoing, and (c) all rights to payment with respect to
any claim or cause of action affecting or relating to any of the foregoing
(hereinafter called “Proceeds”). The word “Indebtedness” is used herein in its
most comprehensive sense and includes any and all advances, debts, obligations
and liabilities of Borrowers, or any of them, heretofore, now or hereafter made,
incurred or created, whether voluntary or involuntary and however arising,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, including under any swap, derivative, foreign
exchange, hedge, deposit, treasury management or other similar transaction or
arrangement, and whether Borrowers may be liable individually or jointly with
others, or whether recovery upon such Indebtedness may be or hereafter becomes
unenforceable.

 

2.              CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER
AGREEMENTS.  This is a continuing agreement and all rights, powers and remedies
hereunder shall apply to all past, present and future Indebtedness of each of
the Borrowers to Bank, including that arising under successive transactions
which shall either continue the Indebtedness, increase or decrease it, or from
time to time create new Indebtedness after all or any prior Indebtedness has
been satisfied, and notwithstanding the death, incapacity, dissolution,
liquidation or bankruptcy of any of the Borrowers or Owner or any other event or
proceeding affecting any of the Borrowers or Owner. This Agreement shall not
apply to any new Indebtedness created after actual receipt by Bank of written
notice of its revocation as to such new Indebtedness; provided however, that
loans or advances made by Bank to any of the Borrowers after revocation under
commitments existing prior to receipt by Bank of such revocation, and
extensions, renewals or modifications, of any kind, of Indebtedness incurred by
any of the Borrowers or committed by Bank prior to receipt by Bank of such
revocation, shall not be considered new Indebtedness. Any such notice must be
sent to Bank by registered U.S. mail, postage prepaid, addressed to its office
at Beverly Hills RCBO, 433 N. Camden Drive, Suite 505, Beverly Hills, California
90210, or at such other address as Bank shall from time to time designate. The
obligations of Owner hereunder shall be in addition to any obligations of Owner
under any other grants or pledges of security for any liabilities or obligations
of any of the Borrowers or any other person heretofore or hereafter given to
Bank unless said other grants or pledges of security are expressly modified or
revoked in writing; and this Agreement shall not, unless expressly herein
provided, affect or invalidate any such other grants or pledges of security.

 

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3.             OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF
STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder
are joint and several and independent of the obligations of Borrowers, and a
separate action or actions may be brought and prosecuted against Owner whether
action is brought against any of the Borrowers or any other person, or whether
any of the Borrowers or any other person is joined in any such action or
actions. Owner acknowledges that this Agreement is absolute and unconditional,
there are no conditions precedent to the effectiveness of this Agreement, and
this Agreement is in full force and effect and is binding on Owner as of the
date written below, regardless of whether Bank obtains collateral or any
guaranties from others or takes any other action contemplated by Owner. Owner
waives the benefit of any statute of limitations affecting Owner’s liability
hereunder or the enforcement thereof, and Owner agrees that any payment of any
Indebtedness or other act which shall toll any statute of limitations applicable
thereto shall similarly operate to toll such statute of limitations applicable
to Owner’s liability hereunder. The liability of Owner hereunder shall be
reinstated and revived and the rights of Bank shall continue if and to the
extent that for any reason any amount at any time paid on account of any
Indebtedness secured hereby is rescinded or must be otherwise restored by Bank,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, all as though such amount had not been paid. The determination as to
whether any amount so paid must be rescinded or restored shall be made by Bank
in its sole discretion; provided however, that if Bank chooses to contest any
such matter at the request of Owner, Owner agrees to indemnify and hold Bank
harmless from and against all costs and expenses, including reasonable
attorneys’ fees (to include outside counsel fees and all allocated costs of
Bank’s in-house counsel), expended or incurred by Bank in connection therewith,
including without limitation, in any litigation with respect thereto.

 

4.             OBLIGATIONS OF BANK. Any money received by Bank in respect of the
Collateral may be deposited, at Bank’s option, into a non-interest bearing
account over which Owner shall have no control, and the same shall, for all
purposes, be deemed Collateral hereunder.

 

5.             REPRESENTATIONS AND WARRANTIES.

 

(a)           Owner represents and warrants to Bank that: (i) Owner’s legal name
is exactly as set forth on the first page of this Agreement, and all of Owner’s
organizational documents or agreements delivered to Bank are complete and
accurate in every respect; (ii) Owner is the owner and has possession or control
of the Collateral and Proceeds; (iii) Owner has the exclusive right to grant a
security interest in the Collateral and Proceeds; (iv) all Collateral and
Proceeds are genuine, free from liens, adverse claims, setoffs, default,
prepayment, defenses and conditions precedent of any kind or character, except
the lien created hereby or as otherwise agreed to by Bank, or as heretofore
disclosed by Owner to Bank, in writing; (v) all statements contained herein are
true and complete in all material respects; (vi) no financing statement covering
any of the Collateral or Proceeds, and naming any secured party other than Bank,
is on file in any public office; and (vii) Owner is not in the business of
selling goods of the kind included within the Collateral subject to this
Agreement, and Owner acknowledges that no sale or other disposition of any
Collateral, including without limitation, any Collateral which Owner may deem to
be surplus, has been or shall be consented to or acquiesced in by Bank, except
as specifically set forth in writing by Bank.

 

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(b)           Owner further represents and warrants to Bank that: (i) the
Collateral pledged hereunder is so pledged at Borrowers’ request; (ii) Bank has
made no representation to Owner as to the creditworthiness of any of the
Borrowers; and (iii) Owner has established adequate means of obtaining from each
of the Borrowers on a continuing basis financial and other information
pertaining to Borrowers’ financial condition. Owner agrees to keep adequately
informed from such means of any facts, events or circumstances which might in
any way affect Owner’s risks hereunder, and Owner further agrees that Bank shall
have no obligation to disclose to Owner any information or material about any of
the Borrowers which is acquired by Bank in any manner.

 

6.             COVENANTS OF OWNER.

 

(a)           Owner agrees in general: (i) to indemnify Bank against all losses,
claims, demands, liabilities and expenses of every kind caused by property
subject hereto; (ii) to permit Bank to exercise its powers; (iii) to execute and
deliver such documents as Bank deems necessary to create, perfect and continue
the security interests contemplated hereby; (iv) not to change Owner’s name, and
as applicable, its chief executive office, its principal residence or the
jurisdiction in which it is organized and/or registered without giving Bank
prior written notice thereof; (v) not to change the places where Owner keeps any
of the Collateral or Owner’s records concerning the Collateral and Proceeds
without giving Bank prior written notice of the address to which Owner is moving
same ; and (vi) to cooperate with Bank in perfecting all security interests
granted herein and in obtaining such agreements from third parties as Bank deems
necessary, proper or convenient in connection with the preservation, perfection
or enforcement of any of its rights hereunder.

 

(b)           Owner agrees with regard to the Collateral and Proceeds, unless
Bank agrees otherwise in writing: (i) that Bank is authorized to file financing
statements in the name of Owner to perfect Bank’s security interest in
Collateral and Proceeds; (ii) to insure the Collateral with Bank named as loss
payee, in form, substance and amounts, under agreements, against risks and
liabilities, and with insurance companies satisfactory to Bank; (iii) to operate
the Collateral in accordance with all applicable statutes, rules and regulations
relating to the use and control thereof, and not to use the Collateral for any
unlawful purpose or in any way that would void any insurance required to be
carried in connection therewith; (iv) not to permit any lien on the Collateral
or Proceeds, including without limitation, liens arising from repairs to or
storage of the Collateral, except in favor of Bank; (v) to pay when due all
license fees, registration fees and other charges in connection with any
Collateral; (vi) not to remove the Collateral from Owner’s premises except in
the ordinary course of Owner’s business; (vii) not to sell, hypothecate or
otherwise dispose of, nor permit the transfer by operation of law of, any of the
Collateral or Proceeds or any interest therein; (viii) not to rent, lease or
charter the Collateral; (ix) to permit Bank to inspect the Collateral at any
time; (x) to keep, in accordance with generally accepted accounting principles,
complete and accurate records regarding all Collateral and Proceeds, and to
permit Bank to inspect the same and make copies thereof at any reasonable time;
(xi) if requested by Bank, to receive and use reasonable diligence to collect
Proceeds, in trust and as the property of Bank, and to immediately endorse as
appropriate and deliver such Proceeds to Bank daily in the exact form in which
they are received together with a collection report in form satisfactory to
Bank; (xii) not to commingle Proceeds or collections thereunder with other
property; (xiii) to give only normal allowances and credits and to advise Bank
thereof immediately in writing if they affect any Collateral or Proceeds in any
material respect; (xiv) in the event Bank elects to receive payments of Proceeds
hereunder, to pay all expenses incurred

 

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by Bank in connection therewith, including expenses of accounting,
correspondence, collection efforts, reporting to account or contract debtors,
filing, recording, record keeping and expenses incidental thereto; and (xv) to
provide any service and do any other acts which may be necessary to maintain,
preserve and protect all Collateral and, as appropriate and applicable, to keep
the Collateral in good and saleable condition and repair, to deal with the
Collateral in accordance with the standards and practices adhered to generally
by owners of like property, and to keep all Collateral and Proceeds free and
clear of all defenses, rights of offset and counterclaims.

 

7.              POWERS OF BANK. Owner appoints Bank its true attorney in fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank’s officers and employees, or any of them, whether or not any of
the Borrowers or Owner is in default: (a) to perform any obligation of Owner
hereunder in Owner’s name or otherwise; (b) to give notice to account debtors or
others of Bank’s rights in the Collateral and Proceeds, to enforce or forebear
from enforcing the same and make extension or modification agreements with
respect thereto; (c) to release persons liable on Proceeds and to give receipts
and acquittances and compromise disputes in connection therewith; (d) to release
or substitute security; (e) to resort to security in any order; (f) to prepare,
execute, file, record or deliver notes, assignments, schedules, designation
statements, financing statements, continuation statements, termination
statements, statements of assignment, applications for registration or like
papers to perfect, preserve or release Bank’s interest in the Collateral and
Proceeds; (g) to receive, open and read mail addressed to Owner; (h) to take
cash, instruments for the payment of money and other property to which Bank is
entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims, and to collect and receive
payment of and endorse any instrument in payment of loss or returned premiums or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank’s sole option, toward repayment of the Indebtedness or replacement
of the Collateral; (I) to exercise all rights, powers and remedies which Owner
would have, but for this Agreement, with respect to all the Collateral and
Proceeds subject hereto; (m) to enter onto Owner’s premises in inspecting the
Collateral; and (n) to do all acts and things and execute all documents in the
name of Owner or otherwise, deemed by Bank as necessary, proper and convenient
in connection with the preservation and perfection of its rights hereunder or
enforcement of its rights hereunder after an Event of Default. Notwithstanding
anything to the contrary provided in this Section 7, the Bank shall only
exercise its rights and remedies under this Section 7(a), (b), (c), (d), (e),
(g), (h), (j), (k), (I) and (m) when any of the Borrowers or Owner is in
default.

 

8.              OWNER’S WAIVERS.

 

(a)                                  Owner waives any right to require Bank to:
(i) proceed against any of the Borrowers or any other person; (ii) marshal
assets or proceed against or exhaust any security held from any of the Borrowers
or any other person; (iii) give notice of the terms, time and place of any
public or private sale or other disposition of personal property security held
from any of the Borrowers or any other person; (iv) take any other action or
pursue any other remedy in Bank’s power; or (v) make any presentment or demand
for performance, or give any notice of nonperformance, protest, notice of
protest or notice of dishonor hereunder or in connection with any obligations or
evidences of indebtedness held by Bank as security for or which constitute in
whole or in part the Indebtedness secured hereunder, or in connection with the
creation of new or additional Indebtedness.

 

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(b)           Owner waives any defense to its obligations hereunder based upon
or arising by reason of: (i) any disability or other defense of any of the
Borrowers or any other person; (ii) the cessation or limitation from any cause
whatsoever, other than payment in full, of the Indebtedness of any of the
Borrowers or any other person; (iii) any lack of authority of any officer,
director, partner, agent or any other person acting or purporting to act on
behalf of any of the Borrowers which is a corporation, partnership or other type
of entity, or any defect in the formation of any such Borrower; (iv) the
application by any of the Borrowers of the proceeds of any Indebtedness for
purposes other than the purposes represented by Borrowers to, or intended or
understood by, Bank or Owner; (v) any act or omission by Bank which directly or
indirectly results in or aids the discharge of any of the Borrowers or any
portion of the Indebtedness by operation of law or otherwise, or which in any
way impairs or suspends any rights or remedies of Bank against any of the
Borrowers; (vi) any impairment of the value of any interest in security for the
Indebtedness or any portion thereof, including without limitation, the failure
to obtain or maintain perfection or recordation of any interest in any such
security, the release of any such security without substitution, and/or the
failure to preserve the value of, or to comply with applicable law in disposing
of, any such security; (vii) any modification of the Indebtedness, in any form
whatsoever, including any modification made after revocation hereof to any
Indebtedness incurred prior to such revocation, and including without limitation
the renewal, extension, acceleration or other change in time for payment of, or
other change in the terms of, the Indebtedness or any portion thereof, including
increase or decrease of the rate of interest thereon; or (viii) any requirement
that Bank give any notice of acceptance of this Agreement. Until all
Indebtedness shall have been paid in full, Owner shall have no right of
subrogation, and Owner waives any right to enforce any remedy which Bank now has
or may hereafter have against any of the Borrowers or any other person and
waives any benefit of, or any right to participate in, any security now or
hereafter held by Bank. Owner further waives all rights and defenses Owner may
have arising out of (A) any election of remedies by Bank, even though that
election of remedies, such as a non-judicial foreclosure with respect to any
security for any portion of the Indebtedness, destroys Owner’s rights of
subrogation or Owner’s rights to proceed against any of the Borrowers for
reimbursement, or (B) any loss of rights Owner may suffer by reason of any
rights, powers or remedies of any of the Borrowers in connection with any
anti-deficiency laws or any other laws limiting, qualifying or discharging
Borrowers’ Indebtedness, whether by operation of Sections 726, 580a or 580d of
the Code of Civil Procedure as from time to time amended, or otherwise,
including any rights Owner may have to a Section 580a fair market value hearing
to determine the size of a deficiency following any foreclosure sale or other
disposition of any real property security for any portion of the Indebtedness.

 

9.              AUTHORIZATIONS TO BANK. Owner authorizes Bank either before or
after revocation hereof, without notice to or demand on Owner, and without
affecting Owner’s liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of, the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security, other than the Collateral and Proceeds, for the payment of the
Indebtedness or any portion thereof, and exchange, enforce, waive, subordinate
or release the Collateral and Proceeds, or any part thereof, or any such other
security; (c) apply the Collateral and Proceeds or such other security and
direct the order or manner of sale thereof, including without limitation, a
non-judicial sale permitted by the terms of the controlling security agreement,
mortgage or deed of trust, as Bank in its discretion may determine; (d) release
or substitute any one or more of the endorsers or guarantors of the
Indebtedness, or any portion thereof, or any other party

 

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thereto; and (e) apply payments received by Bank from any of the Borrowers to
any Indebtedness of any of the Borrowers to Bank, in such order as Bank shall
determine in its sole discretion, whether or not such Indebtedness is covered by
this Agreement, and Owner hereby waives any provision of law regarding
application of payments which specifies otherwise. Bank may without notice
assign this Agreement in whole or in part.

 

10.           PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Owner
agrees to pay, prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral and Proceeds, and upon the failure
of Owner to do so, Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Bank shall be obligations of Owner to Bank,
due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of this Agreement, and shall be
secured by the Collateral and Proceeds, subject to all terms and conditions of
this Agreement.

 

11.            EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an “Event of Default” under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i) any contract or instrument evidencing any Indebtedness, or (ii) any other
agreement between any of the Borrowers and Bank, including without limitation
any loan agreement, relating to or executed in connection with any Indebtedness;
(b) any representation or warranty made by Owner herein shall prove to be
incorrect in any material respect when made; (c) Owner shall fail to observe or
perform any obligation or agreement contained herein; (d) any impairment of any
rights of Bank in any Collateral or Proceeds, or any attachment or like levy on
any property of Owner; and (e) Bank, in good faith, believes any or all of the
Collateral and/or Proceeds to be in danger of misuse, dissipation, commingling,
loss, theft, damage or destruction, or otherwise in jeopardy or unsatisfactory
in character or value.

 

12.            REMEDIES. Upon the occurrence of any Event of Default, Bank shall
have and may exercise without demand any and all rights, powers, privileges and
remedies granted to a secured party upon default under the California Uniform
Commercial Code or otherwise provided by law, including without limitation, the
right (a) to contact all persons obligated to Owner on any Collateral or
Proceeds and to instruct such persons to deliver all Collateral and/or Proceeds
directly to Bank, and (b) to sell, lease, license or otherwise dispose of any or
all Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions. While an Event of Default exists: (a) Owner
will deliver to Bank from time to time, as requested by Bank, current lists of
all Collateral and Proceeds; (b) Owner will not dispose of any Collateral or
Proceeds except on terms approved by Bank; (c) at Bank’s request, Owner will
assemble and deliver all Collateral and Proceeds, and books and records
pertaining thereto, to Bank at a reasonably convenient place designated by Bank;
and (d) Bank may, without notice to Owner, enter onto Owner’s premises and take
possession of the Collateral. Owner further agrees that Bank shall have no
obligation to process or prepare any Collateral for sale or other disposition.

 

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13.           DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS.
In disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred, Bank shall retain all rights, powers, privileges and remedies
herein given.

 

14.           NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in
Section 2 hereof and to Owner at the address of its chief executive office (or
principal residence, if applicable) specified below or to such other address as
any party may designate by written notice to each other party, and shall be
deemed to have been given or made as follows: (a) if personally delivered, upon
delivery; (b) if sent by mail, upon the earlier of the date of receipt or three
(3) days after deposit in the U.S. mail, first class and postage prepaid; and
(c) if sent by telecopy, upon receipt.

 

15.                                      COSTS, EXPENSES AND ATTORNEYS’ FEES.
Owner shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with (a) the perfection and
preservation of the Collateral or Bank’s interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Owner or in any way affecting any of the
Collateral or Bank’s ability to exercise any of its rights or remedies with
respect thereto. All of the foregoing shall be paid by Owner with interest from
the date of demand until paid in full at a rate per annum equal to the greater
of ten percent (10%) or the Prime Rate in effect from time to time.

 

16.           SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Owner may not assign or transfer any of its interests or rights hereunder
without Bank’s prior written consent. Owner acknowledges that Bank has the right
to sell, assign, transfer, negotiate or grant participations in all or any part
of, or any interest in, any Indebtedness of Borrowers to Bank and any
obligations with respect thereto, including this Agreement. In connection
therewith, Bank may disclose all documents and information which Bank now has or
hereafter acquires relating to Owner and/or this Agreement, whether furnished by
Borrowers, Owner or otherwise. Owner further agrees that Bank may disclose such
documents and information to Borrowers.

 

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17.            AMENDMENT. This Agreement may be amended or modified only in
writing signed by Bank and Owner.

 

18.            APPLICATION OF SINGULAR AND PLURAL. In all cases where there is
but a single Borrower, then all words used herein in the plural shall be deemed
to have been used in the singular where the context and construction so require;
and when there is more than one Borrower named herein or when this Agreement is
executed by more than one Owner, the word “Borrowers” and the word “Owner”
respectively shall mean all or any one or more of them as the context requires.

 

19.            SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

 

20.            GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

 

21.            ARBITRATION.

 

(a)             Arbitration. The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise in any way arising out
of or relating to this Agreement and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination.

 

(b)            Governing Rules. Any arbitration proceeding will (i) proceed in a
location in California selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

 

(c)             No Waiver of Provisional Remedies, Self-Help and Foreclosure.
The arbitration requirement does not limit the right of any party to
(i) foreclose against real or personal property collateral; (ii) exercise
self-help remedies relating to collateral or proceeds of collateral such as
setoff or repossession; or (iii) obtain provisional or ancillary remedies such
as replevin, injunctive relief, attachment or the appointment of a receiver,
before during or after the pendency of any arbitration proceeding. This
exclusion does not constitute a waiver of the right or obligation of any party
to submit any dispute to arbitration or reference hereunder, including those
arising from the exercise of the actions detailed in sections (i), (ii) and
(iii) of this paragraph.

 

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(d)            Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal
Rules of Civil Procedure, the California Rules of Civil Procedure or other
applicable law. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

(e)             Discovery. In any arbitration proceeding, discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.

 

(f)             Class Proceedings and Consolidations. No party hereto shall be
entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed this Agreement or any other
contract, instrument or document relating to any Indebtedness, or to include in
any arbitration any dispute as a representative or member of a class, or to act
in any arbitration in the interest of the general public or in a private
attorney general capacity.

 

(g)            Payment Of Arbitration Costs And Fees. The arbitrator shall award
all costs and expenses of the arbitration proceeding.

 

(h)            Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such

 

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indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

 

(i)             Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the documents between the parties or the subject matter of the
dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.

 

(j)            Small Claims Court. Notwithstanding anything herein to the
contrary, each party retains the right to pursue in Small Claims Court any
dispute within that court’s jurisdiction. Further, this arbitration provision
shall apply only to disputes in which either party seeks to recover an amount of
money (excluding attorneys’ fees and costs) that exceeds the jurisdictional
limit of the Small Claims Court.

 

Owner warrants that Owner is an organization registered under the laws of
California.

 

Owner warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 15350 Sherman Way, Suite #350,
Van Nuys, CA 91406.

 

Owner warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional addresses: 2250 Alcazar Street, #136, Los
Angeles, CA 90033; 300 Professional Drive, Scarborough, ME 04074; 152 U.S. Route
1, Scarborough, ME 04074; 992 Union Street, Bangor, ME 04401; 120 Bloomingdale
Road, Suite #4401, White Plains, NY 10605 and 3347 S. Hoover Street, Suite C-10,
Los Angeles, CA 90007.

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of December 4,
2009.

 

HEMACARE CORPORATION

 

 

 

By:

/s/

John Doumitt

 

 

John Doumitt

 

 

Chief Executive Officer

 

 

 

 

 

By:

/s/ Robert S. Chilton

 

 

Robert S. Chilton

 

 

Executive Vice President and Chief Financial Officer

 

 

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