Exhibit 10.4


 


THIRD
PARTY SECURITY AGREEMENT: 


RIGHTS
TO PAYMENT AND INVENTORY


 


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 accounts, deposit
accounts, chattel paper (whether electronic or tangible), instruments,
promissory notes, documents, general intangibles, payments intangibles,
software, letter of credit rights, healthcare insurance receivables and other
rights to payment (collectively called “Rights to Payment”), now existing or at
any time hereafter, and prior to the termination hereof, arising (whether they
arise from the sale, lease or other disposition of inventory or from
performance of contracts for service, manufacture, construction, repair or
otherwise or from any other source whatsoever), including all securities,
guaranties, warranties, indemnity agreements, insurance policies, supporting
obligations and other agreements pertaining to the same or the property
described therein, and in all goods returned by or repossessed from Owner’s
customers, together with a security interest in all inventory, goods held for
sale or lease or to be furnished under contracts for service, goods so leased
or furnished, raw materials, component parts and embedded software, work in
process or materials used or consumed in Owner’s business and all warehouse
receipts, bills of lading and other documents evidencing goods owned or
acquired by Owner, and all goods covered thereby, now or at any time hereafter,
and prior to the termination hereof, owned or acquired by Owner, wherever
located, and all products thereof (collectively called “Inventory”), whether in
the possession of Owner, warehousemen, bailees or any other person, or in
process of delivery, and whether located at Owner’s places of business or
elsewhere (with all Rights to Payment and Inventory referred to herein
collectively as the “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, all Rights to Payment,
including returned premiums, with respect to any insurance relating to any of
the foregoing, and 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 


 


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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.


 


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 


 


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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 and, where applicable, in the Collateral 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; (vii) all persons appearing to be obligated on
the Collateral and Proceeds have authority and capacity to contract and are
bound as they appear to be; (viii) all property subject to chattel paper
has been properly registered and filed in compliance with law and to perfect
the interest of Owner in such property; and (ix) all Rights to Payment and
Proceeds comply with all applicable laws concerning form, content and manner of
preparation and execution, including where applicable Federal Reserve
Regulation Z and any State consumer credit laws.


 


(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 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 Inventory and, where
applicable, Rights to Payment 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) not to use any Inventory
for any unlawful purpose or in any way that would void any insurance required
to be carried in connection therewith; (iv) not to remove Inventory from
Owner’s premises except in the ordinary course of Owner’s business; (v) not
to permit any lien on the Collateral or Proceeds, including without limitation,
liens arising from the storage of Inventory, except in favor of Bank; (vi) not
to sell, hypothecate or dispose of, nor permit the transfer by operation of law
of, any of the Collateral or Proceeds or any interest therein, except sales of
Inventory to buyers in the ordinary course of Owner’s business; (vii) to
furnish reports to 


 


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Bank of all acquisitions, returns, sales and other dispositions of
Inventory in such form and detail and at such times as Bank may require; (viii) to
permit Bank to inspect the Collateral at any time; (ix) 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; (x) if requested
by Bank, to receive and use reasonable diligence to collect Rights to Payment
and Proceeds, in trust and as the property of Bank, and to immediately endorse
as appropriate and deliver such Rights to Payment and Proceeds to Bank daily in
the exact form in which they are received together with a collection report in
form satisfactory to Bank; (xi) not to commingle Rights to Payment, Proceeds or
collections thereunder with other property; (xii) to give only normal
allowances and credits and to advise Bank thereof immediately in writing if
they affect any Rights to Payment or Proceeds in any material respect; (xiii)
on demand, to deliver to Bank returned property resulting from, or payment
equal to, such allowances or credits on any Rights to Payment or Proceeds or to
execute such documents and do such other things as Bank may reasonably request
for the purpose of perfecting, preserving and enforcing its security interest
in such returned property; (xiv) from time to time, when requested by Bank, to
prepare and deliver a schedule of all Collateral and Proceeds subject to this
Agreement and to assign in writing and deliver to Bank all accounts, contracts,
leases and other chattel paper, instruments, documents and other evidences
thereof; (xv) in the event Bank elects to receive payments of Rights to Payment
or Proceeds hereunder, to pay all expenses incurred 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 (xvi) 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 all Collateral in good
and saleable condition, to deal with the Collateral in accordance with the
standards and practices adhered to generally by users and manufacturers 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 Collateral or
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; (I) to
exercise all rights, powers and remedies which Owner would have, but for this
Agreement, with respect to all Collateral and Proceeds subject hereto; (m) to
make withdrawals from and to close 


 


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deposit
accounts or other accounts with any financial institution, wherever located,
into which Proceeds may have been deposited, and to apply funds so withdrawn to
payment of the Indebtedness; (n) to preserve or release the interest
evidenced by chattel paper to which Bank is entitled hereunder and to endorse
and deliver any evidence of title incidental thereto; and (o) 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.


 


(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 


 


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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
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.


 


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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. With respect to
any sale by Bank of any Collateral subject to this Agreement, Owner hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Owner’s trademarks, trade names, trade name rights and/or proprietary labels or
marks. Owner further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.


 


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 personal 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.


 


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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
Bank’s 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.


 


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.


 


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(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.


 


(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.


 


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(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 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.


 


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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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