Document:

Exhibit 10.1

 

STOCKHOLDERS AGREEMENT

 

This STOCKHOLDERS AGREEMENT, dated as of December 15,
2009, is between Facet Biotech Corporation, a Delaware corporation (the “Company”), and Biotechnology Value
Fund, L.P., Biotechnology Value Fund II, L.P., BVF Investments, L.L.C.,
Investment 10, L.L.C., BVF Partners L.P., BVF Inc. and Mark N. Lampert
(collectively, the “BVF Entities”).

 

RECITALS:

 

WHEREAS, as of the date hereof, the BVF Entities
Beneficially Own (as defined below) an aggregate of 3,683,521 shares of common
stock, par value $0.01 per share, of the Company (“Common Stock”),
including the associated rights to purchase shares of Series A Preferred
Stock of the Company (“Rights”) issued pursuant to the Rights Agreement
(as defined below), which represents approximately 14.7% of the shares of
Common Stock outstanding as of the date hereof;

 

WHEREAS, pursuant to the terms of the Rights
Agreement, the Rights will become exercisable under certain circumstances,
including if a person becomes an Acquiring Person (as defined in the Rights
Agreement) by acquiring Beneficial Ownership (as defined below) of 15% or more
of the outstanding shares of Common Stock; and

 

WHEREAS, the BVF Entities desire to have the ability
to purchase additional shares of Common Stock and have requested that the
Company amend the terms of the Rights Agreement so as to permit the BVF
Entities to purchase such shares without causing the Rights to become
exercisable, and the Board has determined that it is in the best interest of
the Company’s stockholders to enter into such an amendment;

 

NOW, THEREFORE, in consideration of the foregoing
premises and of the mutual covenants and obligations hereinafter set forth, the
parties hereto hereby agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.1.   Certain Defined Terms.  As used herein, the following terms shall
have the following meanings:

 

“Acquiring Person”
shall have the meaning set forth in the Rights Agreement.

 

“Affiliate” and “Associate”
shall have the meaning set forth in the Rights Agreement.

 

“Agreement” shall mean this Stockholders Agreement as it may be
amended, supplemented, restated or modified from time to time in accordance
with the terms hereof.

 

“Beneficial Owner”, “Beneficially
Own” and “Beneficial Ownership” shall have the meaning set forth in
the Rights Agreement.

 

 

“Board” shall mean
the Company’s board of directors.

 

“Business Day” shall mean any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by law to be
closed in New York, New York or San Francisco, California.

 

“BVF Group” shall
mean the BVF Entities, and all Affiliates and Associates of the BVF Entities.

 

“BVF Ownership Percentage” shall mean,
at any time, the percentage of the outstanding shares of Common Stock
Beneficially Owned by the BVF Group.

 

“Common Stock” shall
have the meaning set forth in the Recitals.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder from time
to time.

 

“Effective Date” shall
have the meaning set forth in Section 2.1.

 

“Exempted Shares”
shall have the meaning set forth in Section 2.2.

 

A Person shall be deemed the
“Full Owner” of, shall be deemed to “Fully Own” and shall be
deemed to have “Full Ownership” of, any securities if such Person not
only Beneficially Owns such securities but also owns all economic and pecuniary
interest in such securities and retains all voting rights (other than the proxy
granted to the Company pursuant to this Agreement), with there being no hedging
transaction, derivative transaction or other transaction resulting in any form
of synthetic ownership of such securities by any other Person (other than
broad-based index options, broad-based index futures and broad-based publicly
traded market baskets of stock approved for trading by the appropriate federal
government authority).

 

“Grantee” shall have
the meaning set forth in Section 3.2.

 

“Person” shall mean any individual, corporation, limited
liability company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, other entity,
government or any agency or political subdivision thereof or any group pursuant
to Section 13(d)(3) of the Exchange Act comprised of two or more of
the foregoing.

 

“Proportionate Voting”
shall have the meaning set forth in Section 3.1.

 

“Recommended Voting”
shall have the meaning set forth in Section 3.1.

 

“Rights” shall have
the meaning set forth in the Recitals.

 

“Rights Agreement”
shall mean the Rights Agreement, dated as of September 7, 2009, between
the Company and Mellon Investor Services LLC, as Rights Agent, as it may be
amended, supplemented, restated or modified from time to time in accordance
with the terms hereof and thereof, or any successor rights agreement adopted
substantially concurrently with the termination thereof or with the redemption
of the Rights.

 

“Rights Amendment”
shall have the meaning set forth in Section 2.1.

 

2

 

“Subject Shares” shall mean as of a given date that number of
shares of Common Stock, if any, by which the aggregate Beneficial Ownership by
the BVF Group of shares of Common Stock exceeds fifteen percent (15%) of the
outstanding shares of Common Stock on such date.

 

“Transfer” shall mean, directly or indirectly, to sell,
transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by
operation of law or otherwise), either voluntarily or involuntarily, or to
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation
or similar disposition of (by operation of law or otherwise), any Common Stock
or any interest in any Common Stock, including by tendering (or announcing an
intention to tender) into any tender offer, regardless of whether such Common
Stock or interest is purchased pursuant to such tender offer.  For purposes of this Agreement, the term
Transfer shall include the sale of an Affiliate or Associate of any BVF Entity
or the BVF Entity’s interest in an Affiliate or Associate that Beneficially
Owns shares of Common Stock.

 

Section 1.2.  
Methodology for Calculations.  For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including any calculation for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the
Exchange Act as in effect on the date hereof.

 

ARTICLE
II

ACQUISITION OF EXEMPTED SHARES

 

Section 2.1.  
Amendment of Rights Agreement.  If
the Rights are still then redeemable pursuant to Section 23 of the Rights
Agreement, the Company agrees to adopt an amendment to the Rights Agreement in
the form attached as Exhibit A hereto (the “Rights Amendment”) as
soon as practicable after execution hereof, and in any event within one (1) Business
Day of the date of this Agreement (the date of effectiveness of such Rights
Amendment, the “Effective Date”), which Rights Amendment will provide
that the acquisition by the BVF Entities of the Exempted Shares, subject to the
terms and conditions provided herein and in the Rights Amendment, will not result
in any BVF Entity becoming an Acquiring Person.

 

Section 2.2.  
Exempted Shares Definition.  The “Exempted
Shares” (a) shall consist of one share less than such number as would
result in a BVF Ownership Percentage of twenty percent (20%) and (b) must (i) consist
solely of shares of Common Stock, and not include any common stock equivalents
or derivative securities and (ii) be Fully-Owned by the BVF Entities.

 

ARTICLE
III

VOTING

 

Section 3.1.  
Voting .  Each of the BVF Entities
hereby irrevocably and unconditionally agrees that during the term of this
Agreement, so long as the BVF Ownership Percentage is equal to or greater than
fifteen percent (15%), at any meeting of the stockholders of the Company,
however called, including any adjournment or postponement thereof, and in
connection with any written consent of the stockholders of the Company, each
BVF Entity shall, 

 

3

 

and
shall cause all Affiliates and Associates which Beneficially Own any Subject
Shares to, in each case to the fullest extent that such matters are submitted
for the vote or written consent of the Stockholder and that the Subject Shares
are entitled to vote thereon or consent thereto, vote (or cause to be voted),
in person or by proxy, or deliver (or cause to be delivered) a written consent
covering, all of the Subject Shares as to which such BVF Entity controls the
right to vote either (i) in the same proportion as the stockholders of the
Company other than the BVF Group vote with respect to such matter (voting in
such manner, “Proportionate Voting”) or (ii) in accordance with the
recommendation of the Board to the stockholders of the Company with respect to
such matter (voting in such manner, “Recommended Voting”).  All Subject Shares must be voted in
Proportionate Voting or Recommended Voting as provided in this Section 3.1,
with the BVF Entities having the right to make the election between
Proportionate Voting and Recommended Voting, provided that if no such election
is made by the BVF Entities, Proportionate Voting shall apply.  The obligations of the BVF Entities specified
in this Section 3.1 shall apply whether or not any action is recommended
by the Board.

 

Section 3.2.  
Irrevocable Proxy.  Each of the
BVF Entities hereby irrevocably appoints as its proxy, Andrew Guggenhime and
Francis Sarena, in their respective capacities as officers of the Company, and
any individual who shall hereafter succeed to any such officer of the Company,
and any other Person designated in writing by the Company  (collectively, the “Grantees”), each
of them individually, with full power of substitution, to vote or execute
written consents solely with respect to the Subject Shares in accordance with Section 3.1
hereof and, in the discretion of the Grantees, with respect to any proposed
adjournments of any annual or special meetings of the stockholders of the
Company.  This proxy is coupled with an interest and shall be irrevocable,
and each of the BVF Entities will take such further action or execute such
other instruments as may be necessary to effectuate the intent of this proxy
and hereby revokes any proxy previously granted by any BVF Entity with respect
to the Subject Shares that would otherwise conflict with the proxy granted by
this Section 3.2. The Company may terminate this proxy with respect to the
Stockholder at any time at its sole election by written notice provided to the
BVF Entities.  Notwithstanding anything to the contrary in this Agreement,
the proxy granted by this Section 3.2 shall terminate and be of no further
force and effect upon valid termination of this Agreement in accordance with Section 4.2
hereof.  Each BVF Entity hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause to be
done by virtue hereof.  Any BVF Entity
that is not the record owner of the Subject Shares of which it is the
Beneficial Owner shall use reasonable efforts to cause the record owner of such
Subject Shares to execute and deliver an irrevocable proxy conforming to the
provisions of this Section 3.2.

 

Section 3.3.  
Quorum.  The BVF Entities shall be
under no obligation with respect to any shares of Common Stock that it
Beneficially Owns, other than the Subject Shares as provided in Section 3.1,
to be present in person or represented by proxy at any meetings of
securityholders of the Company or to vote such shares of Common Stock.

 

ARTICLE
IV

MISCELLANEOUS

 

Section 4.1.  
Conflicting Agreements.  Each
party represents and warrants that it has not granted and is not a party to any
proxy, voting trust or other agreement that is inconsistent with or conflicts
with any provision of this Agreement.

 

4

 

Section 4.2.  
Termination.

 

(a)   This Agreement shall automatically terminate
upon the earlier of (i) expiration of the Rights Agreement or (ii) redemption
of the Rights by the Company except in connection with the substantially
concurrent adoption of a successor rights agreement.

 

(b)   Nothing in this Section 4.2 shall be
deemed to release any party from any liability for any willful and material
breach of this Agreement or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement.

 

Section 4.3.  
Ownership Information.  The BVF
Entities shall deliver to the Company promptly (but in no event more than two (2) Business
Days) after any Transfer of shares of Common Stock, an accurate written report
specifying the shares of Common Stock Transferred in such transaction and the
number of shares of Common Stock owned by the BVF Group after giving effect to
such transaction; provided, however, that no such report need be
delivered with respect to any Transfer of shares of Common Stock by the BVF
Group that is reported in a statement on Schedule 13D or a Form 4 filed
with the Securities and Exchange Commission and delivered to the Company by the
BVF Entities in accordance with Section 13(d) or Section 16 of
the Exchange Act, as applicable.  The
Company shall be entitled to rely on the most recently delivered report,
statement on Schedule 13D, Form 4 or other notice for all purposes of this
Agreement, unless the BVF Entities shall have updated such information by
delivery of a subsequent report, statement on Schedule 13D, Form 4 or
notice.

 

Section 4.4.  
Amendment and Waiver.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. 
The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

 

Section 4.5.  
Severability.  If any provision of
this Agreement shall be declared by any court of competent jurisdiction to be
illegal, void or unenforceable, all other provisions of this Agreement shall
not be affected and shall remain in full force and effect.

 

Section 4.6.  
Entire Agreement.  Except as
otherwise expressly set forth herein, this Agreement, the Rights Amendment and
the Rights Agreement embody the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, that may have related to the subject matter hereof in
any way.  Without limiting the generality
of the foregoing, to the extent that any of the terms hereof are inconsistent
with the rights or obligations of the BVF Entities under any other agreement
with the Company, the terms of this Agreement shall govern.

 

Section 4.7.  
Successors and Assigns.  Neither
this Agreement nor any of the rights or obligations of any party under this
Agreement shall be assigned, in whole or in part (except by operation of law
pursuant to a merger whose purpose is not to avoid the provisions of this
Agreement), by any party without the prior written consent of the other
party.  Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.

 

5

 

Section 4.8.  
Counterparts.  This Agreement may
be executed in separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same agreement.

 

Section 4.9.  
Remedies.  Each party hereto
acknowledges that money damages would not be an adequate remedy in the event
that each and every one of the covenants or agreements in this Agreement are
not performed in accordance with their terms, and it is therefore agreed that,
in addition to and without limiting any other remedy or right it may have, the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction
enjoining any such breach and enforcing specifically each and every one of the
terms and provisions hereof.  Each party
hereto agrees not to oppose the granting of such relief in the event a court
determines that such a breach has occurred, and to waive any requirement for
the securing or posting of any bond in connection with such remedy.  All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.

 

Section 4.10.  
Notices.  Any notice, request,
claim, demand or other communication under this Agreement shall be in writing,
shall be either personally delivered, sent by reputable overnight courier
service (charges prepaid), sent by facsimile to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder on (i) the date of delivery if sent by messenger, (ii) on
the Business Day following the Business Day on which delivered to a recognized
courier service if sent by overnight courier or (iii) upon confirmation of
receipt, if sent by fax.

 

If to the Company:

 

Facet Biotech Corporation

1500 Seaport Boulevard

Redwood City, CA 94063

Attention: General Counsel

Fax: 650-454-2000

 

with a copy (which shall not
constitute notice) to:

 

Simpson Thacher &
Bartlett LLP

2550 Hanover Street

Palo Alto, CA 94304

Attention:  Richard
Capelouto

Kirsten Jensen

Fax: 650-251-5002

 

6

 

If to the BVF Entities:

 

BVF Partners L.P.

900 North Michigan Avenue

Suite 1100

Chicago, Illinois 60611

Attention: Mark N. Lampert

Fax:

 

with a copy (which shall not
constitute notice) to:

 

Olshan Grundman Frome
Rosenzweig & Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

Attention: Adam W. Finerman, Esq.

Facsimile: (212) 451-2222

 

Section 4.11.  
Governing Law; Consent to Jurisdiction. 
This Agreement shall be governed in all respects by the laws of the
State of Delaware.  Any disagreement,
issue, dispute, claim, demand or controversy arising out of or relating to this
Agreement (each, a “Dispute”) shall be brought only in the Court of
Chancery of the State of Delaware.  Each
of the parties hereby irrevocably consents to the jurisdiction of such court
(and of the appropriate appellate court therefrom) in any such Dispute and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such Dispute in
such court and that any such Dispute which is brought in such court has been
brought in an inconvenient forum. 
Process in any such Dispute may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 4.10
shall be deemed effective service of process on such party.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 4.12.  
Change in Law, Etc.  In the event any law, rule or
regulation comes into force or effect (including by amendment) which conflicts
with the terms and conditions of this Agreement, or any court of competent
jurisdiction shall issue a final, non-appealable order invalidating or
enjoining the performance of any provision hereof, the parties shall negotiate
in good faith to revise this Agreement to achieve the parties’ intention set
forth herein.

 

Section 4.13.  
Interpretation.  The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”.  The words “hereof “, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section and Exhibit references are to this
Agreement unless otherwise specified. 
The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

 

7

 

IN WITNESS WHEREOF, the
parties hereto have executed this Stockholders Agreement as of the date first
written above.

 

FACET
BIOTECH CORPORATION

 

 

	
  By:

  	
  /s/ Faheem Hasnain

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Faheem Hasnain

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  and CEO

  	
   

  	
   

  	
   

  

 

	
  BIOTECHNOLOGY
  VALUE FUND, L.P.

  	
   

  	
  INVESTMENT
  10, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its general partner

  	
   

  	
  By:

  	
  BVF
  Partners L.P., its investment manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
  By:

  	
  BVF
  Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
   

  	
  President

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BIOTECHNOLOGY
  VALUE FUND II, L.P.

  	
   

  	
  BVF
  PARTNERS L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its general partner

  	
   

  	
  By:

  	
  BVF
  Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
   

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
   

  	
  President

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BVF
  INVESTMENTS, L.L.C.

  	
   

  	
  BVF
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its manager

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
   

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  President

  	
   

  	
   

  	
   

  

 

8

 

EXHIBIT A

 

AMENDMENT TO RIGHTS AGREEMENT

 

This Amendment to Rights
Agreement (this “Amendment”) is entered into as of December 15,
2009 by and between Facet Biotech Corporation, a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, as
Right Agent (the “Rights Agent”).

 

RECITALS:

 

WHEREAS, the Company and the Rights Agent have
previously entered into a Rights Agreement dated as of September 7, 2009
(the “Agreement”; capitalized terms used but not defined herein shall
have the meaning set forth in the Agreement);

 

WHEREAS, pursuant to Section 27
of the Agreement, for so long as the Rights are redeemable, the Company may in
its sole and absolute discretion amend any provision of the Agreement in any
respect without the approval of any holders of the Rights, as evidenced by a
writing signed by the Company and the Rights Agent;

 

WHEREAS, as of the date
hereof, the Rights are redeemable; and

 

WHEREAS, the Board of
Directors has deemed it fair, desirable and in the best interests of the
Company and its stockholders to allow the acquisition by certain existing
Company stockholders of additional shares of Common Stock without any such
stockholder becoming an Acquiring Person, and to amend the Agreement
accordingly as set forth below to permit such transaction, and has duly
authorized any officer of the Company to execute and deliver this Amendment.

 

NOW, THEREFORE, in consideration of the premises and
mutual agreements hereinafter set out and of other consideration (the receipt
and sufficiency of which are acknowledged), the parties hereto agree as
follows:

 

1.     Amendment of Section 1(a) of
the Agreement.  The definition of “Acquiring
Person” in Section 1(a) of the Agreement is hereby amended and
supplemented by adding the following sentences at the end thereof:

 

“Notwithstanding anything
contained in this Section 1(a) to the contrary, solely in the case of
any Person who is one of the BVF Entities (as defined below) and with respect
to no other Person: (A) a reference to “20%” shall be substituted for each
reference to “15%” in the foregoing provisions of this Section 1(a), so as
to permit the Beneficial Ownership of up to 20% of the Common Stock of the
Company by such BVF Entities pursuant to, and only if the BVF Entities are
acting in compliance with, the terms of the Stockholders Agreement, dated as of
December 15, 2009 between the Company and the BVF Entities (as the same
may be amended from time to time, the “Stockholders Agreement”) and (B) in
the event that the BVF Ownership Percentage is greater than 15% and less than
20%, in the event of any Transfer (as defined below) by a BVF Entity, upon the
occurrence of any such Transfer such references shall automatically be deemed
replaced by references to the then-current BVF Ownership Percentage plus one
share of Common Stock, solely to the extent such then-current BVF Ownership
Percentage is both lower than the previously applicable BVF Ownership
Percentage and less than 20%,

 

 

unless and until such
then-current BVF Ownership Percentage is less than 15%, at which time all such
references shall revert to “15%” and no additional changes shall be made
pursuant to this clause (B).  For
purposes of this definition:  “BVF
Entities” shall mean Biotechnology Value Fund, L.P., Biotechnology Value
Fund II, L.P., BVF Investments, L.L.C., Investment 10, L.L.C., BVF Partners
L.P., BVF Inc. and Mark N. Lampert; “BVF Ownership Percentage” means, at
any time, the percentage of the outstanding Common Stock Beneficially Owned in
the aggregate by the BVF Entities and all Affiliates and Associates thereof as
of such time; and solely as used in this Section 1(a), “Transfer”
shall mean, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of (by operation of law or
otherwise), either voluntarily or involuntarily, or to enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, assignment, pledge, encumbrance, hypothecation or similar disposition
of (by operation of law or otherwise), any Common Stock or any interest in any
Common Stock, including by tendering (or announcing an intention to tender)
into any tender offer, regardless of whether such Common Stock or interest is
purchased pursuant to such tender offer, and for such purpose the term “Transfer”
shall include the sale of an Affiliate or Associate of any BVF Entity or the
BVF Entity’s interest in an Affiliate or Associate that Beneficially Owns
shares of Common Stock.”

 

2.     Governing
Law.  This Amendment and the Agreement, as
amended hereby, shall be governed by and construed in accordance with the laws
of the State of Delaware, provided, however,
that all provisions regarding the rights, duties, obligations and liabilities
of the Rights Agent shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such state.

 

3.     Effect of Amendment.  Except as expressly modified hereby, the
Agreement remains in full force and effect. 
Upon the execution and delivery hereof, as of the day and year first
above written, the Agreement shall thereupon be deemed to be amended and
supplemented as hereinabove set forth as fully and with the same effect as if
the amendments and supplements made hereby were originally set forth in the
Agreement, and this Amendment and the Agreement shall henceforth be read, taken
and construed as one and the same instrument, but such amendments and
supplements shall not operate so as to render invalid or improper any action
heretofore taken under the Agreement.

 

4.     Descriptive Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

5.     Counterparts.  This Amendment may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Amendment and all of which, when taken together, will be deemed to constitute
one and the same agreement.  The exchange
of copies of this Amendment and of signature pages by facsimile or
electronic transmission shall constitute effective execution and delivery of
this Amendment as to the parties hereto and may be used in lieu of the original
Amendment for all purposes.  Signatures
of the parties hereto transmitted electronically or by facsimile shall be
deemed to be their original signatures for all purposes.

 

6.     Severability.  If any term, provision or restriction of this
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the 

 

10

 

remainder of the
terms, provisions or restriction of this Amendment shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.

 

[Signature Page Follows]

 

11

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed as of the day and year
first above written.

 

	
   

  	
  FACET BIOTECH CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MELLON INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Asa Drew

  
	
   

  	
  Title:

  	
  Vice President &
  Senior Relationship

  
	
   

  	
   

  	
  Manager

  

 

12Exhibit 10.1

 

CREDIT AGREEMENT

 

THIS
CREDIT AGREEMENT (this “Agreement”) is entered into as of December 4,
2009, by and between HEMACARE CORPORATION, a California corporation and CORAL
BLOOD SERVICES, INC., a California corporation (each individually, a “Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”). Each reference herein to “Borrower”
shall mean each and every party, collectively and individually, defined above
as a Borrower.

 

RECITALS

 

Borrower
has requested that Bank extend or continue credit to Borrower as described
below, and Bank has agreed to provide such credit to Borrower on the terms and
conditions contained herein.

 

NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1. LINE OF CREDIT.

 

(a)        Line of Credit.  Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including December 1, 2011, not to exceed at any time the aggregate
principal amount of Five Million Dollars ($5,000,000.00) (“Line of Credit”),
the proceeds of which shall be used to finance Borrower’s working capital
requirements.  Borrower’s obligation to
repay advances under the Line of Credit shall be evidenced by a promissory note
dated as of December 4, 2009 (“Line of Credit Note”), all terms of which
are incorporated herein by this reference.

 

(b)        Limitation on Borrowings.  Outstanding borrowings under the Line of
Credit, to a maximum of the principal amount set forth above, shall not at any
time exceed an aggregate of eighty percent (80%) of Borrower’s eligible
accounts receivable.  All of the
foregoing shall be determined by Bank upon receipt and review of all collateral
reports required hereunder and such other documents and collateral information
as Bank may from time to time require. 
Borrower acknowledges that said borrowing base was established by Bank
with the understanding that, among other items, the aggregate of all returns,
rebates, discounts, credits and allowances for the immediately preceding three (3) months
at all times shall be less than five percent (5%) of Borrower’s gross sales for
said period.  If such dilution of
Borrower’s accounts for the immediately preceding three (3) months at any
time exceeds five percent (5%) of Borrower’s gross sales for said period, or if
there at any time exists any other matters, events, conditions or contingencies
which Bank reasonably believes may affect payment of any portion of Borrower’s
accounts, Bank, in its sole discretion, may reduce the foregoing advance rate
against eligible accounts receivable to a percentage appropriate to reflect
such additional dilution and/or establish additional reserves against Borrower’s
eligible accounts receivable.

 

As
used herein, “eligible accounts receivable” shall consist solely of trade
accounts created in the ordinary course of Borrower’s business, upon which
Borrower’s right to receive payment is absolute and not contingent upon the
fulfillment of any condition whatsoever, and in which Bank has a perfected
security interest of first priority, and shall not include:

 

1

 

(i)          any account which is
more than ninety (90) days past due;

 

(ii)         that portion of any
account for which there exists any right of setoff, defense or discount (except
regular discounts allowed in the ordinary course of business to promote prompt
payment) or for which any defense or counterclaim has been asserted;

 

(iii)        any account which
represents an obligation of any state or municipal government or of the United
States government or any political subdivision thereof (except accounts which
represent obligations of the United States government and for which the assignment
provisions of the Federal Assignment of Claims Act, as amended or recodified
from time to time, have been complied with to Bank’s satisfaction), provided
however, that accounts which represent obligations of hospitals owned by Los
Angeles County (e.g., Los Angeles County-USC Medical Center, Harbor-UCLA
Medical Center and Olive View-UCLA Medical Center) shall be considered eligible
for purposes of this subparagraph (iii);

 

(iv)       any account which
represents an obligation of an account debtor located in a foreign country
other than an account debtor located in a Canadian province or territory, so
long as, in Bank’s determination, such Canadian jurisdiction recognizes Bank’s
first priority security interest in and right to collect such account as a
consequence of any security agreements and UCC filings in favor of Bank, except
to the extent any such account, in Bank’s determination, is supported by a
letter of credit or insured under a policy of foreign credit insurance, in each
case in form, substance and issued by a party acceptable to Bank;

 

(v)        any account which
arises from the sale or lease to or performance of services for, or represents
an obligation of, an employee, affiliate, partner, member, parent or subsidiary
of Borrower;

 

(vi)       that portion of any
account, which represents interim or progress billings or retention rights on
the part of the account debtor;

 

(vii)      any account which
represents an obligation of any account debtor when twenty percent (20%) or
more of Borrower’s accounts from such account debtor are not eligible pursuant
to (i) above;

 

(viii)     that portion of any
account from an account debtor which represents the amount by which Borrower’s
total accounts from said account debtor exceeds fifteen percent (15%) of
Borrower’s total accounts, except with respect to account debtors USC
University Hospital and USC Norris Cancer Hospital (“USC Hospitals”), that
portion of any account of USC Hospitals which represents the amount by which
Borrower’s total accounts from USC Hospitals exceeds an aggregate of
twenty-five percent (25%) of Borrower’s total accounts;

 

(ix)        any account deemed
ineligible by Bank when Bank, in its sole discretion, deems the
creditworthiness or financial condition of the account debtor, or the industry
in which the account debtor is engaged, to be unsatisfactory.

 

2

 

(c)        Letter of Credit Subfeature.  As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue or cause an
affiliate to issue standby letters of credit for the account of Borrower to
finance Borrower’s working capital requirements (each, a “Letter of Credit” and
collectively, “Letters of Credit”); provided however, that the aggregate
undrawn amount of all outstanding Letters of Credit shall not at any time
exceed Nine Hundred Thousand Dollars ($900,000.00).  The form and substance of each Letter of
Credit shall be subject to approval by Bank, in its sole discretion.  Each Letter of Credit shall be issued for a
term not to exceed three hundred sixty-five (365) days, as designated by
Borrower; provided however, that no Letter of Credit shall have an expiration
date subsequent to the maturity date of the Line of Credit.  The undrawn amount of all Letters of Credit
shall be reserved under the Line of Credit and shall not be available for
borrowings thereunder.  Each Letter of
Credit shall be subject to the additional terms and conditions of the Letter of
Credit agreements, applications and any related documents required by Bank in
connection with the issuance thereof. 
Each drawing paid under a Letter of Credit shall be deemed an advance
under the Line of Credit and shall be repaid by Borrower in accordance with the
terms and conditions of this Agreement applicable to such advances; provided
however, that if advances under the Line of Credit are not available, for any
reason, at the time any drawing is paid, then Borrower shall immediately pay to
Bank the full amount drawn, together with interest thereon from the date such
drawing is paid to the date such amount is fully repaid by Borrower, at the
rate of interest applicable to advances under the Line of Credit.  In such event Borrower agrees that Bank, in
its sole discretion, may debit any account maintained by Borrower with Bank for
the amount of any such drawing.

 

(d)        Borrowing and Repayment.  Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

 

SECTION 1.2. INTEREST/FEES.

 

(a)        Interest.  The outstanding principal balance of each
credit subject hereto shall bear interest at the rate of interest set forth in
each promissory note or other instrument or document executed in connection
therewith.

 

(b)        Computation and Payment.  Interest shall be computed on the basis of a
360-day year, actual days elapsed. 
Interest shall be payable at the times and place set forth in each
promissory note or other instrument or document required hereby.

 

(c)        Unused Commitment Fee.  Borrower shall pay to Bank a fee equal to one
hundred twenty-five thousandths percent (0.125%) per annum (computed on the
basis of a 360-day year, actual days elapsed) on the average daily unused
amount of the Line of Credit, which fee shall be calculated on a calendar
quarter basis by Bank and shall be due and payable by Borrower in arrears
within ten (10) days after each billing is sent by Bank.

 

(d)        Letter of Credit Fees.  Borrower shall pay to Bank (i) fees upon
the issuance of each Letter of Credit equal to one and one-half percent (1.50%)
per annum (computed on the basis of a 360-day year, actual days elapsed) of the
face amount thereof, and (ii) fees upon the payment or negotiation of each
drawing under any Letter of Credit and fees upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation,
the transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank’s standard fees and charges then in effect for such
activity.

 

3

 

SECTION 1.3. COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect all
principal, interest and fees due under each credit subject hereto by charging
Borrower’s deposit account number 4121-672778 with Bank, or any other deposit
account maintained by Borrower with Bank, for the full amount thereof.  Should there be insufficient funds in any
such deposit account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.

 

SECTION 1.4. COLLATERAL.

 

As
security for all indebtedness and other obligations of Borrower to Bank subject
hereto, Borrower hereby grants to Bank security interests of first priority in
all Borrower’s accounts receivable, and other rights to payment, general
intangibles, inventory and equipment.

 

All
of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank.  Borrower shall
pay to Bank immediately upon demand the full amount of all charges, costs and
expenses (to include fees paid to third parties and all allocated costs of Bank
personnel), expended or incurred by Bank in connection with any of the
foregoing security, including without limitation, filing and recording fees and
costs of appraisals, audits and title insurance.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Borrower
makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement
and shall continue in full force and effect until the full and final payment,
and satisfaction and discharge, of all obligations of Borrower to Bank subject
to this Agreement.

 

SECTION 2.1. LEGAL STATUS. 
Borrower is a corporation, duly organized and existing and in good
standing under the laws of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.

 

SECTION 2.2. AUTHORIZATION AND VALIDITY.  This Agreement and each promissory note,
contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the “Loan
Documents”) have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

 

SECTION 2.3. NO VIOLATION. 
The execution, delivery and performance by Borrower of each of the Loan
Documents do not violate any provision of any law or regulation, or contravene
any provision of the Articles of Incorporation or By-Laws of Borrower, or
result in any breach of or default under any contract, obligation, indenture or
other instrument to which Borrower is a party or by which Borrower may be
bound.

 

SECTION 2.4. LITIGATION. 
There are no pending, or to the best of Borrower’s knowledge threatened,
actions, claims, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which could
have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.

 

4

 

SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial
statement of Borrower dated December 31, 2008, and all interim financial
statements delivered to Bank since said date, true copies of which have been
delivered by Borrower to Bank prior to the date hereof, (a) are complete
and correct and present fairly the financial condition of Borrower, (b) disclose
all liabilities of Borrower that are required to be reflected or reserved
against under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) have been prepared in
accordance with generally accepted accounting principles consistently
applied.  Since the dates of such financial
statements there has been no material adverse change in the financial condition
of Borrower, nor has Borrower mortgaged, pledged, granted a security interest
in or otherwise encumbered any of its assets or properties except in favor of
Bank or as otherwise permitted by Bank in writing.

 

SECTION 2.6. INCOME TAX RETURNS.  Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.

 

SECTION 2.7. NO SUBORDINATION.  There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower’s obligations
subject to this Agreement to any other obligation of Borrower.

 

SECTION 2.8. PERMITS, FRANCHISES.  Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

 

SECTION 2.9. ERISA. 
Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
or recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

 

SECTION 2.10.
OTHER OBLIGATIONS.  Borrower is not in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.

 

SECTION 2.11.
ENVIRONMENTAL MATTERS.  Except as
disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is
in compliance in all material respects with all applicable federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower’s
operations and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any
of the same may be amended, modified or supplemented from time to time.  None of the operations of Borrower is the
subject of any 

 

5

 

federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste
or substance into the environment. 
Borrower has no material contingent liability in connection with any
release of any toxic or hazardous waste or substance into the environment.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank to extend any credit
contemplated by this Agreement is subject to the fulfillment to Bank’s
satisfaction of all of the following conditions:

 

(a)        Approval of Bank Counsel.  All legal matters incidental to the extension
of credit by Bank shall be satisfactory to Bank’s counsel.

 

(b)        Documentation.  Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly executed:

 

(i)                     This Agreement and each
promissory note or other instrument or document required hereby.

(ii)                  Corporate Resolution: Borrowing (2).

(iii)               Certificate of Incumbency (2).

(iv)              Corporate Resolution: Third Party Collateral (2).

(v)                 Disbursement Order.

(vi)              Continuing Security Agreement: Rights to Payment and
Inventory.

(vii)           Security Agreement: Equipment.

(viii)        Third Party Security Agreement: Rights to Payment
and Inventory (2).

(ix)                Third Party Security Agreement: Equipment
(2).

(x)                   Agreement and Acknowledgement of Security
Interest.

(xi)                Such other documents as Bank may require
under any other Section of this Agreement.

 

(c)        Financial Condition.  There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as determined by Bank, in the market value
of any collateral required hereunder or a substantial or material portion of
the assets of Borrower.

 

(d)        Insurance.  Borrower shall have delivered to Bank
evidence of insurance coverage on all Borrower’s property, in form, substance,
amounts, covering risks and issued by companies satisfactory to Bank, and where
required by Bank, with loss payable endorsements in favor of Bank.

 

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to make each extension
of credit requested by Borrower hereunder shall be subject to the fulfillment
to Bank’s satisfaction of each of the following conditions:

 

(a)        Compliance.  The representations and warranties contained
herein and in each of the other Loan Documents shall be true on and as of the
date of the signing of this Agreement and on the date of each extension of
credit by Bank pursuant hereto, with the same effect as though such
representations and warranties had been made on and as of each such date, and
on each such date, no Event of Default as defined herein, and no condition,
event or act which with the giving of notice or the passage of time or both
would constitute such an Event of Default, shall have occurred and be
continuing or shall exist.

 

6

 

(b)        Documentation.  Bank shall have received all additional
documents which may be required in connection with such extension of credit.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower
covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated
or unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1. PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees
or other liabilities due under any of the Loan Documents at the times and place
and in the manner specified therein, and immediately upon demand by Bank, the
amount by which the outstanding principal balance of any credit subject hereto
at any time exceeds any limitation on borrowings applicable thereto.

 

SECTION 4.2. ACCOUNTING RECORDS.  Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Bank, at any reasonable time, to inspect, audit and
examine such books and records, to make copies of the same, and to inspect the
properties of Borrower.

 

SECTION 4.3. FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form
and detail satisfactory to Bank:

 

(a)        not later than 90 days after and as of
the end of each fiscal year, an audited, 
consolidated and consolidating financial statement of Borrower and its
subsidiaries, prepared by a certified public accountant acceptable to Bank, to
include balance sheet, income statement, statement of cash flow and all
supporting schedules and footnotes;

 

(b)        not later than 30 days after and as of
the end of each fiscal quarter, a consolidated and consolidating financial
statement of Borrower and its subsidiaries, prepared by Borrower, to include
balance sheet, income statement, statement of cash flow and all supporting
schedules and footnotes;

 

(c)        not later than 30 days prior to the
beginning of each fiscal year, a consolidated financial projection of Borrower
and its subsidiaries, prepared by Borrower, to include balance sheet and income
statement at a minimum;

 

(d)        not later than 15 days after and as of
the end of each month, a borrowing base certificate, an aged listing of
accounts receivable and accounts payable submitted electronically to Bank, and
a reconciliation of accounts, and not later than 30 days after and as of each June 30
and December 31, a list of the names and addresses of all Borrower’s
account debtors;

 

(e)        contemporaneously with each annual and
quarterly financial statement of Borrower required hereby, a certificate of the
chief executive officer or chief financial officer of Borrower that said
financial statements are accurate and that there exists no Event of Default nor
any condition, act or event which with the giving of notice or the passage of
time or both would constitute an Event of Default;

 

7

 

(f)         from time to time such other
information as Bank may reasonably request.

 

SECTION 4.4. COMPLIANCE. 
Preserve and maintain all licenses, permits, governmental approvals,
rights, privileges and franchises necessary for the conduct of its business;
and comply with the provisions of all documents pursuant to which Borrower is
organized and/or which govern Borrower’s continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to Borrower and/or its business.

 

SECTION 4.5. INSURANCE. 
Maintain and keep in force, for each business in which Borrower is
engaged, insurance of the types and in amounts customarily carried in similar
lines of business, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers’ compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank’s request schedules setting forth all
insurance then in effect.

 

SECTION 4.6. FACILITIES. 
Keep all properties useful or necessary to Borrower’s business in good
repair and condition, and from time to time make necessary repairs, renewals
and replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.

 

SECTION 4.7. TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good
faith contest or as to which a bona fide dispute may arise, and (b) for
which Borrower has made provision, to Bank’s satisfaction, for eventual payment
thereof in the event Borrower is obligated to make such payment.

 

SECTION 4.8. LITIGATION. 
Promptly give notice in writing to Bank of any litigation pending or
threatened against Borrower.

 

SECTION 4.9. FINANCIAL CONDITION.  Maintain Borrower’s financial condition on a
consolidated basis with its subsidiaries as follows using generally accepted
accounting principles consistently applied and used consistently with prior
practices (except to the extent modified by the definitions herein):

 

(a)        Tangible Net Worth not less than
$5,000,000.00 as of December 31, 2009, with quarterly step-ups of 40% of
net income, excluding losses, commencing the first fiscal quarter end of 2010
and each fiscal quarter end thereafter, with “Tangible Net Worth” defined as the
aggregate of total stockholders’ equity plus subordinated debt less any
intangible assets and less any loans or advances to, or investments in, any
related entities or individuals.

 

(b)        Total Liabilities divided by Tangible
Net Worth not greater than 2.25 to 1.0 at each fiscal quarter end, with “Total
Liabilities” defined as the aggregate of current liabilities and non-current
liabilities less subordinated debt, and with “Tangible Net Worth” as defined
above.

 

(c)        Net income after taxes not less than $200,000.00
on a rolling 2-quarters basis, determined as of each fiscal quarter end.

 

8

 

SECTION 4.10.            NOTICE TO BANK.  Promptly (but in no event more than five (5) days
after the occurrence of each such event or matter) give written notice to Bank
in reasonable detail of:  (a) the
occurrence of any Event of Default, or any condition, event or act which with
the giving of notice or the passage of time or both would constitute an Event
of Default; (b) any change in the name or the organizational structure of
Borrower; (c) the occurrence and nature of any Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding deficiency
with respect to any Plan; or (d) any termination or cancellation of any
insurance policy which Borrower is required to maintain, or any uninsured or
partially uninsured loss through liability or property damage, or through fire,
theft or any other cause affecting Borrower’s property.

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower
further covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower will not without Bank’s prior written consent:

 

SECTION 5.1. USE OF FUNDS. 
Use any of the proceeds of any credit extended hereunder except for the
purposes stated in Article I hereof.

 

SECTION 5.2. OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, and (b) any
other liabilities of Borrower existing as of, and disclosed to Bank prior to,
the date hereof.

 

SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or consolidate with any other
entity; make any substantial change in the nature of Borrower’s business as
conducted as of the date hereof; acquire all or substantially all of the assets
of any other entity; nor sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower’s assets except in the ordinary
course of its business.

 

SECTION 5.4. GUARANTIES. 
Guarantee or become liable in any way as surety, endorser (other than as
endorser of negotiable instruments for deposit or collection in the ordinary
course of business), accommodation endorser or otherwise for, nor pledge or
hypothecate any assets of Borrower as security for, any liabilities or
obligations of any other person or entity, except any of the foregoing in favor
of Bank.

 

SECTION 5.5. LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or investments
in any person or entity, except any of the foregoing existing as of, and
disclosed to Bank prior to, the date hereof.

 

SECTION 5.6. PLEDGE OF ASSETS.  Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower’s assets now
owned or hereafter acquired, except any of the foregoing in favor of Bank or
which is existing as of, and disclosed to Bank in writing prior to, the date
hereof.

 

9

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1. The occurrence of any of the following shall
constitute an “Event of Default” under this Agreement:

 

(a)        Borrower shall fail to pay when due any
principal, interest, fees or other amounts payable under any of the Loan
Documents.

 

(b)        Any financial statement or certificate
furnished to Bank in connection with, or any representation or warranty made by
Borrower or any other party under this Agreement or any other Loan Document
shall prove to be incorrect, false or misleading in any material respect when
furnished or made.

 

(c)        Any default in the performance of or
compliance with any obligation, agreement or other provision contained herein
or in any other Loan Document (other than those specifically described as an “Event
of Default” in this section 6.1), and with respect to any such default that by
its nature can be cured, such default shall continue for a period of twenty
(20) days from its occurrence.

 

(d)        Any default in the payment or
performance of any obligation, or any defined event of default, under the terms
of any contract, instrument or document (other than any of the Loan Documents)
pursuant to which Borrower, any guarantor hereunder or any general partner or
joint venturer in Borrower if a partnership or joint venture (with each such
guarantor, general partner and/or joint venturer referred to herein as a “Third
Party Obligor”) has incurred any debt or other liability to any person or
entity, including Bank.

 

(e)        Borrower or any Third Party Obligor
shall become insolvent, or shall suffer or consent to or apply for the
appointment of a receiver, trustee, custodian or liquidator of itself or any of
its property, or shall generally fail to pay its debts as they become due, or
shall make a general assignment for the benefit of creditors; Borrower or any
Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors
or any other relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time (“Bankruptcy Code”), or
under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or Borrower or any Third Party Obligor shall file an
answer admitting the jurisdiction of the court and the material allegations of
any involuntary petition; or Borrower or any Third Party Obligor shall be
adjudicated a bankrupt, or an order for relief shall be entered against
Borrower or any Third Party Obligor by any court of competent jurisdiction
under the Bankruptcy Code or any other applicable state or federal law relating
to bankruptcy, reorganization or other relief for debtors.

 

(f)         The filing of a notice of judgment lien
against Borrower or any Third Party Obligor; or the recording of any abstract
of judgment against Borrower or any Third Party Obligor in any county in which
Borrower or such Third Party Obligor has an interest in real property; or the
service of a notice of levy and/or of a writ of attachment or execution, or
other like process, against the assets of Borrower or any Third Party Obligor;
or the entry of a judgment against Borrower or any Third Party Obligor; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any Third Party
Obligor.

 

10

 

(g)        There shall exist or occur any event or
condition that Bank in good faith believes impairs, or is substantially to
impair, the prospect of payment or performance by Borrower, any Third Party
Obligor, or the general partner of either if such entity is a partnership, of
its obligations under any of the Loan Documents.

 

(h)        The death or incapacity of Borrower or
any Third Party Obligor if an individual. The dissolution or liquidation of
Borrower or any Third Party Obligor if a corporation, partnership, joint
venture or other type of entity; or Borrower or any such Third Party Obligor,
or any of its directors, stockholders or members, shall take action seeking to
effect the dissolution or liquidation of Borrower or such Third Party Obligor.

 

(i)         Any change in control of Borrower or
any entity or combination of entities that directly or indirectly control
Borrower, with “control” defined as ownership of an aggregate of thirty-five
percent (35%) or more of the common stock, members’ equity or other ownership
interest (other than a limited partnership interest).

 

SECTION 6.2. REMEDIES. 
Upon the occurrence of any Event of Default:  (a) all indebtedness of Borrower under
each of the Loan Documents, any term thereof to the contrary notwithstanding, shall
at Bank’s option and without notice become immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are hereby
expressly waived by Borrower; (b) the obligation, if any, of Bank to
extend any further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers and
remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any
credit subject hereto and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. 
All rights, powers and remedies of Bank may be exercised at any time by
Bank and from time to time after the occurrence of an Event of Default, are
cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.

 

ARTICLE VII

 

MISCELLANEOUS

 

SECTION 7.1. NO WAIVER. 
No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or
remedy.  Any waiver, permit, consent or
approval of any kind by Bank of any breach of or default under any of the Loan
Documents must be in writing and shall be effective only to the extent set
forth in such writing.

 

SECTION 7.2. NOTICES. 
All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing delivered to each party at the following address:

 

	
  BORROWER:

  	
   

  	
  HEMACARE CORPORATION and

  
	
   

  	
   

  	
  CORAL BLOOD SERVICES, INC.

  
	
   

  	
   

  	
  15350 Sherman Way,
  Suite #350

  
	
   

  	
   

  	
  Van Nuys, CA 91406

  
	
   

  	
   

  	
   

  
	
  BANK:

  	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
  Beverly Hills Regional
  Commercial Banking Office

  
	
   

  	
   

  	
  433 N. Camden Drive,
  Suite 505

  
	
   

  	
   

  	
  Beverly Hills, CA 90210

  

 

11

 

or to such other address as
any party may designate by written notice to all other parties.  Each such notice, request and demand shall be
deemed given or made as follows:  (a) if
sent by hand delivery, 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.

 

SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES.  Borrower 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 negotiation and preparation of this Agreement and
the other Loan Documents, Bank’s continued administration hereof and thereof,
and the preparation of any amendments and waivers hereto and thereto, (b) the
enforcement of Bank’s rights and/or the collection of any amounts which become
due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents,
including without limitation, any action for declaratory relief, 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
Borrower or any other person or entity.

 

SECTION 7.4. 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
Borrower may not assign or transfer its interests or rights hereunder without
Bank’s prior written consent.  Bank reserves
the right to sell, assign, transfer, negotiate or grant participations in all
or any part of, or any interest in, Bank’s rights and benefits under each of
the Loan Documents.  In connection
therewith, Bank may disclose all documents and information which Bank now has
or may hereafter acquire relating to any credit subject hereto, Borrower or its
business, any guarantor hereunder or the business of such guarantor, or any
collateral required hereunder.

 

SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each
credit subject hereto and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof.  This Agreement may be amended or modified
only in writing signed by each party hereto.

 

SECTION 7.6. NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for
the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan Documents to
which it is not a party.

 

SECTION 7.7. TIME. 
Time is of the essence of each and every provision of this Agreement and
each other of the Loan Documents.

 

12

 

SECTION 7.8. SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall 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.

 

SECTION 7.9. COUNTERPARTS. 
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and all of
which when taken together shall constitute one and the same Agreement.

 

SECTION 7.10.
GOVERNING LAW.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.

 

SECTION 7.11.
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 (i) any credit subject hereto, or any of the
Loan Documents, and their negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for
additional credit.

 

(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.

 

13

 

(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 any Loan Document, 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

 

14

 

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 Loan Documents or the subject matter of
the dispute shall control.  This
arbitration provision shall survive termination, amendment or expiration of any
of the Loan 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.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

 

	
   

  	
   

  	
  WELLS FARGO BANK,

  
	
  HEMACARE CORPORATION

  	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ John Doumitt

  	
   

  	
  By: 

  	
  /s/ Bruce Tower

  
	
   

  	
  John Doumitt

  	
   

  	
   

  	
  Bruce Tower

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Robert S. Chilton

  	
   

  	
   

  
	
   

  	
  Robert S. Chilton

  	
   

  	
   

  
	
   

  	
  Executive Vice President
  and

  	
   

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CORAL BLOOD SERVICES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ John Doumitt

  	
   

  	
   

  
	
   

  	
  John Doumitt

  	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  Robert S. Chilton

  	
   

  	
   

  
	
   

  	
  Robert S. Chilton

  	
   

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  	
   

  

 

15

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