8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of the earliest event reported):  July 11, 2011

HEMACARE CORPORATION

(Exact name of registrant as specified in its charter)

California	000-15223	95-3280412
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

15350 Sherman Way, Suite 350, Van Nuys, CA  91406

(Address of principal executive offices) (Zip Code)

(818) 226-1968

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

Asset Purchase Agreement

On July 11, 2011, HemaCare Corporation (the “Company”) and its wholly-owned subsidiary, Coral Blood Services, Inc. (collectively, the “Sellers”), completed the sale of the Sellers’ red blood cell collection operation assets (the “Assets”) in California and Maine to The American National Red Cross (the “Buyer”) pursuant to the terms of an Asset Purchase Agreement entered into by the parties on July 11, 2011 (the “Asset Purchase Agreement”).  The Assets included automobiles and equipment, finished goods and work-in-process inventory of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

In consideration for the Assets, the Buyer agreed to pay to the Sellers an aggregate of $3,051,000.  Of the purchase price, $2,475,000 was paid on the closing date, $51,000 will be paid on or around July 15, 2011, and $250,000 will be paid in three equal monthly installments on the 30th, 60th and 90th days following the closing date.  The remaining balance of $275,000 was paid into a one year escrow to satisfy the Sellers’ potential indemnification liabilities to the Buyer.

As a result of the Asset sale, the Sellers will effect a reduction in force of approximately 100 employees in California and Maine, which will result in a third quarter charge of approximately $900,000 in employment related expenses.

The press releases announcing the sale transaction is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The foregoing summary of the Asset Purchase Agreement is qualified in its entirety by reference to the actual agreement attached hereto as Exhibit 2.1

Blood Purchase Agreement

In connection with the sale of the Assets, on July 11, 2011 the Company entered into a blood purchase agreement with Buyer (the “Blood Purchase Agreement”), pursuant to which the Company will sell to the Buyer on an exclusive basis, a minimum of 7,000 and a maximum of 12,000 units of ISBT labeled single donor platelets per year during the term of the Agreement.  The platelets will be sold to the Buyer at a fixed price per unit during the first two years of the agreement, and at a price equal to a percentage of the Buyer’s National Average Selling Price of platelets over the immediately preceding calendar year.  The Blood Purchase Agreement has an initial term expiring on June 30, 2016, and will be extended automatically for additional renewal periods unless either party elects to terminate the agreement upon expiration of the then-current term.

The foregoing summary of the Blood Purchase Agreement is qualified in its entirety by reference to the actual agreement attached hereto as Exhibit 10.1.

Item 1.02 Termination of a Material Definitive Agreement

In connection with the Asset sale, on or around July 11, 2011, the Sellers notified the customers of their red blood cell business of the Sellers’ election to terminate their existing agreements with these customers, with such terminations to take effect upon expiration of the applicable advance notice periods in such agreements.  As part of these terminations, the Company has notified USC University Hospital of its election to terminate the parties’ Blood Donor Center Management Community Mobile Blood Collections Services Agreement, USC Blood Donor Center, USC University Hospital, dated May 8, 2004, as amended to date.  The termination will be effective on September 10, 2011.

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Item 2.01 Completion of Acquisition or Disposition of Assets

Reference is made to the disposition of the Assets that was consummated pursuant to the Asset Purchase Agreement described under Item 1.01 of this report, which description is incorporated by reference into this Item 2.01.

Item 9.01.              Financial Statements and Exhibits

(b)           Pro Form Financial Information

The pro forma unaudited financial information giving effect to the disposition of assets described in Item 2.01 above is filed as Exhibit 99.2 to this report.  The pro forma unaudited financial statements are presented for illustrative purposes only. They are not necessarily indicative of the operating results or financial position that would have been achieved had the disposition been consummated as of the dates indicated or of the results that may be obtained future periods.

(d)           Exhibits

The following exhibits are filed herewith:

Exhibit
Number	Description
2.1*	Asset Purchase Agreement, dated July 11, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and The American National Red Cross.
10.1†	Blood Purchase Agreement, effective as of July 11, 2011, between The American National Red Cross and HemaCare Corporation.
99.1	Press release of HemaCare Corporation, dated July 11, 2011.
99.2	Proforma financial information.
___________________
*	The Asset Purchase Agreement contains a list briefly identifying the contents of all omitted exhibits and schedules.  HemaCare Corporation agrees to furnish to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request.
†	Certain portions of this agreement have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for an order granting confidential treatment pursuant to Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  July 15, 2011	HEMACARE CORPORATION
	By:	/s/  Lisa Bacerra
		Lisa Bacerra,
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit

Number                  Description

2.1* Asset Purchase Agreement, dated July 11, 2011, among HemaCare Corporation, Coral Blood Services, Inc. and The American National Red Cross.

10.1† Blood Purchase Agreement, effective as of July 11, 2011, between The American National Red Cross and HemaCare Corporation.

99.1 Press release of HemaCare Corporation, dated July 11, 2011.

99.2 Pro forma financial information.

___________________

* The Asset Purchase Agreement contains a list briefly identifying the contents of all omitted exhibits and schedules. HemaCare Corporation agrees to furnish to the Securities and Exchange Commission a copy of any omitted exhibit or schedule upon request.

† Certain portions of this agreement have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for an order granting confidential treatment pursuant to Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934.

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EX-2.1

Exhibit 2.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of July 11, 2011 (the “Effective Date”), by and between The American National Red Cross (“Red Cross”), HemaCare Corporation (“HemaCare”), and Coral Blood Services, Inc. (“Coral” and, together with HemaCare, each a “Seller” and collectively the “Sellers”).  Red Cross and the Sellers are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

WITNESSETH:

WHEREAS, the Sellers are the owner of certain assets used in blood collections and manufacturing services (the “Business”); and

WHEREAS, Red Cross desires to purchase certain herein named assets of the Sellers used in the Business, which constitute only a portion of the assets of the Sellers, and the Sellers desire to sell such assets, all upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, it is hereby agreed as follows:

1.             PURCHASE AND SALE OF ASSETS: CLOSING.

a) Purchase and Sale of Assets. Upon the terms and subject to the conditions hereinafter set forth, each Seller hereby agrees to sell to Red Cross, and Red Cross agrees to purchase from each Seller the assets owned by the Seller which are specifically identified on Exhibit A to this Agreement (collectively, the “Assets”), which Assets are used by the Sellers in connection with the Business.

b) Procedure for Closing. At the closing of the transactions contemplated hereby (the “Closing”), the Sellers shall sell, assign, transfer, convey and deliver to Red Cross free and clear of all liabilities whatsoever (whether absolute or contingent, and including all liens, encumbrances, equities, claims, charges or interests of third persons), and Red Cross shall purchase from the Sellers, all of the Sellers’ right, title and interest in or to the Assets. The Closing shall be held at 6:00 a.m. Pacific time on the Effective Date at HemaCare’s principal executive offices located at 15350 Sherman Way, Suite 350, Van Nuys, CA 91406.  The date of the closing is referred to herein as the “Closing Date”.

c) Closing.  At the Closing, in accordance with the terms of this Agreement, each Seller shall deliver to Red Cross a bill or bills of sale, assignments and all other instruments necessary or appropriate in the opinion of counsel to Red Cross to convey all right, title and interest in or to the Assets to Red Cross and all other documents required to be entered into by any Seller pursuant to this Agreement.  At the Closing, in accordance with the terms of this Agreement, Red Cross shall deliver the consideration for the purchase of the Assets as provided in Section 2 of this Agreement and all other documents required to be entered into by Red Cross pursuant to this Agreement.

d) Delivery and Possession of Assets.  At the Closing, each Seller shall deliver possession of the Assets being transferred by such Seller to Red Cross at the Seller’s premises where such Assets are physically located as of the Closing Date.  Red Cross shall remove the Assets from the Sellers’ premises at Red Cross’ expense no later than thirty (30) days following the Closing Date, or by such later date as is agreed to by HemaCare.

e) Irradiator.  Notwithstanding this Section 1 to the contrary, with respect to the Cell X-Ray Irradiator (the “Irradiator”) included as part of the Assets, the purchase and sale of the Irradiator shall not occur, and title thereto shall not pass to Red Cross, until a date which is thirty (30) days following the Closing Date, or such earlier date as specified by Red Cross.  Prior to delivery of the Irradiator, HemaCare and Red Cross shall negotiate in good faith the terms of a leaseback agreement pursuant to which Red Cross will lease the Irradiator to HemaCare, at no cost to HemaCare, for use by HemaCare in performing its obligations to Red Cross pursuant to the Blood Purchase Agreement (as defined below).  During the period from the Closing Date through December 18, 2011, HemaCare will continue in effect the service maintenance agreement presently covering the Irradiator.  On the Closing Date, Red Cross shall pay to HemaCare $9,349.98 to reimburse HemaCare for amounts paid under the service maintenance agreement for the period from the Closing Date through December 18, 2011.

2.             CONSIDERATION.

a) Purchase Price. In consideration of the purchase, sale, conveyance, transfer, assignment and delivery of the Assets, and upon the terms and subject to the conditions of this Agreement, Red Cross shall pay to HemaCare a purchase price (the “Purchase Price”) equal to the sum of (i) Three Million Dollars and No Cents ($3,000,000.00) plus (ii) the Inventory Purchase Amount described in Section 2.b) below, by wire transfer of immediately available funds in accordance with instructions delivered by HemaCare to Red Cross prior to the Closing Date.  Red Cross shall pay the Purchase Price as follows:

i) an amount equal to $2,475,000 shall be paid to HemaCare on the Closing Date;

ii) an amount equal to the Inventory Purchase Amount shall be paid to HemaCare on the fourth (4th) business day following the Closing Date;

iii) $250,000 shall be paid to HemaCare in three equal monthly installments of $83,333.33 each on the 30th, 60th and 90th days following the Closing Date;

iv) $275,000.00 (the “Escrow Amount”) shall be deposited into an escrow account (the “Escrow Holdback Account”) with California Bank and Trust (the “Escrow Agent”) pursuant to the terms of the escrow agreement attached hereto as Exhibit B (the “Escrow Agreement”).   The Escrow Holdback Account shall be available as the sole source of funds for any indemnification liabilities of the Sellers in accordance with Section 8 below. On the one year anniversary of the Closing Date, the Escrow Agent shall distribute all of the Escrow Amount remaining in the Escrow Holdback Account (if any) to HemaCare; provided, however, that if Red Cross has asserted any unresolved claims pursuant to Section 8, the Escrow Agent shall continue to withhold all amounts necessary to satisfy all such unresolved claims as provided in the Escrow Agreement.

b) Inventory Purchase.  On the Closing Date (the “Inventory Determination Date”), Sellers shall deliver to Red Cross a schedule of all finished and work-in-process blood products in Sellers’ inventory as of the Inventory Determination Date which comprise part of the Assets to be acquired by Red Cross pursuant to this Agreement, identified by product type.  With respect to all work-in-process blood products, Sellers shall continue to process such inventory into finished blood products after the Closing Date.  On the fourth (4th) business day following the Closing Date, as part of the Purchase Price, Red Cross shall pay to HemaCare, in the manner set forth in Section 2.a).ii) above, an amount (the “Inventory Purchase Amount”) equal to the aggregate purchase price for all such products in inventory on the Closing Date, at the following unit prices:  Platelets -- $400.00; Red Blood Cells -- $250.00; Fresh Frozen Plasma -- $53.00; and Cryoprecipitate -- $43.00.  Notwithstanding the foregoing, if the Inventory Purchase Amount for all products in inventory other than platelets exceeds $50,000 (such products in inventory in excess of such amount, the “Excess Inventory”), then the Assets shall include, and the Red Cross shall be obligated to purchase pursuant to this Section 2.b), only that portion of the Excess Inventory that meets customary requirements for blood type product mix, as determined by Red Cross in its reasonable discretion.  Notwithstanding Section 1.d) to the contrary, Red Cross shall take possession of the finished blood products in inventory on the Closing Date no later than the first calendar day following the Closing Date, and Red Cross shall take possession of all work-in-process blood products in inventory on the Closing Date no later than the first calendar day following the date such work-in-process becomes finished inventory.

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c) No Assumption of Liabilities. Except as set forth in the Assumption Agreement, Red Cross shall not and does not assume any of the Seller's liabilities, including but not limited to its accounts payable and other trade liabilities incurred in the Business, or the debts, taxes, contingencies or other liabilities of the Business, whether fixed or contingent, and all such liabilities incurred prior to Closing shall remain the sole obligation of the Seller.

3. REPRESENTATIONS AND WARRANTIES OF SELLERS. HemaCare hereby represents and warrants to Red Cross as follows:

a) Organization and Standing. Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has the corporate power and authority to carry on its business as it is now being conducted.

b) Authority Relative to this Agreement. The execution, delivery and performance of this Agreement by each Seller have been duly authorized by the Board of Directors of such Seller. No further corporate or other action is necessary on its part to make this Agreement valid and binding upon it and enforceable against it in accordance with its terms or to carry out the transactions contemplated hereby.

c) No Violations. The execution, delivery and performance of this Agreement by each Seller does not and will not (1) constitute a breach or a violation of any law, rule or regulation, agreement, indenture, deed of trust, mortgage, loan agreement or other instrument to which such Seller is a party or by which it is bound; (2) constitute a violation of any order, judgment or decree to which such Seller is a party or by which it is bound or by which any of such Seller’s assets or properties are bound or affected; or (3) result in the creation of any lien, charge or encumbrance upon any of such Seller’s assets or properties.

d) Litigation. Each Seller (1) is not a party to any litigation, proceeding or administrative investigation and none is pending or, to the knowledge of HemaCare, threatened against it, its properties, or any property used in the Business, (2) knows of no basis for any such litigation, proceeding or investigation which might have a material adverse effect, financial or otherwise, on the Business, (3) knows of no outstanding order, writ, injunction or decree of any court, government, governmental authority or arbitration against or affecting the Business; and (4) knows of no material infringement of any copyright, trademark, trade name, patent or other proprietary right owned or licensed by it.

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e) Title to and Condition of Assets. The Sellers have good and marketable title to all the Assets. As of the date of this Agreement, such Assets are not subject to any guaranty, judgment, execution, pledge, lien, conditional sales agreement, security agreement, encumbrance or charge, except as disclosed pursuant to this Agreement (with respect to which no default exists) and except for liens for taxes not delinquent.  All equipment and other items of tangible personal property and assets included within the Assets are in good condition and repair, reasonable wear and tear excepted, and are operated in conformity with all applicable building and zoning ordinances and regulations and all other applicable laws, ordinances and regulations.

f) Compliance With Applicable Laws. The conduct of the Business by the Sellers does not violate or infringe any federal, state, local or foreign law, statute, ordinance, license or regulation that is presently in effect. To the knowledge of HemaCare, such conduct does not violate or infringe any right or concession, copyright, trademark, trade name, patent, know how or other proprietary right of others, the enforcement of which would adversely affect the Business or the value of the Assets. The Sellers have and have maintained all licenses and permits required by all local, state and federal authorities and regulating bodies.

g) Approvals and Consents. No consent, approval or authorization is required in connection with the execution or delivery of this Agreement by either Seller or the consummation by either of them of the transactions contemplated hereby.

4. REPRESENTATIONS AND WARRANTIES OF RED CROSS.  Red Cross hereby represents and warrants to the Sellers as follows:

a) Organization and Standing. Red Cross is a corporation duly organized, validly existing and in good standing under the laws of the United States of America and has the corporate power and authority to carry on its business as it is now being conducted.

b) Authority Relative to this Agreement. The execution and delivery of this Agreement by Red Cross has been duly authorized by the Red Cross, and no further corporate action is necessary on its part to make this Agreement valid and binding upon it and enforceable against it in accordance with the terms hereof or to carry out the actions contemplated hereby.

c) Approvals and Consents. No additional consent, approval or authorization is required in connection with the execution or delivery of this Agreement by Red Cross or the consummation by Red Cross of the transactions contemplated hereby.

d) No Violations. The execution, delivery and performance of this Agreement by Red Cross do not and will not (1) constitute a breach or a violation of Red Cross’s Articles of Incorporation or by laws, or of any law, rule or regulation, agreement, indenture, deed of trust, mortgage, loan agreement or other instrument to which Red Cross is a party or by which it is bound; (2) constitute  violation of any order, judgment or decree to which Red Cross is a party or by which it is bound

or by which any of Red Cross’s assets or properties are bound or affected; or (3) result in the  creation of any lien, charge or encumbrance upon any of Red Cross’s assets or properties, except as contemplated by this Agreement.

e) Litigation. Red Cross (1) is not a party to any litigation, proceeding or administrative investigation and none is pending or, to the knowledge of Red Cross, threatened against such corporation, its properties, or any property used in its business or the transactions contemplated by this Agreement; (2) knows of no basis for any such litigation, proceeding or investigation which might have a material adverse effect, financial or otherwise, on its business, property, operations or prospects; (3) knows of no outstanding order, writ, injunction or decree of any court, government, governmental authority or arbitration against or affecting it, its properties or business; and (4) knows of no material infringement of any copyright, trademark, trade name, patent or other proprietary right owned or licensed by it.

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5.             COVENANTS.  The Parties hereby agrees as follows:

a) Conduct of the Business Until Closing. Except as Red Cross may otherwise consent in writing, between the date of this Agreement and the Closing Date, each Seller will:

i) neither enter into any transaction, take any action nor fail to take any action which would, or could reasonably be expected to, materially adversely affect such Seller or its usability to perform its obligations under this Agreement; encumber any of the Assets, or dispose of any of the Assets;

ii) neither enter into any transaction, take any action nor fail to take any action, in a manner which would result in any of the representations, warranties, disclosures, agreements or covenants of such Seller contained in this Agreement, the exhibits hereto or any document delivered in connection with the consummation of the transactions contemplated hereby, not to be true and complete, as of the time of such transaction, action or failure to take action, and also on the Closing Date; and

iii) maintain all the Assets in good condition and repair, reasonable wear and tear excepted.

b) Compliance with Laws. Each Seller shall comply with all laws of the State of California, the United States and any other governmental body with jurisdiction over such Seller or the Business.

c) Advice of Changes. Between the date of this Agreement and the Closing, the Sellers will promptly advise Red Cross in writing of any material fact which, if existing or known at the date of this Agreement, would have been required to be set forth in or disclosed pursuant to this Agreement.

d) Other Transactions Prohibited. Prior to the Closing, neither Seller will enter into any written or oral agreements providing for the sale, lease or mortgage of the Assets.

e) Access to Properties and Records, Etc. Between the date of this Agreement and the Closing, after reasonable notice, the Sellers will provide to Red Cross and its counsel, accountants and other representatives full access during normal business hours for inspection of all of the properties, personnel, books, tax returns, contracts, commitments and records of the Sellers to the extent they relate directly to the Business, and will furnish to Red Cross all such additional documents and information with respect to the affairs of the Business as Red Cross or its counsel or accountants may from time to time reasonably request. All such books, tax returns, contracts, commitments, documents and records of the Sellers will be complete and correct as of the date of any inspection by or delivery to Red Cross or its representatives of such items.

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f) Non-Competition.

i) In consideration of the compensation payable hereunder, and to induce Red Cross to enter into this Agreement, HemaCare agrees that, except as otherwise permitted or required pursuant to this Agreement or another written agreement with Red Cross, neither HemaCare nor any of HemaCare’s subsidiaries will during the Restricted Period, directly or indirectly, become a Competitor, or otherwise take any action that may result in owning any interest in, managing, consulting, operating, or otherwise participating in (e.g., as a medical director, contractor, consultant, or employee), a Competitor, anywhere within the United States and its territories at any time during the Restricted Period.

ii) HemaCare further agrees that HemaCare shall not, during the Restricted Period, directly or indirectly take any action that is intended, or is reasonably likely to, (i) induce any customer of the Blood Bank Business to patronize any Competitor; or (ii) request or advise any customer or vendor of the Blood Bank Business to withdraw, diminish or cancel such person’s business or affiliation with the Blood Bank Business.

iii) Nothing in this Section shall be interpreted to prevent any physician employed by HemaCare from engaging in the professional practice of medicine or interfering with such person’s independent medical judgment, without consideration for any pecuniary interests of said physician.  Nothing in this Agreement shall be interpreted to require the referral of any customers of the Blood Bank Business to Red Cross or any of Red Cross’s Affiliates, whether during or following the Restricted Period, and nothing in this Agreement shall be interpreted to prohibit any physician from referring any patients to, or treating patients at, any Competitor, whether during or following the Restricted Period.

iv) HemaCare specifically acknowledges, represents and warrants that the covenants set forth in this Section are reasonable and necessary to protect the legitimate interests of Red Cross, and Red Cross would not have entered into this Agreement in the absence of such covenants.

v) Notwithstanding this Section to the contrary, if HemaCare terminates the Blood Purchase Agreement in accordance with the terms thereof following Red Cross’ breach of its obligations thereunder (following notice and opportunity to cure, as provided in the Blood Purchase Agreement), then the restrictions set forth in this Section as they apply to the collection, production, purchase and/or sale of whole-blood and apheresis derived platelets shall no longer apply, and the definition of Blood Bank Business shall no longer include such activities.

vi) For purposes of this Section, the following terms shall have the following meanings:

“Blood Bank Business” means the business of collecting (including by operating whole-blood collection drives on behalf of hospitals or sponsor organizations, at fixed sites or using mobile collection vehicles), producing, purchasing and selling whole-blood derived and apheresis derived products consisting of red blood cells, fresh frozen plasma, cryoprecipitate, and platelets for sale (directly or indirectly) to hospital blood bank customers for the intended use of patient blood transfusions.  The Blood Bank Business does not include, and HemaCare and its subsidiaries will continue to operate its businesses relating to, therapeutic apheresis, stem cell collection, and the collection, production, purchase and/or sale of all blood-derived products for further manufacturing, cellular therapies, clinical trials, device validation, and research.

“Competitor” means any person, clinic, corporation, partnership, management services organization, proprietorship, independent practice association, firm, entity or association which engages in or derives any economic benefit from, or is preparing to engage in or derive any economic benefit from, the Blood Bank Business.

“Restricted Period” means five (5) years from the Closing Date.

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g) Termination of Customer Contracts.

i) Within five (5) business days following the Closing Date, the Sellers shall provide to each customer of its Blood Bank Business with whom such Seller has a written agreement to provide products or services (a “Customer Contract”), written notice of such Seller’s election to terminate the applicable Customer Contract in accordance with the advance notice termination provisions thereof, which termination shall be effective on the earliest date permitted by such Customer Contract.

ii) Notwithstanding Section 5.f) of this Agreement to the contrary, from and after the Closing Date and through and including the effective date of a Customer Contract, the Sellers may continue to perform their obligations under the applicable Customer Contract and receive the benefits thereof, and to otherwise take all actions that the applicable Seller reasonably determines are necessary to avoid such Seller’s breach of the applicable Customer Contract, except that: (A) without Red Cross’ prior written consent, the Sellers shall not operate collection drives, or otherwise collect blood products for sale, pursuant to any such Customer Contract; and (B) the Sellers shall fulfill sales of all blood products pursuant to any such Customer Contract by purchasing such products from Red Cross for resale to the customer and/or, in the case of platelets only, by selling platelets manufactured by Sellers.  Red Cross agrees to sell or cause its affiliates to sell to Sellers all blood products that either Seller requires in order to fulfill orders placed pursuant to Customer Contracts, only to the extent Red Cross has such products available for sale, which products shall be sold by Red Cross to such Seller at a price equal to the lesser of (A) Red Cross’ then-current market price for such products and (B) the price that such Seller is obligated to sell such products to the applicable customer under the Customer Contract.  If Red Cross is unable or unwilling to sell whole-blood derived products to either Seller for resale under a Customer Contract, then such Seller may purchase such products from a party other than Red Cross.

h) USC Donor Centers.

i) From and after the Closing Date, Sellers shall cease all operations at the donor center located at USC Blood Donor Center, Health Sciences Campus, 2250 Alcazar Street, Suite 136, Los Angeles, CA 90033 (“USC-1”).  From the Closing Date through and including August 31, 2011, Sellers may continue to operate the Blood Bank Business from the donor center located at USC Blood Donor Center, University Park Campus, 3347 South Hoover Street, Suite C10, Los Angeles, CA 90007 (“USC-2”), including the collection and sale of platelets from such facility.  After August 31, 2011, Sellers shall cease all operations at USC-2.  Sellers shall not deliver notice of termination of the lease agreements for USC-1 and USC-2 until Red Cross has first met in person with representatives of USC University Hospital about assuming HemaCare’s obligations under such lease agreements; provided that such meeting occurs no later than fifteen (15) days following the Closing Date.

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ii) For a period of ninety (90) days following the Closing Date, the Sellers may communicate with donors who have donated platelets at USC-1 or USC-2 for the purpose of having such donors continue to donate platelets at another Seller facility (i.e., Seller’s Van Nuys, CA facility).  Following such ninety (90) day period, Sellers shall cease all such communications with those donors who have not theretofore donated or indicated their intent to donate platelets at another Seller facility, and Sellers shall provide to Red Cross a list identifying all such donors.

i) Maine Lease.  As soon as practicable following the Closing Date, but in no event later than ninety (90) days following the Closing Date, Red Cross will advise Sellers as to whether Red Cross desires to lease or sublease the Sellers’ leased facility located at Maine Blood Center, 152 US Route 1, Scarborough, ME 04074 (“Maine-1”), and during such period, Red Cross will pay or reimburse Sellers for all rent and other lease expenses Sellers pay or are obligated pay for the Maine-1 premises.  If Red Cross notifies Sellers that it desires to lease or sublease the Maine-1 premises, than Red Cross shall thereafter be responsible for, and shall pay or reimburse Sellers for all rent and other lease expenses Sellers pay or are obligated pay for the Maine-1 premises from and after the Closing Date, and Red Cross shall indemnify and hold harmless Sellers for any liabilities or other obligations arising under or in connection with the Maine-1 premises, including any lease for such premises.  If Red Cross notifies Sellers that it does not desire to lease or sublease the Maine-1 premises, than Red Cross shall thereafter have no further obligation to Sellers to pay or reimburse Sellers for rent and other lease expenses Sellers pay or are obligated pay for the Maine-1 premises for all periods after the date of such notification (but not for the period before such notification), and Sellers may occupy and use the premises in any manner not otherwise precluded under this Agreement.  Until Red Cross provides Sellers with notice of its intentions for Maine-1, Sellers shall cease operations at Maine-1 and shall provide Red Cross with access to such facility for the purpose of allowing Red Cross to direct Sellers’ prior blood donors to an alternative donation facility operated by Red Cross.

j) Transition Services.  For a period of ninety (90) days following the Closing Date, HemaCare agrees to provide the following transition services to Red Cross:

i) HemaCare will contact its Blood Bank Customers, in coordination with Red Cross, to encourage such customers to use Red Cross for their blood and related product needs;

ii) HemaCare will coordinate with Red Cross in executing a communications plan for transition of the Blood Bank Business, with specific agreed upon documents directed toward hospitals, sponsors, donors, staff and the media;

iii) HemaCare will work with Red Cross, in a method to be mutually determined, to encourage sponsors to organize blood drives with Red Cross, which efforts could include contacting sponsors in coordination with Red Cross;

iv) HemaCare will send out letters, also known as an opt-out letter, to donors, in coordination with Red Cross, for the purposes of determining if the donors do not want their information conveyed to Red Cross.  In the case of platelet donors associated with the USC donor centers, the opt-out letters will be sent as soon as practicable after September 1, 2011.  After 30 days following delivery to a donor of an opt-out letter, HemaCare will provide the donor’s information (in the form of cold calling lists including name, address, phone and email, to the extent permitted pursuant to applicable regulations) to Red Cross.

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v) HemaCare will use good faith efforts to assist Red Cross in transitioning the leases for USC-1 and USC-2 to Red Cross, as reasonably requested by Red Cross; and

vi) HemaCare will provide a calendar of future donor drives, from July 2011 through July 2012, with relevant information, including sponsor name, contact name, address, phone number email and other relevant information.  HemaCare will use their commercially reasonable efforts to transfer to Red Cross all such information via the Hemasphere software program.

6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF RED CROSS.  The obligations of Red Cross under this Agreement are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (the fulfillment of any of which may be waived in writing by Red Cross):

a) Accuracy of Representations and Warranties. The representations and warranties of the Sellers contained in Section 3 of this Agreement will be true and correct in all material respects at and as of the time of the Closing as though then made, except to the extent that such representations and warranties are incorrect as of such later date by reason of events occurring after the date of this Agreement in compliance with the terms hereof.

b) Compliance. The Sellers shall have performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and all exhibits hereto to be performed and complied with by it at or prior to the Closing.

c) Certain Deliveries.  On or prior to the Closing Date, the Sellers will have delivered to Red Cross all of the following (dated as of the Closing Date, except as otherwise indicated):

i) the blood purchase agreement between Red Cross and HemaCare, in the form attached hereto as Exhibit C (the “Blood Products Agreement”)

ii) the testing agreement between Red Cross, National Testing Laboratory Portland and HemaCare, in the form attached hereto as Exhibit D (the “Testing Agreement”); and

iii) such other documents or instruments as the Red Cross reasonably requests and are reasonably necessary to effect the transactions contemplated by this Agreement.

d) Litigation. There shall not be any litigation or proceeding to restrain or invalidate the consummation of the transactions contemplated hereby.

7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS.  The obligations of the Sellers under this Agreement are subject to the satisfaction at or prior to the Closing, of each of the following conditions (the fulfillment of any one of which may be waived in writing by HemaCare):

a) Accuracy of Representations and Warranties. The representations and warranties of Red Cross contained in Section 4 of this Agreement will be true and correct in all material respects at and as of the time of the Closing as though then made, except to the extent that they are incorrect as of the Closing Date by reason of events occurring after the date of this Agreement in compliance with the terms hereof.

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b) Compliance. Red Cross shall have performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and all exhibits hereto to be performed and complied with by it at or prior to the Closing.

c) Certain Deliveries.  On or prior to the Closing Date, Red Cross will have delivered to Sellers all of the following (dated as of the Closing Date, except as otherwise indicated):

i)  the Blood Purchase Agreement;

ii) the Testing Agreement; and

iii) such other documents or instruments as the Sellers reasonably request and are reasonably necessary to effect the transactions contemplated by this Agreement.

d) Litigation. There shall not be any litigation or proceeding to restrain or invalidate the consummation of the transactions contemplated hereby.

8.             INDEMNIFICATION.

a) Survival of Representations Warranties. The representations and warranties of the Parties contained in this Agreement shall survive the Closing Date and shall terminate on the first anniversary of the Closing Date.

b) General--HemaCare. HemaCare agrees to indemnify and hold harmless Red Cross and its directors, officers and affiliates, and each of their successors and assigns (individually, a “Red Cross Indemnified Party”) in respect of any and all costs, losses, claims, liabilities, fines, penalties (including interest which may be imposed in connection therewith and court costs and reasonable fees and disbursements of counsel) (“Damages”) which may be incurred by any Red Cross Indemnified Party arising out of:

i) any breach by the Sellers of any representations, warranties, covenants or agreements made in this Agreement, the exhibits hereto or any document or paper delivered in connection with the transactions contemplated hereby;

ii) any attempt by any person to cause or require Red Cross to pay or discharge any debt, obligation, liability or commitment of the Sellers; and

iii) any action, suit, proceeding, assessment or judgment arising out of or incident to any of the matters indemnified against in this Section 8, including reasonable fees and disbursements of counsel (before and at trial, in bankruptcy proceedings and in appellate proceedings).

c) General-- Red Cross. Red Cross agrees to indemnify and hold harmless the Sellers and their  directors, officers and affiliates, and each of their successors and assigns (individually, a “Seller Indemnified Party”) in respect of any and Damages which may be incurred by any Seller Indemnified Party arising out of:

i) any breach by Red Cross of any representations, warranties, covenants or agreements made in this Agreement, the exhibits hereto or any document or paper delivered in connection with the transactions contemplated hereby;

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ii) any attempt by any person to cause or require either Seller to pay or discharge any debt, obligation, liability or commitment of Red Cross arising out of Red Cross’ operation of the Business after the Closing; and

iii) any action, suit, proceeding, assessment or judgment arising out of or incident to any of the matters indemnified against in this Section 8, including reasonable fees and disbursements of counsel (before and at trial, in bankruptcy proceedings and in appellate proceedings).

d) Right to Defend, Etc.  If the facts giving rise to any claim for indemnification hereunder shall involve any actual claim or demand by any third person against a Red Cross Indemnified Party or a Seller Indemnified Party (who are referred to hereinafter as an “Indemnified Party”), the indemnifying party shall be entitled to notice of and entitled (without prejudice to the right of any Indemnified Party to participate at its own expense with counsel of its own choosing) to defend or prosecute such claim at its own expense and through counsel of its own choosing if it gives written notice of its intention to do so no later than the time by which the interests of the Indemnified Party would be materially prejudiced as a result of its failure to have received such notice; provided, however, that if the defendants in any action shall include both the indemnifying party and the Indemnified Party and the Indemnified Party shall have reasonably concluded that counsel selected by the indemnifying party has a conflict of interest because of the availability of different or additional defenses to the Indemnified Party, the Indemnified Party shall have the right to select separate counsel to participate in the defense of such action on its behalf, at the expense of the indemnifying party.  The Indemnified Party shall cooperate fully in the defense of such claim and shall make available to the indemnifying party pertinent information under its control relating thereto, but shall be entitled to be reimbursed, as provided in this Section, for all reasonable costs and expenses incurred by it in connection therewith.

e) Limitations on Indemnification Obligations.

i) Escrow.  The Escrow Holdback Account secures the Sellers’ respective indemnification obligations set forth in this Agreement.  Subject to the limitations set forth in this Section 8, Red Cross may recover any Damages it has against the Escrow Holdback Account in accordance with the terms of the Escrow Agreement.  Notwithstanding anything in this Agreement to the contrary, the Sellers shall not have any aggregate indemnification liability pursuant to this Section 8 for breaches of representations and warranties in excess of the amount of the Escrow Amount; provided, however, that this limitation shall not apply in the case of intentional misrepresentation or fraud.

ii) Deductible.  The Sellers (in the aggregate) shall not be liable under this Section 8 for any Damages until the aggregate amount otherwise due the Red Cross Indemnified Parties (in the aggregate) exceeds an accumulated total of Thirty Thousand Dollars ($30,000); provided, however, that this limitation shall not apply in the case of intentional misrepresentation, intentional breaches of covenants, or fraud.  Once the aggregate amount of Damages exceeds such threshold amount, then the Red Cross Indemnified Parties shall have the right to recover all Damages in excess of such threshold, subject to any other limitations provided herein.

iii) Exclusive Remedy. The indemnification provisions of this Section 8 shall be the exclusive remedy of the Parties against any other Party with respect to matters arising under or in connection with this Agreement and the transactions contemplated hereby, other than matters arising under or in connection with the Blood Purchase Agreement or the Testing Agreement, which shall not be covered by this Section 8.  Any claim for indemnification must be made within the one year period following the Closing Date, provided, however, that this limitation shall not apply in the case of intentional misrepresentation, intentional breaches of covenants, or fraud, which such claims may be made until the expiration of the applicable statute of limitations.

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9.             GENERAL.

a) No Brokers. Each of the Parties to this Agreement represents and warrants to the other, that it has not utilized the services of any finder, broker or agent.

b) Waivers. No action taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein, therein and in any document delivered in connection herewith or therewith. The waiver by any Party to this Agreement of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

c) Confidentiality. If the transactions contemplated by this Agreement are not consummated, then each of the Parties to this Agreement agrees to keep confidential and shall not use for its own benefit any of the information (unless in the public domain) obtained from any other Party and shall promptly return to such other Parties all schedules, documents or other written information (without retaining copies thereof) previously obtained from such other Parties.

d) Entire Agreement, Amendment. This Agreement (including the exhibits hereto and all documents and papers delivered pursuant hereto) constitutes the entire agreement, and supersedes all prior

agreements and understandings, oral and written, among the Parties to this Agreement with respect to the subject matter hereof. This Agreement may not be modified or otherwise amended except by an instrument in writing executed by the Parties to this Agreement.

e) Assignability. This Agreement shall not be assignable by any Party to this Agreement without the prior written consent of the other Parties to this Agreement.

f) Further Assurances. The Parties to this Agreement will execute and deliver, or cause to be executed and delivered, such additional or further transfers, assignments, endorsements or other instruments as any Party may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement.

g) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

h) Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

i) Governing Law. The validity, construction and enforcement of, and the remedies under, this Agreement shall be governed in accordance with the laws of the State of California without regard to conflict of law principles thereof.

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j) Construction. The Parties acknowledge and agree that each of them has participated in the negotiation of this Agreement and has been represented by counsel. The Parties agree that any rule of law requiring construction of a document against a Party by reason such Party’s having prepared such document shall not apply to this Agreement.

k) Cost of Enforcement. If any Party engages the services of an attorney or any other third party or in any way initiates legal action to enforce its rights under this Agreement, the non-prevailing party agrees to pay to the prevailing party all costs and expenses incurred by it relating to the enforcement of this Agreement (including reasonable attorneys’ and legal assistants’ fees before, at and after trial and in appellate proceedings).

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been signed by the Parties hereto, all on the date first above written.

THE AMERICAN NATIONAL RED CROSS
By:	/s/ Richard Feliciano
Name:	R. Feliciano for C. Hrouda
Title:	VP for EVP Biomedical Services

HEMACARE CORPORATION
By:	/s/ Pete Van Der Wal
Name:	Pete Van Der Wal
Title:	President, CEO

CORAL BLOOD SERVICES, INC.
By:	/s/ Pete Van Der Wal
Name:	Pete Van Der Wal
Title:	President, CEO

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Exhibits Omitted

From Asset Purchase Agreement

Exhibits

Exhibit A                      –           Assets List

Exhibit A-1                  –           Tangible Asset List

Exhibit B                      –           Escrow Agreement

Exhibit C                      –           Blood Purchase Agreement

Exhibit D                     –           Testing Agreement

Exhibit List

EX-10.1

Exhibit 10.1

`AGREEMENT BY AND BETWEEN

THE AMERICAN NATIONAL RED CROSS,

AND HEMACARE CORPORATION

This blood purchase agreement ("Agreement") is effective as of July 11, 2011 ("Effective Date").  The American National Red Cross ("Red Cross"), desires to purchase from HemaCare Corporation ("Vendor"), and Vendor desires to sell to the Red Cross, certain blood products as described in this Agreement and its attachments.  In consideration of the foregoing, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Red Cross and Vendor (the "Parties") agree as follows:

1.0 Supply and Ordering

1.1 The Vendor will supply the Red Cross with the blood products described in Attachment A ("Blood").  Vendor agrees to sell and Red Cross agrees to purchase at least 7,000 and no more than 12,000 units of Blood during each Contract Year during the Term, with the number of units of Blood within such range in any Contract Year to be determined by mutual agreement of Red Cross and Vendor.  A “Contract Year” means the period commencing on the Effective Date and ending on June 30, 2012, and each period of twelve successive calendar months thereafter.  Red Cross is obligated to purchase no more than 12,000 units of Blood in a Contract Year, and Vendor is obligated to sell no more than 7,000 units of Blood in a Contract Year.  The Blood will meet the specifications set forth in Attachment A ("Specifications").

1.2 The Vendor will provide the Blood in accordance with the standing orders described in Attachment B (each, a "Standing Order"). The Standing Orders will be determined by mutual agreement of Vendor and Red Cross on a calendar quarter basis, in advance of the commencement of the applicable calendar quarter; provided that all Standing Orders for a Contract Year do not provide for less than 7,000 or more than 12,000 units of Blood for the Contract Year.

1.3 Red Cross agrees that it is contracting with Vendor for the supply of Blood on a “take or pay” basis, and that Red Cross shall be obligated to pay for of all units of Blood supplied by Vendor, or which Vendor is ready, willing and able to supply, in accordance with the terms of this Agreement at a price equal to 100% of the per unit Fee (as defined below), regardless of whether Red Cross requires or accepts delivery of Blood.

2.0 Regulations and Antitrust Compliance

2.1 The Parties will comply with applicable laws and industry standards, including without limitation, requirements, regulations, standards, recommendations, specifications, guidelines and directives of the Food and Drug Administration ("FDA"); AABB standards; the Specifications; U.S. economic sanctions; anti-terrorism and anti-money laundering laws; the USA PATRIOT Act; laws administered by the U.S. Treasury Department’s Office of Foreign Assets Control; and Executive Order 13224 ("Regulations").   Neither Party will discriminate against any employee or applicant in connection with this Agreement because of any characteristic protected by the Regulations. The Parties will abide by labor law notice posting requirements.

2.2 Vendor represents and warrants: (i) it has not been excluded from any federal healthcare program or barred or suspended from doing business with the Federal Government; (ii) no child, indentured or forced labor or unauthorized workers will be used in any aspect of the provision of the Blood; (iii) there are no FDA proceedings or other regulatory actions pending or threatened against the Vendor for violations of a Regulation that would prohibit or limit the Vendor's ability to provide the Blood; and (iv) the Blood does not infringe on the rights of third parties.

2.3 The Parties will remain fully independent entities.  Any relationship between the Parties is limited to the sale of Blood by the Vendor to the Red Cross, unless otherwise provided under separate agreement.

3.0 Notifications

3.1 If the Vendor obtains confirmed post-donation information, test results that would require a lookback investigation, invalid test results, or any other information that would render the Blood, or any individual unit of the Blood, unsuitable, the Vendor will immediately inform the Red Cross, in accordance with the Vendor’s standard operating procedures.

3.2 If a regulatory agency orders the Vendor to correct or recall the Blood, then the Vendor will provide the Red Cross immediate notice of the correction or recall. The Vendor will: (a) with respect to Blood impacted by the corrective or recall action that is in Red Cross’ inventory (not yet sold to its customers), allow the Red Cross to return such Blood and provide a full refund of the Fee (as defined in Section 5.1) the Red Cross paid for the Blood, as well as shipping and other documented recall costs incurred by the Red Cross in effecting the recall and returning the Blood; and (b) with respect to Blood impacted by the corrective or recall action that already has been sold by Red Cross to its customers, allow the Red Cross or its customers to return such Blood and provide Red Cross a full refund of the Fee (as defined in Section 5.1) the Red Cross paid for the Blood, as well as Red Cross’ internal costs that were incurred in the sale of such Blood to its customers, and all shipping and other documented recall costs incurred by the Red Cross or its customers in effecting the recall and returning the Blood.

3.3 If the Blood is unsuitable for transfusion or not in compliance with the Regulations, the Red Cross will notify the Vendor of the need to return the Blood, and obtain from Vendor a return authorization confirmation before returning such Blood.  Vendor will make arrangements for the return of such Blood to Vendor’s facility at Vendor’s cost, which may include Vendor picking up the Blood or authorizing Red Cross to ship the Blood to Vendor.  Vendor will credit Red Cross the Fee for all Blood returned in accordance with this Agreement upon Vendor’s receipt of such returned Blood.

3.4 The Red Cross will notify the Vendor of any recipient adverse reaction that appears to be related to the Vendor’s collection, manufacturing, storage or distribution of the Blood.

3.5 The Vendor will immediately notify the Red Cross if it receives adverse findings during a regulatory inspection and such findings: (a) revoke regulatory approval of the Blood, or (b) will negatively impact the Vendor's ability to provide the Blood.

3.6 The Vendor will provide Red Cross with at least thirty (30) days advance written notice if the Blood will no longer meet the Specifications.

3.7 The Vendor will provide the following notifications to the Red Cross:  (a) within three calendar days if Blood collected from a donor who tested negative at the time of donation but tests reactive for evidence of HIV or HCV infection on a later donation or who is determined to be at increased risk for transmitting HIV or HCV infection; (b) within forty-five (45) days of the test, of the results of the supplemental (additional, more specific) test for HIV or HCV, as relevant, or other follow-up testing required by the FDA; and (c) as set forth in 21 C.F.R 610.48(b)(3).

4.0 Delivery, Inspection and Acceptance

4.1 The Vendor will deliver the Blood in accordance with Attachment B.

4.2 The Red Cross will accept or reject Blood in accordance with Attachment B.

5.0 Fees and Payment

5.1 The fees for the Blood are set forth in Attachment B (each, a "Fee").  Fees will remain firm and fixed during the Term (as defined in Section 7.1).

5.2 Vendor will submit invoices from time to time following acceptance of Blood (one original and one copy) to 600-A Forest Point Circle, Charlotte, NC 29273.  Each invoice must include the Vendor's name and address, Agreement number, description of the Blood (item number), quantity, delivery date, point of delivery, and payment terms (including discounts, if any).

5.3 Subject to Section 4.2, the Red Cross will make payment to Vendor within thirty (30) days of the receipt of an accurate invoice.

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6.0 Insurance and Indemnity

6.1 Vendor shall defend, indemnify and hold harmless Red Cross from and against any and all third party claims, damages, liabilities, causes of action and costs (including reasonable fees and disbursements of counsel) in respect of bodily injury, death or property damage that are incurred by Red Cross arising from the collection, testing or supply to Red Cross of Plasma, except to the extent the cause of such loss is the negligence or willful misconduct of Red Cross.

Red Cross shall defend, indemnify and hold harmless Vendor from and against any and all third party claims, damages, liabilities, causes of action and costs (including reasonable fees and disbursements of counsel) in respect of bodily injury, death or property damage that are incurred by Vendor arising from the negligent acts or omissions of Red Cross in the use of Blood supplied by Vendor, except to the extent the cause of such loss is the negligence or willful misconduct of Vendor.

Red Cross and Vendor each acknowledge and agree that each shall inform the other of any third party claim which would implicate the foregoing indemnifications as soon as it becomes aware of such claim.

7.0 Term and Termination

7.1 This Agreement will begin on the Effective Date and continue until June 30, 2016 (“Initial Term”), unless terminated earlier as provided herein.  This Agreement will automatically be extended beyond the Initial Term for one additional two-year term (“Extension Term”) unless terminated according to the termination and renewal provisions of this Agreement. Thereafter, this Agreement shall be automatically extended for additional terms of one-year each (each, a “Year Term”) subject to the termination and renewal provisions described herein.  The Initial Term and any Extension Term and Year Term is collectively referred to herein as the "Term".

7.2 Red Cross may provide notice of its intent not to exercise any Extension Term or Year Term and such notice shall act to terminate this Agreement at the end of the then-current term so long as such notice is tendered no fewer than 12 months prior to the beginning of the Extension Term or Year Term in question.  For example, the notice not to exercise extension of the first Extension Term must be given prior to the end of year four of the Initial Term.  Such notice not to extend the second Extension Term must be given prior to the end of the Initial Term and so forth.

7.3 Either Party may terminate this Agreement for cause if: (a) the other fails to fulfill an obligation under this Agreement ("Breach") and the Breach continues for a period of thirty (30) days after the non-breaching Party sends written notice of the Breach, (b) any Regulation is amended in a way that precludes a Party from performing its obligations under this Agreement, effective on the effective date of the amended Regulation; or (c) such Party ceases to operate or otherwise function as a business.

7.4 The Red Cross may immediately terminate this Agreement if: (a) the Vendor can no longer supply the Blood in accordance with the Specifications, or (b) the FDA takes any action that would prevent the Vendor from being able to continue to supply Blood for a period of ninety (90) consecutive days.  In the case set forth in (a), the Red Cross may return its existing inventories of Blood for a refund of the Fees paid by the Red Cross.

7.5 Vendor may terminate this Agreement for convenience so long as it tenders notice of intent to terminate this agreement six (6) months prior to the date of intended termination.

7.5 Unless otherwise provided herein, the following provisions will survive expiration or termination of this Agreement: Sections 3.1, 3.2, 3.4, 7.5, 8.1 through 8.5 and 8.9, and, Article 6.0.

8.0 Additional Clauses

8.1 Confidentiality: Each Party will maintain the content of this Agreement, including its attachments, as confidential.  Neither Party will make disclosures prohibited by this Agreement unless required by law, in which case, the disclosing Party will provide the other with advance notice of disclosure.

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8.2 Name and Marks: Neither Party will use the name, logo or marks of the other without prior written authorization for each use.

8.3 Governing Law: This Agreement is governed by the laws of the District of Columbia without giving effect to its choice or conflict of law rules.

8.4 Notices: The Parties will provide the notices required in this Agreement by a recognized overnight delivery service that provides proof of delivery, to the representatives and addresses in the signature block.

8.5 Interpretation: The definition of "Agreement" includes its preamble and attachments.  All references to 'days' in this Agreement are to calendar days unless otherwise provided herein.   If there is a conflict between this Agreement and any unreferenced attachment, order, request for proposal, proposal, invoice or verbal agreement, this Agreement governs. This Agreement is the entire understanding for the supply of Blood and replaces all prior agreements between the Parties for Blood.  No single remedy in this Agreement is exclusive of any other remedy in the Agreement.  The rights, warranties and remedies in this Agreement are not exclusive and are in addition to other rights and remedies provided by law.

8.6 Modification and Assignment: This Agreement may not be modified, assigned or subcontracted unless the Parties agree in writing.

8.7 Waiver and Severability: No waiver of any term of this Agreement is a waiver of any other term of this Agreement and no waiver of any breach or duty under this Agreement is a waiver of any other breach or duty.  If a provision is unenforceable, the remaining provisions will remain in full force and effect. If applicable, the Parties will negotiate an enforceable provision that is similar to the removed provision.

8.8 Disputes: The Parties will attempt in good faith to resolve any dispute arising out of or relating to this Agreement by negotiation.  If negotiation is unsuccessful, the Parties may resolve the dispute by mediation.  If the dispute is not resolved by mediation, or if the Parties are unwilling to engage in mediation, the Parties will resolve the dispute by panel arbitration conducted in accordance with the CPR Institute for Dispute Resolution Rules for Non-Administered Arbitration.  The place of arbitration is the Red Cross's place of business as set forth in the signature block.  The panel will consist of three arbitrators, one appointed by each Party, and the third arbitrator appointed by the two chosen arbitrators (the "Panel").  The Panel may, at its discretion, provide for discovery by the Parties, not to exceed sixty (60) days from the date of filing of the notice of arbitration.  The Parties will equally split costs and expenses of arbitration, including arbitrators’ fees but not attorneys’ fees.  The Panel may not award punitive or exemplary damages.  The arbitration is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.  The decision of the Panel is final and binding and judgment upon the Panel’s award may be entered by any court of competent jurisdiction.

8.9 Record Access:  Vendor will provide the Red Cross and its agents access to accounts, records, and documents related to this Agreement upon reasonable notice and during normal business hours, for the longer of two years after the Term ends, or, as required by the Regulations.   In addition, Vendor will provide the Red Cross or its agents, and the FDA, access to all documents relating to the Blood upon reasonable advance notice (unless such notice is not possible due to the demand of a regulatory agency) and during business hours.  This provision will survive expiration or termination of this Agreement.

8.10 Relationship of Parties: This Agreement does not create any association, agency, partnership, employment relationship or joint venture between the Parties.

8.11 Tax Exempt: The Vendor will not charge the Red Cross, a nonprofit, 501(c)(3) corporation, any sales tax.  Upon request, the Red Cross will furnish exemption certificates.

8.12 Vendor Inspection System: The Vendor will maintain an inspection and testing system of the Blood.

8.13 Good Faith Negotiation: The Parties agree to negotiate in good faith following execution of this agreement to agree on fee-based systems by which Red Cross will provide Platelet Quality Control Services, Bacterial Detection Services, and supply boxes to Vendor for the packing and delivery of Blood to Red Cross hereunder.  Until the parties are able to agree on the terms of such agreement, Vendor will use its own boxes to deliver Blood hereunder, and Red Cross agrees to return such boxes to Vendor in the ordinary course of business and to reimburse Vendor for any boxes that are lost or damages by Red Cross or while in Red Cross’ possession or control.  In addition, Vendor agrees to apply for a license from the FDA that would enable Vendor to sell single donor platelets no later than December 31, 2011, and following the submission of such application Vendor agrees to use its commercially reasonable efforts to diligently pursue the attainment of such license, including by promptly responding to FDA’s comments on such application or requests for additional information.

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8.14 Force Majeure.  Neither Red Cross nor Vendor shall be deemed to be in default under this Agreement on account of delays in delivery or in the performance of any other act to be performed by Red Cross or Vendor under this Agreement due to any of the following causes:  Acts of God or public enemies, civil war, insurrections or riots, fires, floods, explosions, earthquakes or serious accidents, epidemics or quarantine restrictions, any act of government, governmental priorities, or due to any other cause to the extent it is beyond Red Cross’ or Vendor’s control or not occasioned by Red Cross’ or Vendor’s fault or negligence.  Promptly upon the occurrence of any event under this Section 8.14 that may result in a delay in delivery of purchase of Blood, Red Cross or Vendor, as the case may be, shall give notice to other party, which such notice shall identify such occurrence and specify the period of delay which may reasonably be expected therefrom.  Under all such circumstances, Red Cross or Vendor, as the case may be, shall use all commercially reasonable efforts to correct such delays.

[INTENTIONALLY BLANK]

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The Parties, acting through their duly authorized officers, have executed and delivered this Agreement as of the Effective Date.

THE AMERICAN NATIONAL RED CROSS

Signature:	/s/ Richard Feliciano
Print Name:	R. Feliciano for C. Hrouda
Title:	VP For EVP Biomedical Services
Address:	2025 E. St. NW
	Washington, DC 2006

HEMACARE CORPORATION

Signature:	/s/ Pete van der Wal
Print Name:	Pete van der Wal
Title:	President and CEO
Address:	15350 Sherman Way, Suite 350
	Van Nuys, CA 91406

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ATTACHMENT A

BLOOD SPECIFICATIONS

For the purposes of this Agreement “Blood” shall mean ISBT labeled single donor platelets, meeting the following specifications:

1. All Blood will be delivered to Red Cross F.O.B. Vendor’s facility in Van Nuys, California with a minimum of 3 days prior to expiration measured at the time of delivery.  Vendor shall not be responsible for any delays by Red Cross in accepting delivery or taking physical possession of Blood, and if such delays result in Blood having less than a minimum of 3 days prior to expiration at the time Red Cross takes physical possession of the Blood, Red Cross shall nevertheless be obligated to accept such Blood.  In addition, in instances where the Vendor engages Red Cross to perform testing, the foregoing 3-day deadline will be enforceable only when Red Cross has delivered test results in a timeframe consistent with those articulated or defined in any agreement for testing services between the Red Cross and Vendor. The Parties agree that the three-day deadline will be unconditional when testing is conducted by any third party.

2. All Blood will satisfy applicable guidelines and directives of the Food and Drug Administration (FDA); American Association of Blood Bank (AABB) standards and any additional applicable laws and industry standards.  All Blood will be bacteria tested by FDA approved method.

3. Blood will be a minimum of 75% from male donors to minimize TRALI risk.  Vendor shall deliver Blood shipments each calendar quarter that contain on average at least 15% Rh negative components, and Vendor also shall use its commercially reasonable efforts to deliver individual shipments in accordance with this same specification.  The Parties acknowledge that the nature of blood services makes immediate, strict compliance with the specification in this paragraph 3 of Attachment A difficult to achieve immediately.  Therefore, Red Cross will refrain from strictly enforcing such provisions for a period of 12 months from the execution of this Agreement.

Import volume should be substantially in accordance with the following collection percentage by day of week of collection.

Monday	--	18%
Tuesday	--	13%
Wednesday	--	10%
Thursday	--	10%
Friday	--	14%
Saturday	--	17%
Sunday	--	18%

Example of 140 products per week:

Collection Day	Shipment Day	Percent	Volume
Monday	Wednesday	18%	25
Tuesday	Thursday	13%	18
Wednesday	Friday	10%	14
Thursday	Saturday	10%	14
Friday	Sunday	14%	20
Saturday	Monday	17%	24
Sunday	Tuesday	18%	25

The parties acknowledge and agree that the specifications expressed in this paragraph 3 of this Attachment A will be subject to change based on changes in the prevailing regulatory environment and market conditions, and that the specifications expressed herein may be modified by mutual agreement following good-faith negotiations between the Parties from time to time during the term of this Agreement.

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ATTACHMENT B

FEES AND DELIVERY TERMS

FEE PER PRODUCT

· For the first two Contract Years of the Initial Term (until June 30, 2013), the price per unit of Blood shall be $[l]1.

· For the remaining portion of the Initial Term (from July 1, 2013 until June 30, 2016), the Extension Term and any Year Term, the price per unit of Blood shall be determined once per calendar year and shall apply to all sales of Blood made during the applicable calendar year, and shall be an amount equal to [l]1% of Red Cross’ National Average Selling Price of the Blood for the immediately preceding calendar year, as determined by Red Cross in a manner consistent with historical practice. Red Cross shall provide Vendor with such information as Vendor reasonably requests to confirm Red Cross’ determination of the National Average Selling Price for a particular period.  Red Cross shall inform Vendor of the applicable price per unit of Blood for a calendar year no later than the 15th day following commencement of the calendar year.  Notwithstanding the foregoing, if the National Average Selling Price of the Blood for a calendar year is at least 10% greater or less than the National Average Selling Price of the Blood for the immediately preceding calendar year, then the price per unit of Blood shall thereafter be determined once per calendar quarter and shall apply to all sales of Blood made during the applicable calendar quarter, and shall be an amount equal to [l]1% of Red Cross’ National Average Selling Price of the Blood for the immediately preceding calendar quarter.  The change from calendar year to calendar quarter pricing shall commence with the first calendar quarter of the year in which the 10% price deviation has occurred, by reference to the National Average Selling Price of the Blood for the fourth quarter of the immediately preceding calendar year.

· If Red Cross requests that Vendor perform CMV Testing for a unit of Blood, Vendor will perform such test and Red Cross shall pay to Vendor, in addition to the invoiced price for such Blood, an amount per unit equal to Vendor’s third party out of pocket cost in obtaining such testing plus one dollar ($1.00).

· If Red Cross requests that Vendor perform irradiation of Blood using the irradiation machine sold by Vendor to Red Cross and leased back by Red Cross to Vendor, Vendor will perform such irradiation services and Red Cross shall pay to Vendor, in addition to the invoiced price for such Blood, an amount per unit equal to $28.00.  Vendor shall have no obligation to perform irradiation services if the aforementioned irradiation machine is not available to Vendor or is otherwise not operational at the time of Red Cross’ request for such services.

STANDING ORDERS:

1. Prior to the commencement of a calendar quarter, Vendor and Red Cross will confer in good faith to establish projections for the volume of Blood to be delivered by Vendor to Red Cross during the applicable calendar quarter, which projections may include the volume of Blood and other Blood characteristics the parties believe that that Red Cross will require on each day of the week during the applicable calendar quarter.  The projections will be finalized in advance of commencement of the calendar quarter, will constitute a Standing Order for the purchase and sale of Blood during the calendar quarter, and Vendor will use its commercially reasonable efforts to deliver Blood to Red Cross in accordance with the Standing Order.  Red Cross agrees that Vendor’s failure to deliver Blood on a given day in accordance with a Standing Order shall not constitute a default of Vendor’s obligations under the Standing Order, provided that Vendor otherwise delivers Blood substantially in accordance with the Standing Order during the calendar quarter.  The parties may mutually agree on modifications to a Standing Order during a particular calendar quarter.

1 Terms represented by this symbol are considered confidential.  These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission (“SEC”) and have been filed separately with the SEC.

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2. Vendor acknowledges that the Standing Orders will be determined in part based on the requirements of the Red Cross National Inventory Management System, and will work with Red Cross on establishing projections based on Red Cross’ requirements per the National Inventory Management System.

3. Vendor will include the order number, as provided by the Red Cross, on all packing slips, packaging, delivery receipts and invoices.

4. In all events, the Standing Orders for a Contract Year will provide for the delivery of at least 7,000 units of Blood and no more than 12,000 units of Blood, unless otherwise agreed to in writing by Vendor and Red Cross.

DELIVERY TERMS:

1. Vendor will deliver Blood that is the subject of a Standing Order to Red Cross F.O.B. Vendor’s facility in Van Nuys, California.  Title and risk of loss or damage to Blood shall pass to Red Cross upon delivery by Vendor of Blood to Red Cross (or its carrier) at Vendor’s facility.  Vendor will notify Red Cross, pursuant to procedures Vendor and Red Cross establish from time to time, when Vendor has delivered Blood to Red Cross at Vendor’s facility.

2. Red Cross shall reject Blood as non-conforming within twenty-four (24) hours after such Blood is delivered by Vendor to Red Cross as provided in clause 1 above (i.e., available at Vendor’s facility in Van Nuys, CA), regardless of when Red Cross takes physical possession of the Blood.  Any Blood not rejected as non-conforming within such period shall be deemed accepted by Red Cross.  The parties acknowledge that Blood has a very limited shelf life, and that such acceptance procedures are reasonable under the circumstances.

3. Vendor will package the Blood as required by the Regulations in boxes with sufficient cushioning to insure an intact and undamaged delivery.

4. Vendor will label shipments of Blood as follows in accordance with such reasonable specifications as provided by Red Cross from time to time.

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EX-99.1

Exhibit 99.1

N E W S   R E L E A S E

For Immediate Release

Contact:  HemaCare Corporation

Pete van der Wal, Chief Executive Officer

877-310-0717

www.hemacare.com

RELEASE DATE:  July 11, 2011

HEMACARE SELLS RED BLOOD CELL COLLECTION

OPERATION ASSETS TO AND ENTERS INTO A MULTI-YEAR PLATELET SUPPLY

AGREEMENT WITH THE AMERICAN RED CROSS

LOS ANGELES - HemaCare Corporation (OTCBB:HEMA) announced today that it has reached a definitive agreement to sell certain assets of its Blood Services operations to the American Red Cross.  Under the terms of the sale, which closed today, HemaCare sold its red blood cell collection operation assets to the American Red Cross.  The sale does not include HemaCare’s platelet collection business.

Pete van der Wal, HemaCare’s Chief Executive Officer, said, “This transaction will enable us to better focus on our most profitable growth opportunities, while also providing us with cash to support geographic expansion of our rapidly growing cell therapy collection capabilities.”

Under the terms of the agreement, the American Red Cross acquired HemaCare’s red blood cell collection operation assets in Los Angeles and Maine, consisting primarily of equipment, vehicles and business records, for an aggregate purchase price of $3.0 million plus an additional amount equal to the value of HemaCare’s inventory of blood products on the closing date.  The parties also entered into a multi-year platelet purchase agreement pursuant to which HemaCare will sell to the American Red Cross a minimum of 7,000 units of single donor platelets per contract year.

As a result of the sale, HemaCare will effect a reduction in force of approximately 100 employees in California and Maine, and HemaCare will incur a third quarter charge of approximately $900,000 associated with this action.

HemaCare will hold an investor call to discuss the sale transaction at 4:30 p.m. Eastern Time; 1:30 p.m. Pacific Time on Monday, July 11, 2011.  To attend the call, please dial 877-317-6789 toll free or toll/international at 412-317-6789 approximately 10 minutes prior to the conference start time and ask for the HemaCare investor call/confirmation number 00451997.

15350 Sherman Way, Suite 350, Van Nuys, CA  91406     ·      Phone 818.226.1968     ·      Fax 818.251.5300

A replay of the investor call will be available from 7:30 p.m. Eastern Time; 4:30 p.m. Pacific Time from July 11, 2011 through 11:59 p.m. Eastern Time; 8:59 p.m. Pacific Time July 18, 2011 To listen to the replay please call 877-870-5176 toll free or toll/international 858-384-5517.  Use the replay PIN number:  00451997.

About HemaCare Corporation

HemaCare Corporation is a blood services company serving healthcare providers and the scientific community.  HemaCare and subsidiaries provide human-derived biological products, perform therapeutic apheresis services, and facilitate the implementation of cellular therapy-based trials.

This press release contains “forward-looking statements” under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended).  Statements herein that are not historical facts are forward-looking statements pursuant to the safe harbor provisions referenced above. You may also identify forward-looking statements by use of the words “anticipates,” “expects,” “intends,” “plans” and similar expressions.  The forward-looking statements in this press release include statements about the growth of HemaCare’s cell therapy collection capabilities and the minimum amount of single donor platelets that HemaCare may sell to the American Red Cross under the parties’ blood supply agreement.  Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified.  Such risks and uncertainties include, without limitation, the risks and uncertainties discussed from time to time in the documents HemaCare files with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlined in the forward-looking statements contained herein.  The Company undertakes no obligation to update any of these forward-looking statements to reflect actual results or events or circumstances after the date hereof.

15350 Sherman Way, Suite 350, Van Nuys, CA  91406     ·      Phone 818.226.1968     ·      Fax 818.251.5300

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

On July 11, 2011, HemaCare Corporation (the “Company”) and its wholly-owned subsidiary, Coral Blood Services, Inc. (collectively, the “Sellers”), completed the sale of the Sellers’ red blood cell collection operation assets (the “Assets”) in California and Maine to The American National Red Cross (the “Buyer”) pursuant to the terms of an Asset Purchase Agreement entered into by the parties on July 11, 2011 (the “Asset Purchase Agreement”).  The Assets included automobiles and equipment, finished goods and work-in-process inventory of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

The following unaudited pro forma financial statements of HemaCare Corporation are presented to comply with Article 11 of Regulation S-X and follow SEC prescribed guidelines.  The unaudited pro forma financial statements do not purport to present what the Company’s results would have been had the disposition actually occurred on the dates presented or to project the Company’s results from operations for any future period.  The prescribed guidelines limit pro forma adjustments to those that are directly attributable to the disposition on a factually supportable basis.  Further, the guidelines do not allow for the pro forma effect of cost saving actions that could have been taken by management if the sale of assets had occurred in prior periods.

The unaudited pro forma condensed balance sheet as of March 31, 2011 presents the pro forma effects as if the sale had occurred on March 31, 2011.  The unaudited pro forma consolidated statement of operations for the three months ended March 31, 2011 presents the pro forma effects as if the transaction occurred on January 1, 2011.  The unaudited pro forma consolidated statement of operations for the year ended December 31, 2010 presents the pro forma effects as if the transaction occurred on January 1, 2010.

These unaudited pro forma financial statements and accompanying notes should be read together with the Company’s audited consolidated financial statements and the accompanying notes, as of and for the fiscal year ended December 31, 2010, filed on Form 10-K on March 23, 2011, and the Company’s unaudited consolidated financial statements for the three months ended March 31, 2011, filed on Form 10-Q on May 11, 2011.

HEMACARE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2011
				Pro Forma
	As Reported			Adjustment (B)			Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	2,194,000		$	2,475,000		$	4,669,000
Restricted cash		660,000						660,000
Accounts receivable, net of allowance for								-
doubtful accounts of $95,000		2,761,000						2,761,000
Product inventories and supplies		721,000			(262,000	)		459,000
Prepaid expenses		308,000						308,000
Assets held for sale		246,000						246,000
Other receivables		171,000			575,000			746,000
Total current assets		7,061,000			2,788,000			9,849,000
Plant and equipment, net of accumulated
depreciation and amortization of $7,887,000		2,876,000			(187,000	)		2,689,000
Other assets		146,000						146,000
Total assets	$	10,083,000		$	2,601,000		$	12,684,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	1,860,000					$	1,860,000
Accrued payroll and payroll taxes		896,000			900,000			1,796,000
Other accrued expenses		261,000			53,000			314,000
Current portion of capital lease		17,000						17,000
Liabilities related to assets held for sale		2,142,000						2,142,000
Total current liabilities		5,176,000			953,000			6,129,000
Deferred rent		512,000						512,000
Long term portion of capital lease		71,000						71,000
Shareholders' equity:
Common stock, no par value - 20,000,000 shares authorized,
9,712,948 issued and outstanding		16,321,000						16,321,000
Accumulated deficit		(11,997,000	)		1,648,000			(10,349,000	)
Total shareholders' equity		4,324,000			1,648,000			5,972,000
Total liabilities and shareholders' equity	$	10,083,000		$	2,601,000		$	12,684,000
		-			-			-
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements

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HEMACARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended March 31, 2011
					Pro Forma			Pro Forma
		As Reported			Adjustment (A)			Adjustment (B)			Pro Forma
Revenue
Blood services		$	4,837,000		$	(3,431,000	)	$	-		$	1,406,000
Therapeutic services			2,149,000			-			-			2,149,000
	Total revenue		6,986,000			(3,431,000	)		-			3,555,000
Operating costs and expenses
Blood services			4,657,000			(2,746,000	)		-			1,911,000
Therapeutic services			1,462,000			-			-			1,462,000
	Total operating costs and expenses		6,119,000			(2,746,000	)		-			3,373,000
	Gross profit		867,000			(685,000	)		-			182,000
General and administrative expenses			1,235,000			(182,000	)		953,000			2,006,000
Loss from operations			(368,000	)		(503,000	)		(953,000	)		(1,824,000	)
Provision for income taxes			10,000			-			-			10,000
Loss from continuing operations			(378,000	)		(503,000	)		(953,000	)		(1,834,000	)
(Loss) income from discontinued operations			(12,000	)		-			2,601,000			2,589,000
Net (loss) income		$	(390,000	)	$	(503,000	)	$	1,648,000		$	755,000
(Loss) income per share
Basic and diluted
Continuing operations		$	(0.04	)	$	(0.05	)	$	(0.10	)	$	(0.19	)
Discontinued operations		$	(0.00	)	$	-		$	0.27		$	0.27
Total		$	(0.04	)	$	(0.05	)	$	0.17		$	0.08
Weighted average shares outstanding-basic			9,712,948			9,712,948			9,712,948			9,712,948
Weighted average shares outstanding-diluted			9,712,948			9,712,948			9,712,948			9,712,948
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements

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HEMACARE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Year Ended December 31, 2010
					Pro Forma			Pro Forma
		As Reported			Adjustment (A)			Adjustment (B)			Pro Forma
Revenue
Blood services		$	22,366,000		$	(15,676,000	)	$	-		$	6,690,000
Therapeutic services			7,886,000			-			-			7,886,000
	Total revenue		30,252,000			(15,676,000	)		-			14,576,000
Operating costs and expenses
Blood services			20,244,000			(12,310,000	)		-			7,934,000
Therapeutic services			5,631,000			2,000			-			5,633,000
	Total operating costs and expenses		25,875,000			(12,308,000	)		-			13,567,000
	Gross profit		4,377,000			(3,368,000	)		-			1,009,000
General and administrative expenses			5,183,000			(907,000	)		960,000			5,236,000
Loss from operations			(806,000	)		(2,461,000	)		(960,000	)		(4,227,000	)
Benefit from income taxes			(60,000	)		-			-			(60,000	)
Loss from continuing operations			(746,000	)		(2,461,000	)		(960,000	)		(4,167,000	)
(Loss) income from discontinued operations			(50,000	)		-			2,682,000			2,632,000
Net (loss) income		$	(796,000	)	$	(2,461,000	)	$	1,722,000		$	(1,535,000	)
(Loss) income per share
Basic and diluted
Continuing operations		$	(0.07	)	$	(0.25	)	$	(0.10	)	$	(0.42	)
Discontinued operations		$	(0.01	)	$	-		$	0.27		$	0.26
Total		$	(0.08	)	$	(0.25	)	$	0.17		$	(0.15	)
Weighted average shares outstanding-basic			9,968,120			9,968,120			9,968,120			9,968,120
Weighted average shares outstanding-diluted			9,968,120			9,968,120			9,968,120			9,968,120
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements

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HemaCare Corporation

Notes to Unaudited Pro Forma Consolidated Financial Statements

Note 1—Basis of Presentation

On July 11, 2011, HemaCare Corporation (the “Company”) and its wholly-owned subsidiary, Coral Blood Services, Inc. (collectively, the “Sellers”), completed the sale of the Sellers’ red blood cell collection operation assets (the “Assets”) in California and Maine to The American National Red Cross (the “Buyer”) pursuant to the terms of an Asset Purchase Agreement entered into by the parties on July 11, 2011 (the “Asset Purchase Agreement”).  The Assets included automobiles and equipment, finished goods and work-in-process inventory of blood products, a trademark and books and records relating to blood drive sponsors and blood donors.

The unaudited proforma consolidated balance sheet as of March 31, 2011 presents pro forma effects of the transaction as if the sale had occurred on March 31, 2011.  The unaudited pro forma consolidated statement of operations for the three months ended March 31, 2011 presents pro forma effects as if the transaction had occurred on January 1, 2011.  The unaudited pro forma statement of operations for the fiscal year ended December 31, 2010 presents the pro forma effects as if the sale had occurred on January 1, 2010.

Note 2—Notes Regarding the Unaudited Pro Forma Adjustments

(A) The pro forma adjustments for the period ending March 31, 2011 eliminate the operations relating to the assets sold as if the transaction had occurred on January 1, 2011.  The pro forma adjustments for the period ending December 31, 2010 eliminate the operations relating to the assets sold as if the transaction had occurred on January 1, 2010.

(B) The pro forma adjustments present the effects of the transaction as follows:

Cash received at closing	$    2,475,000
Cash held in escrow	$       275,000
Remainder of cash receivable within 90 days of closing	$       250,000
Cash receivable for inventory at closing	$         50,000
Inventory sale and write down	$    (262,000)
Accrued employee separation expenses	$    (900,000)
Accrued legal fees	$      (53,000)
Value of fixed assets sold at closing	$    (187,000)
Gain from discontinued operations	$ (1,648,000)

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