UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF NEW YORK
IN RE: CHAPTER 11
CELLULAR PRODUCTS, INC. 94-13415 K
NOTICE OF MOTION REGARDING SALE OF
ASSETS PURSUANT TO 11 U.S.C. SECTION 363
AND RULES 6004(a) and (c) and
2000 (a) and (c) OF THE RULES
OF BANKRUPTCY PROCEDURE
PLEASE TAKE NOTICE that Cellular Products, Inc., (the
"Debtor"), by and through their attorneys, Aaron, Dautch, Sternberg
& Lawson, will move before this Court for an Order authorizing the
Debtor to sell assets, which constitute property of the estate,
pursuant to 11 U.S.C. Section 541, pursuant to an Asset Purchase
Agreement entered into between the Debtor and Hemagen Diagnostics
Inc. dated August 20th, 1996, and amendment dated August 26th,
1996, which hearing will be conducted and held on the 24th day of
September, 1996, at 11 o'clock in the forenoon or as soon
thereafter as counsel can be heard. A copy of the debtor's motion
and the aforementioned Agreement are on file with the Court. The
proposed sale is in accordance with 11 U.S.C. Section 363(f) and
proposes to sell, transfer, convey all assets, free and clear of
any and all liens, claims or encumbrances, which liens, claims or
encumbrances will attach to the proceeds to the extent applicable.
The Court will subsequently on the 3rd day of October, 1996 at
10:00 o'clock in the forenoon, entertain and consider such higher
and better offers as may be submitted to the debtor pursuant to
such terms as approved and set by the court at the September 24th,
1996 hearing.
PLEASE TAKE NOTICE that any objection must be filed with this
court and served upon Aaron, Dautch, Sternberg & Lawson, attorneys
for the debtor, 500 Convention Tower, Buffalo, New York, 14202, on
or before the 17th day of September, 1996.
DATED: August 27th, 1996
Respectfully submitted:
/s/ William E. Lawson, Esq.
_______________________________
William E. Lawson, Esq.
Aaron, Dautch, Sternberg
and Lawson
500 Convention Tower
Buffalo, New York 14202
716-854-3015
To All Creditors and Parties in Interest
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF NEW YORK
IN RE: CHAPTER 11
CELLULAR PRODUCTS, INC. 94-13415 K
MOTION FOR APPROVAL OF SALE OF
PROPERTY OF THE ESTATE PURSUANT
TO 11 U.S.C. SECTION 363 (f)
TO: MICHAEL J. KAPLAN
United States Bankruptcy Judge
CELLULAR PRODUCTS, INC. (the "Debtor"), by its attorneys,
Aaron, Dautch, Sternberg & Lawson, in support of its motion for
approval of sale of property of the estate pursuant to 11 U.S.C.
Section 363, hereby represents as follows:
1. The debtor filed a petition under Chapter 11 of the United
States Bankruptcy Code on November 23rd, 1994, and has been
operating as a debtor-in-possession in accordance with 11 U.S.C.
Section 1108.
2. The Court has jurisdiction to hear and determine this
motion pursuant to 28 U.S.C. Section 1334 and a general order of
reference entered by the District Court for the Western District of
New York in accordance with 28 U.S.C. Section 157. This is a core
proceeding pursuant to 28 U.S.C. Section 157(b). On or about
August 20th, 1996, the Debtor, as Seller, entered into an Asset
Purchase Agreement (the "Asset Purchase Agreement") with Hemagen
Diagnostics, Inc. ("Hemagen") as Buyer, pursuant to which the
Debtor will sell all of its assets ("assets") as set forth in the
attached agreement dated August 20th, 1996 and amendment dated
August 26, 1996. Since the filing of the Chapter 11 petition, the
debtor has entertained various offers of purchase with regard to
its assets after exchange of confidentiality agreement and after
receiving proof of financial stability from the offerees. After
considerable dialogue and negotiations, the debtor determined that
acceptance of the Hemagen offer is in the best interest of the
estate and creditors in this case.
3. In light of the substantial time and effort the Debtor's
directors have been forced to expend with regard to the various
suitors interested in the purchase of the debtor, they have been
hard pressed to meet their daily operating obligations as well as
their efforts to increase sales and market product. This, to a
degree, has been compounded by the resignation of the former CEO of
the corporation whose duties have fallen on the shoulders of the
remaining directors, Michael Durski and James Hengst. Further, the
corporation is being pressured with regard to the administrative
loan balance, which loan had been previously approved by this
court. Such note is a demand note which appears will be shortly
called which would put severe financial pressure on the Debtor.
Further, the Debtor, without influx of capital which it
anticipated, as a result of its original plan is short of that cash
that it anticipated to cover operating expenses. In addition,
further delay results in additional professional fees which would
seriously erode debtor's assets, and therefore, it is necessary to
expedite approval of the terms of the Asset Agreement by proceeding
in accordance with 11 U.S.C. Section 363 rather than undertaking a
much lengthier procedure necessarily involved in seeking approval
of a plan through confirmation of a plan of liquidation in
accordance with the provisions of 11 U.S.C., 1127 ET. Seg.
4. Upon approval and consummation of the sale of the Assets,
in accordance with the Asset Purchase Agreement, the debtor shall
forthwith file a plan of liquidation and disclosure statement
providing for a distribution of the proceeds realized from the
proposed instant sale.
5. Upon information and belief, the Debtor is current with
regard to all tax obligations and therefore there are not any
possible liens pending in favor of the New York State Department of
Taxation and Finance or the Internal Revenue Service.
6. The Asset Purchase Agreement when consummated, generates
substantial funds for the Debtor's estate, which after payment of
the Secured Creditors, professional fees, and repayment of the
outstanding administrative loan, will permit the debtor to fashion
a disclosure statement and plan of liquidation resulting in an
approximate 30 percent dividend to the general unsecured creditors,
payable at closing approximately one-half of such dividend and the
balance one year from the date of closing.
WHEREFORE, the debtor respectfully requests an Order of this
court approving the sale of its assets according to the terms of
the Asset Purchase Agreement attached hereto, free and clear of the
interest of claims, security interest, liens or encumbrances, which
to the extent applicable, will be asserted against proceeds
allotted to any such encumbered asset or to approve such materially
higher and better offers which may be submitted by qualified
parties as may be received by the debtor, along with such other and
further relief as may be appropriate.
DATED: August 27th, 1996
AARON, DAUTCH, STERNBERG & LAWSON
By /s/ William E. Lawson
________________________________
William E. Lawson
500 Convention Tower
Buffalo, New York 14202
HEMAGEN
August 20, 1996
Cellular Products, Inc.
872 Main Street
Buffalo, NY 14202
Hemagen Diagnostics, Inc. or its nominee, ("Hemagen") hereby
offers to purchase all of the assets of Cellular Products, Inc.
("CPI"), including without limitation all real estate (excluding,
however, 878 Main Street, Buffalo, NY), cash, accounts receivables,
machinery and equipment, inventory, contracts, and all general
intangibles including tradename, trademarks, patents, copyrights
and trade secrets, (the "Assets"), as follows:
1. Purchase Price. The Purchase Price shall be Six Hundred
Thousand Dollars ($600,000.00), $400,000.00 payable at the time of
closing and $200,000.00 payable on the first anniversary
thereafter. In addition, Hemagen shall assume, on the same terms
and conditions given to CPI, up to $70,000 of the current trade
payables of CPI (meaning payables which are not past due or which
have been invoiced to CPI within 90 days before or after closing).
In the event the purchase is made by Hemagen's nominee, Hemagen
will issue an unsecured guarantee for the deferred payment of the
$200,000 due after closing.
2. Conditions to Closing. The obligations of Hemagen to
consummate the transaction herein, unless expressly waived by
Hemagen in writing, are subject to the satisfaction at or prior to
closing of each of the following conditions:
(a) All material consents, approvals and waivers from
third parties and governmental agencies necessary to permit the
Debtor to transfer the Assets to Hemagen as shall have been
obtained or provided for and no such consent, approval or waiver
shall have been withdrawn.
(b) This Agreement and the transactions contemplated
hereby shall have been duly approved by the Bankruptcy Court, and
the documents and instruments to be delivered to Hemagen at the
closing shall be in full compliance with applicable law and
effective to sell, convey and assign all of CPI's right, title and
interest to all of the Assets, free and clear of all liens and
encumbrances, with Hemagen permitted to continue operating at 872
Main Street, Buffalo, N.Y.
(c) Since the date of this Agreement, there has not been
any material adverse change in the business or operation of CPI
including, without limitation, the Assets, and CPI has not
incurred, or become subject to, any liability, obligation or
commitment of any nature, except liabilities incurred in the
ordinary course of business and consistent with past practice.
(d) At least 75 percent of CPI's existing employees agree
to accept employment with Hemagen.
(e) Confirmation by Hemagen based upon audited financial
statements at Hemagen's expense that the financial information
furnished by Debtor is true and accurate.
(f) CPI shall file for an expedited hearing in form and
substance satisfactorily to CPI and Hemagen directing that any
competing offers for the Assets be at least $650,000.
(g) Except to the extent required by fiduciary
obligations under applicable law, CPI, its officers, directors and
employees, shall not directly or indirectly initiate or solicit any
proposals for a sale or purchase of all or substantially all of the
Assets. CPI shall promptly notify and communicate to Hemagen the
terms and identity of any offeror or inquiry.
(h) If the Assets are ultimately sold to a third party,
subject to court direction, Hemagen will be paid $40,000 of any
successor high bid, plus 50 percent of any amount paid in excess of
$650,000 up to but not exceeding an additional $40,000 in order to
reimburse Hemagen for its out of pocket expenses which CPI and
Hemagen agree is commercially reasonable and necessary to induce
Hemagen to enter into and consummate this transaction.
(i) This Agreement is contingent upon approval of the
Bankruptcy Court after notice to creditors and a hearing, if so
requested by the Court.
If the foregoing is acceptable, kindly indicate your
acceptance below and return a signed copy to Hemagen on or before
close of business on Wednesday, August 21, 1996 or this Offer shall
be deemed withdrawn.
HEMAGEN DIAGNOSTICS, INC.
By: /s/ Carl Franzblau
________________________________
Carl Franzblau, President
Acknowledged and agreed to in accordance with the terms and
conditions outlined herein.
CELLULAR PRODUCTS, INC.
By: /s/ Michael S. Durski
________________________________
Michael S. Durski, Vice President
By: /s/ James C. D. Hengst
________________________________
James C. D. Hengst, President
HEMAGEN
August 26, 1996
Cellular Products, Inc.
872 Main Street
Buffalo, NY 14202
This letter, if accepted by Cellular Products, Inc. ("CPI"),
amends the letter agreement previously executed by Hemagen
Diagnostics, Inc. ("Hemagen") and CPI dated August 20, 1996 (the
"Letter Agreement") regarding the purchase all of the assets of
CPI. In all other respects, the Letter Agreement shall remain in
full force and effect. The Letter Agreement is amended as follows:
1. Amendment to Paragraph 2 (h): Paragraph 2 (h) is deleted
in its entirety and the following new Paragraph 2 (h) is
substituted in place thereof:
"(h) If the Assets are ultimately sold to a third party,
subject to court direction, Hemagen will be paid the lesser of:
(A) the actual out of pocket expenses incurred by
Hemagen, or
(B) $40,000 of any successor high bid, plus 50
percent of any amount paid in excess of $650,000 up to but not
exceeding an additional $40,000, in order to reimburse Hemagen for
its out of pocket expenses which CPI and Hemagen agree is
commercially reasonable and necessary to induce Hemagen to enter
into and consummate this transaction. If Hemagen is reimbursed
pursuant to the terms of this Paragraph, then, subject to CPI
waiving any breach of confidentiality claims, Hemagen will make
available its findings to any third party presenting a competing
offer. The parties acknowledge that Hemagen is not able to control
the actions of its independent accountants and therefore Hemagen
cannot make any representations regarding access to the
accountants' workpapers or whether the accountants will issue an
opinion regarding the financial records of CPI which a third party
may rely upon."
If the foregoing amendment is acceptable, kindly indicate your
acceptance below and return a signed copy to Hemagen.
HEMAGEN DIAGNOSTICS, INC.
By: /s/ Carl Franzblau
________________________________
Carl Franzblau, President
Acknowledged and agreed to in accordance with the terms and
conditions outlined herein.
CELLULAR PRODUCTS, INC.
By: /s/ Michael S. Durski
________________________________
Michael S. Durski, Vice President
By: /s/ James C. D. Hengst
________________________________
James C. D. Hengst, President