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Letter Of Intent

Letter of Intent

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 This Letter of Intent involves

CORD BLOOD AMERICA, INC. | Cord Blood America, Inc | México, SA

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Date: 12/8/2010
Industry: Healthcare Facilities     Sector: Healthcare

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This letter agreement (the “Agreement”) sets forth our agreement and understanding as to the essential terms of the sale to Cord Blood America, Inc., a Florida Corporation, and/or its wholly owned Mexican subsidiary it is in the process of organizing (collectively the " Purchaser ") by Cryo-Cell de México, S.A. de C.V. (" Cryo-Cell de México ") (Cryo-Cell de México shall also be referred to as the “ Seller ”), of all of the Seller's assets and business, both tangibles and intangibles, except such assets as are specifically excluded herein (the " Business "). The Business is located in Mexico and engaged primarily in the collection and storage of cord blood cell samples. The parties agree that this Agreement is binding and enforceable in accordance with its terms, and inures to the benefit of the parties and their respective successors and assigns.


1. PURCHASE OF JBZM ASSETS. On the Closing Date (as such term is defined further below), the Purchaser will purchase substantially all of the assets associated with the Business conducted by Cryo-Cell de México (hereinafter the “ JBZM Assets ”). A list of the JBZM Assets is included in the attached Exhibit “A”. The following assets are expressly excluded from the transaction:


a. the tract of land identified in Exhibit A, in which the corporate offices and the laboratory property of Cryo-Cell de México are located, to be leased by Cryo-Cell de México to Purchaser on a 20 year lease at the current lease rate per month and current terms, subject to Purchaser’s approval. (the “ New Lease ”). The tract of land referred to above is the property of Samuel Alvo Shemaria and co-owners, and is divided in two real-estate, the first located at 295 Aztecas street, Fraccionamiento Monraz, Guadalajara, Jalisco and the second located at 307 and 311 Aztecas Street, from which solely the one identified with number 311 will be subject to the New Lease, since number 307 is currently occupied under a gratuitous loan with a term of five (5) years by an institution engaged in lamaze education activities.


b. any and all liabilities which encumber the JBZM Assets, which shall be paid off in full at Closing.


2. PURCHASE OF CASH IN BANK ACCOUNTS. At the Closing Date, and as additional consideration to Purchaser in connection with the transaction, there shall be turned over and delivered  to Purchaser , by way of an electronic transfer, the funds in the bank accounts of the Business equal to, after deduction for all outstanding checks, draws and charges, an aggregate cash sum in Pesos that represent the amount of unrendered prepaid service packages sold by Cryo-Cell de México to its customers, which Seller estimates is currently approximately $2,400,000.00 (two million, four hundred thousand U.S. dollars), which said amount will be adjusted to reflect the actual amount as of the Closing Date, plus an amount equal to ninety (90) days of net operating capital for the Business necessary to cover operating costs for the Business for three months after the Closing Date, in accordance with the pro-forma balance statement approved by both parties on the Closing Date.


3. ASSUMED LIABILITIES. The Purchaser will assume as of the Closing Date only the liabilities associated with (i) the New Lease, (ii) those liabilities and obligations arising in connection with the operation of the Business by the Purchaser after the Closing Date, and (iii) those liabilities arising after the Closing Date in connection with the performance by the Purchaser of the contracts and agreements associated with the Business acquired by Purchaser, including the payment of any royalties due under any license agreement assigned to Purchaser by Seller.








4. PURCHASE PRICE. The Purchase Price shall be a total of a maximum of US$17,840,000.00 (Seventeen million, eight hundred and forty thousand 00/100 Dollars), subject to the below (the “ Purchase Price ”), to be paid as follows:


a. DEPOSIT: Upon execution of this Agreement, Purchaser shall transfer to Seller an amount of one hundred twenty-five thousand dollars (US$125,000.00) in cash, along with an additional one hundred twenty-five thousand dollars (US$125,000.00) in the form of Cord Blood America, Inc. restricted Common Stock (said shares to be valued as set forth below) (the “ Deposit ”). The Deposit shall be deposited within the 15 day period following the execution of this Agreement, in an escrow account maintained in a brokerage firm in Mexico, it shall not accrue any interests or earnings in benefit of Purchaser and shall be refundable to Purchaser at its request in the event one of the conditions for closing set forth in paragraph 7 below is not met. In the event that Closing takes place, the Deposit will be credited in favor of Purchaser to the payment of the Purchase Price.


b. JBZM ASSETS: Purchaser shall pay Seller the sum of US$17,840,000.00 (Seventeen million eight hundred and forty thousand 00/100 Dollars) for the JBZM Assets, payable as US$12,250,000.00 (Twelve million, two hundred fifty thousand 00/100 Dollars) in cash at the Closing Date, subject to subparagraph (c) below and the Addendum hereto in addition to the Deposit referenced above, which will be credited to Seller at the Closing Date, with the balance to be paid as follows: Commencing after six (6) months from the Closing Date, Purchaser shall begin making quarterly payments to Seller.  Specifically, Purchaser shall pay Seller $333,500.00 (Three hundred thirty-three thousand, five hundred dollars), plus an amount equal to 80% of the Net Profits received by Purchaser resulting from the Business for the prior full calendar quarter, up to an additional $333,500.00 (Three hundred thirty-three thousand, five hundred dollars).  The minimum payment for any calendar quarter shall be $333,500.00 (Three hundred thirty-three thousand, five hundred dollars) and the maximum payment for any calendar quarter shall be $667,000.00 (Six hundred sixty-seven thousand dollars).  Purchaser shall make these payments within 5 (five) business days of the date Purchaser makes its quarterly filings with the U.S. Securities and Exchange Commission.  Purchaser shall make these payments to Seller until such time as the total amount of $5,340,000.00 (Five million, three hundred forty thousand dollars) has been paid through these quarterly payments.  Purchaser agrees to use its best efforts to maximize the Net Profits from the Business.  The quarterly cash payments shall be documented in promissory notes issued by Purchaser which shall include a 15 day grace period and a late payment interest rate equal to the amount payable multiplied times 1.3.


c. ESCROW OF FUNDS.  The aggregate purchase price for the Business shall be adjusted in accordance with the additional provisions set forth in the Addendum hereto, and by this reference incorporated herein, and a 3 rd party escrow shall be established and a portion of the purchase money cash deposited therein, all in accordance with the provisions of said Addendum.


d. VALUATION OF SHARES  For purposes of valuation of shares to be deposited pursuant to paragraph 4(a),  the shares of the Common Stock of Purchaser shall be valued using the average closing price for said Common Stock over the 20 trading days preceding the date specified for delivery of said shares, provided however, that in no event shall Purchaser be obligated to deliver to Seller in the aggregate more than a total number of its shares equal to 25% of the outstanding shares of Purchaser, calculated after the issuance of all shares to Seller.  In the event of any split or reverse stock split of the common stock of Purchaser, the above share valuation formula shall be adjusted proportionally, but in the aggregate, Purchaser shall in no event be obligated to deliver in the aggregate to Seller more than a total number of shares equal to 25% of the outstanding shares of Purchaser, calculated after the issuance of such shares to Seller. In case the total amount of Cord Blood America, Inc. restricted Common Stock that the Purchaser is obligated to deliver to Seller represents more than 25% of the outstanding shares of Purchaser, Purchaser shall pay in cash the differential between the amount that represents 25% of the outstanding shares of Purchaser and the total amount to be paid within three business days of the date such shares are due to be paid.








5. GUARANTEE. Purchaser shall guarantee payment of the Purchase Price to Seller in a form and structure acceptable to Seller. The perfection of the guarantee shall occur at Closing. The Guarantee for the payment of the Purchase Price shall include the following: (i) establishing a Mexican trust ( fideicomiso ) whereby one or more of the JBZM Assets, as well as the shares that represent a controlling interest of Purchaser, are transferred to the trust and administered until the Purchase Price is fully paid, and (ii) the issuance by Purchaser of promissory notes for the amount of the Purchase Price that will not be paid at Closing.

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