SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party Other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Material
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HEMACARE CORPORATION
---------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------
2) Aggregate number of securities to which transactions applies:
-----------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 1
[LOGO]
HEMACARE CORPORATION
____________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 17, 1999
9:30 a.m.
_________________
The 1999 Annual Meeting of Shareholders (the "Meeting") of HemaCare
Corporation (the "Company") will be held at the Warner Center Marriott
Hotel, 21850 Oxnard Street, Woodland Hills, California 91367, on
Thursday, June 17, 1999 at 9:30 a.m. (Pacific Daylight Savings Time), for
the following purposes:
1. To amend the Company's Bylaws to provide a range in the number
of authorized directors of the Company of five to nine
directors.
2. To elect five directors for the ensuing year;
3. To amend Article One of the Company's Restated Articles of
Incorporation to change the name of the Company to Comprehensive
Blood Services, Inc.
4. To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
Only holders of Common Stock of the Company of record at the close of
business on April 23, 1999 will be entitled to notice of and to vote at
the Meeting.
In order that your shares may be represented at the Meeting and to assure
a quorum, please complete, date and sign the enclosed Proxy and return it
promptly in the self-addressed, stamped envelope enclosed for that
purpose, whether or not you expect to attend the Meeting in person.
By Order of the Board of Directors
/s/ JoAnn R. Stover
----------------------------
JoAnn R. Stover
Secretary
Sherman Oaks, California
May 4, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE.
<PAGE>
HEMACARE CORPORATION
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
May 4, 1999
__________________________
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of HemaCare Corporation (the "Company"), for use only at the
Annual Meeting of Shareholders (the "Meeting") to be held at the Warner
Center Marriott Hotel, 21850 Oxnard Street, Woodland Hills, CA 91367,
Thursday, June 17, 1999 and at any and all adjournments or postponements
thereof. Unless the accompanying Proxy has been previously revoked, the
shares represented by the Proxy will, unless otherwise directed, be voted at
the Meeting for the nominees for election as directors named below and, with
discretion, on all such other matters as may properly come before the
Meeting. A shareholder of record may revoke the Proxy at will at any time
prior to the voting of shares by voting in person at the Meeting or by
filing with the Secretary of the Company a duly executed Proxy bearing a
later date or an instrument revoking the Proxy. Shareholders whose shares
are held in street name should consult with their brokers or other nominees
concerning procedures of revocation.
In addition to soliciting Proxies by mail, the Company's officers, directors
and other regular employees, without additional compensation and upon
Company approval, may solicit Proxies personally or by other appropriate
means. The total cost of solicitation of Proxies will be borne by the
Company. Although there are no formal agreements to do so, it is
anticipated that the Company will reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding any Proxy soliciting materials to their principals.
It is anticipated that this Proxy Statement and accompanying Proxy will
first be mailed to shareholders on or about May 7, 1999.
VOTING RIGHTS AND BROKER NON-VOTES
Holders of the Company's common stock, without par value (the "Common
Stock"), of record as of the close of business on April 23, 1999, are
entitled to vote on all matters presented to the Meeting. On April 23,
1999, there were 7,281,120 Common Shares outstanding, which constitutes all of
the outstanding voting securities of the Company. Each holder of Common
Stock is entitled to one vote for each share held, except that in the
election of directors, each shareholder has cumulative voting rights and is
entitled to as many votes as equal the number of shares held multiplied by
the number of directors to be elected (five). All such votes may be cast
for a single candidate or distributed among any or all the candidates as the
shareholder sees fit. However, no shareholder shall be entitled to cumulate
votes unless the candidate's name has been placed in nomination prior to the
voting and the shareholder, or any other shareholder, has given notice at
the Meeting prior to the voting of their intention to cumulate their votes.
The Company is soliciting authority to cumulate votes in the election of
directors, and the enclosed Proxy grants discretionary authority for such
purpose. The election of directors requires the affirmative vote for each
candidate of a plurality of the votes cast. Approval to amend the Company's
Bylaws to change the number of authorized directors and its Restated
Articles of Incorporation to change the name of the Company requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and entitled to vote at the Meeting. Typically, any other
matters that may be presented at the Meeting will require the affirmative
vote of a majority of the shares represented and voting at the Meeting.
Abstentions, and any shares as to which a broker or nominee has indicated
that it does not have discretionary authority to vote ("broker non-votes"),
on a particular matter generally will be treated as shares that are present
and are entitled to vote for purposes of determining the presence of a
quorum (so long as any broker non-vote shares are voted on at least one
matter at the Meeting) but as unvoted for purposes of determining whether
approval of the shareholders has been obtained with respect to any such
matter. Under California law and the Company's Bylaws, a quorum consists of
the presence in person or by proxy of the holders of a majority of the
shares entitled to vote at the Meeting, and a matter (other than the
election of directors) voted on by shareholders will be approved if it
receives the vote of a majority of the shares both present and voting, which
shares also constitute a majority of the required quorum, unless the vote of
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<PAGE>
a greater number of shares is required. Accordingly, abstentions and broker
non-votes will have no effect on such a vote; provided, however, that in the
event the number of shares voted affirmatively does not represent a majority
of the required quorum, abstentions and broker non-votes will have the
effect of a "no" vote. Because Proposals 1 and 3, amendments of the
Company's Bylaws and Article One of the Company's Restated Articles of
Incorporation, require the affirmative vote of a majority of all outstanding
shares of Common Stock entitled to vote and not just a majority of the
shares present and voting, a broker non-vote will have the effect of a "no"
vote with regard to Proposals 1 and 3. Under California law and the
Company's Bylaws, abstentions from voting, broker non-votes and votes
otherwise withheld in the election of directors, which is by plurality, have
no effect.
Recently, the Securities and Exchange Commission ("the "SEC") amended its
rule governing a company's ability to use discretionary proxy authority with
respect to shareholder proposals which were not submitted by the
shareholders in time to be included in the proxy statement. As a result of
that rule change, in the event a shareholder proposal was not submitted to
the Company prior to April 3, 1999, the enclosed Proxy will confer authority
on the proxyholders to vote the shares in accordance with their best
judgment and discretion if the proposal is presented at the Meeting. As of
the date hereof, no shareholder proposal has been submitted to the Company,
and management is not aware of any other matters to be presented for action
at the Meeting. However, if any other matters properly come before the
Meeting, the Proxies solicited hereby will be voted by the proxyholders in
accordance with the recommendations of the Board of Directors. Such
authorization includes authority to appoint a substitute nominee for any
Board of Directors' nominee identified herein where death, illness or other
circumstances arise which prevents such nominee from serving in such
position and to vote such Proxy for such substitute nominee.
ELECTION OF DIRECTORS
Information Concerning the Nominees
- -----------------------------------
The Company's Bylaws provide for seven directors. Currently, there are five
directors. Mr. Johnson was newly appointed in 1999, and Mr. Nicely was
appointed in 1998. Two vacancies remain on the Board of Directors (provided
that, in the event Proposal 1 is approved by the shareholders, no such
vacancies will exist). The Company has not identified individuals to fill
the vacancies on the Board of Directors (provided that, in the event
Proposal 1 is approved by the shareholders, no such vacancies will exist),
and Proxies may be voted for not more than five nominees for director. Each
director will hold office until the next Annual Meeting of Shareholders or
until the election of his or her successor. All Proxies received by the
Board of Directors will be voted for the election, as directors, of the
nominees listed below if no direction to the contrary is given. In the
event that any nominee is unable or declines to serve, an event that is not
anticipated, the Proxies will be voted for the election of any nominee who
may be designated by the Board of Directors.
The information set forth below is submitted with respect to the nominees
for whom it is intended that Proxies will be voted.
ALAN C. DARLINGTON (48), has been a Director since January 1997 and Chairman
of the Board since December 1997. In September 1998, Mr. Darlington was
appointed Executive Chairman and, in December 1998, assumed full time duties
as Executive Chairman. Mr. Darlington is President of Timpe & Darlington,
Inc., a healthcare management consulting firm specializing in financial
advisory services to physician management companies and to other providers
concerning managed care, which he founded in 1991. Prior to the formation
of Timpe & Darlington, he was a partner of Arthur Andersen & Co. where he
was employed from 1976 to 1991. Mr. Darlington received his Business
Administration degree from the School of Business at California State
University at Los Angeles in 1976 and has been a Certified Public Accountant
since 1978. Mr. Darlington was a member of the Audit and Compensation
committees from January 1997 to September 1998.
CHARLES R. SCHWAB, JR. (34), has been a Director since December 1997. Since
1994, Mr. Schwab has been the general partner of Kensington Capital
Management, LLC, a private investment fund that is also a significant
shareholder in the Company. From 1990 to 1994, Mr. Schwab was employed as a
proprietary money manager for Paribas Limited in London, England, a
subsidiary of Banque Paribas, a French commercial bank. Mr. Schwab received
his Business Administration degree in 1986 at Northwestern University and
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<PAGE>
his Masters degree in Finance from the University of Chicago in 1989. Mr.
Schwab was elected Chairman of the Compensation Committee in December 1997
and is a member of the Audit Committee.
JULIAN L. STEFFENHAGEN (55), has been a Director since December 1997. Since
1979, Mr. Steffenhagen has held several management positions at Beckman
Coulter, Inc. an international manufacturer of laboratory equipment and
diagnostic reagents. He is currently the Vice President, Strategic
Planning, Corporate Development and Investor Relations. He earned his
Bachelor of Science and Master of Science degrees from the University of
Michigan. Mr. Steffenhagen was elected Chairman of the Audit Committee in
December 1997 and is a member of the Compensation Committee.
WILLIAM D. NICELY (51), has been the Chief Executive Officer and a Director
since June 1998. Prior to joining the Company, Mr. Nicely had been Chief
Executive Officer of the Southern California Region of the American Red
Cross Blood Services since 1995. From 1994 to 1995, he was Senior Vice
President of Network Development and Operations of Community Care of
America, a national health care company that owns and operates long-term
care facilities. Prior to that time, Mr. Nicely served as CEO with several
major medical centers and healthcare institutions in the southwest. Mr.
Nicely received his Bachelor of Science and Master of Science degrees from
Ohio State University.
ROBERT L. JOHNSON (60), has been a Director since April 1999. Since 1986,
Mr. Johnson has been Senior Vice President, Legal and General Counsel of the
Catholic Healthcare West System, headquartered in San Francisco, CA. Prior
to joining Catholic Healthcare West, Mr. Johnson was in the private practice
of law and and is admitted to practice in the Federal and State Courts of
Arizona and California, as well as the United States Supreme Court and, in
1995, served as the President of the American Academy of Healthcare Attorneys.
Mr. Johnson obtained his LL.B. degree, cum laude at the University of
Arizona in 1962.
The Board of Directors recommends a vote FOR each director nominated.
Directors and Executive Officers
- --------------------------------
The Board of Directors consists of the nominees described above. Messrs.
Alan C. Darlington and William D. Nicely and Ms. Sharon C. Kaiser are the
executive officers of the Company.
SHARON C. KAISER (54), has been Senior Vice President of Finance since
December 1997 and Chief Financial Officer since May 1995. Ms. Kaiser was a
member of the Board of Directors from May 1996 until December 1997. From
1991 until joining the Company, Ms. Kaiser acted as an independent financial
consultant to various businesses. Prior to that time, Ms. Kaiser held
senior financial positions at Weyerhaeuser Mortgage Company and the Koll
Company. Ms. Kaiser was with Arthur Andersen & Co. from 1979 to 1987,
serving as a senior manager for the last four years. Ms. Kaiser is a
graduate of the University of Southern California and has been a Certified
Public Accountant since 1981.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Committees of the Board
- -----------------------
The Board of Directors has had Audit and Compensation committees since
January 1989 and a Nominating Committee since June 1997. Since the
formation of the Nominating Committee, in June 1997, its functions have been
performed by the full Board. Members of the Audit and Compensation
committees are comprised of outside directors. As of April 1999, members
of the Audit and Compensation committees include Messrs. Julian Steffenhagen
and Charles Schwab, Jr. Mr. Steffenhagen is chairman of the Audit Committee
and Mr. Schwab is chairman of the Compensation Committee.
The functions of the Audit Committee include reviewing and making
recommendations to the Board of Directors with respect to: The engagement
or re-engagement of an independent public accounting firm to audit the
Company's financial statements for the then current fiscal year, and the
terms of the engagement; the policies and procedures of the Company with
respect to maintaining the Company's books and records and furnishing any
necessary information to the independent auditors; the procedures to
encourage access to the Audit Committee and to facilitate the timely
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<PAGE>
reporting during the year by authorized representatives of the Company's
independent auditors to the Audit Committee of their recommendations and
advice; the implementation by management of the recommendations made by the
independent auditors in their annual management letter; the adequacy and
implementation of the Company's internal audit controls and the adequacy and
competency of the related personnel; and such other matters relating to the
Company's financial affairs and accounts as the Audit Committee may in its
discretion deem desirable.
The functions of the Compensation Committee include reviewing and making
recommendations to the Board of Directors with respect to the compensation
package to be offered to all Company officers and the incentive programs to
be offered to all employees in the effort to attract and retain qualified
personnel.
The functions of the Nominating Committee include recruiting and
recommending candidates for election to the Board of Directors and reviewing
criteria for board membership against current needs of the Board. The
Committee also approves for recommendation to the Board of Directors the
slate of nominees for directors to be elected by shareholders and performs
other functions, which from time to time may be assigned by the Board of
Directors.
Meetings and Attendance
- -----------------------
The Board of Directors held eight meetings and took action by unanimous
written consent (as permitted by California law) on 13 occasions during
1998. During 1998, each Director attended 100% of the total number of
meetings of the Board of Directors held during the period for which he was a
Director. The Audit Committee met two times and the Compensation Committee
met four times in 1998. The Board performed the functions of the Nominating
Committee in 1998.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth information concerning the annual and long-
term compensation earned by the Named Executive Officers for services
rendered in all capacities to the Company for the fiscal years ended
December 31, 1998, 1997 and 1996. The "Named Executive Officers" include
(i) each person who served as Chief Executive Officer during fiscal 1998
(two persons), (ii) each person who served as an executive officer at
December 31, 1998 and was among the four most highly paid executive officers
of the Company, not including the Chief Executive Officer, during fiscal
1998 with total annual salary and bonus of more than $100,000 (one person)
and (iii) up to two persons who would be included under clause (ii) above
had they served as an executive officer at December 31, 1998 (none).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
------------------------------------- -----------
Name and Securities All Other
Principal Salary Bonus Other Annual Underlying Compensation
Position Year ($) ($) Compensation(1) Options ($) (2)
- ----------------- ----- -------- ------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Hal I. Lieberman 1998 $124,553(3) $ 0 -- 0 $ 56,250(4)
President & CEO 1997 $150,000 $ 0 -- 125,000 $ 18,012
1996 $134,515(5) $ 0 -- 0 $ 2,530
William D. Nicely 1998 $118,591(6) $ 0 -- 200,000 $ 2,988
CEO 1997 $ -- $ 0 -- 0 $ 0
1996 $ -- $ 0 -- 0 $ 0
Sharon C. Kaiser 1998 $135,307 $18,000 -- 0 $ 3,847
Sr. Vice Pres- 1997 $125,000 $ 0 -- 7,500 $ 3,068
ident Finance 1996 $125,000 $ 0 -- 48,000 $ 0
& CEO
</TABLE>
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<PAGE>
__________
(1) During fiscal 1996, 1997 and 1998, the Named Executive Officers received
personal benefits, the aggregate amounts of which for each Named Executive
Officer did not exceed the lesser of $50,000 or 10% of the total of the
annual salary and bonus reported for such Named Executive Officer in such
years.
(2) "All Other Compensation" consists of Company contributions to its Employee
Salary Deferral Plan (401(k)). In the case of Mr. Lieberman, it also
includes $708 and $655 in term life insurance premiums paid by the Company
on Mr. Lieberman's behalf in 1997 and 1996, respectively. In 1997, Mr.
Lieberman did not participate in the Company's 401(k) Plan but received
reimbursement of $17,304 for salary deferred in 1996 (See Footnote 5).
(3) Mr. Lieberman was CEO through June 1, 1998 and President through August
31, 1998.
(4) From September 1998 to December 1998, Mr. Lieberman received severance
compensation of this amount.
(5) From July 1996 through January 12, 1997, Mr. Lieberman voluntarily
deferred 20% of his salary.
(6) Mr. Nicely was appointed Chief Executive Officer effective June 1, 1998.
Included in his salary is a $4,154 automobile allowance.
All stock options granted in the fiscal year ending December 31, 1998 were
granted under the Company's 1996 Stock Incentive Plan (the "1996 Plan").
The following two tables set forth information concerning stock options
granted to, exercised by and owned by the Named Executive Officers.
OPTION/SAR GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------
Potential Realizable
Market Value at Assumed
Number of % of Total Price Annual Rates of Stock
Securities Options on Date Price Appreciation
Underlying Granted to Exercise of for Option Term (1)
Options Employees in Price Grant Expiration ------------------
Name Granted (#) Fiscal Year ($/Sh) ($/Sh) Date 5% ($) 10% ($)
- ---------- ----------- ----------- --------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William D.
Nicely 200,000 48.78% $0.625 $0.656 5/31/08 $42,448 $86,299
</TABLE>
_____________
(1) The dollar amounts under these columns are the result of calculations at
the 5% and 10% annual rates of stock appreciation as required by rules of
the Securities and Exchange Commission and are not intended to forecast
possible future appreciation, if any, of the Company's stock price. The
amount of gain, if any, to the optionee is dependent upon the increase in
the price of the Company's Common Stock, which will benefit all share-
holders commensurately.
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL 1998 YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Options Value of Unexercised
at Fiscal In-the-Money Options
Year-End (#) at Fiscal Year-End ($)
------------------- ----------------------
Shares Value
Acquired on Realized Exer- Unexer- Exer- Unexer-
Name Exercise (#) ($) ciseable cisable cisable cisable
- ----------- ------------- --------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
William D.
Nicely -0- $ 0 0 200,000 0 0
Hal I. -0- $ 0 125,000 0 0 0
Lieberman
Sharon C. -0- $ 0 46,300 12,000 0 0
Kaiser
</TABLE>
- ---------------
(1) Based on a price per share of $0.46, which was the closing bid price of
the Common Stock on the OTC Bulletin Board at the close of business on
December 31, 1998.
Compensation of Directors
- -------------------------
Directors who are not employees of the Company receive $750 and
reimbursement of travel expenses for each Board meeting attended. Mr.
Darlington received $98,750 in 1998 for services rendered as Chairman and
Executive Chairman of the Company. In March 1999, the Compensation
Committee of the Board of Directors formalized a contract for Mr.
Darlington's full time services. (See "Employment Agreements and
Arrangements.")
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<PAGE>
Each person who has not previously served as a director of the Company and
who is initially elected or appointed as a non-employee director, is granted
a vested stock option to purchase 15,000 shares of Common Stock at the
market price on the date of grant. In March 1999, the Compensation
Committee approved to an annual grant of 15,000 vested stock options
exercisable at the market price on the date of grant, to each outside board
member.
Employment Agreement and Arrangements
- -------------------------------------
Pursuant to an agreement effective as of March 10, 1999 (the "Darlington
Agreement"), Alan C. Darlington has been engaged as the Company's Executive
Chairman. The Darlington Agreement requires Mr. Darlington to devote
substantially all his time to the business of the Company. The Darlington
Agreement provides for an annual salary of $200,000 with annual bonus
opportunities contingent upon the Company's annual earnings growth as well
as an option to purchase up to 250,000 shares of the Company's common stock
subject to certain vesting requirements as provided in the Darlington
Agreement. The Darlington Agreement expires on December 31, 1999 subject to
automatic one-year extensions unless notice of termination is provided by
either party within 30 days prior to a scheduled expiration date.
Pursuant to an Employment Agreement dated as of May 27, 1998 (the "Nicely
Agreement"), William D. Nicely has been employed as the Company's Chief
Executive Officer. The Nicely Agreement provides that Mr. Nicely receive an
annual salary of $200,000 and, subject to specified performance targets, an
annual bonus of up to 40% of his base salary and options to purchase 200,000
shares of the Company's common stock, subject to certain vesting
requirements as set forth in the Nicely Agreement. The Nicely Agreement
expires on May 31, 2000, subject to automatic renewal unless notice of
termination is provided by either party.
Pursuant to an Employment Agreement dated September 1, 1988, Hal I.
Lieberman (the "Lieberman Agreement"), which agreement terminated effective
August 31, 1998, Mr. Lieberman acted as President and Chief Executive
Officer of the Company. The Lieberman Agreement provided for an annual
salary of $150,000 and bonus opportunities. Under the terms of the
Lieberman Agreement, Mr. Lieberman will continue to receive his salary
through August 31, 1999.
In January 1996, Sharon C. Kaiser, Chief Financial Officer, became a full-
time employee of the Company. The Company has agreed that upon termination
of her employment with the company, unless such termination is for cause,
Ms. Kaiser will receive a termination payment equal to six months of her
compensation. Ms. Kaiser currently receives an annual salary of $135,000.
Stock Option Plans
- -------------------
The Company's 1986 Stock Option Plan (the ?1986 Plan?) expired July 9, 1996.
As of April 15, 1999, there were options outstanding under the 1986 Plan
exercisable for 65,800 shares of Common Stock with exercise prices ranging
from $3.50 to $3.69 and with expiration dates ranging from September 29,
1999 to July 1, 2006. As of April 15, 1999, 325,501 shares of Common Stock
had been issued upon exercise of stock options granted under the 1986 Plan.
In 1996, the Board of Directors, with shareholder approval, adopted the
Company's 1996 Stock Incentive Plan (the "1996 Plan"). The purposes of the
1996 Plan are to (i) enable the Company to attract, motivate and retain top-
quality directors, officers, employees, consultants and advisors, (ii)
provide substantial incentives for such persons to act in the best interests
of the shareholders of the Company, and (iii) reward extraordinary effort by
such persons on behalf of the Company. The 1996 Plan provides for awards in
the form of stock options, which may be either "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified stock options, or restricted stock.
The total number of shares of Common Stock available for distribution under
the 1996 Plan is 1,400,000, however, no award may be made at any time if,
after giving effect to such award, the total number of shares of Common
Stock issuable upon exercise of all outstanding options and warrants of the
Company (whether or not under the 1996 Plan) plus the total number of shares
of Common Stock called for under any stock bonus or similar plan of the
company (including shares of Common Stock underlying awards under the 1996
Plan) would exceed 30% of the total number of shares of Common Stock
outstanding at the time of such award. As of April 15, 1999, there were
options outstanding under the 1996 Plan exercisable for 1,122,500 shares of
Common Stock with exercise prices ranging from $0.41 to $2.44 and with
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<PAGE>
expiration dates ranging from March 20, 2007 to March 9, 2009. As of April
15, 1999, no shares of Common Stock had been issued upon exercise of stock
options granted under the 1996 Plan.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee is composed entirely of non-employee directors
none of whom are affiliates of the Company. Messrs. Charles R. Schwab, Jr.
and Julien L. Steffenhagen are members of the Committee. Mr. Schwab was
appointed Chairman of the Committee in December 1997. Mr. Alan Darlington
was a member of the Committee through August 1998, at which time he became
Executive Chairman of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") reviews and recommends to the
Board of Directors the compensation and other terms and conditions of
employment of the executive officers of the Company, as well as incentive
plan guidelines for HemaCare employees generally. The Committee is
composed entirely of non-employee directors.
The policies underlying the Committee's compensation decisions are designed
to attract and retain the best qualified management personnel available.
The Company compensates its executive officers primarily through salaries.
The Company, at its discretion, may, as it has in other years, reward
executive officers through bonus programs based on profitability and other
objectively measurable performance factors.
In establishing executive compensation, the Committee evaluates individual
performance as it impacts overall Company performance with particular focus
on an individual's contribution to the realization of operating profits and
achievement of strategic business goals including the timely development and
introduction of products and the creation of markets in new geographic
territories. The Committee also considers the performance of the Company
relative to the performance of its competitors and seeks to compensate
executives at levels comparable to the average compensation paid for similar
positions by other companies within the technological services industry
which are of a like size (in terms of net worth and level of business).
Market data on competitive compensation levels were obtained from proxy
statements disclosing compensation paid to executives in comparable
positions in small- to medium-sized businesses within the technological
services industry. The Company has, from time to time, gathered executive
compensation information from salary surveys conducted by outside consulting
firms. The Committee further attempts to rationalize a particular
executive's compensation with that of other executive officers of the
Company in an effort to distribute compensation fairly among the executive
officers. Although the components of executive compensation (salary and
option grants) are reviewed separately, compensation decisions are made
based on a review of total compensation. The number of shares covered by
option grants is determined in the context of this review. Because the
Committee establishes the size of option grants based on its evaluation of
an individual's performance and competitive factors, as described above, it
does not consider options previously granted in determining the size of any
executive's option grant in a particular year.
As part of his employment agreement, Mr. Nicely receives an annual salary of
$200,000 and, subject to specified performance targets, an annual bonus of
up to 40% of his base salary. Mr. Nicely was also granted stock options to
purchase 200,000 shares of the Company's common stock, subject to certain
vesting requirements as set forth in the employment agreement.
Mr. Darlington, pursuant to his agreement, receives an annual salary of
$200,000 with annual bonus opportunities contingent upon the Company's
annual earnings growth. Mr. Darlington was also granted stock options to
purchase up to 250,000 shares of the Company's common stock, subject to
certain vesting requirements as set forth in the Services Agreement.
There were no employee bonus plans in effect in 1998. However, Ms. Sharon
Kaiser, the Company's Chief Financial Officer, received a bonus of $18,000
due to her performance and contribution to the asset purchase of Coral
Therapeutics, Inc. in October 1998. The Committee is considering an
employee bonus plan for 1999.
-7-
<PAGE>
Since the Company's historical levels of executive compensation have been
substantially less than $1,000,000 per employee annually, the Compensation
Committee has not yet established a policy with respect to qualifying
compensation to the Company's executive officers for deductibility under
Section 162(m) of the Internal Revenue Code of 1986, as amended.
Compensation Committee
- ----------------------
Charles R. Schwab, Jr., Chairman
Julian Steffenhagen
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR HEMACARE CORPORATION
Set forth below is a graph comparing the yearly cumulative total shareholder
return on the Company's Common Stock, with the yearly cumulative total return
on (a) the Nasdaq Stock Market (U.S. Companies) Index and (b) the Nasdaq
Health Services Stock Index. The graph assumes $100 invested on December 31,
1993 in each of the Company's Common Stock, the NASDAQ Stock Market Index and
the NASDAQ Health Services Index. The comparison assumes that all dividends
are reinvested.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of
the Company's Common Stock.
<GRAPH>
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
HemaCare
Corporation 100.0 56.5 65.2 54.4 8.2 8.0
Nasdaq Stock
Market 100.0 97.8 138.3 170.0 208.3 294.5
(U.S. Companies)
Nasdaq Health
Services Stocks 100.0 107.3 136.1 135.9 138.5 117.3
</TABLE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the ownership of the Company's Common Stock
as of March 30, 1999 by (i) all persons known to the Company to own
beneficially more than 5% of the outstanding Common Stock, (ii) each
director (and nominee for director) of the Company, (iii) each Named
Executive Officer and (iv) all executive officers and directors of the
Company as a group. Except as otherwise indicated, each of the persons
named below has sole voting and investment power with respect to the shares
of Common Stock owned by such shareholder.
-8-
<PAGE>
Number of Percent of
Shares Outstanding
Beneficially Common
Name Owned Stock
- ------------------------------------- --------------- ------------
[S] [C] [C]
Charles R. Schwab, Jr. (1) 607,100 (2)(3) 8.32%
Kensington Value Fund, LLC (1) 588,100 (4) 8.08
William D. Nicely 40,000 (5) 0.55
Alan C. Darlington 82,500 (6) 1.12
Sharon C. Kaiser 55,000 (7) 0.75
Julian Steffenhagen 15,000 (8) 0.21
Robert L. Johnson 15,000 (8) 0.21
All executive officers and
directors as a group (6 persons) 814,600 10.90%
___________
(1) The address of Kensington Value Fund, LLC ("Kensington") and
Charles R. Schwab, Jr. is 8888 Keystone Crossing, Indianapolis, IN 46240.
The foregoing information was obtained from a Schedule 13D/A dated
December 5, 1997 filed by Kensington with the SEC.
(2) Includes 588,100 shares held by Kensington, of which Mr. Schwab is the
president and majority shareholder. Mr. Schwab disclaims beneficial
ownership of the shares beneficially owned by Kensington.
(3) Includes 15,000 shares issuable upon exercise of currently exercisable
options.
(4) Charles R. Schwab, Jr. is the president and majority shareholder of
Kensington. See Note 2.
(5) Represents shares issuable upon exercise of stock options exercisable
within 60 days of April 30, 1999.
(6) Includes 62,500 shares issuable upon exercise of stock options exercisable
within 60 days of April 30, 1999.
(7) Includes 46,300 shares issuable upon exercise of stock options exercisable
within 60 days of April 30, 1999.
(8) Represents shares issuable upon exercise of currently exercisable stock
options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the directors
and officers of the Company and persons who own more than ten percent of the
Company?s Common Stock to file with the SEC reports of initial ownership and
changes in ownership of the Company's Common Stock. All filings for
officers and directors have been filed on a timely basis.
CERTAIN TRANSACTIONS
Not applicable.
COMPANY PROPOSALS
The following proposals will be submitted for shareholder consideration and
voting at the Meeting.
PROPOSAL 1 - AMENDMENT OF BYLAWS TO PROVIDE A RANGE IN THE NUMBER OF
AUTHORIZED DIRECTORS OF THE COMPANY OF FIVE TO NINE DIRECTORS.
The Board of Directors recommends the adoption of the following amendment to
Section 2(a) of the Company's Bylaws:
"Section 2(a) of the Bylaws of HemaCare as amended to date, is hereby
amended to read in its entirety as follows:
-9-
<PAGE>
(a) The authorized number of directors of the corporation shall be not
less than five (5) nor more than nine (9). The exact number of
directors shall be five (5) until changed, within the limits
specified above, by a bylaw amending this Section 2(a), duly adopted
by the board of directors or by the shareholders. The indefinite
number of directors may be changed, or a definite number may be
fixed without provision for an indefinite number, by a duly adopted
amendment to the articles of incorporation or by an amendment to
this bylaw duly adopted by the vote or written consent of holders of
a majority of the outstanding shares entitled to vote; provided,
however, than a amendment reducing the fixed number or the minimum
number of directors to a number less than five (5) cannot be adopted
if the votes cast against its adoption at a meeting, or the shares
not consenting in the case of an action by written consent, are
equal to more than sixteen and two-thirds percent (16 2/3%) of the
outstanding shares entitled to vote thereon. No amendment may
change the stated maximum number of authorized directors to a number
greater than two (2) times the stated minimum number of directors
minus one (1)."
Pursuant to Section 2(a), as currently amended, the authorized number of
directors is seven. The Board of Directors currently has five members
and two vacancies. The Board of Directors has determined that it would
be in the best interests of the Company to reduce the exact number of
directors on the Board rather than maintaining the two vacancies while
seeking suitable nominees for the Board of Directors. By providing for a
Board of Directors ranging in size from five to nine members with the
exact number fixed by an amendment to the Bylaws adopted by either the
Board or the shareholders, the Board retains the flexibility to add
qualified directors to the Board in the event such additions become
desirable. Such an ability may also make it easier for the Company to
attract financing because a large investor may request representation on
the Board as a condition to making the investment.
Reducing the number of directors may increase the number of votes
required to elect a director using cumulative voting. Accordingly, by
fixing the exact number of directors at five instead of nine, it may
become more difficult for minority shareholders to elect a director.
Vote Required
- -------------
The approval of the amendment of the Company's Bylaws requires the
affirmative vote of a majority of the outstanding shares of the Company's
Common Stock. An abstention or a broker non-vote is not an affirmative
vote and, therefore, will have the same effect as a vote against the
proposal. See "Voting Rights and Broker Non-Votes."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" ADOPTION OF THE AMENDMENT TO THE BYLAWS TO
PROVIDE FOR A RANGE IN THE NUMBER OF AUTHORIZED DIRECTORS
OF THE COMPANY OF FIVE TO NINE DIRECTORS
PROPSAL 2 - ELECTION OF DIRECTORS
Each of the following persons nominated for election as a director to hold
office until the next Annual Meeting of Shareholders and until the election
of his or her successor:
Alan C. Darlington
Charles R. Schwab, Jr.
Julian L. Steffenhagen
William D. Nicely
Robert L. Johnson
Each nominee listed above is a member of the Board of Directors. All
proxies received by the Board of Directors will be voted for the nominee if
no directions to the contrary are given. In the event that any nominee is
unable or declines to serve, an event that is not anticipated, the proxies
will be voted for the election of a nominee by the Board of Directors, or if
none are so designated, will be voted according to the judgement of the
person or persons voting the proxy.
-10-
<PAGE>
Vote Required
- -------------
The election of directors requires the affirmative vote for each candidate
of a plurality of the votes cast. Votes withheld from any director are
counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but have no other legal effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE NOMINEES
PROPOSAL 3 - AMENDMENT TO ARTICLE ONE OF THE COMPANY'S RESTATED ARTICLES
OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO COMPREHENSIVE BLOOD
SERVICES, INC.
On March 10, 1999, the Board of Directors adopted a resolution to amend the
Company's Restated Articles of Incorporation to change the name of the
company from "HemaCare Corporation" to "Comprehensive Blood Services, Inc."
As a result of its recent expansion into additional markets and the
Company's desire to be recognized as a national provider of blood services,
the Board of Directors believes that the Company and its shareholders would
benefit from the proposed name change. The Board is seeking the shareholders'
approval to change the name of the Company and will effect such name change
only in the event the shareholders approve Proposal 3 and the Board
determines within one year following shareholder approval that such amendment
is in the best interest of the Company.
In the event the name change is effected, the Company will continue to
operate its Southern California operations under the HemaCare name and its
east coast operations will continue under the name of Coral Blood Services,
Inc, since each name has a reputation of providing high quality blood
products and services to its customers.
The following is the proposed amendment to Article One of the company's
Restated Articles of Incorporation:
ARTICLE ONE
The name of this corporation is Comprehensive Blood Services, Inc.
Vote Required
- -------------
The approval of the amendment of the Company's Bylaws requires the
affirmative vote of a majority of the outstanding shares of the Company's
Common Stock. An abstention or a broker non-vote is not an affirmative vote
and, therefore, will have the same effect as a vote against the proposal.
See "Voting Rights and Broker Non-Votes."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants appointed to audit the Company's 1998
financial statements were Arthur Andersen LLP, who continue to serve in such
capacity for the current year. A representative of Arthur Andersen LLP is
expected to be present at the Meeting with the opportunity to make a
statement if he or she so desires and to respond to appropriate questions.
FUTURE PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. Any such proposal to be included in the proxy
statement for the Company's 2000 annual meeting of shareholders must be
submitted by a shareholder prior to January 8, 2000 in a form that
complies with applicable regulations. Recently, the SEC amended its rule
governing a company's ability to use discretionary proxy authority with
respect to shareholder proposals which were not submitted by the
shareholders in time to be included in the proxy statement. As a result of
that rule change, in the event a shareholder proposal is not submitted to
the Company prior to March 24, 2000, the proxies solicited by the Board of
Directors for the 2000 annual meeting of shareholders will confer authority
on the proxyholders to vote the shares in accordance with their best
-11-
<PAGE>
judgment and discretion if the proposal is presented at the 2000 annual
meeting of shareholders without any discussion of the proposal in the proxy
statement for such meeting.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (excluding the exhibits thereto), as filed with the SEC,
accompanies this Proxy Statement, but it is not deemed to be a part of the
proxy soliciting material.
The Company will provide a copy of the exhibits to its Annual Report on Form
10-K for the fiscal year ended December 31, 1998 upon the written request of
any beneficial owner of the Company's securities as of the record date for
the Annual Meeting and reimbursement of the Company's reasonable expenses.
Such request should be addressed to the Company c/o JoAnn Stover, Corporate
Secretary, at 4954 Van Nuys Boulevard, Sherman Oaks, California 91403.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders calls for the transaction
of such other business as may properly come before the Meeting, the Board of
Directors has no knowledge of any matters to be presented for action by the
shareholders at the Meeting, other than as set forth above. The enclosed
Proxy gives discretionary authority, however, in the event that any
additional matters should be presented.
SHAREHOLDERS ARE URGED IMMEDIATELY TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ JoAnn R. Stover
----------------------------
JoAnn R. Stover
Secretary
Sherman Oaks, California
May 4, 1999
-12-
<PAGE>
APPENDIX A
HEMACARE CORPORATION
This proxy is solicited on behalf of the Board of Directors
The undersigned appoints either or both Alan C. Darlington
and/or William D. Nicely as Proxy, with the power to appoint
their respective substitutes, and authorizes either or both of
them to represent and to vote, as designated below (including,
as to Proposal 2, the discretionary authority to cumulate
votes), all the shares of Common Stock of HemaCare Corporation
held of record by the undersigned on April 23,1999 at the Annual
Meeting of Shareholders to be held on June 17, 1999 or any
adjournment or postponement thereof.
1. AMENDMENT OF BYLAWS TO PROVIDE A RANGE IN THE NUMBER OF
AUTHORIZED DIRECTORS OF THE COMPANY OF FIVE TO NINE
DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
2. ELECTION OF DIRECTORS:
Please mark only one box per nominee. If no allocation is
indicated, an equal number of voting shares will be cast for
each nominee.
Withhold
Vote For Authority to Vote
---------- -----------------
ALAN C. DARLINGTON / / / /
CHARLES R. SCHWAB JR. / / / /
JULIEN L. STEFFENHAGEN / / / /
WILLIAM D. NICELY / / / /
RICHARD L. JOHNSON / / / /
3. PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO
COMPREHENSIVE BLOOD SERVICES, INC.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on back)
----------------------------------------------
<PAGE>
This proxy, when properly executed will be voted in the
manner directed by the undersigned shareholder. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 and 3. Please sign exactly as name appears below. When
shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated:..............................., 1999
___________________________
___________________________
(Signature if jointly held)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
2
<PAGE>
APPENDIX 2
LETTER TO SHAREHOLDERS
To Our Shareholders:
1998 was a year of significant progress for HemaCare. During the year,
the Company generated earnings of $0.10 per share, and in the fourth
quarter, completed an acquisition that expands the scope of its
operations to eleven states in the eastern US.
The accomplishments in 1998, as well as other developments in the
marketplace, in management's view, position the Company to increase its
revenues and profits in future years and, ultimately, to provide
dramatic gains in shareholder value.
1998 Operating Results
- ----------------------
Substantially all of HemaCare's 1998 earnings were generated in the
last six months of 1998.
In the third quarter the Company generated sales of $2.7 million and
net income of $258,000 or $0.04 per share. These results reflected
increased product sales, strong and steady clinical and therapeutic
service sales, and the elimination of unprofitable programs. The
results also reflect significant productivity improvements in our
California operations.
In the fourth quarter, the Company generated revenues of $4.7 million
and net income of $444,000 or $0.06 per share. The fourth quarter
revenue increase reflects the addition of Coral Blood Services
operations, and the fourth quarter earnings performance reflects
continued strong sales and operating results in California.
Coral Blood Services Acquisition
- --------------------------------
In October, the Company acquired the assets and business of a former
competitor, Coral Therapeutics, Inc (CTI). CTI's business consisted of
several successful hospital blood management programs, significant
therapeutic services operations in several states and interoperative
autologous transfusion operations (blood cell salvage during surgery).
While the CTI was not a financial success, it did build a solid
reputation for quality services and a talented staff of blood industry
professionals. HemaCare hired most of CTI's operating personnel and
continued its successful programs, now operating them under the brand
name Coral Blood Services. The addition of Coral leverages HemaCare's
management and overhead structure over a larger organization, and
provides a profitable base of operations on both coasts for further
growth.
The Coral transaction involves other synergistic benefits to HemaCare
that should benefit future earnings. These include:
1. Opportunities to extend the benefits of HemaCare's FDA
establishment license to the Coral operations, which permits
interstate sales of blood products;
2. Capitalizing on Coral's knowledge and experience with voluntary
donors; and
3. Introducing more efficient Company-wide operating procedures.
HemaCare's management is focused on continuing to improve the Company's
operating and financial performance and capitalizing on its national
market position to generate future profitable growth. This letter,
investor conference calls and our contacts with the press and the
analyst community are designed to communicate the results of our
efforts and our view of the Company's future prospects. We believe, our
efforts will be are successful, and that the Company's success will
result in an improved stock price.
We look forward to reporting on the further progress of the Company,
and welcome your questions, continued involvement and support.
Sincerely,
/s/ Alan Darlington /s/ Bill Nicely
- -------------------- ---------------------
Alan Darlington Bill Nicely
Chairman of the Board Chief Executive Officer
