SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)
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14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Hemagen Diagnostics, Inc.
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(Name of Registrant as Specified In Its Charter)
Jerry L. Ruyan, William P. Hales, Thomas A. Donelan, Christopher P. Hendy
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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<PAGE>
Hemagen Diagnostics, Inc.
40 Bear Hill Road
Waltham, Massachusetts 02451
Dear Hemagen Diagnostics, Inc. Stockholders:
Through the attached Consent Statement, we are providing you with an
opportunity to replace four of Hemagen's Board of Directors with our nominees
and to approve certain other proposals which are described in the attached
Consent Statement. All Hemagen stockholders are being asked to express their
consent to the proposals by marking, signing and dating the enclosed WHITE
consent card and returning it in the enclosed, postage-paid envelope, to our
solicitor, Beacon Hill Partners as set forth in the Consent Statement.
Our purpose is to adopt structural and management changes which we believe
will make Hemagen more responsive to stockholders by increasing its
profitability and thereby increasing stockholder value. Please read the
following material.
Our Company and its Stock Price Can Be Substantially Improved
Hemagen went public in February 1993 at a price of $5 per share. While
Hemagen's stock price has declined by approximately 80% since that time, the S&P
500 has returned 294% and the Russell 2000 Index has returned 197%.
We think Hemagen's current Board of Directors has failed to provide the
full-time professional management that is necessary in order to realize the
potential of Hemagen.
For example, as you may be aware, since Hemagen went public, it has been
managed by the same family group. The President and CEO's full-time position is
as Professor and Chairman of the Biochemistry Department and Associate Dean for
Graduate Affairs at the Boston University School of Medicine, which means he is
not able to devote 100% of his time, effort and attention to the company's
affairs.
Our nominees intend to restructure Hemagen's management with the goal of
improving its performance. If elected, the new directors intend to focus on more
profitable sales and a reduction in expenses. If these goals are successfully
implemented, we believe the company and the stock price will benefit
accordingly.
We Can Only Implement Our Plan with Your Help
In order to bring about progress in the company and to provide for the
proper management of its business, we want to replace Carl Franzblau, Lawrence
Gilbert, Charles W. Smith and Paul N. Fruitt with Jerry L. Ruyan, William P.
Hales, Christopher P. Hendy and Thomas A. Donelan. Information about these new
nominees is contained in the accompanying Consent Solicitation. Although, in
effect, we intend to replace only four of the six members of the Hemagen Board
of Directors, we must remove all six directors and then re-elect a slate of six
in order that all directors will serve for one-year terms. When we refer to the
"nominees" in this consent statement, we are referring to all six of the
nominees we have presented for election.
<PAGE>
We Believe We Can Deliver Stockholder Value
Our four new director nominees have strong backgrounds, both in the
diagnostics industry and in a wide variety of businesses. We believe that we
will bring about an increase in the value of your investment in Hemagen. Members
of our group include Jerry L. Ruyan, a founder, director and former CEO of
Meridian Diagnostics, Inc. (KITS on the Nasdaq National Market), who has spent
almost twenty-five years in the diagnostics industry. Mr. Ruyan and his
associates started with five hundred dollars in a basement in 1976 and grew
Meridian Diagnostics, Inc. into a $50,000,000 business with a market
capitalization in 1996, when Mr. Ruyan resigned to pursue other
investment/business opportunities, of over $140,000,000. Mr. Ruyan would become
the Company's new Chairman and Co-CEO. William P. Hales, an investment banker
and CPA, has substantial experience in the capital and equity markets. Mr. Hales
has spent six years in public accounting with Ernst & Young and Coopers &
Lybrand advising clients on both audit and management consulting issues. Mr.
Hales has spent the last seven years in the investment banking field and is well
able to make decisions to improve profitability and create value for all
shareholders. Christopher P. Hendy and Thomas A. Donelan both have impressive
credentials in the commercial banking industry with Marine Midland Bank and
Fifth Third Bank working with troubled companies. A biographical sketch of each
of our Nominees is included in the Consent Solicitation for your review.
We are asking each stockholder to vote to support us in this endeavor.
Further, in consideration or our efforts, we are asking for a commitment from
Hemagen stockholders by agreeing to grant us an "out-of-the-money" option for
15% of the fully-diluted outstanding shares of Hemagen common stock. The number
of "fully-diluted" shares includes outstanding options and warrants to purchase
Hemagen common stock. This option will be exercisable above the market (as set
forth in the Consent Statement) and will serve to align our objectives with
those of all stockholders, namely to create as much stock price appreciation as
possible-which will benefit all stockholders. We will not profit from these
stock options unless and until Hemagen's common stock price exceeds $__ per
share.
We urge you to take advantage of this opportunity to make these much-needed
changes for the betterment of Hemagen. If we fail in this effort, there may not
be another opportunity.
Please note that although our proposals are stated separately as required
by SEC rules, they are integrated in that none of them will be adopted unless
all are approved.
Please sign and return your consent cards today. Call us if you have
questions or suggestions.
Sincerely,
WILLIAM P. HALES
(212) 757-9682
JERRY L. RUYAN
THOMAS A. DONELAN
CHRISTOPHER P. HENDY
(800) 205-0407
<PAGE>
Our Consent Solicitation
We are furnishing this Consent Solicitation Statement and form of written
consent in connection with our solicitation of written consents from the holders
of common stock of Hemagen Diagnostics, Inc. to take the following actions, in
the order set forth below, in place of a meeting of Hemagen's stockholders, as
authorized by Delaware law:
1. Amend Article III, Section 1 of the Bylaws to eliminate the classified
Board of Directors;
2. Remove Hemagen's Board of Directors and any other person or persons (other
than the persons elected pursuant to this consent) elected or appointed to
the Board of Directors prior to the effective date of this stockholder
action in addition to or in lieu of any of such current members to fill any
newly created directorship or vacancy on the Board of Directors, or
otherwise;
3. Amend Article III, Section 2 of the Bylaws to permit Hemagen's stockholders
to fill vacancies on the Board of Directors;
4. Elect our nominees, Jerry L. Ruyan, William P. Hales, Thomas A. Donelan,
Christopher P. Hendy, Dr. Ricardo M.de Oliveira and Dr. Alan S. Cohen as
directors of Hemagen to fill the newly created vacancies on the Board of
Directors and to serve until their respective successors are duly elected
and qualified;
5. Repeal any Bylaws adopted by the Board of Directors since February 4, 1993
and prior to the effective date of this stockholder action other than the
Bylaws adopted by this Consent; and
6. Approve the grant of options to purchase 7.5% of the outstanding
fully-diluted shares of Hemagen common stock at $____ per share to William
P. Hales and 7.5% of the outstanding fully-diluted of Hemagen common stock
at $____ per share to Redwood Holdings Inc.
The sole shareholder of Redwood Holdings Inc. is an employee stock
ownership plan whose principal participants are Jerry L. Ruyan, Thomas A.
Donelan and Christopher P. Hendy, each of whom is a nominee for director under
this consent solicitation.
Stockholders of Hemagen are being asked to express their consent to the
proposals by marking, signing and dating the enclosed WHITE consent card and
returning it in the enclosed, postage-paid envelope to our solicitor, Beacon
Hill Partners, in accordance with the instructions set forth below.
We recommend that you consent to each of the proposals. Our delivery of
consents to Hemagen is conditioned on the receipt of approval of all of the
proposals. Consequently, if all of the proposals are not approved, none of the
proposals will be enacted even though sufficient consents may have been received
to approve a particular proposal.
<PAGE>
This Consent Statement and the enclosed WHITE consent card are first being
furnished to Hemagen's stockholders on or about ____________, 1999.
Consent Procedure
What Provisions of Law Govern Hemagen in Connection with the Consent
Solicitation?
Delaware law provides that, unless otherwise provided in the certificate of
incorporation, the actions proposed in this Consent Statement may be taken at
any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote if a consent or consents in writing,
setting forth the actions so taken, are signed by the holders of a majority of
the outstanding Hemagen common stock as of the record date, and such consents
are delivered to Hemagen's headquarters. Acceptable methods of delivery are
outlined in Delaware law.
Hemagen's Certificate of Incorporation is silent on this matter. The
written, unrevoked consents of the holders of a majority of the outstanding
shares of common stock approving all of the proposals contained in this Consent
Statement as of the record date must be delivered to Hemagen to effect the
actions described in this Consent Solicitation. Delaware law further provides
that no written consent shall be effective to take the corporate action referred
to therein unless, within 60 days of the earliest dated consent delivered in the
manner required by Delaware law, written consents signed by a sufficient number
of holders to take such action are delivered to the corporation.
As soon as we have received valid and unrevoked consents representing a
majority of the outstanding common stock as of the record date evidencing
approval of all of our proposals, we will deliver the consents to Hemagen as
required by Delaware law. After we make that delivery, stockholders will be
unable to revoke a consent.
We will notify all stockholders who have not consented to the actions at
such time as we have been able to secure their effectiveness.
What is the Record Date for the Consent Solicitation?
June __, 1999. Therefore, a sufficient number of consents must be returned
to us by __________, 1999 so that we can deliver the consents to Hemagen within
the 60-day period required under Delaware law.
Under Delaware law, the Board of Directors of Hemagen may fix the record
date for an action by written consent. Under these circumstances, the record
date may precede the date of the Board's action in setting the record date and
may not be later than ten days following the Board's action. The Board of
Directors of Hemagen has not, however, fixed a record date for the consent
solicitation. Therefore, as provided in Delaware law, the record date of June
__, 1999 is the date that we delivered a signed consent to Hemagen setting forth
votes in favor of all of the proposals.
<PAGE>
How Many Shares Must be Voted in Favor of the Proposals to Effect Them?
Consents may only be executed by stockholders of record at the close of
business on the Record Date. As of March 31, 1999, Hemagen had outstanding
7,751,890 shares of Common Stock. Based on its review of publicly available
information, we are not aware of any material change since March 31, 1999 in the
number of outstanding shares of Common Stock. Each share of Common Stock
entitles the record holder thereof to cast one vote. Hemagen's Certificate of
Incorporation and Bylaws do not provide for cumulative voting.
The number of votes necessary to effect the proposals is __________. We
intend to execute consents for the ______ shares of Common Stock we own in favor
of all of the proposals. Accordingly, based on the information known to us,
written consents by holders representing an additional _______ shares of Common
Stock, or __% of the shares not owned by us, will be required to adopt and
approve each of the proposals.
Since we must receive consents from a majority of Hemagen's outstanding
shares in order for the proposals to be adopted, abstentions, failures to vote,
broker non-votes or directions to withhold authority to vote on the WHITE
consent card will have the same effect as a "no" vote with respect to our
solicitation.
Our delivery of consents to Hemagen is conditioned on the receipt of
approval of all of the proposals. Consequently, if all of the proposals are not
approved, none of the proposals will be enacted even though sufficient consents
may have been received to approve a particular proposal.
If you are in favor of the actions we are proposing, you must send us a
written consent. If we do not receive a consent from you, it will be the same as
a "no" vote. We, therefore, urge you to mark, sign, date and return the enclosed
consent as soon as possible.
What Must I do to Consent?
1. If your shares of Hemagen Common Stock are held in your own name, please
sign, date and return the enclosed WHITE consent card today in the
postage-paid envelope provided.
2. If your shares of Hemagen Common Stock are held in the name of a brokerage
firm, bank nominee or other institution, only that entity can execute a
consent with respect to your shares. They will do so only upon receipt of
your specific instructions. Accordingly, you should contact the person
responsible for your account and instruct him or her to vote a WHITE
consent card on your behalf today.
<PAGE>
How Do I Complete the Consent Card?
You may elect to consent to, withhold consent or abstain with respect to
each Proposal by marking the "Consent," "Consent Withheld" or "Abstain" box, as
applicable, underneath each such Proposal on the accompanying WHITE consent card
and signing, dating and returning it promptly in the enclosed postage-paid
envelope.
If the stockholder who has executed and returned the consent card has
failed to check a box marked "Consent," "Consent Withheld" or "Abstain" for any
or all of the proposals, such stockholder consent card will be treated as a
consent to such proposal or proposals.
Your consent is important. Please mark, sign and date the enclosed WHITE
consent card and return it in the enclosed postage-paid envelope promptly.
Failure to return your consent will have the same effect as voting against the
proposals.
If you have any questions or require any assistance in executing or
delivering your consent, please call our solicitors:
Beacon Hill Partners, Inc.
90 Broad Street, 20th Floor
New York, New York 10004
(XXX) XXX-XXXX
Can I Revoke My Consent?
You can revoke your consent at any time before its exercise by submitting a
written, dated revocation of such consent or a later dated consent covering the
same shares. Your revocation may be in any written form validly signed by the
record holder as long as it clearly states that the consent previously given is
no longer effective. You must execute and deliver your revocation before the
time that the action authorized by the executed consent is taken. You may
deliver the revocation to Beacon Hill Partners at the address set forth above.
The Proposals
This solicitation statement and the accompanying form of written consent
are first being furnished on or about _________, 1999, in connection with our
solicitation from the holders of shares of Common Stock of written consents to
take the following actions without a stockholders meeting, as permitted by
Delaware law:
<PAGE>
1. The Classified Board Proposal. Amend the Bylaws to eliminate the classified
Board of Directors:
"RESOLVED, that the stockholders hereby amend Article III, Section 1
of the Bylaws by deleting the fourth and fifth sentences thereof."
This proposal would result in the elimination of the classified Board
of Directors of Hemagen.
2. The Director Removal Proposal. Remove existing directors from the
Board of Directors:
"RESOLVED, that each current member of the Board of Directors of
Hemagen, and any other person or persons (other than the persons
elected pursuant to this consent) elected or appointed to the Board of
Directors of Hemagen prior to the effective date of this resolution in
addition to or in lieu of any of such current members to fill any
newly created directorship or vacancy on the Board of Directors of
Hemagen, or otherwise, is hereby removed and the office of each member
of the Board of Directors is hereby declared vacant."
Delaware law provides that, if the Board of Directors is not classified,
directors of Hemagen may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors. This
proposal would remove all of the current directors so that the Nominees, if
elected, would constitute the six members of the Board of Directors.
3. The Director Vacancy Proposal. Amend the Bylaws to permit stockholders
to fill vacancies on the Board of Directors:
"RESOLVED, that the stockholders hereby amend Article III of the
Bylaws by deleting the first sentence of Section 2 and by
replacing it with a new first sentence, which shall read as
follows:
'If vacancies occur in the Board of Directors, or if new
directorships are created, they may be filled by a majority of
directors then in office, although less than a quorum, by a sole
remaining director, or by a vote of the stockholders at an annual
or special meeting of the stockholders or by written consent in
lieu of a meeting of stockholders.'";
This proposal would amend Section 2 of Article III of the Bylaws to provide
that vacancies on the Board of Directors created as a result of the removal of
the current directors may be filled by stockholders of Hemagen as well as by the
directors. The Bylaws currently provide that vacancies on the Board of Directors
may be filled by the directors then in office. No provision is made for the
filling of vacancies by stockholders. The proposed Bylaw amendment would grant
to stockholders the right to elect the Nominees to fill the vacancies on the
Board of Directors created by adoption of the Director Removal Proposal.
4. The Director Election proposals. Elect the six persons listed below to
fill the newly vacant directorships:
"RESOLVED, that the following persons are hereby elected as
directors of the Company to fill the newly created vacancies on
the Board of Directors, and to serve until their successors are
elected and qualified: Jerry L. Ruyan, William P. Hales, Thomas
A. Donelan, Christopher P. Hendy, Dr. Ricardo M.de Oliveira and
Dr. Alan S. Cohen."
<PAGE>
We seek to replace four of the current Directors with our Nominees. Our
primary purpose in seeking to elect the Nominees to the Board of Directors is to
adopt structural and management changes which we believe will make Hemagen more
responsive to shareholders and increase stockholder value. If elected, the
Nominees would be responsible for managing the business and affairs of Hemagen.
Dr. de Oliveira and Dr. Cohen are currently directors of Hemagen. However, in
order that all directors of Hemagen will serve one-year terms instead of, in the
case of Dr. de Oliveira and Dr. Cohen, completing their existing term as
directors of Hemagen , we must remove all of the Directors and reelect Dr. de
Oliveira and Dr. Cohen.
Our Nominees understand that, as directors of Hemagen, each of them has an
obligation under Delaware law to the most scrupulous observance of his duty of
care and duty of loyalty, which requires an undivided and unselfish loyalty to
Hemagen and demands that there be no conflict between duty and self interest.
Each of our Nominees has undertaken personally, if elected, to be bound by and
discharge his duty of care and duty of loyalty to Hemagen and has agreed to
perform his duties in good faith, in a manner that he reasonably believes to be
in the best interests of Hemagen and all of its stockholders.
The following sets forth information about the Nominees:
Jerry L. Ruyan, age 53, 9468 Montgomery Road, Cincinnati, Ohio 45242. Prior
to becoming a founder of Redwood in 1995, Mr. Ruyan was president and chief
executive officer of Meridian Diagnostics, Inc., a publicly traded company that
develops diagnostic test products for the global medical industry. As a founder
of Meridian, he is intimately familiar with developing growth for a company from
start-up to identifying market potential, nurturing product development,
operating successful organizations and accessing public markets. He guided
Meridian through each stage to create a thriving, and still growing, public
company. Mr. Ruyan has been an active, successful investor in other companies in
need of private equity infusions and management support. He serves on the boards
of the following public companies: Meridian Diagnostics, Inc., Meritage
Hospitality Group Inc. and Cafe Odyssey Inc. and is on the boards of several
private companies such as The Last Best Place Catalog Company and Schonstedt
Instrument Company. Mr. Ruyan is a trustee for Ashland University. Mr. Ruyan
received a B.S. degree in Biology from Ashland University and a Master's degree
in Microbiology from The Ohio State University.
William P. Hales, age 31, 408 West 57th Street, 4A, New York, New York
10019, is a certified public accountant and has been a Senior Investment Advisor
with Jesup & Lamont Securities corporation, an investment banking and brokerage
firm, since May, 1997. Mr. Hales has substantial experience in the capital and
equity markets, in financing public and private companies and managing
investments in public companies. Mr. Hales received his B.A. in Accounting from
Pace University. From 1992 to present, Mr. Hales has been a full time money
manager with several investment banking firms including D. Blech & Co., from
March 1994 to September 1994, Josephthal, Lyon & Ross, from September 1994 to
July 1996, and The Thornwater Company, L.P., from July 1996 to May 1997. From
1988 to 1992, Mr. Hales was a practicing CPA with Coopers & Lybrand in New York
City. From 1985 to 1988, Mr. Hales was a practicing CPA with Ernst & Young in
New York City. While in public accounting, Mr. Hales served numerous clients in
varied industries including banking, manufacturing and financial institutions
both in an audit and consulting capacity.
<PAGE>
Thomas A. Donelan, age 43, 9468 Montgomery Road, Cincinnati, Ohio 45242,
has extensive experience consulting with corporate clients. A twenty-year
veteran of the banking industry, he has expertise in business analysis, loan
organization, equity portfolio management and structuring financing packages for
merger and acquisition transactions. These skills are valuable in determining
investment opportunities, supporting corporate management in achieving their
business objectives and managing a portfolio of fund investments. Prior to
becoming a founder of Redwood Venture Group in 1995, Mr. Donelan spent twenty
years in the Fifth Third organization and was vice president, commercial
lending. He has also served as a board member for Blue Chip Venture Fund in
Cincinnati and Alpha Capital Venture Fund in Chicago. He serves on the boards of
Meritage Hospitality Group, Inc., a public company; Schonstedt Instrument
Company and The Avon Workshop Inc, private companies; and St. Joseph Orphanage,
a charitable organization. Mr. Donelan earned a B.S. degree in Political Science
from Northern Kentucky University and a J.D. from Chase College of Law.
Christopher P. Hendy, age 41, 9468 Montgomery Road, Cincinnati, Ohio 45242,
has over __ years of experience providing capital to help privately held
companies attain their financial goals. Prior to joining Redwood Venture Group,
Inc. in August of 1996, Mr. Hendy spent the preceding five years in the Asset
Based Lending department of Fifth Third Bank. As vice president and manager of
the department, Mr. Hendy increased portfolio outstandings by 47% to over
$330,000,000. Prior to that, Mr. Hendy was with Marine Midland Bank where he
rose through positions of increasing responsibility to regional manager-vice
president. Mr. Hendy serves on the Boards of two private companies--Schonstedt
Instrument Company and The Avon Workshop Inc. His experience in assessing the
prospects and management abilities of small cap companies is a great asset to
Redwood. Mr. Hendy received his B.S. degree in Business Administration from
Xavier University.
Alan S. Cohen, M.D., age 72, has served as a Director of the Corporation
since its inception. Dr. Cohen has been employed by the Boston University School
of Medicine as a Professor of Medicine since 1968 and a Professor of
Pharmacology since 1974. Dr. Cohen is Editor-in-Chief of the International
Journal of Amyloid. Dr. Cohen served as the Director of the Arthritis Center of
Boston University from 1976 to 1994. From 1972 to 1992, Dr. Cohen served as
Chief of Medicine of Boston City Hospital. Dr. Cohen is a past president of the
American College of Rheumatology. Dr. Cohen received his Bachelor of Arts degree
from Harvard College and his M.D. degree from the Boston University School of
Medicine.
Ricardo M. de Oliveira, M.D., age 47, has been the Vice President of
Research and Development and a Director of the Corporation since its inception.
From 1980 through 1990, Dr. de Oliveira was a Professor at the University of Sao
Paulo in Brazil. Dr. de Oliveira is also the Director of Clinical Pathology at
the Cancer Hospital of Sao Paulo, Brazil. Dr. de Oliveira received his M.D.
degree from the Faculdade de Ciencias Medicas da Santa Casa de Sao Paulo in
Brazil.
<PAGE>
Exhibit A sets forth information regarding shares of Hemagen common stock
owned of record and beneficially by us and, to our best knowledge, by those
participating in this solicitation on our behalf, the Nominees, or any associate
or immediate family member of the foregoing persons.
Except as otherwise set forth in this Consent Statement, no one
participating in this solicitation on our behalf, the Nominees, or any associate
or immediate family member of any of the foregoing persons is or has within the
past year been a party to any contract, arrangement or understanding with
respect to any securities of Hemagen.
We have agreed to indemnify each of our Nominees against all liabilities,
including liabilities under the federal securities laws, in connection with this
consent solicitation and such person's involvement in the operation of Hemagen
and to reimburse such Nominee for his out-of-pocket expenses.
If the proposals are elected, we will request reimbursement from Hemagen
for the expenses that we incur in connection with this consent solicitation as
more fully described below under "Costs of the Consent Solicitation" on page __.
5. The Bylaw Repeal Proposal. Repeal any Bylaws adopted by the Board of
Directors since February 4, 1993.
"RESOLVED, that any amendments to the Bylaws adopted by the Board of
Directors of Hemagen on or after February 4, 1993 and prior to the
effective date of this resolution (other than the Bylaws adopted
pursuant to this consent), are hereby rescinded and shall have no
further force or effect."
We also seek the repeal of any Bylaws adopted by the Board of Directors
since February 4, 1993 through the date that the proposals are adopted so that
the Board of Directors cannot use new Bylaws or Bylaws which have not been
disclosed to Hemagen's stockholders to prevent the stockholders from
accomplishing the objectives described in this Consent Statement.
We not aware of any Bylaws that would be repealed by the approval of this
proposal. Rules of the Securities and Exchange Commission require that Bylaws
and any amendments be filed as exhibits to the reports filed with the SEC. No
such filings have been made with respect to Hemagen's Bylaws since their initial
filing on February 4, 1993. Approval of this proposal could result in the repeal
of Bylaws which may be in the best interests of Hemagen's stockholders, although
we believe such a possibility to be unlikely in view of the failure of the Board
of Directors to disclose any such Bylaws. If Hemagen has amended the Bylaws and
discloses such amendment, we may forward additional solicitation materials to
Hemagen's stockholders regarding such actions and seek appropriate remedies.
<PAGE>
Delaware law provides that "the power to adopt, amend or repeal bylaws
shall be in the stockholders entitled to vote. . . ; provided, however, any
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. . . . The fact that such power has
been so conferred upon the directors. . . shall not divest the stockholders or
members of the power, nor limit their power to adopt, amend or repeal bylaws."
We believe that such an unequivocal statement makes it clear that the
stockholders of Hemagen have the power under Delaware law to repeal Bylaws as
provided by this proposal, whether or not the Bylaws so amended or repealed are
known to the stockholders. To our knowledge, the Delaware courts have not
addressed the validity of a proposal of the form of this proposal. Hemagen's
certificate of incorporation confers the power to adopt, amend or repeal the
Bylaws on the Board of Directors, and the Bylaws provide for such amendment or
repeal by the Board of Directors without a vote of Hemagen's stockholders.
6. The Stock Option Proposal. Approve the grant of stock options to
William P. Hales and Redwood Holdings Inc.
"RESOLVED, that the Company grant options to purchase 7.5% of the
outstanding fully-diluted shares of Hemagen common stock Hemagen
common stock at $____ per share to William P. Hales and 7.5% of
the outstanding fully-diluted shares of Hemagen common stock of
Hemagen common stock at $____ per share to Redwood Holdings Inc.,
in each case as of the effective date of this resolution, with
such further terms and conditions as determined by the Board of
Directors."
Approval of this resolution by the stockholders of Hemagen will not result
in the issuance of the option by Hemagen. Under Delaware law, options to
purchase shares of common stock must be approved by the Board of Directors. If
the proposals set forth in this Consent Statement are approved by Hemagen
stockholders, we intend that the Board of Directors of Hemagen will approve the
option. We are seeking stockholder approval of the option in advance in order to
satisfy requirements of the Nasdaq SmallCap Market.
The exercise price for the stock option that we have described is $___
which is __% above the average of the closing prices for the Hemagen common
stock during the 30 trading day period ending June __, 1999, the date of the
public announcement of this consent solicitation. We will not profit from these
stock options unless and until Hemagen's stock price exceeds $__ per share.
Thereafter, increases in the value of stock underlying our stock options will be
shared by all stockholders of Hemagen as Hemagen's stock price increases
further.
As of March 31, 1999 and according to publicly-available information,
Hemagen had 7,751,890 shares of common stock outstanding and had 3,894,873
shares underlying outstanding options and warrants to purchase Hemagen common
stock. Therefore, if this option were granted effective March 31, 1999, each of
Mr. Hales and Redwood Holdings Inc. would receive an option to purchase 873,507
shares of Hemagen common stock at $__ per share. While we are unaware of any
material change in the number of outstanding shares, options and warrants of
Hemagen since March 31, 1999, the actual number of shares that Mr. Hales and
Redwood Holdings Inc. would be able to purchase under their options would be
determined as of the effective date of the adoption of the proposals.
<PAGE>
If all of our proposals are approved by the stockholders of Hemagen, we and
the other Nominees will work diligently to improve your value in the stake of
Hemagen. We are not asking for common stock, free of charge. All we are asking
is that we have the opportunity to profit from our labor in consideration of
past expenses and services, and future services, to Hemagen.
Also, please remember that if all of our proposals are not approved, none
of our proposals will have any effect. Therefore, unless stockholders advocate
change for Hemagen and indicate their desire for change by adopting all of the
proposals, we will not receive the option outlined in this proposal even if this
particular proposal is approved.
Certain Other Information Regarding Hemagen
Stockholder proposals
Stockholders are referred to Hemagen's 1998 Annual Report and the Proxy
Statement for Hemagen's 1999 Annual Meeting of Stockholders for information
regarding the compensation and remuneration paid and payable and other
information related to Hemagen's officers and directors and for information to
the beneficial ownership of Hemagen's securities by officers, directors and
beneficial owners of 5% or more of the Common Stock. Hemagen's 1999 Proxy
Statement states that the deadline for stockholders to submit proposals to be
considered for inclusion in Hemagen's Proxy Statement for the next year's Annual
Meeting of Stockholders is expected to be November 25, 1999.
Costs of Consent Solicitation
Written consents may be solicited by mail, advertisement, telephone,
facsimile or in person. We have retained Beacon Hill Partners to act as our
solicitor in this consent solicitation. Approximately 25 employees of Beacon
Hill Partners will engage in the solicitation. We have agreed to pay Beacon Hill
Partners a fee of $20,000 plus reasonable out-of-pocket expenses. Beacon Hill
Partners has also agreed to provide consulting and analytic services and act as
proxy solicitor with respect to banks, brokers, institutional investors and
individual stockholders.
Costs related to the solicitation of consents to the proposals include
expenditures for attorneys, accountants, investment bankers, consent solicitors,
printing, postage, litigation and related expenses and filing fees and are
expected to aggregate approximately $_____, of which approximately $30,000 has
been spent to date. The portion of such costs allocable solely to the
solicitation of consents to the proposals is not readily determinable. Actual
expenditures may vary materially from the estimate, however, as many
expenditures cannot be readily predicted. The entire expense of preparing,
assembling, printing and mailing this Consent Statement and any other consent
soliciting materials and the cost of soliciting consents will be borne by us. If
the proposals are elected, we will request reimbursement from Hemagen for these
expenses.
<PAGE>
Banks, brokerage houses and other custodians, nominees and fiduciaries may
be requested to forward our solicitation materials to the beneficial owners of
the shares they hold of record, and we will reimburse them for their reasonable
out-of-pocket expenses. If your shares are registered in your own name, you may
mail or fax both sides of your consent card to us at the address or fax number
listed below.
Your consent is important. No matter how many or how few shares you own,
please submit your consent to the proposals contained in this Consent Statement.
Our delivery of consents to Hemagen is conditioned on the receipt of approval of
all of the proposals. Consequently, if all of the proposals are not approved,
none of the proposals will be enacted even though sufficient consents may have
been received to approve a particular proposal. Only your latest dated consent
counts.
If you have any questions or require any assistance in executing or
delivering your consent, please call our solicitors:
Beacon Hill Partners, Inc.
90 Broad Street, 20th Floor
New York, New York 10004
(XXX) XXX-XXXX
<PAGE>
EXHIBIT A
SHARES HELD BY US AND
OTHER PERSONS NOMINATED AS DIRECTORS BY THIS PROXY STATEMENT
The following persons are the beneficial owners of Shares purchased and
sold in open market transactions executed on the Nasdaq SmallCap Market since
June 30, 1997 in the amount and on the dates set forth below:
William P. Hales
Purchase
Date or Sale Number of Shares Price Per Unit
---- ------- ---------------- --------------
6/5/98 Purchase 2,500 $1.22
6/10/98 Purchase 6,400 1.28
8/21/98 Purchase 5,000 1.06
2/4/99 Purchase 2,000 1.50
3/25/99 Purchase 2,500 1.13
5/28/99 Purchase 5,000 .88
6/4/99 Purchase 2,600 1.30
6/11/99 Purchase 25,000 1.13
6/14/99 Purchase 2,000 1.19
6/14/99 Purchase 40,000 1.06
6/15/99 Purchase 35,000 1.03
6/17/99 Purchase 25,100 1.17
6/18/99 Purchase 25,000 1.06
6/21/99 Purchase 10,000 1.25
6/24/99 Purchase 5,000 1.19
6/24/99 Purchase 2,000 1.25
6/24/99 Purchase 3,000 1.09
6/25/99 Purchase 1,000 1.19
6/25/99 Purchase 49,500 warrants 0.19
<PAGE>
Jerry L. Ruyan
Purchase
Date or Sale Number of Shares Price Per Unit
---- ------- ---------------- --------------
7/29/97 Purchase 5,000 2.00
7/29/97 Purchase 5,000 2.00
8/8/97 Sale 1,500 1.88
9/30/97 Purchase 7,000 2.00
9/26/97 Purchase 26,500 1.96
9/22/97 Purchase 2,000 1.94
9/18/97 Purchase 22,000 1.89
10/3/97 Purchase 5,400 2.00
10/8/97 Purchase 2,500 2.00
10/8/97 Purchase 4,500 2.00
11/3/97 Sale 500 1.88
11/3/97 Purchase 72,727 2.19(1)
11/30/98 Purchase 5,000 0.94
12/1/98 Purchase 3,000 0.94
12/8/98 Purchase 5,000 0.88
12/18/98 Purchase 15,000 0.77
12/18/98 Purchase 15,000 0.77
1/29/98 Sale 2,000 1.69
12/31/98 Purchase 5,000 0.78
3/25/99 Purchase 500 1.13
3/25/99 Purchase 500 1.13
3/26/99 Purchase 4,000 1.13
3/26/99 Purchase 5,000 1.13
6/17/99 Purchase 400 1.06
6/17/99 Purchase 500 1.06
6/17/99 Purchase 2,000 1.06
<PAGE>
Thomas A. Donelan
Purchase
Date or Sale Number of Shares Price Per Unit
---- ------- ---------------- --------------
6/14/99 Purchase 100 $1.03
Christopher P. Hendy
Purchase
Date or Sale Number of Shares Price Per Unit
---- ------- ---------------- --------------
6/8/99 Purchase 5,000 $1.00
6/11/99 Purchase 4,900 1.06
6/11/99 Purchase 100 1.03
6/14/99 Purchase 8,500 1.06
6/15/99 Purchase 1,000 1.06
6/16/99 Purchase 2,000 1.06
6/18/99 Purchase 3,500 1.06
Dr. Alan S. Cohen(2)
Purchase
Date or Sale Number of Shares Price Per Unit
---- ------- ---------------- --------------
10/9/98 Purchase 10,000 $0.84
(1) Each unit purchased consisted of one share of Hemagen Common Stock and
one warrant to purchase Hemagen Common Stock.
(2) According to publicly-available information, this is the only
transaction of Dr. Cohen's. In addition, according to
publicly-available information, Dr. de Oliveira has not engaged in any
transactions in Hemagen common stock.
<PAGE>
Consent Card
Hemagen Diagnostics, Inc.
Consent of stockholders to action without a meeting
This Consent is being solicited by William P. Hales and Jerry L. Ruyan
The undersigned, a stockholder of record of Hemagen Diagnostics, Inc. (the
"Company"), hereby consents pursuant to Section 228 of the Delaware General
Corporation Law, with respect to the number of shares of Common Stock, par value
$0.01 per share, of Hemagen held by the undersigned, to each of the following
actions, which will occur in the order set forth in this Consent Card, without
prior notice and without a vote, as more fully described in the consent
statement, receipt of which is hereby acknowledged.
1. Classified Board Proposal: Amend the Bylaws to eliminate the classified
Board of Directors of Hemagen, pursuant to the resolution set forth in the
consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
If no box is marked with respect to the Classified Board Proposal, this
Consent will be voted in favor of the amendment of the Bylaws as set forth
above.
2. Director Removal Proposal: Remove the current members of the Board of
Directors of Hemagen other than the directors elected by this consent,
pursuant to the resolution set forth in the consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
If no box is marked with respect to the Director Removal Proposal, this
Consent will be voted in favor of the removal of the directors of Hemagen as set
forth above.
3. Director Vacancy Proposal: Amend the Bylaws to provide that Hemagen's
stockholders may fill vacancies on the Board of Directors of Hemagen,
pursuant to the resolution set forth in the consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
If no box is marked with respect to the Director Vacancy Proposal, this
Consent will be voted in favor of the amendment of the Bylaws as set forth
above.
<PAGE>
4. Director Election Proposal: Elect the following six persons listed below
(the "Nominees") to fill the newly vacant directorships, pursuant to the
resolution set forth in the consent statement:
Jerry L. Ruyan, William P. Hales, Thomas A. Donelan, Christopher P.
Hendy, Dr. Ricardo M.de Oliveira and Dr. Alan S. Cohen
CONSENT CONSENT WITHHELD ABSTAIN
To withhold consent to a proposed Nominee, specify the Nominee in the
following space:
-------------------------------------------------------------------
If no box is marked above with respect to the Director Election Proposal,
this Consent will be voted in favor of the election of all five Nominees.
5. Bylaw Proposal: Repeal any Bylaws adopted by the Board of Directors of
Hemagen since January 1, 1998 (other than the Bylaws adopted by this
consent), pursuant to the resolution set forth in the consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
If no box is marked with respect to the Bylaw Proposal, this Consent will
be voted in favor of the repeal of any Bylaws adopted since January 1, 1998 as
set forth above.
6. Stock Option Proposal. Approve the grant of options to purchase 7.5% of the
outstanding fully-diluted shares of Hemagen common stock at $____ per share
to William P. Hales and 7.5% of the outstanding fully-diluted of Hemagen
common stock at $____ per share to Redwood Holdings Inc., pursuant to the
resolution set forth in the consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
If no box is marked with respect to the Stock Option Proposal, this consent
will be voted in favor of the approval of the stock option to Messrs. Hales and
Ruyan.
PLEASE ACT PROMPTLY.
IMPORTANT: THIS CONSENT MUST BE SIGNED AND DATED TO BE VALID.
Dated: ____________________________ , 1999
Signature: _______________________________
Signature
(if held jointly): __________________________
Title or authority
(if applicable): _________________________
<PAGE>
Please sign exactly as name appears hereon. If shares are registered in
more than one name, the signature of all such persons should be provided. A
corporation should sign in its full corporate name by a duly authorized officer,
stating his or her title. Trustees, guardians, executors and administrators
should sign in their official capacity, giving their full title as such. If a
partnership, please sign in the partnership name by authorized persons. The
consent card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS CONSENT
BEFORE MAILING THE CONSENT IN THE ENCLOSED ENVELOPE.
