SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.__)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
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 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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(14) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction 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 identity 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:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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ATTENTION HEMAGEN STOCKHOLDERS
If after reading the attached materials you want to support our proposals you
must do the following:
1. Sign and return the WHITE consent card enclosed.
2. Act before the cut-off date of September 17, 1999.
3. Not return the BLUE or any other proxy card sent to you by management
If you do nothing, the effect will be a vote against our proposal since we need
the affirmation of a majority of all outstanding shares.
<PAGE>
Hemagen Diagnostics, Inc.
40 Bear Hill Road
Waltham, Massachusetts 02451
July 20, 1999
Dear Hemagen Stockholder:
Through the attached Consent Statement, we are providing you with an
opportunity to remove and replace members 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 our 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.
If you elect our nominees, we will analyze all aspects of Hemagen and,
where appropriate, make structural and management changes designed to make it
more responsive to stockholders. Our goal in making such changes will be to
increase Hemagen's profitability and stockholder value. Of course, there can be
no assurance that we will be successful in our efforts. Please read the
following material.
Our Goal is to Substantially Improve Hemagen and its Stock Price
Hemagen went public on February 4, 1993 at a price of $5 per share and
closed at $6 on that date. Hemagen stockholders have suffered a significant
decline in their investment since then. The following chart shows the change in
a $100 investment in Hemagen at $6 and a $100 investment in the other indices
shown at the close on February 4, 1993 through February 4, 1999:
Willshire
Peer Russell Small
Hemagen Group(1) 2000 Cap Index S&P 500
------- ------- ------ --------- -------
2/4/93 ........ $100.00 $100.00 $100.00 $100.00 $100.00
2/4/94 ........ 43.75 90.69 112.61 111.79 104.50
2/6/95 ........ 31.25 115.79 108.64 106.75 107.03
2/5/96 ........ 52.08 230.28 137.05 132.06 142.68
2/4/97 ........ 37.50 172.96 159.00 160.58 175.56
2/4/98 ........ 28.13 126.91 228.59 200.00 223.98
2/4/99 ........ 23.96 148.29 179.80 195.75 277.71
======= ======= ======= ======= =======
(1) The Peer Group consists of Diagnostic Products Corp., Meridian Diagnostics,
Immucor, Inc. and Idexx Laboratories. All calculations exclude cash
dividends paid.
<PAGE>
We think Hemagen's current Board of Directors has failed to provide the
full-time professional management that is necessary for Hemagen to achieve its
full potential.
For example, as you may be aware, since Hemagen went public, it has been
managed by the same family group. The Chairman, President and CEO, Carl
Franzblau, is a full-time Professor and Chairman of the Biochemistry Department
and Associate Dean for Graduate Affairs at the Boston University School of
Medicine, which means, in our opinion, he is not able to devote One Hundred
Percent of his time, effort and attention to the company's affairs. The
Treasurer, Myrna Franzblau, is the wife of Carl Franzblau. The Chief Financial
Officer & General Counsel, William Franzblau, is the son of Carl and Myrna
Franzblau. The Vice President of Sales & Marketing, Scott Weiss, is the
son-in-law of Carl and Myrna Franzblau. We believe that the stockholders of
Hemagen deserve full-time, professional management.
We own 8.7% of Hemagen's stock. 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
We believe we can improve Hemagen by providing better and more experienced
management of its business. We want to replace current directors Carl Franzblau,
Lawrence Gilbert, Charles W. Smith, Alan S. Cohen, Ricardo M. de Oliveira and
Paul N. Fruitt with Jerry L. Ruyan, William P. Hales, Christopher P. Hendy and
Thomas A. Donelan. Information about these nominees is contained in the
accompanying Consent Solicitation. When we refer to the "nominees" in this
consent statement, we are referring to all of the nominees we have presented for
election.
Our Goal is to Substantially Increase Stockholder Value
Our four new director nominees have strong backgrounds, both in the
diagnostics industry and in a wide variety of businesses. Our aim is to bring
about an increase in the value of your and our investment in Hemagen. Members of
our group are Jerry L. Ruyan, a founder and formerly Director and CEO of
Meridian Diagnostics, Inc., a publicly-traded company. Mr. Ruyan has spent
almost twenty-five years in the diagnostics industry. Mr. Ruyan and his
associates started Meridian in 1976 and by 1996, when Mr. Ruyan resigned as an
officer of Meridian, it had grown into a business with annual revenues of $30
million and a market capitalization of over $140 million. 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 that are necessary to improve profitability
and create value for all stockholders. Christopher P. Hendy and Thomas A.
Donelan both have impressive credentials with Marine Midland Bank and Fifth
Third Bank in the commercial banking industry working with troubled companies. A
biographical sketch of each of our nominees is included in the Consent
Solicitation for your review.
<PAGE>
Mr. Ruyan would become Hemagen's new Chairman and CEO, and Mr. Hales would
become its new President. The remaining members of Hemagen's management would
consist of persons, not currently identified, with experience in the diagnostics
industry. We have no current plans to effect any further change in control of
Hemagen, sell or merge Hemagen or make any significant acquisitions or
dispositions of assets. We anticipate that total executive compensation after
these changes would be about the same as last reported by Hemagen.
We are asking each stockholder to vote to support us in this endeavor.
Furthermore, in consideration or our efforts, we are asking for a commitment
from Hemagen stockholders to agree to grant us options 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. We would not be paying Hemagen any monetary consideration
in exchange for the grant of the options. These options will be exercisable for
$1.36 per share which represents a 33-1/3% premium over the average of the
closing price of Hemagen Common Stock during the 30 day trading period ending
June 25, 1999, the date of the public announcement of our consent solicitation.
The options 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 $1.36 per share. Additionally, we will not
exercise these options for a period of eighteen months or until the stock trades
above $5 per share for 20 consecutive business days, unless there is a further
change in control.
We urge you to take advantage of this opportunity to make these changes in
the Board of Directors for the betterment of Hemagen. If we fail in this effort,
there may not be another opportunity.
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 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. Repeal the Bylaw amendments adopted July 2, 1999 along with any other
amendments 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;
2. Amend Article III, Section 1 of the Bylaws to eliminate the classified
Board of Directors;
3. Remove Hemagen's Board of Directors and any other person or persons (other
than those 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;
4. Amend Article III, Section 2 of the Bylaws to permit Hemagen's stockholders
to fill vacancies on the Board of Directors;
5. Elect our nominees, Jerry L. Ruyan, William P. Hales, Thomas A. Donelan and
Christopher P. Hendy as directors of Hemagen to fill four of the six newly
created vacancies on the Board of Directors and to serve until their
respective successors are duly elected and qualified; and
6. Approve the grant of options to purchase 7.5% of the outstanding
fully-diluted shares of Hemagen Common Stock at $1.36 per share to William
P. Hales and 7.5% of the outstanding fully-diluted shares of Hemagen Common
Stock at $1.36 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.
<PAGE>
We recommend that you consent to each of the proposals. Our delivery of
consents on Proposals 2 through 6 is conditioned upon the receipt of approval
for each of those proposals. Consequently, if each of Proposals 2 through 6 are
not approved, none of them will be enacted even though sufficient consents may
have been received to approve a particular proposal.
This Consent Statement and the enclosed WHITE consent card are first being
furnished to Hemagen's stockholders on or about July 21, 1999.
Consent Procedure
What Provisions of Law Govern Hemagen in Connection
with the Consent Solicitation?
Hemagen is a Delaware corporation and is bound by the Delaware General
Corporation Law (the "DGCL"). Hemagen's Bylaws provide for a classified Board of
Directors which is divided currently into three classes of two directors each.
Section 109 of the DGCL allows stockholders to amend the bylaws of a Delaware
corporation. Pursuant to Section 216 of the DGCL, unless the Certificate of
Incorporation or Bylaws provide otherwise, the affirmative vote of a majority of
the Hemagen shares can amend the bylaws. Neither Hemagen's Certificate nor its
Bylaws contain provisions regarding amendments to the Bylaws. Hemagen's Board of
Directors, after learning of initiation of this consent solicitation procedure,
purported to amend the Bylaws on July 2, 1999 to increase the vote necessary for
stockholders to amend the Bylaws to two-thirds of all outstanding shares
entitled to vote. We believe this action is invalid and was made by Hemagen's
current Board purely as a device to prevent stockholders from adopting our
proposals. We further believe this action represents a breach of fiduciary duty
by the directors of Hemagen to their stockholders and demonstrates the attitude
of management toward the stockholders. We intend to contest this matter in
Delaware courts. Our Proposal 1 would repeal this and any other bylaws adopted
since the Company went public.
Once Proposal 1 is effected, our Proposal 2 would amend the Bylaws to
eliminate the classified Board of Directors. Section 141(k) of the DGCL allows
the stockholders to remove directors with or without cause. If the corporation
has a classified Board, however, directors may be removed only for cause. If
Proposal 2 is adopted, it would, by eliminating the classified Board of
Directors, allow the stockholders to remove directors without cause. Proposals 4
and 5 would then amend the Bylaws to allow stockholders to fill the vacancies
created as a result of the removal of the present directors. Once Proposal 4 is
adopted, the adoption of Proposal 5 would result in the election of our nominees
to fill the vacancies on the Board of Directors.
We are seeking to take this action by consent solicitation. Section 228 of
the DGCL provides that, absent a contrary provision in the Certificate of
Incorporation, any action that may be taken at a meeting of the stockholders may
be taken by the written consent of at least the minimum number of votes that
<PAGE>
would be necessary to take such action at a meeting in which all shares entitled
to vote were present and voting. Hemagen's Certificate of Incorporation contains
no contrary provision.
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 Proposal 1, we will deliver those consents to Hemagen. When we
receive valid unrevoked consents representing a majority of the outstanding
Common Stock as of the record date evidencing approval of proposals 2 through 6,
we will also deliver those consents to Hemagen. After deliveries are made,
stockholders will be unable to revoke a consent with respect to those delivered.
WE URGE STOCKHOLDERS NOT TO BE DISCOURAGED OR CONFUSED BY ACTIONS OF
HEMAGEN'S BOARD OF DIRECTORS IN PURPORTING TO AMEND THE BYLAWS TO INCREASE THE
VOTE NECESSARY TO EFFECT THESE PROPOSALS. EXPRESS YOUR SUPPORT FOR OUR PROPOSALS
BY SUBMITTING THE WHITE PROXY CARD.
Assuming our Consent Solicitation is successful, we will notify all
stockholders as soon as practicable after the effectiveness of consents by press
release and by mail.
What is the Record Date for the Consent Solicitation?
June 29, 1999.
What is the Deadline for Submitting Consents?
Section 228 of the DGCL requires that, in order for our proposals to be
adopted, Hemagen must receive written consents signed by a sufficient number of
holders to adopt the proposals within 60 days of the earliest dated consent
delivered to Hemagen. In order to consent to our proposals, you must return your
written consent to us no later than September 17, 1999, which is within 60 days
of the date we delivered the first executed consent.
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 June 29, 1999. As of March 31, 1999, Hemagen had outstanding
7,651,890 shares of Common Stock excluding shares held in the Company's treasury
and which are not entitled to vote on the proposals. Based on our review of
publicly available information, we are not aware of any 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 in the election
of directors.
<PAGE>
Based on available records, the affirmative vote of 3,825,945 shares is
necessary to effect the proposals. We intend to execute consents for the 684,854
shares of Common Stock we own in favor of all of the proposals. Accordingly,
written consents by owners of an additional 3,141,091 shares of Common Stock, or
45% of the shares not owned by us, will be required to adopt and approve each of
the proposals. Under the Bylaw amendment purportedly approved by the Board of
Directors on July 2, 1999, the affirmative vote of 5,101,260 shares (consisting
of 4,416,406, or 63% of the shares not owned by us) would be necessary to effect
the proposals.
Under Section 228 of the DGCL, consents taken without a meeting are not
adopted by a percentage of those voting at the meeting but rather a percentage
of all outstanding shares. Therefore, we must receive consents from a majority
of all Hemagen's outstanding shares in order for the proposals to be adopted.
Abstentions, failures to vote and broker non-votes will have the same effect as
a "no" vote with respect to our solicitation.
Our delivery of consents on Proposals 2 through 6 is conditioned upon the
receipt of approval for each of those proposals. Consequently, if each of
Proposals 2 through 6 are not approved, none of them 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, please sign, date and return the
enclosed WHITE consent card today in the postage-paid envelope provided or
contact the person responsible for your account and instruct them to vote
the WHITE consent card on your behalf today.
How Do I Complete the Consent Card?
You may elect to consent, withhold consent or abstain with respect to each
Proposal by marking the "Consent," "Consent Withheld" or "Abstain" box, as
<PAGE>
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 a stockholder who has executed and returned a 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
(212) 843-8500
(800) 755-5001
Can I Revoke My Consent?
You can revoke your consent at any time before it is delivered to Hemagen
by submitting a written, later dated revocation of such consent covering the
same shares. You can also make any revocation of consent that you previously
submitted null and void by submitting a written, dated consent covering the same
shares which will have the effect of consenting to our proposals. Any consent or
revocation may be delivered to Beacon Hill Partners at the address set forth
above no later than September 17, 1999. Only your latest-dated consent or
revocation of consent will count.
The Proposals
This solicitation statement and the accompanying form of written consent
are first being furnished on or about July 21, 1999, in connection with our
solicitation from the holders of shares of Hemagen Common Stock of written
consents to take the following actions without a stockholders meeting, as
permitted by Section 228 of the DGCL:
1. The Bylaw Repeal Proposal. Repeal the Bylaw amendments adopted July 2, 1999
and any other amendments adopted by the Board of Directors since February
4, 1993.
"RESOLVED, that all amendments to the Bylaws adopted by the Board
of Directors of Hemagen on July 2, 1999 and all other amendments to
the Bylaws adopted by the Board of Directors 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."
<PAGE>
We seek the repeal of all Bylaws adopted by the Board of Directors since
February 4, 1993 through the date that these 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 are not aware of any Bylaws that would be repealed by the approval of
this proposal other than those adopted on July 2, 1999 after announcement of our
solicitation of consents. Those amendments purported to increase the vote
necessary to amend the Bylaws and to require Hemagen to pay all expenses,
including attorneys' fees, incurred by any Hemagen director, officer, employee
or agent in defending any proceeding brought against them in advance of the
final disposition of any such action. Rules of the Securities and Exchange
Commission require that Bylaws and any amendments be filed as exhibits to
reports filed with the SEC. Except for filings related to the July 2 actions
purporting to adopt Bylaw changes, 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
interest of Hemagen's stockholders, although we believe this 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
amendments and seek appropriate remedies.
Section 109 of the DGCL provides that stockholders of Hemagen have the
power to repeal Bylaws as provided by this proposal, whether or not the Bylaws
so amended or repealed are known to the stockholders. Hemagen's Certificate of
Incorporation and Bylaws confer the power to adopt, amend or repeal the Bylaws
on the Board of Directors. However, Section 109 preserves the right of
shareholders to make such amendments.
2. 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."
Hemagen's Board of Directors is currently divided into three classes of two
directors each. Two Directors are elected annually for a period of three years
at each Annual Meeting of Stockholders to serve until their successors are duly
elected by the stockholders. Removing the classified Board would enable Hemagen
stockholders to elect annually all members of the Board to serve one-year terms.
Under Hemagen's current system, three annual meetings are required to remove all
of Hemagen's existing directors.
<PAGE>
A classified Board of Directors could discourage, delay or prevent a
takeover or change of control of Hemagen. A classified board structure could
prevent sudden shifts in corporate policy and could contribute to the stability
of Hemagen's corporate governance. Adoption of this proposal would result in the
elimination of the classified Board of Directors of Hemagen and would permit the
stockholders of Hemagen to remove the existing directors.
Hemagen has a number of additional anti-takeover measures, and we have no
current plans to remove or modify any such existing measures. Hemagen's
Certificate of Incorporation authorizes the Board of Directors to issue up to
1,000,000 shares of preferred stock, none of which is currently outstanding.
Hemagen can issue such preferred stock in one or more series, the terms of which
may be determined at the time of issuance by the Board of Directors, without
further action by stockholders. The ability of the Board of Directors to issue
preferred stock could discourage, delay or prevent a takeover of the Company.
Section 203 of the DGCL generally restricts the ability of a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result of
the application of Section 203 and certain provisions in Hemagen's Certificate
of Incorporation and Bylaws, potential acquirors of Hemagen may find it more
difficult or be discouraged from attempting to effect an acquisition transaction
with Hemagen, thereby possibly depriving holders of Hemagen's securities of
certain opportunities to sell or otherwise dispose of such securities at
above-market prices pursuant to such transactions.
On February 10, 1999, the Board of Directors of Hemagen adopted a "poison
pill" by paying a dividend of one common share purchase right (a "Right") for
each outstanding share of Hemagen Common Stock. The Rights will become
exercisable only if a person or group acquires 15 percent or more of Hemagen's
Common Stock, or announces a tender offer that would result in ownership of 15
percent or more of Hemagen's Common Stock. Each Right would entitle a
stockholder to buy one share of Common Stock. Once a person or group has
acquired 15 percent or more of the outstanding Common Stock of Hemagen, each
Right may entitle its holder, other than the 15 percent person or group, to
purchase $4.00 worth of newly issued shares of Common Stock of Hemagen or of any
company that acquires Hemagen at a price equal to 50 percent of the current
market price. The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire Hemagen
on terms not approved by the Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
since the Rights may be redeemed by Hemagen at $.001 per Right prior to the time
that a person or group has acquired beneficial ownership of 15% or more of the
Hemagen Common Stock.
The elimination of the classified Board would eliminate one of Hemagen's
anti-takeover measures.
<PAGE>
3. The Director Removal Proposal. Remove existing directors from the Board of
Directors immediately following the effectiveness of Proposal 2:
"RESOLVED, that each current member of the Board of Directors of
Hemagen, and any other person or persons (other than those 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."
Hemagen's Board of Directors currently consists of Mr. Paul N. Fruitt and
Mr. Charles W. Smith, whose terms expire in 1999; Dr. Alan S. Cohen and Mr.
Lawrence Gilbert, whose terms expire in 2000; and Dr. Carl Franzblau and Dr.
Ricardo M. de Oliveira, whose terms expire in 2001.
4. 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 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 their written consent in
lieu of a meeting of stockholders.'";
This proposal would amend Section 2 of Article III of the Bylaws to clarify
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. Section 223 of the DGCL permits stockholders to fill such vacancies
unless such power has been specifically taken away. 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 clarify that stockholders have the right to elect
the Nominees to fill the vacancies on the Board of Directors created by adoption
of Proposal 3.
5. The Director Election Proposals. Elect the four 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
<PAGE>
Board of Directors, and to serve until their successors are elected
and qualified: Jerry L. Ruyan, William P. Hales, Thomas A. Donelan and
Christopher P. Hendy."
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
allow us to analyze all aspects of the Company and, where appropriate, make
structural and management changes designed to make Hemagen more responsive to
stockholders and to increase stockholder value. Once we assume control of
Hemagen, we intend to develop a business plan within the next 60 days. If
elected, the Nominees would be responsible for managing the business and affairs
of Hemagen.
If our proposals are adopted, Mr. Ruyan would become Hemagen's new Chairman
and CEO, and Mr. Hales would become Hemagen's new President. The remaining
members of Hemagen's management would consist of persons, not currently
identified, with experience in the diagnostics industry.
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 such duties and the
director's self interest. Each of our Nominees has undertaken, if elected, to be
bound by and to discharge his duty of care and duty of loyalty to Hemagen, and
has agreed to perform his duties in good faith and 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. He served as
a director of Meridian from its inception until July 7, 1999 when he resigned
his director and consulting relations with Meridian in order to be able to
operate Hemagen without the suggestion of any conflict of interest. He remains
an owner of approximately 3.2% of Meridian's outstanding Common Stock. 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. Mr.
Ruyan's stock ownership in Meridian creates a potential conflict of interest
since Meridian and Hemagen compete in certain product areas and may be
competitors in other fields in the future. He also serves on the boards of
Meritage Hospitality Group Inc. and Cafe Odyssey Inc., both public restaurant
companies, and is also 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.
<PAGE>
William P. Hales, age 37, 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 auditing and consulting capacity.
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 Bank organization and was a vice president of
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 Schonstedt Instrument Company and The Avon Workshop Inc, both 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 Salmon P. Chase College of Law.
Christopher P. Hendy, age 41, 9468 Montgomery Road, Cincinnati, Ohio 45242,
has over 18 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
that 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 Board of Meritage Hospitality Inc. and 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.
<PAGE>
The election of our four Nominees would leave two vacancies on the Board of
Directors. These vacancies will only be filled by vote of the stockholders at
the next stockholders' meeting.
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, and 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, any 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. To the best of our knowledge, no one
participating in this solicitation on our behalf, any Nominees, or any associate
or immediate family member of any of the foregoing persons has been convicted in
a criminal proceeding.
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 related out-of-pocket expenses.
If our proposals are accepted, we will request reimbursement from Hemagen
for the expenses that we incur in connection with this consent solicitation, as
is more fully described below under "Costs of the Consent Solicitation" on page
17.
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 at $1.36 per
share to William P. Hales and 7.5% of the outstanding fully-diluted
shares of Hemagen Common Stock at $1.36 per share to Redwood Holdings
Inc., in each case as of the effective date of this resolution, with
such further terms and conditions as are determined by the Board of
Directors."
Approval of this resolution by the stockholders of Hemagen by itself will
not result in the issuance of the options. Under Section 157 of the DGCL,
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 grants. We are seeking stockholder approval of the option
grants in advance in order to satisfy requirements of the Nasdaq SmallCap
Market. We will not advance any monetary consideration to Hemagen in exchange
for the grant of the options. If our proposals are adopted, we do not intend to
make any changes in the current general compensation level structure of Hemagen.
The exercise price for the stock options that we have described is $1.36 which
represents a 33-1/3% premium over the average of the closing prices for Hemagen
Common Stock during the 30 trading day period ending June 25, 1999, the date of
the public announcement of this consent solicitation. Furthermore, the options
will not be exercisable for a period of eighteen months from issuance unless the
stock trades above $5 per share for 20 consecutive trading days unless there is
a change in control in which case the option will be exercisable at that time.
In any event, we will not profit from these stock options unless and until
Hemagen's stock price exceeds the exercise price of $1.36 per share. Thereafter,
increases in the value of stock underlying our stock options will be shared by
all stockholders of Hemagen.
<PAGE>
As of March 31, 1999 and according to publicly-available information,
Hemagen had 7,651,890 shares of Common Stock outstanding, excluding treasury
shares, and an additional 3,894,873 shares underlying outstanding options and
warrants to purchase Hemagen Common Stock. Therefore, if these options were
granted effective March 31, 1999, each of Mr. Hales and Redwood Holdings Inc.
would receive an option to purchase 866,007 shares of Hemagen Common Stock at
$1.36 per share. While we are unaware of any 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. The exercise of these options could dilute existing equity
interests of stockholders.
If our proposals are approved by the stockholders, we and the other
Nominees will work diligently to improve the value of your investment in
Hemagen. By requesting stockholder approval of the grant of these options, we
are asking that we have the opportunity to profit from our efforts in
consideration of past expenses and services, and future services, to Hemagen.
The current Hemagen stockholders' interest in Hemagen Common Stock will be
diluted as a result of the grant and exercise of the options.
Also, please remember that if each of Proposals 2 through 6 are not
approved, none of them will be enacted even though sufficient consents may have
been received to approve a particular proposal. Therefore, unless stockholders
advocate change for Hemagen and indicate their desire for change by adopting
each of Proposals 2 through 6, 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 relating to Hemagen's officers and directors and for information as
to the beneficial ownership of Hemagen's securities by officers, directors and
<PAGE>
beneficial owners of 5% or more of the Common Stock. Hemagen's 1999 Proxy
Statement states that the expected 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 $125,000, of which approximately $60,000 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
our proposals are adopted, we will request reimbursement from Hemagen for these
expenses.
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 on Proposals 2 through 6 is conditioned on the receipt
of approval for each of those proposals. Consequently, if all of those proposals
are not approved, none of them 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
(212) 843-8500
(800) 755-5001
<PAGE>
EXHIBIT A
SHARES HELD BY US
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:
Jerry L. Ruyan
- --------------
Date Purchase 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 2.81(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
6/29/99 Purchase 3,000 1.38
<PAGE>
William P. Hales
- ----------------
Date Purchase 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 0.19
warrants
Thomas A. Donelan
- -----------------
Date Purchase or Sale Number of Shares Price Per Unit
------- ---------------- ---------------- --------------
6/14/99 Purchase 100 $1.03
6/28/99 Purchase 25,000 1.38
6/29/99 Purchase 25,000 1.38
Christopher P. Hendy
- --------------------
Date Purchase 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
6/25/99 Purchase 6,500 0.94
6/29/99 Purchase 3,500 1.31
7/1/99 Purchase 5,000 1.25
(1) Each unit purchased consisted of one share of Hemagen Common Stock and one
warrant to purchase Hemagen Common Stock. The purchase price was $2.19 for
each share of Common Stock and $0.62 for each warrant to purchase Hemagen
Common Stock.
<PAGE>
Consent Card
Hemagen Diagnostics, Inc.
Consent of stockholders to action without a meeting
This Consent is being solicited by Jerry L. Ruyan and William P. Hales
The undersigned, a stockholder of record of Hemagen Diagnostics, Inc.,
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.
If a box for any proposal is not marked, this Consent, if signed, will
be voted in favor of that proposal.
1. Bylaw Proposal: Repeal the Bylaw amendments adopted by the Board of
Directors of Hemagen on July 2, 1999 and any other Bylaw amendments
adopted since February 4, 1993 (other than the Bylaw amendments
adopted by this consent), pursuant to the resolution set forth in the
consent statement.
CONSENT CONSENT WITHHELD ABSTAIN
2. 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
3. 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
4. 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
<PAGE>
5. Director Election Proposal: Elect the following four 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
and Christopher P. Hendy
If no box is marked, this Consent will be voted in favor of the
election of all four Nominees.
CONSENT CONSENT WITHHELD ABSTAIN
To withhold consent to a proposed Nominee, specify the Nominee in the
following space:
-------------------------------------------------------------------
6. Stock Option Proposal. Approve the grant of options to purchase 7.5%
of the outstanding fully-diluted shares of Hemagen Common Stock at
$1.36 per share to William P. Hales and 7.5% of the outstanding
fully-diluted of Hemagen Common Stock at $1.36 per share to Redwood
Holdings Inc., pursuant to the resolution set forth in the consent
statement.
CONSENT CONSENT WITHHELD ABSTAIN
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): _________________________
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.
