<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Gamma Biologicals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GAMMA BIOLOGICALS, INC.
3700 MANGUM ROAD, HOUSTON, TEXAS 77092
JUNE 27, 1997
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders to be
held August 7, 1997, at 3:00 p.m., Central time, at the offices of the
Company, 3700 Mangum Road, Houston, Texas.
It will be a pleasure for the officers and directors to meet with you and
have an opportunity to answer any questions you may have about Company
affairs. The officers and directors will be available to talk individually
with shareholders before and after the meeting.
Whether or not you plan to attend the meeting, we urge you to sign and
return the enclosed proxy so that your shares will be represented at the
meeting.
Sincerely,
LOGO
[SIGNATURE APPEARS HERE]
David E. Hatcher
Chairman of the Board
<PAGE>
GAMMA BIOLOGICALS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Gamma Biologicals, Inc. (the
"Company") will be held August 7, 1997, at 3:00 p.m., Central time, at the
offices of the Company, 3700 Mangum Road, Houston, Texas 77092, for the
following purposes:
1. To elect directors;
2. To adopt the 1997 Outside Director Stock Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on June 16, 1997 as
the record date for the meeting, and only holders of Common Stock of record at
such time will be entitled to vote at the meeting or any adjournments thereof.
Further information regarding the meeting, the nominees for election as
directors and the 1997 Outside Director Stock Option Plan is set forth in the
accompanying proxy statement.
By order of the Board of Directors,
LOGO
[SIGNATURE APPEARS HERE]
Lawrence E. Letwin
Secretary
June 27, 1997
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY
AT YOUR EARLIEST CONVENIENCE.
<PAGE>
GAMMA BIOLOGICALS, INC.
3700 MANGUM ROAD, HOUSTON, TEXAS 77092
JUNE 27, 1997
----------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the annual meeting of shareholders (the "Meeting") of Gamma
Biologicals, Inc. (the "Company") to be held at the time and place and for the
purposes set forth in the foregoing Notice of Annual Meeting of Shareholders
(the "Notice") and at any adjournments thereof.
SOLICITATION AND VOTING OF PROXIES
The solicitation will be conducted by mail. The Company will bear the
expense of the solicitation of proxies, including the charges and expenses of
brokerage firms and others incurred in forwarding solicitation material to
beneficial owners of stock. Further solicitation of proxies may be made by
telephone or oral communication with shareholders of the Company following the
original solicitation. All further solicitation will be by regular employees
of the Company who will not be additionally compensated therefor. Copies of
the Proxy, Notice and Proxy Statement are being mailed to shareholders on or
about June 27, 1997.
Proxies in the accompanying form are solicited by the management at the
direction of the Board of Directors. Execution and return of the proxy will
not in any way affect a shareholder's right to attend the Meeting and to vote
in person, and a shareholder giving a proxy has the power to revoke it at any
time before it is exercised by giving written notice to the Company at or
prior to the Meeting. A proxy may also be revoked by execution of a proxy
bearing a later date or by attendance at the Meeting and voting in person by
ballot. Properly executed proxies in the accompanying form, received in due
time and not previously revoked, will be voted as specified. A proxy received
by management which does not withhold authority to vote or on which no
specification has been indicated will be voted for the proposals set forth in
this Proxy Statement and for the nominees for the Board of Directors of the
Company named in Proposal No. 1 of this Proxy Statement. A majority of the
outstanding shares will constitute a quorum at the Meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Abstentions are counted
in tabulations of the votes cast on proposals presented to shareholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
At the date of this Proxy Statement, management of the Company does not know
of any business to be presented at the Meeting other than those matters which
are set forth in the Notice accompanying this Proxy Statement. If any other
business should properly come before the Meeting, it is intended that the
shares represented by proxies will be voted with respect to such business in
accordance with the judgment of the persons named in the proxy.
1
<PAGE>
COMMON STOCK OUTSTANDING AND PRINCIPAL HOLDERS THEREOF
Only holders of Common Stock of the Company of record at the close of
business on June 16, 1997 are entitled to notice of and to vote at the
Meeting. At that date, there were outstanding 4,603,052 shares of the
Company's Common Stock, which is the only class of stock that has been issued
by the Company. Each shareholder is entitled to one vote for each share of
Common Stock held of record by the shareholder on that date for all matters
coming before the Meeting and, except as otherwise provided by applicable law,
a favorable vote consists of a simple majority of the votes cast. Shareholders
are not entitled to cumulate their votes in the election of directors, which
means that the holders of more than half of the shares voting for the election
of directors can elect all of the directors if they choose to do so.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of May 15, 1997, the ownership of the
Company's Common Stock by (i) each shareholder, if any, who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
each director and nominee, (iii) each named executive officer and (iv) all
directors and executive officers as a group. Except as otherwise indicated,
the shareholders listed in the table have sole voting and investment power
with respect to the shares indicated. All information with respect to
beneficial ownership has been furnished by the shareholders to the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
---------------- ----------------- --------
<S> <C> <C>
Betty F. Hatcher................................. 222,324(1) 4.79%
David E. Hatcher................................. 139,099(2) 2.99%
H.H. "Will" Hardee............................... 72,338(3) 1.57%
John J. Moulds................................... 49,725(4) 1.07%
Bryan J. Brieden................................. 30,820(5) *
Jimmie L. Turner................................. 25,897(6) *
John Case........................................ 20,599(7) *
R. Bruce LaBoon.................................. 12,500(8) *
Hayle B. Randolph................................ 10,100(8) *
Dr. Richard H. Aster............................. 10,000(9) *
All executive officers and directors as a group
(16 persons).................................... 648,626(10) 13.32%
Dimensional Fund Advisors Inc.
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401.......................... 267,600(11) 5.81%
</TABLE>
- --------
* Less than 1.0%.
(1) Includes 42,725 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options.
(2) Includes 53,000 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options.
(3) Includes 10,000 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options granted under the
1997 Outside Director Stock Option Plan which is being submitted to the
shareholders for their approval at the Meeting. See Proposal No. 2. Also
includes 2,400 shares owned of record by Mrs. Hardee, beneficial ownership
of which is disclaimed by Mr. Hardee.
(4) Includes 39,500 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options.
2
<PAGE>
(5) Includes 10,000 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options. Also includes 5,226
shares owned of record by Mrs. Brieden, beneficial ownership of which is
disclaimed by Mr. Brieden.
(6) Includes 17,500 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options and 1,950 shares
owned of record by Mrs. Turner, beneficial ownership of which is
disclaimed by Mr. Turner.
(7) Includes 10,500 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options and 799 shares owned
of record by Mrs. Case, beneficial ownership of which is disclaimed by Mr.
Case.
(8) Includes 10,000 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options.
(9) Includes 10,000 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options granted under the
1997 Outside Director Stock Option Plan which is being submitted to the
shareholders for their approval at the Meeting. See Proposal No. 2.
(10) Includes 264,849 shares which can be acquired during the next 60 days
pursuant to the exercise of outstanding stock options.
(11) Includes 267,600 shares held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of the
DFA Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund Advisors
Inc. serves as investment manager. Dimensional Fund Advisors Inc.
disclaims beneficial ownership of all such shares.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
INFORMATION CONCERNING DIRECTORS
It is proposed that six directors will be elected at the Meeting, each to
hold office until the annual meeting of shareholders in 1998 and until his or
her successor is duly elected and qualified. The Company has no reason to
believe that any nominee will be unavailable to serve at the time of election.
All of the nominees are presently members of the Board of Directors of the
Company. There are no family relationships among any of the directors of the
Company. The names of the nominees, together with information as to their
principal occupations, age, and experience, are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- --------
<C> <S> <C> <C>
Dr. Richard H. Aster........ Senior Investigator at the Blood 66 1997
Center of Southeastern Wisconsin
and professor of medicine at
Medical College of Wisconsin(1)
Bryan J. Brieden............ Consultant(2) 69 1970
H. H. "Will" Hardee......... Senior Vice President of Rauscher 42 1997
Pierce Refsnes, Inc.(3)
Betty F. Hatcher............ Executive Vice President and 64 1988
Assistant Secretary of the
Company(4)
David E. Hatcher............ Chairman of the Board, President 74 1970
and Chief Executive Officer of
the Company(5)
Hayle B. Randolph........... Blood services consultant(6) 66 1991
</TABLE>
- --------
3
<PAGE>
(1) Dr. Aster retired in May 1996 as President and Chief Executive Officer of
the Blood Center of Southeastern Wisconsin after 26 years. Dr. Aster is
Chairman of Genetic Testing Institute, Inc. and is a director of Principle
Preservation Portfolios, a mutual fund company and subsidiary of the BC
Ziegler Company.
(2) In 1994, Mr. Brieden retired as President of Bryan Biologicals, Inc., a
distributor of laboratory supplies, a position he held for more than five
years. Mr. Brieden now serves as a consultant to Bryan Biologicals, Inc.
(3) Mr. Hardee served as Senior Vice President of Kidder Peabody Co. for three
years from 1991 until October 1994. Mr. Hardee has served as Senior Vice
President of Rauscher Pierce Refsnes, Inc. since October 1994.
(4) Ms. Hatcher served as the Senior Vice President and Secretary of the
Company prior to becoming a consultant to the Company in 1988. Ms. Hatcher
was appointed Assistant Secretary of the Company in February 1989 and was
appointed Director of Product Development of the Company in February 1990.
She was appointed Executive Vice President of the Company in August 1992.
(5) Mr. Hatcher served as President of the Company until June 1992 and became
President of the Company again in October 1996.
(6) Mr. Randolph served as President and Chief Executive Officer of Blood
Systems, Inc. until his retirement in March 1991. Mr. Randolph served as a
consultant on various projects for Blood Systems, Inc. and as the
Executive Director of Blood Systems Research Foundation until January 15,
1993 and is currently an independent consultant to the blood services
industry.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met five times during fiscal 1997. The
Board has established two standing committees, the Audit Committee, which is
comprised of Messrs. Aster, Brieden, LaBoon and Randolph, and the
Compensation/Stock Option Committee, which is comprised of Messrs. Brieden,
Hardee, LaBoon and Randolph. The Audit Committee exercises oversight with
respect to the Company's accounting practices and procedures and its
relationship with its independent auditors, and the Compensation/Stock Option
Committee makes recommendations to the Board of Directors regarding the
compensation of officers and employees of the Company and the granting of
options under the Company's 1991 Employee Stock Option Plan and 1995 Employee
Stock Option Plan. The Audit Committee met one time during fiscal 1997, and
the Compensation/Stock Option Committee met four times during fiscal 1997.
There is no nominating committee. No incumbent director attended fewer than
75% of the total number of meetings of the Board of Directors and of all
committees of the board on which he or she served in fiscal 1997.
DIRECTOR COMPENSATION
Directors of the Company who are also employees of the Company do not
receive fees for attending meetings of the Board of Directors. Non-employee
directors of the Company receive a retainer of $3,000 per year, payable in
quarterly installments, and a fee of $600 for each meeting of the Board of
Directors and for each meeting of each committee of the Board of Directors
attended by such director. Pursuant to the 1997 Outside Director Stock Option
Plan which is being submitted to the shareholders for their approval at the
Meeting, upon initial election to the Board of Directors, non-employee
directors shall receive an option to purchase 10,000 shares of the Company's
Common Stock.
4
<PAGE>
PROPOSAL NO. 2 -- ADOPTION OF 1997 OUTSIDE
DIRECTOR STOCK OPTION PLAN
The Board of Directors of the Company has approved the 1997 Outside Director
Stock Option Plan (the "1997 Director Plan"), and has directed that the 1997
Director Plan be submitted to the shareholders for approval. The 1997 Director
Plan provides for the grant of non-qualified stock options covering up to an
aggregate of 100,000 shares of the Company's Common Stock. The purpose of the
1997 Director Plan is to provide the outside directors additional incentive
for their service as directors and an incentive, through options to acquire
Common Stock of the Company, to increase the value of the Company's Common
Stock. The Company is dependent for the successful conduct of its business on
the initiative, effort and judgment of its directors. This summary of the
material terms of the 1997 Director Plan is qualified in its entirety by
reference to the full text of the 1997 Director Plan which is attached to this
Proxy Statement as Appendix A.
The 1997 Director Plan provides for appropriate adjustment of shares
available under the 1997 Director Plan and of shares subject to outstanding
stock options in the event of any changes in the outstanding Common Stock of
the Company by reason of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction.
Only outside directors are eligible to participate in the 1997 Director
Plan. Each director who is not an employee of the Company and who was elected
or appointed to the Board of Directors after September 1, 1996 will be granted
a stock option to purchase 10,000 shares of the Company's Common Stock,
effective as of the later of May 14, 1997 or the date of his appointment or
election to the Board of Directors. The Board of Directors will also have the
discretion and authority to grant stock options to directors in lieu of cash
compensation to the directors. During the lifetime of the option holder, any
stock option will be exercisable only by the recipient, and will be
transferable only by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order.
Each stock option shall have a term of ten years from the grant date
thereof. The 1997 Director Plan shall be effective as of May 14, 1997;
provided, however, that the 1997 Director Plan and all stock options granted
under the 1997 Director Plan shall be void if the 1997 Director Plan is not
approved by the shareholders. The 1997 Director Plan shall expire and
terminate on the earlier to occur of (i) May 14, 2007, and (ii) the date on
which there have been granted to eligible directors pursuant to the 1997
Director Plan stock options to purchase an aggregate of 100,000 shares of
Common Stock. The Board shall have the authority to set the stock option
exercise price, but the stock option exercise price shall not be less than an
amount equal to 85% of the arithmetic mean of the fair market value of the
Common Stock on the last trading day of each of the six calendar months
preceding the date of grant of the stock option. On June 17, 1997, the last
reported sales price of the Common Stock was $4.4375 per share. Payment in
full for the number of shares purchased upon the exercise of stock options
granted under the 1997 Director Plan shall be made in cash, or certified or
cashier's check, or by Common Stock of the Company already owned by and in the
possession of the stock option holder, or any combination thereof, at the same
time that the stock option is exercised.
Each stock option shall be evidenced by a stock option agreement containing
terms and conditions not inconsistent with the provisions of the 1997 Director
Plan. The stock options are exercisable in whole or in part upon the grant and
each stock option shall continue to be exercisable until the stock option
shall terminate or expire, notwithstanding any other provision of the 1997
Director Plan or agreement thereunder.
5
<PAGE>
The Board of Directors may at any time and from time to time amend the 1997
Director Plan. In addition to Board approval of any amendment to the 1997
Director Plan, if the Board of Directors determines on advice of counsel that
it is necessary or desirable to obtain shareholder approval of any amendments
to the 1997 Director Plan in order to comply with Rule 16b-3 of the rules and
regulations under the Securities and Exchange Act of 1934, or any successor
rule, or for any other reason, then the effectiveness of any such amendment
may be conditioned upon its approval by the holders of a majority of the
outstanding voting stock of the Company (voting as a single class) entitled to
vote on the amendment at a meeting of such shareholders, or such other
shareholder approval as may be specified by the Board of Directors. No change
may be made in, and no amendment, recision, suspension or termination of the
1997 Director Plan shall have an effect on, stock options previously granted
under the 1997 Director Plan which may impair or alter the rights or
obligations of the holders thereof, except that any change may be made in
stock options previously granted with the consent of the optionees.
Under federal income tax law, the grant of a non-qualified stock option has
no tax effect on the Company or the optionee to whom it is granted. If the
shares received on exercise of a non-qualified stock option are not subject to
restrictions on transfer and risk of forfeiture, the exercise will result in
ordinary income to the optionee equal to the excess of fair market value of
the shares at the time of exercise over the stock option price. The optionee's
tax basis in the shares received will be equal to the aggregate exercise price
paid by the optionee plus the amount of taxable income recognized. Upon any
subsequent disposition of the shares, any further gain or loss will normally
be capital gain or loss, and will be long-term if held more than one year
after exercise. If a transferable stock option is sold, the gain recognized by
the optionee will be ordinary income. The Company will generally be allowed,
at the time of recognition of ordinary income by the optionee, to take a
deduction for federal income tax purposes in an amount equal to such
recognized income.
If the shares received on exercise of a non-qualified stock option are
subject to substantial restrictions on transfer or substantial risk of
forfeiture, the exercise of the stock option will only result in a taxable
transaction to the employee and a deduction to the Company if the optionee
elects to be taxed at that time, and the tax consequence under such
circumstances will be as described in the preceding paragraph. If an effective
election is not made, income will only be recognized when the restriction on
transfer or risk of forfeiture lapses, at which time the optionee will
recognize ordinary income equal to the excess of fair market value of the
shares purchased over the stock option price at that time and the Company will
generally be allowed an equal deduction at that time. The optionee's tax basis
in the shares received will be equal to the aggregate stock option price plus
the amount of taxable income recognized. Taxation of any subsequent
disposition of shares will normally generate capital gain or loss as described
above.
6
<PAGE>
The following table sets forth the stock options that the groups referred to
below will receive in 1997 if the 1997 Director Plan is approved by the
Company's shareholders at the Meeting. Executive officers and employee
directors are not eligible to participate in the 1997 Director Plan.
NEW PLAN BENEFITS
1997 OUTSIDE DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER
OF
NAME AND POSITION UNITS
----------------- ------
<S> <C>
David E. Hatcher......................................................... 0
Chairman of the Board, President and Chief Executive Officer
Betty Francis Hatcher.................................................... 0
Executive Vice President, Assistant Secretary and Director
Jimmie L. Turner......................................................... 0
Executive Vice President and Chief Operating Officer
John L. Moulds........................................................... 0
Senior Vice President, Chief Science Officer and Director
John Case................................................................ 0
Vice President--Regulatory Affairs
Executive Group.......................................................... 0
Non-Executive Director Group............................................. 20,000
Non-Executive Officer Group.............................................. 0
Employee Group........................................................... 0
</TABLE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages, length of service as an
officer, and the positions of the persons who are not nominees for director
and who are executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE OFFICER SINCE POSITION
---- --- ------------- --------
<C> <C> <C> <S>
Jimmie L. Turner................. 58 1989 Executive Vice President
and Chief Operating
Officer
John J. Moulds................... 53 1980 Senior Vice President and
Chief Science Officer
Raul F. Alvarez.................. 48 1996 Vice President--
International Business
Susan A. Batcha ................. 43 1996 Vice President--
Manufacturing
John Case ....................... 70 1980 Vice President--
Regulatory Affairs
Thomas H. Frame ................. 42 1996 Vice President--Research
and Development
Marilyn K. Moulds ............... 53 1996 Vice President--
Consultation and
Education
Margaret J. O'Bannion ........... 42 1989 Vice President--Finance
and Chief Financial
Officer
Gary L. Parrish.................. 60 1994 Vice President--National
Sales and Customer
Services
</TABLE>
Mr. Turner joined the Company in 1976 as a sales representative and became
Vice President--Customer Services in August 1989. Mr. Turner became Executive
Vice President and Chief Operating Officer in October 1996.
7
<PAGE>
Mr. Moulds joined the Company in 1975 and became Vice President--
Consultation and Education in 1980. Mr. Moulds became Executive Vice President
and Chief Operating Officer of the Company in 1989 and was appointed President
and Chief Operating Officer of the Company in June 1992. Mr. Moulds became
Senior Vice President and Chief Science Officer in October 1996.
Mr. Alvarez joined the Company in 1994 as International Sales and Marketing
Manager. Previously, Mr. Alvarez had been division general manager of Menarini
Diagnostics in Barcelona, Spain and Florence, Italy. Mr. Alvarez became Vice
President--International Business in August 1996.
Ms. Batcha joined the Company in 1981 in Coombs manufacturing. Ms. Batcha
became department supervisor in 1984, and was named director of manufacturing
in 1989. She became Vice President--Manufacturing in August 1996.
Mr. Case joined the Company in 1976 and became Vice President--Regulatory
Affairs in 1980.
Mr. Frame joined the Company in 1993 as Director of Monoclonal Production
and Product Development. Previously, Mr. Frame had been a senior scientist
specializing in monoclonal research at the Central Laboratory of the
Netherlands Red Cross Transfusion Service. Mr. Frame became Vice President--
Research and Development in August 1996.
Ms. Moulds joined the Company in 1975 as supervisor of consultation and
education. Ms. Moulds became director, consultation and education, in 1989 and
Vice President--Consultation and Education in August 1996.
Ms. O'Bannion joined the Company in 1978 and was named Controller of the
Company in 1987. Ms. O'Bannion became Vice President--Finance and Chief
Financial Officer in August 1989.
Mr. Parrish joined the Company in 1977 as a sales representative and was
named National Sales Manager in 1989. He became Vice President-National Sales
in August 1994 and was appointed Vice President--National Sales and Customer
Services in October 1996.
COMPENSATION/STOCK OPTION COMMITTEE REPORT(1)
The Compensation/Stock Option Committee of the Board of Directors (the
"Committee") is composed entirely of outside directors and is responsible for
developing and making recommendations to the Board with respect to the
Company's executive compensation policies. This Committee Report sets forth
the components of the Company's executive officer compensation and describes
the basis on which the fiscal 1997 compensation determinations were made by
the Committee with respect to the executive officers of the Company.
In designing its executive compensation programs, the Company follows its
belief that executive compensation should reflect the value created for
shareholders while supporting the Company's strategic goals. The following
objectives have been adopted by the Committee:
1. Executive compensation should be meaningfully related to the value
created for shareholders;
2. Executive compensation programs should reflect and promote the
Company's value and reward individuals for outstanding contributions
to the Company's success; and
- --------
(1) Notwithstanding filings by the Company with the Securities and Exchange
Commission ("SEC") that have incorporated or may incorporate by reference
other SEC filings (including this proxy statement) in their entirety, this
Compensation Committee Report shall not be incorporated by reference into
such filings and shall not be deemed to be "filed" with the SEC except as
specifically provided otherwise or to the extent required by Item 402 of
the Regulation S-K.
8
<PAGE>
3. Short and long term executive compensation play a critical role in
attracting and retaining well qualified executives.
The Committee currently implements a compensation program based on three
components: a base salary, a bonus program related to Company and individual
performance during the relevant year, and a stock option program. The
Committee regularly reviews the various components of the Company's executive
compensation to ensure that they are consistent with the Company's objectives.
BASE SALARY. The Committee, in recommending the appropriate base salaries of
the Company's executive officers, generally considers the level of executive
compensation in similar companies in the industry. In addition, the Committee
takes into account (i) the performance of the Company and the roles of the
individual executive officers with respect to such performance and (ii) the
particular executive officer's specific responsibilities, and the long-term
performance of such executive officer in those areas of responsibility.
ANNUAL INCENTIVES. The bonus program provides direct financial incentives,
in the form of an annual cash bonus, to executive officers to achieve and
exceed the Company's annual goals. The Committee recommends cash bonuses based
upon the Committee's evaluation of the contributions of each individual
officer during the applicable fiscal year in achieving the goals of the
Company for that year.
LONG-TERM INCENTIVES. The stock option program is currently the Company's
primary long-term incentive plan for executive officers and key employees. The
objectives of the stock option program are to align executive officer
compensation and shareholder return, and to enable executive officers to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock. In addition, grants of stock options to the named
executive officers and others are intended to retain and motivate executives
to improve long-term corporate and stock market performance. Stock options are
granted at the prevailing market value and will only have value if the
Company's stock price increases. Generally, grants of stock options vest in
equal amounts over four years, and executives must be employed by the Company
at the time of vesting in order to exercise a stock option.
Consistent with the Company's compensation program outlined above,
compensation for each of the named executive officers, as well as other senior
executives, consists of a base salary, bonus and stock options. The base
salaries for the named executive officers for fiscal 1997 were at levels below
competitive amounts paid to executives with comparable qualifications,
experience and responsibilities of other companies engaged in the same or
similar business as the Company. The Committee has not yet determined the
amount of cash bonuses, if any, to be paid to the named executive officers for
fiscal 1997.
The Committee believes that the compensation of the chief executive officer
("CEO") should be impacted by Company performance. Mr. Hatcher founded the
Company in 1970 and has served as its CEO since that time. During fiscal 1997,
Mr. Hatcher received a base salary of $215,000, which the Committee believes
to be average for the base salary for chief executive officers with comparable
qualifications, experience and responsibilities of other companies engaged in
the same or similar business as the Company. At this time, this Committee has
not made a determination as to the bonus, if any, to be paid to Mr. Hatcher
for fiscal 1997.
Compensation Committee: H.H. "Will" Hardee, Bryan J. Brieden, R. Bruce
LaBoon and Hayle B. Randolph.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except as set forth below, no member of the Compensation/Stock Option
Committee of the Board of Directors of the Company was, during fiscal 1997, an
officer or employee of the Company or any of its subsidiaries, was formerly an
officer of the Company or any of its subsidiaries, or had any relationships
requiring disclosure.
During fiscal 1997, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served on the compensation committee of the Board of Directors, (ii) a
director of another entity, one of whose executive officers served on the
Compensation Committee of the Board of Directors, or (iii) a member of the
Compensation Committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served as a
director of the Company.
The Company distributes its products in the State of Michigan through Bryan
Biologicals, Inc. In fiscal 1997, the Company's sales to Bryan Biologicals,
Inc. amounted to approximately $195,000, or 1.1%, of the Company's net sales.
Mr. Bryan J. Brieden, a director of the Company, is a consultant to, and
former president and principal owner of, Bryan Biologicals, Inc. As of May 1,
1997, Bryan Biologicals, Inc. owed the Company approximately $109,000 on open
account for product purchases made from October 1996 through April 1997. No
interest is charged by the Company on such obligation. The largest amount owed
to the Company by Bryan Biologicals, Inc. at any time during fiscal 1997 was
approximately $126,000.
During fiscal 1997 the Company retained the law firm of Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P. and proposes to retain the firm in the current
fiscal year. Mr. LaBoon, a director of the Company, is a partner in the firm.
10
<PAGE>
COMPENSATION TABLES
The cash and other compensation paid by the Company and its subsidiaries
during fiscal 1997 to each of the executive officers of the Company as to whom
the total cash compensation exceeded $100,000 were as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
------------------ ------ ------- ------ --------------- ------------ ------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
David E. Hatcher........ 1997 215,100 0 11,284 0 29,014(2)
Chairman of the Board,
President 1996 209,949 0 10,992 7,000 28,265
and Chief Executive
Officer 1995 207,834 35,000 11,423 0 27,405
John J. Moulds.......... 1997 136,154 0 2,010 0 6,148(3)
Senior Vice President, 1996 146,680 0 1,896 7,000 6,017
Chief Science Officer
and Director 1995 139,757 20,000 1,874 0 6,098
Betty F. Hatcher........ 1997 110,100 0 6,526 0 18,105(4)
Executive Vice
President, 1996 106,680 0 6,214 5,000 17,328
Assistant Secretary and
Director 1995 102,065 6,500 6,217 0 16,297
John Case............... 1997 110,100 0 0 0 0
Vice President--
Regulatory Affairs 1996 106,680 0 0 3,000 0
1995 102,065 6,500 0 0 0
Jimmie L. Turner........ 1997 103,657 0 2,960 0 8,463(5)
Executive Vice
President and 1996 95,046 0 2,796 3,000 8,011
Chief Operating Officer 1995 91,680 6,500 2,766 0 7,715
</TABLE>
- --------
(1) For each named executive officer in fiscal 1997, represents payments by
the Company for the named executive's taxes on split dollar premium
payment.
(2) Represents the dollar value of premiums paid by the Company with respect
to a split dollar life insurance policy for the benefit of the named
executive.
(3) Includes $5,169 which represents the dollar value of premiums paid by the
Company with respect to a split dollar life insurance policy for the
benefit of the named executive, and $979 which represents Company matching
contributions pursuant to the Company's 401(k) Retirement Savings Plan.
(4) Includes $16,780 which represents the dollar value of premiums paid by the
Company with respect to a split dollar life insurance policy for the
benefit of the named executive, and $1,325 which represents Company
matching contributions pursuant to the Company's 401(k) Retirement Savings
Plan.
(5) Includes $7,610 which represents the dollar value of premiums paid by the
Company with respect to a split dollar life insurance policy for the
benefit of the named executive, and $853 which represents Company matching
contributions pursuant to the Company's 401(k) Retirement Savings Plan.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FISCAL
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END YEAR END
NAME ON EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
---- ----------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David E. Hatcher........ 0 0 53,000/9,000 $12,225/0
John J. Moulds.......... 0 0 39,500/9,000 $ 7,335/0
John Case............... 0 0 10,500/3,500 $ 1,630/0
Betty F. Hatcher........ 0 0 42,725/6,250 $ 8,750/0
Jimmie L. Turner........ 0 0 17,500/3,500 $ 2,445/0
</TABLE>
PERFORMANCE GRAPH
The following performance graph provided by Standard & Poor's compares the
performance of the Company's Common Stock to the Russell 2000 Index and a Peer
Group Index (as defined below) for the Company's last five fiscal years. Many
of the Company's peers are privately-held companies, or subsidiaries or
divisions of larger publicly-held companies. As a result, there is only one
public company to which the Company may realistically compare itself.
Accordingly, the Peer Group Index consists of Immucor, Inc. The graph below
assumes $100 invested on March 31, 1992 in Company Common Stock or Index and
that any dividends are reinvested.
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
GAMMA BIOLOGICALS, INC., RUSSELL 2000, PEER GROUP
(Performance results through 3/31/97)
LOGO
<TABLE>
<CAPTION>
3/31/92 3/31/93 3/31/94 3/31/95 3/31/96 3/31/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
GBL........................... n $100.00 58.70 109.19 80.18 77.42 67.97
Russell 2000.................. l $100.00 114.86 127.50 134.52 173.69 182.56
Peer Group.................... s $100.00 55.77 44.23 53.85 101.92 73.08
</TABLE>
- --------
Assumes $100 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in GBL common
stock, Russell 2000, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Source: Standard & Poor's Compustat
Custom Products Division
12
<PAGE>
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with Mr. Hatcher, Ms.
Hatcher, Mr. Moulds, Ms. O'Bannion, Mr. Turner, Mr. Parrish, Mr. Alvarez, Mr.
Frame, Ms. Batcha and Ms. Moulds, which provide severance benefits upon a
change of control of the Company. Under these agreements, if one of the named
employee's employment is terminated without cause following a change of
control, he or she will be compensated by the Company as described below. Each
of Mr. Hatcher, Ms. Hatcher, Mr. Moulds, Ms. O'Bannion, Mr. Turner, Mr.
Parrish, Mr. Alvarez and Mr. Frame will receive a lump sum payment equal to a
specified percentage of his or her average annual compensation for the five
years preceding the change of control. The percentage for Mr. Hatcher is 299%
and the percentage for Ms. Hatcher, Mr. Moulds, Ms. O'Bannion, Mr. Turner, Mr.
Parrish, Mr. Alvarez and Mr. Frame is 200%. Each of Ms. Batcha and Ms. Moulds
will receive a lump sum payment equal to 200% of her average annual
compensation for the two years preceding the change of control. Stock options
granted to the named employees by the Company and not then exercisable will
become immediately exercisable in full. The Company is required to pay the
named employees all amounts owed to the named employees by the Company under
any deferred compensation arrangements. The Company is also required to
reimburse the named employees for all legal fees incurred as a result of
termination of employment following a change of control.
SPLIT-DOLLAR AGREEMENTS
The Company has purchased life insurance policies insuring the lives of Mr.
Brieden, Ms. Hatcher, Mr. Hatcher, Mr. Moulds, Ms. O'Bannion, Mr. Turner, Mr.
Parrish, Mr. Letwin, Mr. Alvarez, Mr. Frame, Ms. Batcha and Ms. Moulds and has
entered into split-dollar agreements with these persons. The Company is the
owner of the policies and by the terms of the split-dollar agreements is
obligated to pay all premiums and to take all necessary steps, upon the death
of the insured, to obtain the death benefits provided under the policies. The
insured is obligated to reimburse the Company on an annual basis for the value
of the economic benefit of the policy to the insured for that year (as
determined for federal income tax purposes). Upon the death of the insured,
the Company is entitled to receive a portion of the death benefits provided
under the policy equal to the amounts of net premiums and interest on policy
loans, if any, to the insured paid by the Company, plus 3% interest. This
amount is payable from the death benefits. With respect to all policy proceeds
in excess of the amounts required to be paid to the Company, the insured has
the right to designate the beneficiaries of the policy and the right to elect
the settlement option with respect to such proceeds. The Company has the right
to obtain loans secured by the policy. The insured may also obtain loans
secured by the policy, with the Company's consent. With the consent of the
Company, interest on policy loans to the insured may be paid by the Company.
All dividends declared by the issuer of the policy will be first applied to
purchase one-year term insurance on the insured's life in an amount not to
exceed the guaranteed cash value of the policy at the next policy anniversary,
with any remaining dividends being used to purchase additional paid-up
insurance.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of
the Company's common stock (collectively, "Filing Persons") to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership
(Form 3), reports in changes of ownership (Form 4), or annual reports of
ownership (Form 5). All Filing Persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on its review of the copies of such
reports furnished to the Company and upon certain representations made by the
Filing Persons, during fiscal 1997, all of the Filing Persons filed the
required reports on a timely basis except for Bryan J. Brieden, who filed a
Form 4 reporting a disposition of shares ten months late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company distributes its products in the State of Michigan through Bryan
Biologicals, Inc. In fiscal 1997, the Company's sales to Bryan Biologicals,
Inc. amounted to approximately $195,000, or 1.1%, of the Company's net sales.
Mr. Bryan J. Brieden, a director of the Company, is a consultant to, and
former president and principal owner of, Bryan Biologicals, Inc. As of May 1,
1997, Bryan Biologicals, Inc. owed the Company approximately $109,000 on open
account for product purchases made from October 1996 through April 1997. No
interest is charged by the Company on such obligation. The largest amount owed
to the Company by Bryan Biologicals, Inc. at any time during fiscal 1997 was
approximately $126,000.
During fiscal 1997 the Company retained the law firm of Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P. and proposes to retain the firm in the current
fiscal year. Mr. LaBoon, a director of the Company, is a partner in the firm.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The independent auditors of the Company are Deloitte & Touche LLP who have
acted in that capacity for many years. The Company has requested that Deloitte
& Touche LLP act as the independent auditors for the Company for fiscal 1998.
Representatives of Deloitte & Touche LLP will be present at the Meeting,
having the opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions addressed to them.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1998 annual
meeting of shareholders must be received by the Company at its principal
executive offices (3700 Mangum Road, Houston, Texas 77092) by February 27,
1998, for inclusion in the Company's proxy materials relating to the annual
meeting.
14
<PAGE>
GENERAL
The management does not intend to present any matter for action at the
Meeting other than the matters described above, and does not know of any other
matters to be brought before the Meeting. However, if any such other matter
should properly come before the Meeting, or if any vacancy in the proposed
slate of directors should be caused by an unexpected occurrence before the
holding of the election, the proxies will vote thereon in accordance with the
recommendations of management or for such other nominee as management may
select.
The information set forth above as to the present principal occupations of
the nominees for directors, as to their beneficial ownership of securities of
the Company, and as to other information not of record with the Company is
based upon information furnished to the Company by those nominees.
By order of the Board of Directors,
LOGO
[SIGNATURE APPEARS HERE]
Lawrence E. Letwin
Secretary
June 27, 1997
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE ANNUAL
REPORT OF THE COMPANY ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1997,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF THE ANNUAL REPORT
SHOULD BE DIRECTED TO MS. MARGARET J. O'BANNION, GAMMA BIOLOGICALS, INC., 3700
MANGUM ROAD, HOUSTON, TEXAS 77092.
15
<PAGE>
APPENDIX A
GAMMA BIOLOGICALS, INC.
1997 OUTSIDE DIRECTOR STOCK OPTION PLAN
ARTICLE I
Purpose
Gamma Biologicals, Inc. (the "Company") is dependent for the successful
conduct of its business on the initiative, effort and judgment of its
directors. This Outside Director Stock Option Plan (the "Plan") is intended to
provide the outside directors of the Company additional compensation for their
service as directors and an incentive, through options to acquire stock in the
Company, to increase the value of the Company's Common Stock (as defined
below).
ARTICLE II
Administration
The Plan shall be administered by the Board of Directors of the Company (the
"Board"). Subject to the express provisions of the Plan and the policies of
each stock exchange on which any of the Company's stock at any time may be
traded, the Board shall have plenary authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations regulating it, and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's determination on the matters referred to in this Plan shall
be final, conclusive and binding upon all optionees. No member of the Board
shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to the Plan or any transaction
under the Plan.
ARTICLE III
Eligibility and Participation
Under the Plan each director who at the time of his initial appointment or
election to the Board is not an employee of the Company and who is first
elected or appointed to the Board after September 1, 1996 ("Eligible Outside
Director") shall, effective as of the later of May 14, 1997 or the date of his
appointment or election to the Board, be granted an option to purchase from
the Company 10,000 shares of the Company's Common Stock, par value $0.10 per
share ("Common Stock"), at a price determined as set forth in Article IV
below. The Board shall have plenary authority, in its sole discretion and as
it deems appropriate in lieu of cash compensation to directors, to grant
additional options to purchase Common Stock from the Company at a price
determined as set forth in Article IV below.
ARTICLE IV
Terms and Conditions of Options;
Option Price; Transferability
(a) Each option granted under the Plan shall be evidenced by a Director
Stock Option Agreement (the "Agreement") in substantially the form attached
hereto as Exhibit A, or such other form as may be hereafter approved by the
Board on the advice of counsel to the Company. The Agreement shall be executed
by the Company and the optionee.
A-1
<PAGE>
(b) The Board shall determine the per share option price for each option,
but in no event shall the per share option price be less than an amount equal
to 85% of the arithmetic mean (rounded up to the nearest 1/8 of a dollar) of
the Fair Market Value of the Common Stock on the last trading day of each of
the six calendar months preceding the date of grant of the option. In no event
shall the option price be less than the par value of the Company's Common
Stock.
(c) Options granted hereunder shall not be transferable otherwise than by
will or operation of the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Internal Revenue Code of
1986, as amended (the "Code"), or Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA"), or the rules thereunder.
(d) No stock option granted hereunder shall be exercisable unless the Plan
and all shares issuable on the exercise thereof have been registered under the
Securities Act of 1933, as amended (the "1933 Act"), and all other applicable
securities laws, and there is available for delivery a prospectus meeting the
requirements of Section 10 of the 1933 Act, or the Company shall have first
received the opinion of its counsel that registration under the 1933 Act and
all other applicable securities laws is not required in connection with such
issuance. At the time of exercise, if the shares with respect to which the
stock option is being exercised have not been registered under the 1933 Act
and all other applicable securities laws, the Company may require the optionee
to provide the Company whatever written assurance counsel for the Company may
require that the shares are being acquired for investment and not with a view
to the distribution thereof, and that the shares will not be disposed of
without the written opinion of such counsel that registration under the 1933
Act and all other applicable securities laws is not required. Share
certificates issued to the optionee upon exercise of the stock option shall
bear a legend to the foregoing effect to the extent counsel for the Company
deems it advisable.
(e) For purposes of the Plan, the term "Fair Market Value" on any date shall
mean (i) if the Common Stock is listed or admitted to trade on a national
securities exchange or national market system, the closing price of the Common
Stock, as published in the Wall Street Journal, so listed or admitted to trade
on such date or, if there is no trading of the Common Stock on such date, then
the closing price of the Common Stock on the next preceding date on which
there was trading in such shares; (ii) if the Common Stock is not listed or
admitted to trade on a national securities exchange or national market system,
the mean between the bid and asked price for the Common Stock on such date, as
furnished by the National Association of Securities Dealers, Inc. through
NASDAQ or a similar organization if NASDAQ is no longer reporting such
information; or (iii) if the Common Stock is not listed or admitted to trade
on a national securities exchange and if bid and asked prices for the Common
Stock are not so furnished through NASDAQ or a similar organization, the value
established by the Board for purposes of the Plan. In addition to the above
rules, Fair Market Value shall be determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
ARTICLE V
Shares Subject to Plan and Duration of Plan
The Plan shall expire and terminate on the earlier to occur of (i) May 14,
2007 and (ii) the date on which there have been granted to Eligible Outside
Directors pursuant to the Plan options to purchase an aggregate of 100,000
shares of the Common Stock (subject to adjustment as provided in Article VI).
Shares subject to options under the Plan may be either authorized and unissued
shares or issued shares which have been acquired by the Company and are being
held in its treasury, in the sole discretion of the Board.
A-2
<PAGE>
ARTICLE VI
Adjustments
(a) Adjustments Upon Changes in Capitalization. Subject to any required
action by the Company's directors and shareholders, the number of shares
provided for in each outstanding stock option and the price per share thereof,
and the number of shares provided for in the Plan, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Company's Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock), a stock
split, a reverse stock split, or any other increase or decrease in the number
of such shares effected without receipt of consideration by the Company, and
shall also be proportionately adjusted in the event of a spin-off, spin-out,
or other distribution of assets to shareholders of the Company, to the extent
necessary to prevent dilution of the interests of grantees pursuant to the
Plan or of the other shareholders of the Company, as applicable. If the
Company shall engage in a merger, consolidation, reorganization or
recapitalization, each outstanding stock option (or if such transaction
involves less than all of the shares of the Company's Common Stock, then a
number of stock options proportionate to the number of such involved shares),
shall become exercisable for the securities and other consideration to which a
holder of the number of shares of the Company's Common Stock subject to each
such stock option would have been entitled to receive in any such merger,
consolidation, reorganization or recapitalization.
(b) Acceleration. In the event of a potential merger or consolidation
involving the Company regardless of whether the Company is the surviving
entity of such merger or consolidation, a potential liquidation or dissolution
of the Company, a potential sale or other disposition by the Company of all or
substantially all of its assets, or a potential sale or other disposition by
the shareholders of the Company of all or substantially all of the outstanding
Common Stock to one purchaser (any such merger, consolidation, liquidation,
dissolution, or sale being referred to herein as a "Significant Event"), then
the Company shall have the option of terminating all outstanding stock options
upon the actual occurrence of the Significant Event, by notice to all
optionees at least 15 days before the occurrence of the Significant Event. Any
exercise by an optionee in these circumstances may be conditioned upon the
occurrence of the Significant Event. Upon the actual occurrence of the
Significant Event, each outstanding stock option shall terminate if the
Company exercises its option under this paragraph (b). If the potential
Significant Event does not in fact occur for any reason, then the Company's
exercise of its option under this paragraph (b) shall have no effect and his
or her rights will be the same as if the Company had never exercised its
option under this paragraph (b).
(c) Change of Par Value. In the event of a change in the Company's Common
Stock which is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be Common
Stock within the meaning of the Plan.
(d) Miscellaneous. The adjustments provided for in this Article shall be
made by the Board whose determination in that respect shall be final, binding
and conclusive. Except as hereinbefore expressly provided in this Article, the
holder of a stock option shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock or other stock not actually issued
and delivered to the holder. Any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect and no adjustment by reason thereof shall be made with respect to
the number or price of shares of the Company's Common Stock subject to any
stock option. The grant of a stock option pursuant to the Plan shall not
affect in any way the right or power of the Company to, among other things,
make adjustments, reclassifications,
A-3
<PAGE>
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve or liquidate or sell or transfer all or any part
of its business or assets.
ARTICLE VII
Amendment or Discontinuance
The Board may at any time and from time to time amend the Plan, as it shall
deem advisable. In addition to Board approval of any amendment to the Plan, if
the Board further determines on advice of counsel that it is necessary or
desirable to obtain shareholder approval of any amendment to the Plan in order
to comply with Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rule, as it shall read as of
the time of amendment, or for any other reason, then the effectiveness of any
such amendment may be conditioned upon its approval by the holders of a
majority of the outstanding voting stock of the Company (voting as a single
class), and entitled to vote on, and voted for or against approval of, the
amendment at a meeting of such shareholders duly held in accordance with the
applicable laws of the state or other jurisdiction in which the Company is
incorporated, or such other shareholder approval as may be specified by the
Board.
No change may be made in, and no amendment, rescission, suspension or
termination of the Plan shall have an effect on, stock options previously
granted under the Plan which may impair or alter the rights or obligations of
the holders thereof, except that any change may be made in stock options
previously granted with the consent of the optionees.
ARTICLE VIII
Miscellaneous
(a) Governing Law. The Plan and the stock options issued hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Texas applicable to contracts made and performed within that State.
(b) No Liability for Good Faith Determinations. The members of the Board
shall not be liable for any act, omission or determination taken or made in
good faith with respect to the Plan or any stock option granted under it. All
Board members shall also be entitled, with respect to all matters relating to
the Plan, to all of the protections and rights, including without limitation
indemnification and limitation of liability rights, provided to Board members
generally pursuant to applicable law, the Articles of Incorporation of the
Company, the Bylaws of the Company or otherwise.
(c) Other Benefits. Participation in the Plan shall not preclude the
optionee from eligibility in any other stock option plan of the Company or any
of its subsidiaries or any benefit, insurance, pension, profit sharing,
retirement, bonus or other compensation plans that the Company or any of its
subsidiaries has adopted, or may, at any time, adopt for the benefit of
directors.
(d) Severability. In the event any provision of the Plan shall be held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but shall be fully severable and the
Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
A-4
<PAGE>
(e) Notice. Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail. Any notice
required or permitted to be delivered hereunder shall be deemed to be
delivered on the date that it is personally delivered or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore
specified by written notice delivered in accordance herewith. The Company or
an optionee may change, at any time and from time to time, by written notice
to the other, the address which it or he had theretofore specified for
receiving notices. Until it is changed in accordance herewith, the Company and
each optionee shall specify as its and his address for receiving notices the
address set forth in the Agreement pertaining to the shares to which such
notice relates.
ARTICLE IX
Shareholder Approval
The Plan shall be effective as of May 14, 1997, the date on which it
received the approval of a majority of the disinterested members of the Board.
However, the Plan and all stock options granted under the Plan shall be void
if the Plan is not approved on or before September 15, 1997 by the holders of
a majority of the outstanding voting stock of the Company (voting as a single
class) present, or represented, and entitled to vote at a meeting of such
shareholders duly held in accordance with the applicable laws of the state or
other jurisdiction in which the Company is incorporated. No stock option
granted under the Plan shall be exercisable in whole or in part unless and
until such shareholder approval is obtained.
A-5
<PAGE>
GAMMA BIOLOGICALS, INC.
PROXY FOR ANNUAL MEETING TO BE HELD AUGUST 7, 1997
The undersigned hereby appoints David E. Hatcher and Jimmie L. Turner, or
either of them, each with power of substitution, the proxies of the
undersigned, to vote the stock of the undersigned at the annual meeting of
shareholders of Gamma Biologicals, Inc., to be held at the offices of the
Company at 3700 Mangum Road, Houston, Texas on August 7, 1997, at 3:00 P.M.,
Central time, or at any adjournments thereof, as follows:
1. To elect as directors the following persons: Dr. Richard H. Aster, Bryan
J. Brieden, H. H. "Will" Hardee, Betty F. Hatcher, David E. Hatcher and
Hayle B. Randolph.
2. To adopt the 1997 Outside Director Stock Option Plan.
3. To vote in accordance with the recommendations of management upon
whatever other business may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS and will be voted as
indicated by the shareholder. Unless a contrary direction is indicated, the
proxies shall vote the shares FOR the election as directors of the Board's
nominees, and in accordance with the recommendations of management on any
other business coming before the meeting.
(continued on reverse side)
<PAGE>
GAMMA BIOLOGICALS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
For All
1. ELECTION OF DIRECTORS (See Reverse) For Withheld Except
0 0 0
- ---------------------------
Nominee Exception(s)
2. 1997 OUTSIDE DIRECTOR STOCK OPTION PLAN. For Against Abstain
0 0 0
3. OTHER BUSINESS. To vote in accordance For Against Abstain
with the recommendations of management 0 0 0
upon whatever other business may properly
come before the meeting.
Please sign exactly as your name appears hereon.
Signature ____________________________ Date___________
[_] Check if Change of Address.
