UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ------------ to -------------
Commission file Number: 0-26126
SEROLOGICALS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 58-2142225
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
780 Park North Blvd.
Suite 110
Clarkston, Georgia 30021
(Address of principal (Zip Code)
executive offices)
(404) 296-5595
(Registrant's Telephone Number Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past (90) days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at August 1, 1997
------- -----------------------------
Common Stock, $.01 par value per share 14,630,632
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INDEX
SEROLOGICALS CORPORATION AND SUBSIDIARIES
PART I.
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
December 29, 1996 and June 29, 1997 .................................3
Condensed Consolidated Statements of Income -
For the six and three months ended June 30, 1996 and June 29, 1997...4
Condensed Consolidated Statements of Cash Flows -
For the six months ended June 30, 1996 and June 29, 1997 ...........5
Notes to Condensed Consolidated Financial Statements...................6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................9-14
PART II.
Item 4. Submission of Matters to a Vote of Security Holders............14
Item 6. Exhibits and Reports on Form 8-K ..............................14
SIGNATURES .............................................................15
2
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PART I.
Item 1. Financial Statements
SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 29, June 29,
1996 1997
------------ --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $21,232 $14,371
Trade accounts receivable, net 5,235 8,368
Inventories 5,746 7,706
Other current assets 1,131 1,267
------- -------
Total current assets 33,344 31,712
------- -------
PROPERTY AND EQUIPMENT, net 9,800 11,901
------- -------
------- -------
OTHER ASSETS:
Goodwill, net 33,541 44,447
Other 4,152 5,398
------- -------
Total other assets 37,693 49,845
------- -------
$80,837 $93,458
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt
and capital lease obligations $3,567 $1,655
Accounts payable 2,795 2,102
Accrued liabilities 6,208 8,157
Deferred revenue 69 501
------- -------
Total current liabilities 12,639 12,415
------- -------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current maturities 147 2,781
------- -------
OTHER LIABILITIES 168 307
STOCKHOLDERS' EQUITY:
Common stock 141 149
Additional paid-in capital 52,164 56,794
Retained earnings 15,368 20,866
Cumulative translation adjustment 210 146
------- -------
Total stockholders' equity 67,883 77,955
------- -------
$80,837 $93,458
======= =======
The accompanying notes are an integral part of these
condensed consolidated balance sheets.
3
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Six Months Ended Three Months Ended
-------------------- ---------------------
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
--------- --------- --------- ---------
Net sales $31,440 $45,962 $16,661 $26,059
Costs and expenses:
Cost of sales 18,508 29,211 9,837 17,133
Selling, general and
administrative expenses 4,632 6,204 2,339 3,264
Product development expenses 1,130 1,000 541 445
Interest expense (income), net 373 (224) 210 (65)
Other expense, net 882 1,077 462 596
------- ------- ------- -------
Income before income taxes
and extraordinary loss 5,915 8,694 3,272 4,686
Provision for income taxes 2,141 3,196 1,127 1,714
------- ------- ------- -------
Income before extraordinary
loss 3,774 5,498 2,145 2,972
Extraordinary loss on early
retirement of debt, net of
income taxes (14) - (14) -
------- ------- ------- -------
Net income $3,760 $5,498 $2,131 $2,972
======= ======= ======= =======
Net income per common
share-primary:
Income before extraordinary
loss $0.27 $0.36 $0.15 $0.19
Extraordinary loss - - - -
------- ------- ------- -------
Net income $0.27 $0.36 $0.15 $0.19
======= ======= ======= =======
Weighted average common and
common equivalent shares
outstanding-primary 13,756 15,360 14,071 15,620
======= ======= ======= =======
The accompanying notes are an integral part of these
condensed consolidated statements.
4
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
--------------------
June 30, June 29,
1996 1997
-------- --------
Operating activities:
Net income $3,760 $5,498
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,670 2,231
Deferred income tax (benefit) provision (52) 178
Extraordinary loss, net 14 -
Changes in operating assets and liabilities,
net of acquisitions of businesses:
Trade accounts receivable, net (1,322) (2,742)
Inventories (856) (372)
Other current assets (489) (116)
Accounts payable (574) (1,214)
Accrued expenses 546 830
Deferred revenue 142 (383)
------ ------
Total adjustments (921) (1,588)
------ ------
Net cash provided by operating activities 2,839 3,910
------ ------
Investing activities:
Purchases of property and equipment (1,151) (1,697)
Acquisition of businesses (4,639) (10,020)
Other (198) (75)
------ ------
Net cash used in investing activities (5,988) (11,792)
------ ------
Financing activities:
Net payments under revolving line of credit (3,213) -
Proceeds from issuance of long-term debt - 230
Payments on long-term debt and capital
lease obligations (1,306) (108)
Proceeds from public stock offering 21,670 -
Proceeds from employee stock plans 294 886
------ ------
Net cash provided by financing activities 17,445 1,008
------ ------
Effect of changes in foreign exchange rate 11 13
------ ------
Net increase (decrease) in cash and
cash equivalents 14,307 (6,861)
Cash and cash equivalents, beginning of period 2,887 21,232
------ ------
Cash and cash equivalents, end of period $17,194 $14,371
------ ------
Supplemental Disclosures:
Interest Paid $362 $146
Taxes Paid 1,843 3,523
The accompanying notes are an integral part of these
condensed consolidated statements.
5
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SEROLOGICALS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 1997
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Serologicals Corporation (the "Company") is a leading worldwide
provider of specialty human antibody-based products and services to major
healthcare companies. The Company's services, including donor recruitment,
donor management and clinical testing services, enable the Company to
provide value-added, antibody-based products that are used as the active
ingredients in therapeutic and diagnostic pharmaceutical products. The
Company operates 58 donor centers, 14 of which specialize in the collection
of specialty antibodies and 44 of which primarily collect IVIG antibodies
from which a number of products are produced. The Company is also engaged
in the development, manufacturing and sale of monoclonal antibodies at its
facilities in the United Kingdom.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation. The accompanying statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, which are of a normal
recurring nature, to present fairly the Company's financial position,
results of operations and cash flows at the dates and for the periods
presented. Interim results of operations are not necessarily indicative of
results to be expected for a 12-month period. The interim financial
statements should be read in conjunction with the audited consolidated
financial statements as of December 29, 1996 and the notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 29,
1996.
Earnings per share
Net income per share is computed using the weighted average number of
shares of common stock outstanding plus common equivalent shares. Common
equivalent shares from the Nations Note (Note 3) (using the "if-converted"
method) and stock options and warrants (calculated according to the
treasury stock method) have been included in the computation when dilutive.
For the periods presented, fully diluted earnings per share has not been
presented as the dilutive effect is not material. (Note 4).
Weighted average common and common equivalent shares outstanding for
all periods presented have been adjusted to reflect the Company's 3-for-2
common stock split effected in the form of a 50% stock dividend paid
February 28, 1997 to holders of record as of February 10, 1997.
2. ACQUISITION OF THE NATIONS GROUP
On March 6, 1997, the Company acquired Nations Biologics, Inc. and its
affiliates (the "Nations Group") for approximately $14.2 million (the
"Nations Acquisition"), before recording certain transaction costs and
subject to adjustment based primarily on the post-acquisition performance
of the businesses acquired over the 14-month period subsequent to closing.
The purchase price consisted of approximately $10.2 million of cash and the
issuance to one of the sellers of a $4.0 million convertible subordinated
promissory note maturing on March 7, 2002 (the Nations Note as defined in
Note 3). The Company financed the $10.2 million of cash paid at closing
with cash on hand.
6
<PAGE>
The Nations Acquisition was accounted for as a purchase in accordance
with APB No. 16, and accordingly, the purchase price has been preliminarily
allocated to the net tangible and identifiable intangible assets acquired
based on their estimated fair values as of the acquisition date. The
excess of the cost over the estimated fair values of the net tangible and
identifiable intangible assets acquired has been preliminarily allocated to
goodwill.
The following unaudited data summarize the pro forma results of
operations for the six months ended June 30, 1996 and June 29, 1997 as if
the Nations Acquisition had occurred on January 1 of each period. The
unaudited pro forma information has been prepared for comparative purposes
only and does not purport to represent what the results of operations would
actually have been had the transaction actually occurred on the dates
indicated, or what the results of operations may be in the future.
Further, the results for the six months ended June 30, 1996 include a non-
recurring gain of $555,000 recognized by the Nations Group from the sale of
a donor center.
Six Months Ended
------------------------
(In thousands, except per share data) June 30, June 29,
1996 1997
-------- --------
Net sales $34,540 $49,084
Net income $3,908 $5,451
Net income per share $0.28 $0.36
3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations at December 29, 1996 and June
29, 1997 consisted of the following (in thousands):
December 29, June 29,
1996 1997
------------ --------
$4.0 million convertible subordinated note
payable, interest at 4.5% payable quarterly
commencing July 1, 1997; maturing on March 7,
2002 $ -- $4,000
$3.5 million convertible subordinated note
payable, interest payable monthly at 5.25%;
principal payable on April 9, 1997 3,500 --
Capital lease obligations at varying
interest rates and terms, maturing through
2001 200 169
Other notes at varying interest rates and
terms maturing through March 2000 14 267
------ ------
3,714 4,436
Less current maturities 3,567 1,655
------ ------
$147 $2,781
====== ======
7
<PAGE>
In connection with the Nations Acquisition, the Company issued one of
the sellers a $4.0 million convertible subordinated note (the "Nations
Note") maturing on March 7, 2002. The Nations Note bears interest at a
rate of 4.5% per annum through the earlier of the date of repayment,
conversion or March 7, 2000. On or after March 7, 1998, 1999 and 2000, the
payee may call for repayment (or conversion into shares of the Company's
common stock) one-third, two-thirds and all, respectively, of the then
outstanding principal amount of the Nations Note, subject to certain
restrictions as to minimum amounts and frequency. The Nations Note is
convertible at the option of the holder at a conversion price of $18.76 per
share, the fair market value of the Company's common stock at the date of
issuance. The Company has the right to call the Nations Note at any time
commencing March 7, 2000, or earlier if certain events occur.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"),
"Earnings per Share", which will become effective for the Company in its
fiscal quarter and year ending December 28, 1997. This statement
establishes new, simplified standards for computing and presenting earnings
per share. SFAS No. 128 replaces the traditional presentations of primary
earnings per share and fully diluted earnings per share with basic earnings
per share and diluted earnings per share, respectively. Basic earnings per
share excludes the dilutive effect of stock options, warrants and similar
instruments while diluted earnings per share is computed similarly to fully
diluted earnings per share. Pro forma earnings per share, assuming the
adoption of SFAS No. 128 for the periods indicated below, is as follows:
Six months ended Three months ended
-------------------- -------------------
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
-------- -------- -------- -------
Basic earnings per share-
pro forma $0.29 $0.38 $0.16 $0.20
Diluted earnings per share-
pro forma $0.27 $0.36 $0.15 $0.19
In July 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"), which
establishes standards for reporting and display of "comprehensive income",
which is the total of net income and all other non-owner changes in
stockholders' equity, and its components. The Company is in the process of
evaluating SFAS No. 130 and its impact and will adopt the standard in the
first quarter of its 1998 fiscal year.
In July 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS No. 131"). SFAS No. 131, which supersedes SFAS Nos.
14, 18, 24 and 30, establishes new standards for segment reporting, using
the "management approach," in which reportable segments are based on the
same criteria on which management disaggregates a business for making
operating decisions and assessing performance. The Company is in the
process of evaluating SFAS No. 131 and its impact and will adopt the
standard for its 1998 fiscal year.
8
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5. SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
The following non-cash investing and financing transactions were
entered into during the six months ended June 30, 1996 and June 29, 1997
(in thousands):
Six Months Ended
--------------------
June 30, June 29,
1996 1997
-------- --------
Debt assumption $1,154 $ --
Forgiveness of note receivable in
connection with business acquisition 500 --
Issuance of promissory notes as
acquisition consideration -- 4,100
Conversion of subordinated note payable
into common stock -- 3,500
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements
This Form 10-Q contains certain "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, which
generally can be identified by the use of terms such as "may," "expect,"
"anticipate," "intend," "estimate," "believe", "continue" or similar
variations or the negative thereof. These forward looking statements
include, without limitation, statements regarding the effect of changing
regulatory and industry standards; the level of capital expenditures during
the following twelve months; the sufficiency of capital and liquidity to
fund operations, capital expenditures and the Company's acquisition
strategy; and the use of proceeds from the Company's Revolver. These
forward looking statements are subject to certain risks and uncertainties,
such as changes in the economy or market conditions, changes in government
policy or regulations and other factors discussed in Part I of the
Company's Annual Report on Form 10-K for the year ended December 29, 1996,
which could cause actual results to differ materially.
Overview and Recent Developments
The Company is a leading worldwide provider of specialty human
antibody-based products and services to major healthcare companies. As of
August 1, 1997, the Company operated 58 donor centers, 14 of which
specialize in specialty antibody collections and 44 of which primarily
collect IVIG antibodies from which a number of products are produced. The
Company also operates two Food and Drug Administration ("FDA") licensed
monoclonal antibody manufacturing facilities in Scotland and a laboratory
testing facility in Clarkston (Atlanta), Georgia.
On March 6, 1997, the Company acquired Nations Biologics, Inc. and its
affiliates (the "Nations Group"), which operated 16 non-specialty donor
centers (the "Nations Acquisition"). The Company paid approximately $14.2
million, before recording certain transaction costs and subject to
adjustment based primarily on the post-acquisition performance of the
businesses acquired over the 14-month period subsequent to closing. The
purchase price consisted of approximately $10.2 million of cash and the
issuance to one of the sellers of a $4.0 million convertible subordinated
promissory note maturing on March 7, 2002 (See Note 3 of Notes to Condensed
Consolidated Financial Statements). The Company financed the $10.2 million
of cash paid at closing with cash on hand.
9
<PAGE>
In February 1997, the Company declared a 3-for-2 split of its common
stock effected in the form of a 50% stock dividend paid on February 28,
1997 to holders of record as of February 10, 1997. All share and per share
amounts herein have been retroactively adjusted to reflect such split.
Increasing regulatory scrutiny continues to be a significant factor
affecting the industry, resulting in more detailed and frequent inspections
by the FDA and a greater number of observations per inspection, deficiency
notices and warning letters. One factor contributing to this trend is the
FDA's implementation of a new approach to plasma facility inspections
entitled "Team Biologics". Under this new approach, substantially all
plasma facility inspections will be performed by highly trained field
investigators who will focus more extensively on the FDA's current good
manufacturing practices (GMP) and the Quality Assurance guidelines adopted
by the FDA in 1995. On occasion, the Company has received notifications
and deficiency notices from the FDA of possible deficiencies in the
Company's compliance with FDA regulations or its own internal standard
operating procedures. To date, the Company believes that it has adequately
addressed or corrected such deficiencies.
The Company is also subject to numerous industry- and customer-
mandated standards. Industry trade organizations, such as the American
Blood Resources Association ("ABRA"), and the Company's customers
continually evaluate their practices and procedures regarding new
information or public concerns over blood safety and diseases which may be
transmitted from donors through their blood or blood components. Based
upon such evaluation, a certain portion of the population may be prohibited
from donating in the future, or certain new testing and screening
procedures may be required to be performed with respect to certain donors.
One specific concern currently facing the industry is Creutzfeld-Jakob
disease ("CJD"), a fatal disease occurring sporadically in the world at an
incidence of about one per million population per year and which has been
reportedly linked in some cases to bovine spongiform encephalopathy, also
known as "mad cow disease". While no acceptable testing or screening
procedure currently exists to detect CJD, it has generally been found to
have a higher incidence in the older population. In response to this
concern, effective in April 1997 and with respect to certain products, one
of the Company's customers ceased accepting antibodies collected from
donors over the age of 59. Another standard voluntarily accepted by the
industry which was adopted effective July 1, 1997 relates to the acceptance
of new donors. In an effort to further minimize the potential that
infected plasma could enter the manufacturing process undetected, all new
(i.e., first-time) donors' plasma is excluded from further manufacture
until a negative set of test results is also obtained on a second donation
within six months, essentially precluding one-time donations. Although the
Company does not believe that the loss of donors resulting from these new
standards is likely to have a material impact on its current operating
results, there is no assurance that the long-term impact of these
requirements, or the imposition of other measures will not have a material
adverse effect on future operations.
Results of Operations
The following table sets forth certain operating data of the Company
as a percentage of net sales for the periods indicated below:
Six months ended Three months ended
----------------- -----------------
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
------- ------- ------- -------
Net sales 100.0% 100.0% 100.0% 100.0%
Gross profit 41.1% 36.4% 41.0% 34.3%
Selling, general and
administrative expenses 14.7% 13.5% 14.0% 12.5%
Product development expenses 3.6% 2.2% 3.2% 1.7%
Income before extraordinary
loss 12.0% 12.0% 12.9% 11.4%
Net income 12.0% 12.0% 12.8% 11.4%
10
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Three months ended June 30, 1996 and June 29, 1997
Net sales increased 56.4%, or $9.4 million, from $16.7 million in 1996
to $26.1 million in 1997. Of the increase, approximately $5.3 million was
attributable to the full-quarter effect of the acquisition of Simi
Biologicals, Inc. ("Simi") in December 1996 and the Nations Acquisition in
March 1997. Net sales attributable to the Nations Acquisition included
initial shipments from two donor centers which received the requisite
approvals to commence shipping during the quarter. The remainder of the
increase, or approximately $4.1 million, was primarily attributable to
additional net sales of anti-D antibodies, IVIG antibodies and, to a lesser
extent, additional net sales of clinical diagnostic antibodies and anti-
hepatitis antibodies. The Company's net sales of therapeutic antibodies
increased 68.0%, while net sales of diagnostic antibodies increased 17.2%.
Gross profit increased 30.8%, or $2.1 million, from $6.8 million in
1996 to $8.9 million in 1997. Of the increase, approximately $1.5 million
was primarily attributable to increased net sales of, and higher margins
on, anti-D antibodies and increased net sales of IVIG antibodies, while the
remainder was primarily attributable to the full-quarter effect of the
Nations Acquisition and, to a lesser extent, the acquisition of Simi.
Gross profit, as a percentage of net sales ("gross margin") decreased from
41.0% to 34.3%, primarily due to an increase in net sales of relatively
lower-margin IVIG antibodies as a percentage of total net sales from
approximately 35% in 1996 to 47% in 1997. In addition, gross margins in
the second quarter of 1997 were negatively impacted by initial shipments
from two donor centers approved during the quarter, whose cost of sales
generally include a higher amount of non-recurring start up expenses.
Gross margins from the Company's specialty antibody products decreased
slightly, from 55.3% in 1996 to 54.9% in 1997, due primarily to a shift in
the product mix of monoclonal antibody shipments made in 1997, offset by
higher gross margins on anti-D.
Selling, general and administrative expenses increased 39.5%, or
$925,000, from $2.3 million in 1996 to $3.3 million in 1997. The increase
was primarily attributable to a larger sales, financial and recruiting
infrastructure needed to support the Company's acquisitions and growth.
However, selling, general and administrative expenses, as a percentage of
net sales, decreased from 14.0% to 12.5%.
Product development expenses, which relate primarily to the
development of monoclonal antibodies for blood typing reagents and for
therapeutic products, decreased 21.6%, or $96,000, from $541,000 in 1996 to
$445,000 in 1997, or 17.7%, primarily due to the timing of certain
expenditures relating to the Company's development of a monoclonal anti-D
antibody for therapeutic purposes.
Interest expense (income), net decreased 131.0%, or $275,000, from net
interest expense of $210,000 in 1996 to net interest income of $65,000 in
1997, as a result of the retirement of approximately $7.9 million of debt
in June 1996 with proceeds from a secondary stock offering and the
subsequent investment of the remaining proceeds in short term instruments,
offset in part by the additional interest expense attributable to the
Nations Note.
Other expense, net increased 29.0%, or $134,000, from $462,000 in 1996
to $596,000 in 1997, substantially all of which was due to the full-
quarter effect of the amortization of goodwill and other intangible assets
acquired in the Nations Acquisition.
The provision for income taxes, as a percentage of income before
income taxes and extraordinary loss, increased from 34.4% to 36.6%. The
provision for income taxes in the second quarter of 1996 was impacted by
the tax benefit related to a non-recurring dividend paid by the Company's
foreign subsidiary. The provision for income taxes in the second quarter
of 1997 reflects a higher level of non-deductible goodwill resulting from
recent acquisitions.
11
<PAGE>
Six Months June 30, 1996 and June 29, 1997
Net sales increased 46.2%, or $14.5 million, from $31.4 million in
1996 to $46.0 million in 1997. Of the increase, approximately $8.0 million
was attributable to the full-period effect of the Nations Acquisition in
March 1997 and, to a lesser extent, acquisitions completed during 1996.
The remainder of the increase, or approximately $6.5 million, was
attributable to increased sales of anti-D, IVIG antibodies and clinical
diagnostic and monoclonal antibody products. Consolidated net sales of the
Company's therapeutic and diagnostic products increased 53.5% and 22.5%,
respectively.
Gross profit increased 29.5%, or $3.8 million, from $12.9 million in
1995 to $16.8 million in 1997. Of the increase, approximately $3.0 million
was the result of increased sales of, and higher margins on, anti-D and, to
a lesser extent, increased sales of IVIG and monoclonal antibody products.
The remainder of the increase, or approximately $826,000, was attributable
to the full-period effect of the Nations Acquisition in March 1997 and, to
a lesser extent, acquisitions completed during 1996. Gross margins
decreased from 41.1% for the first six months of 1996 to 36.4% for the
comparable period of 1997, primarily attributable to an increase in net
sales of relatively lower-margin IVIG antibodies as a percentage of total
net sales from approximately 33% in 1996 to 44% in 1997, initial shipments
during 1997 from the two donor centers approved during 1997 and a shift in
the product mix of monoclonal antibody shipments made in 1997, offset by
higher gross margins on anti-D.
Selling, general and administrative expenses increased 33.9%, or $1.6
million, from $4.6 million in 1996 to $6.2 million in 1997. The increase
was primarily attributable to a larger sales, financial and recruiting
infrastructure needed to support the Company's acquisitions and growth.
However, selling, general and administrative expenses, as a percentage of
net sales, decreased from 14.7% to 13.5%.
Product development expenses decreased $130,000, or 11.5%, from $1.1.
million in the first six months of 1996 to $1.0 million in the current
year, primarily due to the timing of certain expenditures relating to the
Company's development of a monoclonal anti-D antibody for therapeutic
purposes.
Interest expense (income), net decreased 160.1%, or $597,000, from net
interest expense of $373,000 in 1996 to net interest income of $224,000 in
1997, as a result of the retirement of approximately $7.9 million in debt
in June 1996 with proceeds from a secondary stock offering and the
subsequent investment of the remaining proceeds in short term instruments,
offset in part by the additional interest expense attributable to the
Nations Note.
Other expense, net increased 22.1%, or $195,000, from $882,000 in 1996
to $1.1 million in 1997 due primarily to the full-quarter effect of
amortization of intangible assets resulting from acquisitions completed
during 1996 and the Nations Acquisition in the first quarter of 1997.
Liquidity and Capital Resources
As of June 29, 1997, the Company had cash and cash equivalents and
working capital of $14.4 million and $19.3 million, respectively. Cash
and cash equivalents decreased $6.9 million from December 29, 1996,
primarily from the use of approximately $10.2 million of cash on hand for
the Nations Acquisition on March 6, 1997, offset by cash provided by
operations. Pending further use, the Company currently invests all excess
cash in highly liquid, short term instruments with original maturities of
three months or less.
Net cash provided by operations for the six months ended June 29, 1997
and June 30, 1996 was approximately $3.9 million and $2.8 million,
respectively, or an increase of approximately $1.1 million. The increase
in cash flow from operations was primarily attributable to increased net
income of $1.7 million, $561,000 of additional non-cash depreciation and
amortization expense and $230,000 of additional non-cash deferred income
tax provision, offset by an increase in operating working capital cash
outflows of approximately $1.4 million. The increased cash used for
operating working capital was primarily attributable to a larger increase
in accounts receivable of $1.4 million, a larger decrease in accounts
payable and accrued expenses of $640,000 and a larger decrease in deferred
revenue of $525,000, offset by a smaller increase in inventories of
$484,000 and other current assets of $373,000. The change in inventories,
accounts receivable and accounts payable and accrued expenses was primarily
due to the timing of product shipments, collections and payments, respectively,
while the decrease in deferred revenue was due to initial
shipments from two donor centers licensed during 1997.
12
<PAGE>
Net cash used in investing activities for the six months ended June
29, 1997 was $11.8 million as compared to $6.0 million for the six months
ended June 30, 1996. Cash used in investing activities in the first six
months of 1996 was primarily related to the February 1996 acquisition of
Am-Rho Laboratories, Inc. for approximately $1.1 million in cash, the March
1996 acquisition of Southeastern Biologics, Inc. and its affiliates for
approximately $3.6 million in cash and capital expenditures of
approximately $1.2 million. Cash used in investing activities in 1997
primarily consisted of approximately $10.2 million in cash used for the
Nations Acquisition and capital expenditures of approximately $1.7 million.
Net cash provided by financing activities, including the effects of
changes in foreign currency rates, for the six months ended June 29, 1997
was approximately $1.0 million as compared to $17.5 million for the
comparable period of 1996. Net cash provided by financing activities in
1996 was primarily related to approximately $21.7 million in net proceeds
to the Company from a secondary stock offering in June 1996, offset in part
by net principal payments on the Revolver (as defined below) and other
indebtedness. The financing activities during the first six months of 1997
primarily consisted of proceeds from the exercise of stock options.
Capital expenditures relate primarily to the Company's facilities and
related equipment, the Company's information system and the development of
additional specialty and non-specialty antibody donor centers. During the
first six months of 1997, capital expenditures were approximately $1.7
million, consisting primarily of expenditures related to the expansion of
the Company's laboratory testing facility in Clarkston (Atlanta), Georgia,
the expansion of the Company's monoclonal manufacturing facility in the
United Kingdom and the upgrading of the Company's information system.
During the next twelve months, the Company anticipates increased
levels of capital expenditures. The major factors affecting this increase
include (i) the expansion of the Company's laboratory testing facility and
international headquarters in Clarkston, Georgia; (ii) the re-engineering
and upgrading of the Company's information systems to support its planned
growth; and (iii) the development, relocation and upgrading of specialty
and non-specialty donor centers to increase production capabilities and
efficiencies.
The Company has a revolving credit facility with a bank providing for
maximum borrowings of $20 million, of which $15 million may be used for
acquisitions (the "Revolver"). The Company anticipates using the proceeds
from the Revolver primarily to fund acquisitions. There were no amounts
outstanding under the Revolver at December 29, 1996 or June 29, 1997.
The Company believes that existing cash balances, cash generated from
operations and the borrowing capacity available under the Revolver are
sufficient to fund operations and anticipated capital expenditures for at
least 12 months. As the Company continues to evaluate acquisition and
growth opportunities, it anticipates that additional funding may be
necessary. The Company is evaluating alternative strategies to raise
additional capital, including increasing the borrowing capacity under the
Revolver and the issuance and sale of securities.
The Company is in the third year of two five-year supply contracts
with Bayer Corporation ("Bayer") for the sale of antibodies for IVIG. The
contracts provide for successive one-year renewals, unless notice is given
by either party, and commitments from Bayer to purchase specified amounts
on an escalating basis over the five-year term. The revenues provided under
the contracts are significant and represented approximately 30% of the
Company's revenues for the six months ended June 29, 1997. In addition, in
connection with the Nations Acquisition, the Company acquired several
supply contracts with Alpha Therapeutic Corporation for the sale of IVIG
antibodies collected at 12 of the 16 donor centers operated by the Nations
Group and an additional contract with Bayer for the sale of IVIG antibodies
collected at the remaining four donor centers. Early termination of the
contracts could adversely affect the Company.
13
<PAGE>
On January 15, 1997, the Company entered into an amended agreement
with the holders of a 9% convertible subordinated note issued in the
principal amount of $3.5 million in connection with one of its
acquisitions. Under the terms of the amendment, the interest rate was
decreased to 5.25%. Concurrent with the amendment, the Company called the
note for prepayment on April 9, 1997 and the holders of the note exercised
their conversion rights, resulting in the issuance of 375,000 shares of the
Company's common stock on April 2, 1997.
In connection with the Nations Acquisition, the Company issued one of
the sellers a $4.0 million convertible subordinated note maturing on March
7, 2002. The Nations Note bears interest at a rate of 4.5% per annum
through the earlier of the date of repayment, conversion or March 7, 2000.
On or after March 7, 1998, 1999 and 2000, the payee may call for repayment
(or conversion into shares of the Company's common stock) one-third, two-
thirds and all, respectively, of the then outstanding principal amount of
the Nations Note, subject to certain restrictions as to minimum amounts and
frequency. The Nations Note is convertible at the option of the holder at
a conversion price of $18.76 per share, the fair market value of the
Company's common stock at the date of issuance. The Company has the right
to call the Nations Note at any time commencing March 7, 2000, or earlier
if certain events occur.
PART II.
Item 4. Submission of Matters to a Vote of Security Holders.
The Registrant held its 1997 Annual Meeting of Stockholders on May 20,
1997.
At the Annual Meeting, Samuel A. Penninger, Jr. and James L. Currie
were elected directors. The number of shares of common stock voted in favor
of the election of each person was not less than 10,235,502 and not more
than 1,080 against. In addition, the following other directors continued as
such after the meeting: Harold J. Tenoso, Ph.D , Matthew C. Weisman,
Lawrence E. Tilton and George M. Shaw, M.D., Ph.D.
In addition, at the Annual Meeting, stockholders voted to increase the
authorized common stock of the Company from 30 million shares to 50 million
shares, with 9,997,843 votes FOR, 142,550 votes AGAINST and 639 ABSTAINING.
Further, stockholders ratified at the Annual Meeting the appointment of
Arthur Andersen LLP as independent auditors of the Company, with 10,234,895
votes FOR, 1,048 votes AGAINST and 96,189 votes ABSTAINING
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit 3.1: Amended and Restated Articles of Incorporation of
the Company
Exhibit 10.1: Employment Agreement between the Company and P. Ann
Hoppe
Exhibit 10.2: Employment Agreement between the Company and Toby
Simon, M.D.
Exhibit 27: Financial Data Schedule
b. Reports on Form 8-K:
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEROLOGICALS CORPORATION
-------------------------
(Registrant)
Date: August 13, 1997 By: /s/ Russell H. Plumb//
-------------------------
Russell H. Plumb
Vice President/Chief Financial
Officer (Principal Financial and
Accounting Officer)
15
EXHIBIT 3.1
NOTE: AS REQUIRED IN SECTION 109(c) OF REGULATION S-T, THE ARTICLES OF
INCORPORATION OF THE COMPANY HAVE BEEN RESTATED TO REFLECT ALL AMENDMENTS.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEROLOGICALS HOLDINGS, INC.
Serologicals Holdings, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY as follows:
1. The present name of the corporation is Serologicals Holdings,
Inc. (the "Corporation"), which is the name under which the Corporation was
originally incorporated; the date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware was October 17, 1994 and the date of filing of the Amended and
Restated Certificate of Incorporation of the Corporation was November 9,
1994.
2. The amendment and restatement of the Certificate of
Incorporation herein certified has been duly adopted by the Corporation's
Board of Directors and stockholders in accordance with Sections 242 and 245
of the General Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation is hereby amended
and restated in its entirety as follows:
FIRST: Name. The name of the Corporation is: Serologicals
Corporation.
SECOND: Registered Office. The registered office of the
Corporation is to be located at 32 Loockerman Square, Suite L-100, in the
City of Dover, County of Kent, State of Delaware, 19904. The name of its
registered agent at that address is The Prentice-Hall Corporation System,
Inc.
THIRD: Corporate Purpose. The purpose of the Corporation is
to engage in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: Capitalization. The total number of shares of stock
which the Corporation shall have authority to issue is 51,000,000 shares, of
which 50,000,000 shall be common stock, par value $.01 per share ("Common
Stock") and 1,000,000 shares shall be preferred stock, par value $.01 per
share ("Preferred Stock").
FIFTH: Preferred Stock. The Board of Directors is expressly
authorized at any time, and from time to time, to provide for the issuance
of shares of Preferred Stock in one or more series, with such voting powers,
full or limited, or without voting powers and with such designations,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall be stated
and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors, subject to the limitations
prescribed by law and in accordance with the provisions hereof, including
(but without limiting the generality thereof) the following:
(a) The designation of the series and the number of shares
to constitute the series.
(b) The dividend rate, if any, of the series, the
conditions and dates upon which such dividends shall be payable, the
relation which such dividends shall bear to the dividends payable on any
other class or classes of stock of the Corporation, and whether such
dividends shall be cumulative or noncumulative.
(c) Whether the shares of the series shall be subject to
redemption by the Corporation and, if made subject to such redemption, the
times, prices, other terms and conditions of such redemption and including
(but without limiting the generality thereof) whether such shares which are
redeemed by the Corporation may be reissued except as otherwise provided by
law.
(d) The terms and amount of any sinking fund provided for
the purchase or redemption of the shares of the series.
(e) Whether or not the shares of the series shall be
convertible into or exchangeable for shares of any other class or classes or
of any other series of any class or classes of stock of the Corporation and,
if provision be made for conversion or exchange, the times, prices, rates,
adjustments and other terms and conditions of such conversion or exchange.
(f) The extent, if any, to which the holders of the shares
of the series shall be entitled to vote with respect to the election of
directors or otherwise.
(g) The restrictions, if any, on the issue or reissue of
any additional Preferred Stock.
(h) The rights of the holders of the shares of the series
upon the dissolution, liquidation, or winding up of the Corporation.
SIXTH: Series A Preferred Stock. The powers, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations and restrictions in respect of the Series A Preferred Stock are
as follows:
6.1 Voting Rights. Except as otherwise required by law or
expressly provided herein, each share of Series A Preferred Stock shall
entitle the holder thereof to vote on all matters submitted to a vote of
stockholders of the Corporation and to have the number of votes equal to the
number of shares of Common Stock into which such share of Series A Preferred
Stock is then convertible pursuant to the provisions hereof, assuming for
this purpose only that shares of Series A Preferred Stock are convertible
into fractional shares, at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited. Except as otherwise required by law, expressly
provided herein or expressly provided in the Series A Preferred Stock and
Warrant Purchase Agreement dated December 20, 1989 between Serologicals,
Inc. ("Serologicals"), certain of its then shareholders and certain
purchasers thereunder (the "1989 Purchase Agreement"), the provisions
thereof (to the extent not superseded) to be applicable to the holders of
shares of Series A Preferred Stock, the holders of shares of Series A
Preferred Stock and common Stock shall vote together and not as separate
classes.
6.2 Dividend Rights. In the event any dividend or other
distribution payable in cash or other property is declared on the Common
Stock, each holder of shares of Series A Preferred Stock on the record date
for such dividend or distribution shall be entitled to receive on the date
of payment or distribution of such dividend or other distribution the same
case or other property which such holder would have received if on such
record date such holder was the holder of record of the number (including
any fraction) of shares of Common Stock into which the shares of Series A
Preferred Stock then held by such holder are then convertible.
6.3 Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, each holder of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the
corporation available for distribution to its stockholders, before any
payment or declaration and setting apart for payment of any amount shall be
made in respect of common Stock or to any other class of stock issued after
the issuance of the Series A Preferred Stock, an amount per share equal to
the sum of (a) $266.16, plus (b) interest from the date of issuance of such
share to the date of payment in liquidation hereunder, calculated at 8% per
annum, compounded annually, plus (c) the amount of declared but unpaid
dividends as of the date of payment in liquidation hereunder. If upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the assets to be distributed to the holders of Series A
Preferred Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation to be distributed shall be distributed ratably to
the holders of Series A Preferred Stock.
6.4 Redemption. The Series A Preferred Stock is not
subject to redemption by the Corporation; provided, however, the Series A
Preferred Stock may be repurchased by the Corporation from the holders of
Series A Preferred Stock upon terms agreed to by such holders, such
repurchase to be pro rata unless otherwise agreed by all such holders.
6.5 Conversion.
(a) Conversion Procedure.
(i) Any holder of shares of Series A
Preferred Stock may, at any time, convert all or any number of such shares
held by such holder into fully paid and nonassessable shares of Common
Stock, at the applicable Conversion Price (as hereinafter defined) thereof
in effect at the time of conversion determined as provided herein. Each
share of Series A Preferred Stock shall be convertible into the number of
shares of Common Stock that results from dividing $266.16 (such amount to be
adjusted proportionately in the event the shares of Series A Preferred Stock
are subdivided into a greater number or combined into a lesser number) by
the Conversion Price per share in effect at the time of conversion.
(ii) Each conversion of shares of Series A
Preferred Stock will be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing
such shares to be converted have been surrendered at the principal office of
the Corporation. At such time as such conversion has been effected, the
rights of the holder of such shares of Series A Preferred Stock as such
holder will cease and the person (or entity) or persons (or entities) in
whose name or names any certificate or certificates for shares of Common
Stock are to issued upon such conversion will be deemed to have become the
holder or holders of record of the shares of Common Stock represented
thereby.
(iii) As soon as possible after a conversion
has been effected (but in any event within three business days in the case
of subparagraph (A) below), the Corporation will deliver to the converting
holder of Series A Preferred Stock:
(A) a certificate or certificates representing the number
of shares of Common Stock issued by reason of such conversion in such
name or names and such denomination or denominations as the converting
holder has specified;
(B) payment in an amount equal to all dividends, if any,
owing pursuant to Section 6.2 hereof with respect to each share of
Series A Preferred Stock converted which have not been paid prior
thereto, plus the amount payable under subparagraph (vii) of this
Section 6.5(a) with respect to such conversion; and
(C) a certificate representing any shares of Series A
Preferred Stock which were represented by the certificate or
certificates delivered to the Corporation in connection with such
conversion but which were not converted.
(iv) If for any reason the Corporation is
unable to pay any dividends owing pursuant to Section 6.2 on the shares of
Series A Preferred Stock being converted, the Corporation will pay such
dividends to the converting holder as soon thereafter as funds of the
Corporation are legally available for such payment. At the request of any
such converting holder, the Corporation will provide such holder with
written evidence of its obligation to such holder.
(v) The issuance of certificates for shares
of Common Stock upon conversion of shares of Series A Preferred Stock will
be made without charge to the holders of such shares of Series A Preferred
Stock for any issuance tax in respect thereof or other cost incurred by the
Corporation in connection with such conversion and the related issuance of
shares of Common Stock. Upon conversion of each share of Series A Preferred
Stock, the Corporation will take all such actions as are necessary in order
to insure that the Common Stock issuable with respect to such conversion
will be validly issued, fully paid and nonassessable.
(vi) The Corporation will not close its books
against the transfer of shares of Series A Preferred Stock or of common
Stock issued or issuable upon conversion of shares of Series A Preferred
Stock in any manner which interferes with the timely conversion of shares of
Series A Preferred Stock.
(vii) If any fractional interest in a share of
Common Stock would, except for the provisions of this subparagraph (vii), be
deliverable upon any conversion of shares of Series A Preferred Stock, the
Corporation, in lieu of delivering the fractional share thereof, will pay
any amount to the holder thereof equal to the Market Price of such
fractional interest as of the date of conversion. "Market Price" of any
security means the average of the closing prices of such security's sales on
all securities exchanges on which such security may at the time be listed,
or, if there has been no sale on any such exchange of any day, the average
of the highest bid and lowest asked prices on all such exchanges at the end
of such day, or, if on any day such security is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York City time, or, if on any day such security is not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices
on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting
of the day as of which Market Price is being determined and the 20
consecutive business days prior to such day. If at anytime such security is
not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Market Price will be the fair value thereof
reasonably determined in good faith by the Board of Directors of the
Corporation.
(b) Conversion Price.
(i) The initial Conversion Price for the
Series A Preferred Stock will be $2.6616. In order to prevent dilution of
the conversion rights granted under this Section 6.5, the Conversion Price
will be subject to adjustment from time to time pursuant to this Section
6.5.
(ii) If and whenever on or after the merger
of Serologicals Acquisition, Inc. with and into Serologicals the Corporation
issues or sells, or in accordance with subsection 6.5(c) is deemed to have
issued or sold, other than in a transaction described in subsection 6.5(d),
any shares of its Common Stock for a consideration per share less than the
Conversion Price in effect for the Series A Preferred Stock immediately
prior to the time of such issue or sale, the Conversion Price will be
reduced to a price determined by dividing (A) the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the Conversion Price in effect immediately prior to such issue
or sale and (2) the consideration, if any, received by the Corporation upon
such issue or sale, by (B) the number of shares of Common Stock outstanding
immediately after such issue or sale.
(c) Effect on Conversion Price of Certain Events. For
purposes of determining the adjusted Conversion Price under subsection
6.5(b), the following will be applicable:
(i) Issuance of Rights or Options. If the
Corporation in any manner grants any rights or options to subscribe for or
to purchase Common Stock or any stock or other securities convertible into
or exchangeable for common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Conversion Price in effect immediately prior to the time of the granting of
such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities will be deemed to be outstanding and to have
been issued and sold by the Corporation for such price per share. For
purposes of this paragraph, the "price per share for which Common Stock is
issuable" will be determined by dividing (A) the total amount, if any,
received or receivable by the Corporation as consideration for the granting
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of all such Options,
plus in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the exercise of Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of
such Options. No further adjustment of the Conversion Price will be made
when Convertible Securities are actually issued upon the exercise of such
Options or when Common Stock is actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If
the Corporation in any manner issues or sells any Convertible Securities and
the price per share for which Common Stock is issuable upon such conversion
or exchange is less than the Conversion Price in effect immediately prior to
the time of such issue or sale, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
will be deemed to be outstanding and to have been issued and sold by the
Corporation for such price per share. For the purposes of this paragraph,
the "price per share for which Common Stock is issuable" will be determined
by dividing (A) the total amount received or receivable by the Corporation
as consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Corporation upon the conversion or exchange thereof, by (B) the total
maximum number of shares of common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of the
conversion Price will be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue
or sale of such Convertible Securities is made upon exercise of any Options
for which adjustments of the Conversion Price had been or are to be made
pursuant to other provisions of this Section 6.5, no further adjustment of
the Conversion Price will be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion
Rate. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time, the
Conversion Price in effect at the time of such change will be readjusted to
the Conversion Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed conversion rate,
as the case may be, at the time initially granted, issued or sold (provided,
however, notwithstanding the foregoing, no such adjustment shall increase
the Conversion Price then in effect).
(iv) Treatment of Expired Options
Unexercised Convertible Securities. Upon the expiration of any Option or
the termination of any right to convert or exchange any Convertible Security
without the exercise of any such Option or right, the Conversion Price then
in effect hereunder will be adjusted to the Conversion Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued (provided, however,
notwithstanding the foregoing, no such adjustment shall increase the
conversion Price then in effect).
(v) Calculation of Consideration Received.
If any Common Stock, Option or Convertible Security is issued or sold or
deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Corporation
therefor. In case any Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation will be the fair
value of such consideration (as determined by the Board of Directors of the
Corporation), except where such consideration consists of securities, in
which case the amount of consideration received by the Corporation will be
the Market Price thereof as of the date of receipt. If any Common Stock,
Option or Convertible Security is issued in connection with any merger in
which the Corporation is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair value (as determined by
the Board of Directors of the Corporation) of such portion of the net assets
and business of the non-surviving corporation as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be.
(vi) Integrated Transactions. In case any
Option is issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integrated transaction in which no
specific consideration is allocated to such Option by the parties thereto,
the Option will be deemed to have been issued without consideration.
(vii) Treasury Shares. The number of shares
of Common Stock outstanding at any given time does not include shares owned
or held by or for the account of the Corporation or any subsidiary, and all
disposition of any shares so owned or held will be considered an issue or
sale of Common Stock.
(viii) Record Date. If the Corporation takes
a record of the holders of common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (B) to subscribe for or purchase
Common Stock or Convertible Securities, then for purposes of this Section
6.5 such record date will be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution
or the date of the granting of such right of subscription or purchase, as
the case may be.
(ix) Certain Exceptions. Anything herein to
the contrary notwithstanding, no adjustment will be made to the Conversion
Price by reason of the following:
(A) the issuance of shares of Common Stock upon conversion
of shares of Series A Preferred Stock;
(B) the issuance of shares of Common Stock to employees of
the Corporation or any Subsidiary upon the approval of the Board of
Directors pursuant to an employee stock option or purchase plan which
has been approved by the holders of 67% of the shares of Series A
Preferred Stock then outstanding;
(C) the issuance of shares of Common Stock (or options
therefor) upon the exercise of such options granted to Harold J. Tenoso
pursuant to the Employment Agreement between Harold J. Tenoso and
Serologicals dated March 8, 1993 (the "Tenoso Option"); and
(D) the issuance of shares of Common Stock (or warrants
therefor) upon the exercise of such warrants granted to State Street
Bank & Trust Company pursuant to the Warrant and Warrant Agreement
dated March 9, 1993 (the "State Street Warrant").
(d) Subdivision or Combination of Common Stock. If
the Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior
to such subdivision will be proportionately reduced, and if the Corporation
at any time combines (by reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased.
(e) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the
Corporation's assets to another person or entity which is effected in such a
way that holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for common Stock is referred to herein as an "Organic Change."
Prior to the consummation of any Organic Change, the Corporation will make
appropriate provisions (in form and substance satisfactory to the holders of
100% of the shares of Series A Preferred Stock then outstanding) to insure
that each of the holders of Series A Preferred Stock will thereafter have
the right to acquire and receive, in lieu of or in addition to the shares of
common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's shares of Series A Preferred Stock, such shares
of stock, securities or assets as such holder would have received in
connection with such Organic Change if such holder had converted his Series
A Preferred Stock immediately prior to such Organic Change. In any such
case, the Corporation will make appropriate provisions (in form and
substance satisfactory to the holders of 100% of the shares of Series A
Preferred Stock then outstanding) to insure that the provisions of this
Section 6.5 will thereafter be applicable to the Series A Preferred Stock
(including, in the case of any such consolidation, merger or sale in which
the successor corporation or purchasing corporation is other than the
Corporation, an immediate adjustment of the Conversion Price to the value
for the common Stock reflected by the terms of such consolidation, merger or
sale, and a corresponding immediate adjustment in the number of shares of
Common Stock acquirable and receivable upon conversion of shares of Series A
Preferred Stock, if the value so reflected is less than the Conversion Price
in effect immediately prior to such consolidation, merger or sale). The
Corporation will not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than
the corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form reasonably
satisfactory to the holders of 67% of the shares of Series A Preferred Stock
then outstanding), the obligation to deliver to each such holder such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
(f) Notices.
(i) Immediately upon any adjustment of the
Conversion Price, the Corporation will give written notice thereof to all
holders of shares of Series A Preferred Stock.
(ii) The Corporation will give written
notice to all holders of shares of Series A Preferred Stock at least 20 days
prior to the date on which the Corporation closes its books or takes a
record (A) with respect to any dividend or distribution upon Common Stock,
(B) with respect to any pro rata subscription offer to holders of common
Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Corporation will also give written
notice to the holders of shares of Series A Preferred Stock at least 20 days
prior to the date on which any Organic Change, dissolution or liquidation
will take place.
(g) Reservation of Common Stock. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Preferred Stock, such number of its
shares of common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Series A Preferred Stock, and if
at any time the number of authorized but unissued shares of common Stock
shall not be sufficient to effect the conversion of all then outstanding
shares of Series A Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purposes.
(h) Notice to Holders. Any notice required by the
provisions of this Section 6.5 to be given to the holders of shares of
Series A Preferred Stock shall be deemed given when personally delivered to
such holder, one (1) business day after the same is delivered to an
overnight courier service, postage prepaid, or three (3) business days after
the same has been deposited in the United States mail, certified or
registered mail, return receipt requested, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the
Corporation.
(i) Taxes and Charges. The Corporation will pay all
taxes and other governmental charges that may be imposed in respect of the
issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred Stock.
(j) Rounding. All calculations under this Section 6.5
shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(k) Automatic Conversion. Each share of Series A
Preferred Stock shall automatically be converted into shares of Common Stock
at the then effective Conversion Price upon the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, resulting in the sale by the Corporation
of Common Stock to the public at an aggregate price of not less than
$5,000,000 and at a price per share not less than $10.00 (such price per
share to be adjusted proportionately in the event the shares of Common Stock
are subdivided into a greater number or combined into a lesser number),
provided that (a) the aggregate value of the outstanding stock of the
Corporation based on such sale at such price per share is not less than
$50,000,000, and (b) not less than thirty (30) nor more than ninety (90)
days advance written notice of such closing shall have been given to the
holders of shares of Series A Preferred Stock, which notice shall
specifically refer to the automatic conversion of shares of Series A
Preferred Stock provided for in this section 6.5(k).
6.6 Certain Restrictions and Limitations. So long as not
less than 6,011 shares of Series A Preferred Stock remain outstanding (such
number to be adjusted proportionately in the event of any combination of the
shares of Series A Preferred Stock into a lesser number or subdivision of
the shares of Series A Preferred Stock into a greater number), without the
approval, by vote or written consent, of the holders of not less than 67% of
the shares of Series A Preferred Stock then outstanding, the Corporation
will not:
(a) directly or indirectly declare or pay, or permit
any Subsidiary which is not a wholly-owned Subsidiary to declare or pay, any
dividends, or make, or permit any Subsidiary which is not a wholly-owned
Subsidiary to make, any distributions upon any of its equity securities; or
(b) directly or indirectly redeem, purchase or
otherwise acquire, or permit any Subsidiary to directly or indirectly
redeem, purchase or otherwise acquire, any of the Corporation's or any
Subsidiary's equity securities, except (i) as required by the terms of the
Series A Preferred Stock; or (ii) the repurchase of shares of Common Stock
as contemplated by the Amended and Restated Shareholders Agreement dated as
of August 31, 1993, as amended from time to time, by and among the
Corporation and its shareholders; or
(c) except for (i) the issuance of shares of Series A Preferred
Stock and shares of Common Stock issued upon the conversion of such shares
of Series A Preferred Stock, (such numbers to be adjusted proportionately in
the event the shares of common Stock are combined into a lesser number or
subdivided into a greater number); (ii) the issuance of shares of Common
Stock (or options therefor) to non-management personnel of the Corporation
or any Subsidiary upon the approval of the Board of Directors pursuant to an
employee stock option plan or purchase plan which has been approved by the
holders of 67% of the Series A Preferred Stock then outstanding; and (iii)
the issuance of the Tenoso Option and the State Street Warrant and shares of
Common Stock issuable upon the exercise thereof; authorize, issue or enter
into any agreement providing for the issuance (contingent or otherwise) of,
(A) any notes or debt securities containing equity features (including
without limitation, any notes or debt securities convertible into or
exchangeable for equity securities, issued in connection with the issuance
of equity securities (or any securities convertible into or exchangeable for
any equity securities); or
(d) merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person (other than, in the case
of a Subsidiary, with or into the Corporation or any wholly-owned
Subsidiary); or
(e) sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of other than the sale of
inventory in the ordinary course of business, in excess of twenty-five
percent of the consolidated assets of the Corporation in any twelve-month
period; or
(f) liquidate, dissolve or effect a recapitalization
or reorganization in any form of transaction; or
(g) make any amendment to the Corporation's Certificate
of Incorporation or By-laws as then in effect; or
(h) enter into, or permit any Subsidiary to enter into, any
transaction with any of its or any Subsidiary's Affiliates, except in the
ordinary course of business and upon fair and reasonable terms no less
favorable to the Corporation or any Subsidiary than would be obtained by the
Corporation or any Subsidiary in a comparable arm's length transaction with
a Person who is not the Corporation's or any Subsidiary's Affiliate;
provided, however, nothing in this clause (h) shall be deemed to prohibit
payments to officers, directors and other agents of the Corporation or any
Subsidiary pursuant to indemnities contained in the Corporation's or any
Subsidiary's certificate of incorporation by-laws or any indemnity
agreement to which the Corporation or any Subsidiary is a party; or
(i) make or permit to exist, or permit any subsidiary
to make or permit to exist, any Investment other than: (i) Investments in
short-term obligations issued by, or guaranteed by, the United States
Government, (ii) Investments in negotiable certificates of deposit, bankers'
acceptances or money market securities issued by any bank or branch of a
bank having assets of at least $500,000,000 in the aggregate and which are
issued by the Federal Deposit Insurance Corporation, (iii) Investments in
commercial paper rated P1 or A1 by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, (iv) Investment in Serologicals
Acquisition Co. Limited, a Scottish corporation ("Bioscot") and (v)
Investments disclosed in the Schedules and Exhibits to the 1989 Purchase
Agreement; or
(j) make, or permit any Subsidiary to make, any loans
or advances to, or guarantees for the benefit of, any Person, other than
travel advances and similar loans to employees not to exceed $25,000 at any
one time in the aggregate and transactions contemplated by the 1989 Purchase
Agreement; or
(k) enter into, or permit any Subsidiary to enter
into, the ownership, active management or operation of any business other
than the business conducted by the Corporation and its Subsidiaries as of
the date of Closing; or
(l) establish or acquire any Subsidiaries other than
(i) Bioscot, (ii) Subsidiaries in connection with the restructuring of the
business of the Corporation into holding company structure; and (iii)
Subsidiaries in connection with the acquisition of the assets related to the
plasma center operations of certain corporate entities affiliated with
Acadiana Ventures, Inc.; or
(m) create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist,
Indebtedness other than (i) a credit facility of up to $11,500,000 with
NationsBank of Georgia, N.A. and (ii) capitalized leases having annual
aggregate scheduled payments not in excess of $350,000; or
(n) make, or permit any Subsidiary to make, any
capital expenditure or series of related capital expenditures (including,
without limitation, payments with respect to capitalized leases) or any
other acquisition of assets, in excess of $150,000 for any single
expenditure or acquisition or $250,000 in the aggregate in any twelve-month
period, other than expenditures in the amount of $750,000 identified in
Schedule 8.5(n) of the 1989 Purchase Agreement.
Capitalized terms used but not defined in this Section 6.6
shall be deemed to have the respective meanings ascribed to them in the 1989
Purchase Agreement (to the extent not superseded).
6.7 Cancellation of Series A Preferred Stock. No share or
shares of Series A Preferred Stock acquired by the Corporation by reason of
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
SEVENTH: Common Stock. The powers, preferences and relative,
participating, optional or other rights, and the qualifications, limitations
and restrictions in respect of the Common Stock are as follows:
Subject to the prior or equal rights, if any, of the holders
of shares of Series A Preferred Stock or any series of Preferred Stock
expressed by the Board of Directors in the resolution or resolutions
providing for the issuance of such Preferred Stock, the holders of common
Stock shall be entitled (i) to receive dividends when and as declared by the
Board of Directors out of any funds legally available therefor, (ii) in the
event of any dissolution, liquidation or winding up of the corporation,
whether voluntary or involuntary (sometimes referred to herein as a
liquidation), after payment or provision for payment of the debts and other
liabilities of the Corporation and the preferential amounts to which the
holders of any outstanding shares of Series A Preferred Stock or Preferred
Stock now or hereafter authorized, shall be entitled upon liquidation to
receive the remaining assets of the Corporation, ratably according to the
number of shares of Common Stock held, and (iii) to one vote for each share
of Common Stock held on all matters submitted to a vote of stockholders.
EIGHTH: Board of Directors.
8.1 Number. The business and affairs of the Corporation
shall be under the direction of the Board of Directors. The number of
directors, subject to any right of the holders of any class or series of
Preferred Stock to elect additional directors, shall be fixed from time to
time by the Board of Directors pursuant to the By-Laws of the Corporation,
but in any event shall be not less than Five (5) nor more than Eleven (11).
8.2 Classification. Immediately subsequent to the date of
this Amended and Restated Certificate of Incorporation, the Board of
Directors shall be divided into three classes, designated Class 1, Class 2
and Class 3, as nearly equal in number as the then total number of directors
constituting the whole Board of Directors permits, with the term of office
of one class expiring each year. The term of the directors in Class 1 shall
expire at the first election of directors after the date of this Amended and
Restated Certificate of Incorporation, the term of the directors of Class 2
shall expire at the second election of directors after the date of this
Amended and Restated Certificate of Incorporation and the term of directors
of Class 3 shall expire at the third election of directors after the date of
this Amended and Restated Certificate of Incorporation. Subject to the
foregoing, at each annual meeting of stockholders, the successors to the
class of directors whose term shall then expire shall be elected to hold
office for a term expiring at the third succeeding annual meeting and each
director so elected shall hold office until his successor is elected and
qualified, or until his earlier resignation or removal.
If the number of directors is changed, any increase or
decrease in the number of directors shall be apportioned among the three
classes so as to make all classes as nearly equal in number as possible, and
the Board of Directors shall decide which class shall contain an unequal
number of directors. Notwithstanding the foregoing, whenever holders of any
shares of Preferred Stock, or any series thereof, shall be entitled, voting
separately as a class, to elect any directors, or directors so elected shall
be allocated, each time they are so elected, to the class whose term expires
as the next succeeding annual meeting of stockholders and the terms of all
directors so elected by such holders shall expire at the next succeeding
annual meeting of stockholders.
8.3 Nomination. Whenever, and so long as, the Corporation
is subject to the reporting requirements of Section 12 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
subject to the rights of the holders of any series of Preferred Stock, only
persons who are nominated in accordance with the procedures set forth in
this Section 8.3 shall be eligible to serve as directors. Nominations of
persons for election to the Board of Directors may be made at an annual
meeting of stockholders (a) by or at the direction of the Board of Directors
or(b) by any stockholder of the Corporation who is a stockholder of record
at the time of giving notice provided for in this Section 8.3, who shall be
entitled to vote for election of directors at the meeting and who complies
with the procedures set forth below. Any such nominations (other than those
made by or at the direction of the Board of Directors) must be made pursuant
to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the Corporation not less than 60 days
nor more than 90 days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that in the event that the
annual meeting with respect to which such notice is to be tendered is not
held within 30 days before or after such anniversary date, notice by the
stockholder to be timely must be received no later than the close of
business upon the 10th day following the day on which notice of the meeting
or public disclosure thereof was given or made. Such stockholder's notice
shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, all information relating
to such person that is required to be disclosed in solicitations of proxies
for election of directors, or is otherwise required, in each case pursuant
to Regulation 14 under the Exchange Act (including such person's written
consent to being named as a nominee and to serve as a director if elected);
and (b) as to the stockholder giving the notice (i) the name and address, as
they appear on the Corporation's books, of such stockholder, (ii) the class
and number of shares of stock of the corporation which are beneficially
owned by such stockholder and (iii) a description of all arrangements of
understandings between such stockholder and any other person or persons
(including their names) in connection with such nomination and any material
interest of such stockholder in such nomination. At the request of the
Board of Directors, any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the Corporation
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. If the Board of Directors shall
determine, based on the facts, that a nomination was not made in accordance
with the procedures set forth in this Section 8.3, the Chairman of the Board
of Directors or the person presiding at such meeting shall so declare to the
meeting and the defective nomination shall be disregarded. In addition to
the foregoing provisions of this Section 8.3, a stockholder shall also
comply with all applicable requirements of the Exchange Act, and the rules
and regulations thereunder with respect to the matters set forth in this
Section 8.3.
8.4 Vacancies. Subject to the rights of the holders of any
series of Preferred Stock, newly created directorships, resulting from (i)
an increase in the authorized number of directors, (ii) death, (iii)
resignation, (iv) retirement, (v) disqualification, (vi) removal from office
or (vii) any other cause, may be filled solely by a majority vote of the
remaining directors then in office, although less than a quorum, or by the
sole remaining director, and each director so chosen shall hold office for a
term expiring at the annual meeting of stockholders at which the term of the
class to which he or she has been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the
authorized number of directors shall shorten the term of any incumbent
director.
8.5 Removal. A director may be removed only for cause, by
the holders of a majority of the outstanding shares of all classes of
capital stock of the Corporation entitled to vote in the election of
directors, considered for this purpose as one class.
NINTH: Stockholder Action. Whenever, and so long as, the
Corporation is subject to the reporting requirements of Section 12 and 15(d)
of the Exchange Act, and subject to the rights of the holders of any series
of Preferred Stock, any action required or permitted to be taken by
stockholders pursuant to this Certificate of Incorporation or under
applicable law may be effected only at a duly called annual or special
meeting of stockholders and with a vote thereat, and may not be effected by
consent in writing. Except as otherwise required by law and subject to the
rights of any series of Preferred Stock, annual and special meetings of the
stockholders of the Corporation may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the members of the Board
of Directors, the Chairman of the Board of Directors, the Chief Executive
Officer or the President. Subject to applicable law and the rights of
holders of any series of Preferred Stock, stockholders are not permitted to
call an annual or special meeting or to require that the Board of Directors
call an annual or special meeting.
TENTH: Liability of Directors. No director shall be personally
liable to the Corporation or its stockholders for monetary damages for
breach of a fiduciary duty as a director; provided, however, that to the
extend required by the provisions of Section 102(b)(7) of the General
Corporation Law of the State of Delaware or any successor statute, or any
other laws of the State of Delaware, this provision shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, (iv) for any transaction form which the
director derived an improper personal benefit, or (v) for any act or
omission occurring prior to the date when the provisions becomes effective.
If the General Corporation Law oaf the State of Delaware hereafter is
amended to authorize the further elimination or limitation on personal
liability of directors, then the liability of a director of the Corporation,
in addition to the limitation on personal liability provided herein, shall
be limited to the fullest extent permitted by the amended General
Corporation Law of the State of Delaware. Any repeal or modification of
this Article Tenth by the stockholders of the corporation shall be
prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.
ELEVENTH: Indemnification and Advancement of Expenses:
11.1 Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director, officer or
employee of the corporation or is or was serving at the request of the
corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, shall be indemnified by the
Corporation to the fullest extent permitted by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended,
against all expense, liability and loss (including settlement) reasonably
incurred or suffered by such person in connection with such service;
provided, however, that the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by him
only if such proceeding was authorized by the Board of Directors, either
generally or in the specific instance. The right to indemnification shall
include the advancement of expenses incurred in defending any such
proceeding in advance of its final disposition in accordance with procedures
established from time to time by the Board of Directors; provided, however,
that if the General Corporation Law of the State of Delaware so requires,
the director, officer or employee shall deliver to the corporation an
undertaking to repay all amounts so advanced if it shall ultimately be
determined that he is not entitled to be indemnified under this Article
Eleventh or otherwise.
11.2 Nonexclusivity. The rights of indemnification provided
in this Article Eleventh shall be in addition to any rights to which any
person may otherwise be entitled by law or under any By-law, agreement, vote
of stockholders or disinterested directors, or otherwise. Such rights shall
continue as to any person who has ceased to be a director, officer or
employee and shall insure the benefit of his heirs, executors and
administrators, and shall be applied to proceedings commenced after the
adoption hereof, whether arising from acts or omissions occurring before or
after the adoption hereof.
11.3 Insurance. The corporation may purchase and maintain
insurance to protect any persons against any liability or expense asserted
against or incurred by such person in connection with any proceeding,
whether or not the Corporation would have the power to indemnify such person
against such liability or expense by law or under this Article Eleventh or
otherwise. The Corporation may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of
credit) to insure the payment of such sums as may become necessary to effect
indemnification as provided herein.
11.4 Amendment. No amendment to or repeal of this Article
Eleventh shall apply to or have any effect on the rights of any individual
referred to in this Article Eleventh for or with respect to acts or
omissions of such individual occurring prior to such amendment or repeal.
TWELFTH: Amendment of By-Laws. The affirmative approval, by vote
or written consent, of the holders of not less than 67% of the shares of
Series A Preferred Stock then outstanding shall be required to amend or
repeal, or adopt any provisions inconsistent with the By-laws s then in
effect. Upon the conversion of all of the shares of Series A Preferred
Stock, the Board of Directors shall have the power to make, amend and repeal
the By-laws of the Corporation. Any By-laws made by the Board of Directors
under the powers conferred hereby may be amended or repealed by the Board of
Directors or by the stockholders of the corporation as provided in the By-
laws.
THIRTEENTH: Amendment of Certificate of Incorporation. The
affirmative approval, by vote or written consent, of the holders of not less
than 67% of the shares of Series A Preferred Stock then outstanding shall be
required to amend or repeal, or adopt any provisions inconsistent with this
Certificate of Incorporation. Upon the conversion of all of the shares of
Series A Preferred Stock, the Corporation reserves the right to amend or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been affirmed and acknowledged this 10th day of May, 1995.
SEROLOGICALS HOLDINGS, INC.
By: /s/Harold J. Tenoso, Ph.D.//
----------------------------
Harold J. Tenoso, Ph.D.
President and Chief
Executive Officer
ATTEST:
By: /s/Peggy P. Merritt//
--------------------
Peggy P. Merritt
Secretary
EXHIBIT 10.1
January 23, 1997
P. Ann Hoppe
7608 Georgetown Pike
McLean, VA 22102-1412
Dear Ann:
I am pleased on behalf of Serologicals, Inc. ("Serologicals" or the
"Corporation"), to offer you ("you" or the "Executive") employment
with Seroligcals, Inc. (the "Employment") on the terms set forth herein
(the "Offer").
1. Position, Duties and Responsibilities.
a. You shall serve as Vic President, Regulatory Affairs, responsible
for the duties outline in the attached Job Description.
b. You will devote all your business time and attention to the business
and affairs of the Corporation consistent with your position with the
Corporation. Nothing herein, however, shall preclude you from engaging in
charitable and community affairs, or giving attention to your investments
provided that such activities do not interfere unreasonably with the
performance of your duties and responsibilities enumerated herein.
Serologicals agrees to permit you to continue to serve as a legal expert
witness and assist the Bavarian Red Cross so long as the time spent on these
activities is taken from your accrued paid time off benefit and that the work
performed does not interfere unreasonably with your duties and responsibilities
as the Vice President, Regulatory Affairs or present a conflict of interest
with Serologicals' operations.
c. To the extent they are not inconsistent with the terms herein, you
shall be subject to all of the requirements and provisions described in the
Corporation's employee handbook, as it may be amended from time to time.
d. Your Employment shall commence hereunder within the next 30-60 days
(the "Effective Date") and continue for successive one (1) year periods
following the completion of your probationary period (first 90 days of
employment) (such 90 day period being hereinafter referred to as, the
"Probationary Period"), provided that the parties may extend the term of this
Agreement at any time prior to its termination unless otherwise terminated
pursuant to the provisions hereof.
2. Compensation and Related Matters.
a. Base Salary. You shall be paid a base salary (the "Base Salary")
equal to $135,000 per year. The Base Salary shall be payable to you in the
manner and on the date(s) on which the Corporation pays its other executives,
but in no event less frequently than monthly.
b. Incentive Compensation. You shall be eligible to participate in such
bonus and incentive compensation plans of the Corporation in which other
officers of the Corporation are generally eligible to participate, as the Board
or a Committee thereof shall in good faith determine from time to time in its
sole discretion, subject to and in accordance with the terms and provisions of
such plans.
c. Stock Options. You are hereby granted the option (Board, Compensation
Committee and/or Stockholder approval required) to purchase 30,000 shares of
the Serologicals Corporation $.01 par value common stock at an initial exercise
price equal to the fair market value of Serologicals Corporation stock on the
date of commencing employment. The Options shall have a term of ten (10) years
and, so long as you are then employed by the Corporation, the right to exercise
the Options shall vest and be fully exercisable at the rate of 7,500 per year
commencing on the first anniversary of the Effective Date. Such options shall
be issued pursuant to a stock option agreement entered into by you and
Serologicals and shall be subject to all the other terms and conditions
contained in the Plan, the provisions of which shall be determined in the sole
discretion of the Board of Directors or a committee thereof.
d. Employee Benefit Programs. You shall be eligible to receive fringe
benefits now provided or which may hereinafter be provided by the Corporation
to its executives.
All newly hired employees remain in a probationary status for the first ninety
(90) days of employment. Upon successful completion of the Probationary
Period, you will become eligible for participation in the Corporation benefits
set forth below.
-- Comprehensive medical/dental insurance, including Prescription Card
Service
-- Corporation paid life insurance (two times your annual salary)
-- Serologicals Corporation's Employees' Retirement Plan - 401(k)
-- Short-term Disability Insurance
-- Long-term Disability Insurance
-- Flexible Spending Account (Medical and Dependent Care)
-- Employee Stock Purchase Plan
e. Reimbursement of Expenses. It is contemplated that in connection with
your Employment hereunder, you may be required to incur business,
entertainment and travel expenses. The Corporation agrees to promptly
reimburse you in full for all reasonable out-of-pocket business,
entertainment and other related expenses (including all expenses of travel
and living expenses while away from home on business or at the
request of, and in service of, the Corporation) incurred or expended by you
incident to the performance of your duties hereunder; provided, that you
properly account for such expenses in accordance with the policies and
procedures established by the Board and applicable to the executives of the
Corporation.
f. Paid Time Off. You shall be entitled, in each calendar year of your
Employment, to the number of paid vacation days determined by the Corporation
from time to time to be appropriate for its executives, but in no event less
than four (4) weeks in any such year during your Employment term (pro-rated, as
necessary, for partial calendar years during your Employment). You may take
your allotted vacation days at such times as are mutually convenient for the
Corporation and you, consistent with the Corporation's vacation policy in
effect with respect to its executives. Additionally, you shall also be
entitled to forty (40) hours of sick leave and forty (40) hours of paid
family/medical time off per calendar year (pro-rated, as necessary, for partial
calendar years during the your Employment Term). You shall also be entitled to
all paid holidays given by the Corporation to its executives.
g. Relocation. Serologicals, Inc. agrees to reimburse you as expenses
are incurred for the following relocation expenses:
-- Reimbursement of the costs associated with the sale and purchase of
your residence within twenty-four (24) months of the Effective Date,
including without limitation realtor's fees, not more than one
mortgage loan financing point, appraisals, etc. and other standard
closing costs (including reasonable attorney's fees in connection with
such closings.) There will be no reimbursement for loss of any equity
on the sale of the Executive's current residence.
-- Reimbursement of temporary housing expense (not to exceed six (6)
months), not to exceed $2,200/month.
-- Full reimbursement of reasonable moving expenses, including the
actual costs of packing, shipping, unpacking, and placing household
goods and personal effects from one residence. Full value insurance
protection. A two stage move from your primary residence in Virginia
to your primary residence in Georgia is authorized. Additionally,
Serologicals agrees to reimburse you for a one-time move of a piano
from a third party address in Maryland to your new primary residence
in Georgia.
-- Temporary storage of household goods (not to exceed 90 days).
-- One-time relocation payment equal to two (2) weeks pay to help cover
the cost of incidental moving expenses.
-- Two (2) one (1) week trips for employee and spouse travel to Atlanta
for the purpose of house hunting (airfare, hotel, rental car
included).
-- One-time gross-up to cover tax liability for relocation payments made
under this Section g. Payment is made at year end.
3. Termination. Notwithstanding the foregoing, the Corporation may terminate
your employment at any time. In the event of termination without cause, you
shall be entitled to continue to receive your Base Salary for a nine (9) month
period from the effective date of termination. Under no other termination
circumstances will you be eligible for any form of salary continuation.
In the event of termination for cause (as defined below), from and after the
date of such termination, you shall no longer be entitled to receive the Base
Salary or any other compensation which would have otherwise been due and all of
the unvested Options shall terminate immediately. Any rights and benefits that
you may have in respect to any other compensation or any employee benefit plan
or programs of the Corporation shall then terminate immediately unless the
terms of these plans provide differently, in which case your rights and
benefits shall be determined in accordance with the terms of such other
compensation arrangement, plan or program, and in any event, you shall have no
rights or benefits under any arrangement, plan or program, unless such
arrangement, plan or program, is in writing and you are specified as a
participant therein. The term "Cause", as used herein, shall mean (i) the
Executive's willful misconduct, gross negligence or dishonesty in the
performance of her duties on behalf of the Corporation, (ii) the willful
neglect, failure or refusal of the Executive to carry out any reasonable
request of the Board of Directors or President/Chief Executive Officer
consistent with the duties and responsibilities of Executive contemplated
hereunder, (iii) the material breach of any provision of this letter by the
Executive or (iv) the entering of a plea of guilty or nolo contendere to, or
the Executive's conviction of, a felony or other crime involving moral
turpitude, dishonesty, theft of unethical business conduct. Termination of
employment pursuant to this Section 3 shall be made to the Executive by, and
be effective upon, written notice from the President/Chief Executive Officer or
the Board of Directors; provided that prior to termination of your Employment
on account of clause (ii) or (iii) above, the Executive shall be given written
notice of such breach by the President/Chief Executive Officer or the Board of
Directors and a reasonable opportunity to cure such breach.
4. Nondisclosure. You acknowledge and agree that, during your employment by
the Corporation hereunder, you will come to have knowledge and information with
respect to trade secrets or confidential or secret plans, projects, materials,
business methods, operations, techniques, customers, employees, financial
conditions, policies and accounts of the Corporation with respect to the
business of the Corporation, including, but not limited to, the identity of
donors and donor lists of the Corporation, its successors or assigns or any of
its affiliates ("Confidential Information"). You agree that you will not at
any time divulge, furnish or make accessible to anyone (other than in the
regular course of your performance of services for the benefit of the
Corporation, its successors or assigns) any Confidential Information of the
Corporation. Notwithstanding the foregoing, Confidential Information shall not
include any information which (i) is known generally to the public (other than
as a result of unauthorized disclosure by you), (ii) was available to you on
a nonconfidential basis prior to its disclosure to you by the Corporation or
(iii) is required to be disclosed pursuant to the valid order of a
governmental agency or a judicial court of competent jurisdiction, in which
case you shall give prompt written notice to the Corporation of such
requirement so that the Corporation may take such action as it deems
appropriate.
5. Non-Compete and Non-Solicitation. As a material inducement to the
Corporation to enter into this letter, you agree that at all times during the
term of your Employment hereunder and for a period of twelve (12) months after
the termination of your Employment, you will not, in any way, directly or
indirectly, knowingly solicit, divert, or take away or attempt to solicit,
divert, or take away customers, the business, or any of the donors of the
Corporation that dealt with the Corporation in any capacity through its donor
center operations during your Employment.
You agree that during your Employment and for a period of twelve (12) months
after the termination for any reason of your Employment, you will not in a
geographic area in which the Corporation was conducting business during the
term of your Employment or at the date of termination thereof, directly, or
indirectly through any means, including a business entity in which you have an
ownership interest, knowingly request or induce any other employee of the
Corporation or its affiliates or any donor to the Corporation or its affiliates
to terminate their relationship with the Corporation or its affiliates and
enter into an employment or consulting relationship with another business
entity engaged in a business similar to the Corporation's.
6. Miscellaneous.
a. Governing Law. This letter is to be governed by and interpreted in
accordance with the laws of the State of Georgia applicable to agreements made
and to be performed within that State except as provided herein.
b. No Attorney Provided. The Corporation advises you that it is not
providing legal advice in connection with your acceptance and execution hereof
and that, if you so elect, you should consult with an attorney prior to such
execution.
c. Affiliate. References to the "Corporation" hereunder shall include
"affiliates" thereof, as such term is defined in Rule 405 under the Securities
Act of 1933, as amended. The Corporation shall have the right to designate any
of its affiliates as your employer hereunder provided that the Executive's
duties shall be consistent with her above described job description and
provided further that in the event of such designation, the Corporation shall
remain responsible for its obligations hereunder in the event that any such
designee fails to perform such obligation.
d. Assignment and Assumption. This agreement shall be binding on
successors and assigns; however, with the exception of the rights of
Serologicals' outlined in Section 6 (c) above, no assignment may be made by the
other party without the prior written consent of either party.
e. Severability. If any provision of this letter shall be determined to
be invalid, illegal or unenforceable in whole or in part, all other provisions
hereof shall remain in full force and effect to the fullest extent permitted by
law.
This offer remains open through January 27, 1997. Please indicate your
acceptance of this Offer by signing in the space provided below and returning
to us no later than January 27, 1997.
Very truly yours,
SEROLOGICALS CORPORATION
By: /s/ Harold J. Tenoso, Ph.D.//
-------------------------------
Harold J. Tenoso, Ph.D.
Title: President/CEO
ACKNOWLEDGED AND AGREED
this 21st day of January 1997.
/s/P. Ann Hoppe//
- -----------------
P. Ann Hoppe
JOB DESCRIPTION
EXEMPT
Date: January 23, 1997
TITLE: VICE PRESIDENT, REGULATORY AFFAIRS
DEPARTMENT: REGULATORY AFFAIRS
LOCATION: CORPORATE
INCUMBENT P. ANN HOPPE
POSITION PURPOSE: Provide corporate representation for Serologicals' licensed
facilities in all matters with the FDA and Center for Biologics Evaluation and
Research (CBER). Ensure all facilities are operating in compliance with cGMPs
as defined under 21 CFR and Serologicals' SOPs.
ESSENTIAL JOB FUNCTIONS:
1. Direct the Regulatory Affairs Department to include the following:
-- Administration: review and edit Standard Operating Procedures (SOP)
and FDA submissions;
-- Quality Assurance: ensure compliance and provide audits of all
locations;
-- Training: ensure appropriate and timely training of staff.
2. Approve immunogen cell assignments for donors who are immunized with
investigative red blood cells and/or matched imperfectly.
3. Administer CLIA Standards and OSHA Regulations for all locations.
4. Provide leadership in problem identification and resolution.
5. Act as FDA Responsible Head for Company.
ADDITIONAL DUTIES AND RESPONSIBILITIES:
1. ISO 9000
-- Assist in maintaining the established Quality System under the ISO
9000 guidelines and continue educating the departmental staff
members on the Company's Quality System; ensure that all
operations in the department are within compliance.
2. Other assignments as directed by the President/CEO.
POSITION: VP, REGULATORY AFFAIRS
ORGANIZATIONAL RELATIONSHIPS:
President/CEO
|
|
VP, Regulatory Affairs
|
---------------------------------------------------------
| | |
Director, QA Training Coordinator Regulatory Affairs
| Administrator
| |
Quality Administrative
Assurance Assistant
Engineer
|
|
Quality
Control
Technician
JOB SPECIFICATIONS:
1. Bachelor's degree in a biological field.
2. Minimum fifteen (15) years experience in the source plasma industry in a
regulatory capacity.
3. Thorough knowledge and understanding of regulatory agencies associated with
Serologicals' operations and industry.
4. Excellent written and verbal communication skills.
5. Ability to operate a computer keyboard and calculator.
6. Occupational exposure to blood borne pathogens (level #2).
PHYSICAL REQUIREMENTS:
1. Ability to travel via automobile/airplane.
2. Ability to view display terminal images <18" away from face for extended
periods of time.
3. Ability to sit for extended periods of time - up to four (4) hours at a
time.
4. Ability to lift, tug, pull up to twenty-five (25) pounds.
I acknowledge by my signature below, that the duties listed on this job
description represent those tasks falling within my immediate responsibility.
I must inform my immediate supervisor and/or the Director, Human Resources
should I have a significant change in duties and responsibilities after signing
this description.
/s/ P. Ann Hoppe// 1/27/97
- ---------------------------------------- --------------------
Signature of Employee Date
/s/Harold J. Tenoso Ph.D.// 1/27/97
- ---------------------------------------- --------------------
Signature of President/CEO Date
/s/ Regina Bryant// 1/27/97
- ---------------------------------------- --------------------
Signature of Director, Human Resources Date
EXHIBIT 10.2
December 11, 1996
Toby Simon, M.D.
6210 East Oak
Scottsdale, AZ 85257
Dear Toby:
I am pleased on behalf of Serologicals, Inc. (the "Corporation"), to offer
you ("you" or the "Executive") employment with Serologicals, Inc. (the
"Employment") on the terms set forth herein (the "Offer").
1. Position, Duties and Responsibilities.
a. You shall serve as the Vice President, Medical and Scientific
Affairs, responsible for the duties outlined in the attached Job
Description.
b. You will devote all your business time and attention to the
business and affairs of the Corporation consistent with your position with
the Corporation. Nothing herein, however, shall preclude you from engaging
in charitable and community affairs, or giving attention to your investments
provided that such activities do not interfere with the performance of your
duties and responsibilities enumerated herein.
c. Except as otherwise specifically stated herein, you shall be
subject to all of the requirements and provisions described in the
Corporation's employee handbook, as it may be amended from time to time.
d. Your Employment shall commence hereunder effective on or about
March 1 - May 1, 1997 (the "Effective Date") and continue for successive one
(1) year periods following the completion of your probationary period (first
90 days of employment) (such 90 day period being hereinafter referred to as,
the "Probationary Period"), unless otherwise terminated pursuant to the
provisions hereof.
2. Compensation and Related Matters.
a. Base Salary. You shall be paid a base salary (the "Base Salary")
equal to $145,000 per year. The Base Salary shall be payable to you in the
manner and on the date(s) on which the Corporation pays its other
executives, but in no event less frequently than monthly.
b. Incentive Compensation. You shall be eligible to participate in
such bonus and incentive compensation plans of the Corporation in which
other officers of the Corporation are generally eligible to participate, as
the Board or a Committee thereof shall determine from time to time in its sole
discretion, subject to and in accordance with the terms and provisions of
such plans.
c. Stock Options. You are hereby granted 40,000 Options (Board,
Compensation Committee and/or Stockholder approval required) of the
Corporation's $.01 par value common stock at an initial exercise price equal
to the fair market value of Corporation stock on the date of commencing
employment. The Options shall have a term of ten (10) years and, so long as
you are then employed by the Corporation, the right to exercise the Options
shall vest and be fully exercisable at the rate of 10,000 per year
commencing on the first anniversary of the Effective Date. Such options
shall be issued pursuant to a stock option agreement entered into by you and
the Corporation and shall be subject to all the other terms and conditions
contained in the Plan, the provisions of which shall be determined in the
sole discretion of the Board of Directors or a committee thereof. In the
event of termination of your Employment prior to the vesting in full of your
Options, the Options will continue to vest until the end of your severance
period, if any.
d. Employee Benefit Programs. You shall be eligible, subject to the
satisfactory completion of a physical examination, to receive fringe
benefits now provided or may hereinafter be provided by the Corporation to
its executives.
All newly hired employees remain in a probationary status for the first
ninety (90) days of employment. Upon successful completion of the
Probationary Period, you will become eligible for participation in the
Corporation benefits set forth below. In addition, the Corporation agrees
to reimburse you for your COBRA expenses for existing medical/dental
benefits during the Probationary Period.
-- Comprehensive medical/dental insurance, including Prescription Card
Service
-- Corporation paid life insurance (two times your annual salary)
-- Serologicals Corporation's Employees' Retirement Plan - 401(k)
-- Short-term Disability Insurance
-- Long-term Disability Insurance
-- Flexible Spending Account (Medical and Dependent Care)
-- Employee Stock Purchase Plan
e. Reimbursement of Expenses. It is contemplated that in connection
with your Employment hereunder, you may be required to incur business,
entertainment and travel expenses. The Corporation agrees to promptly
reimburse you in full for all reasonable out-of-pocket business,
entertainment and other related expenses (including all expenses of travel
and living expenses while away from home on business or at the request of,
and in service of, the Corporation) incurred or expended by you incident to
the performance of your duties hereunder; provided, that you properly
account for such expenses in accordance with the policies and procedures
established by the Board and applicable to the executives of the
Corporation.
f. Paid Time Off. You shall be entitled, in each calendar year of
your Employment, to the number of paid vacation days determined by the
Corporation from time to time to be appropriate for its executives, but in
no event less than four (4) weeks in any such year during your Employment
(pro-rated, as necessary, for partial calendar years during your Employment
). You may take your allotted vacation days at such times as are mutually
convenient for the Corporation and you, consistent with the Corporation's
vacation policy in effect with respect to its executives. Additionally, you
shall also be entitled to sixteen (16) hours of personal time off and eighty
(80) hours of sick leave per calendar year (pro-rated, as necessary, for
partial calendar years during your Employment ). You shall also be entitled
to all paid holidays given by the Corporation to its executives.
g. Relocation. Serologicals, Inc. agrees to reimburse you for the
following relocation expenses:
-- Reimbursement on costs associated with the sale and purchase of
residence within eighteen (18) months of the Effective Date,
including without limitation realtor's fees, not more than one
mortgage loan financing point, appraisals, and other standard
closing costs (including reasonable attorney's fees in connection
with such closings.) There will be no reimbursement for loss of
any equity on the sale of the Executive's current residence.
-- Reimbursement of temporary housing expense (not to exceed six
months), not to exceed $2,200/month.
-- Full reimbursement of reasonable moving expenses, including the
actual costs of packing, shipping, unpacking, and placing household
goods and personal effects from one residence. Full value
insurance protection.
-- Temporary storage of household goods (not to exceed 90 days).
-- One-time relocation payment equal to two (2) weeks pay to help
cover the cost of incidental moving expenses.
-- Two (2) one (1) week trips for employee and spouse travel to
Atlanta for the purpose of house hunting (airfare, hotel, rental
car included).
-- One-time gross-up to cover tax liability for relocation payments
made under this Section g. Payment is made at year end.
3. Termination by the Company. Notwithstanding the foregoing, the
Corporation may terminate your employment at any time. In the event of
termination resulting from the elimination of your position, you shall be
entitled to continue to receive your Base Salary for a nine (9) month period
from effective date of termination. Under no other termination
circumstances will you be eligible for any form of salary continuation.
4. Nondisclosure. You acknowledge and agree that, during your employment
by the Corporation hereunder, you will come to have knowledge and
information with respect to trade secrets or confidential or secret plans,
projects, materials, business methods, operations, techniques, customers,
employees, financial conditions, policies and accounts of the Corporation
with respect to the business of the Corporation, including, but not limited
to, the identity of donors and donor lists of the Corporation, its
successors or assigns or any of its affiliates ("Confidential Information").
You agree that you will not at any time divulge, furnish or make accessible
to anyone (other than in the regular course of your performance of services
for the benefit of the Corporation, its successors or assigns) any
Confidential Information of the Corporation. Notwithstanding the foregoing,
Confidential Information shall not include any information which (i) is
known generally to the public (other than as a result of unauthorized
disclosure by you), (ii) was available to you on a nonconfidential basis
prior to its disclosure to you by the Corporation or (iii) is required to be
disclosed pursuant to the valid order of a governmental agency or a judicial
court of competent jurisdiction, in which case you shall give prompt written
notice to the Corporation of such requirement so that the Corporation may
take such action as it deems appropriate.
5. Non-Compete and Non-Solicitation. As a material inducement to the
Corporation to enter into this letter, you agree that at all times during
your Employment and for a period of twelve (12) months after the termination
of your Employment, you will not, in any way, directly or indirectly,
solicit, divert, or take away or attempt to solicit, divert, or take away
customers, the business, or any of the donors of the Corporation that dealt
with the Corporation in any capacity through its donor center operations
during your Employment.
You agree that during your Employment and for a period of twelve (12) months
after the termination for any reason of your Employment, you will not in a
geographic area in which the Corporation was conducting business during the
term of your Employment or at the date of termination thereof, directly, or
indirectly through any means, including a business entity in which you have
an ownership interest, request or induce any other employee of the
Corporation or its affiliates or any donor to the Corporation or its
affiliates to terminate their relationship with the Corporation or its
affiliates and enter into an employment or consulting relationship with
another business entity engaged in a business similar to the Corporation's.
6. Miscellaneous.
a. Governing Law. This letter is to be governed by and interpreted in
accordance with the laws of the State of Georgia applicable to agreements
made and to be performed within that State except as provided herein.
b. No Attorney Provided. The Corporation advises you that it is not
providing legal advice in connection with your acceptance and execution
hereof and that, if you so elect, you should consult with an attorney prior
to such execution.
c. Affiliate. References to the "Corporation" hereunder shall include
"affiliates" thereof, as such term is defined in Rule 405 under the
Securities Act of 1933, as amended. The Corporation shall have the right to
designate as your employer hereunder Serologicals, Inc., Seramed, Inc., any
affiliate of which the Executive shall have significant operating or
managerial responsibility or any other affiliate to which the Executive
agrees; provided that in the event of such designation, the Corporation
shall remain responsible for its obligations hereunder in the event that any
such designee fails to perform such obligation.
d. Severability. If any provision of this letter shall be determined
to be invalid, illegal or unenforceable in whole or in part, all other
provisions hereof shall remain in full force and effect to the fullest
extent permitted by law.
Please indicate your acceptance of this Offer by signing in the space
provided below.
Very truly yours,
SEROLOGICALS CORPORATION
By: /s/Harold J. Tenoso, Ph.D.//
--------------------------
Harold J. Tenoso, Ph.D.
Title: President/CEO
ACKNOWLEDGED AND AGREED
this 23rd day of December, 1996.
/s/Toby Simon, M.D.//
- --------------------
Toby Simon, M.D.
JOB DESCRIPTION
EXEMPT
DATE: December 11, 1996
JOB TITLE: VICE PRESIDENT, MEDICAL AND SCIENTIFIC AFFAIRS
DIVISION: SEROLOGICALS CORPORATION
DEPARTMENT: HEALTHCARE SERVICES
INCUMBENT: TOBY SIMON, M.D.
POSITION PURPOSE:
Manage Serologicals Corporation's medical-related affairs, including serving
as the Corporation's Medical Director, providing senior consultation to the
Healthcare Services Division, and providing technical guidance for research
and development initiatives through effective strategic planning,
communication, policy formation, delegation, and control.
MAJOR DUTIES:
1. Assist President/CEO in developing and organizing the Corporation's
Healthcare Services Division in conjunction with remainder of Corporation's
business divisions.
2. Acting as the Corporation's Medical Director, oversee and evaluate the
Corporation's medical affairs operations to ensure compliance with state and
federal regulations and standard operating procedures.
3. Provide technical guidance for Corporation's research and development
initiatives.
4. As required, provide management services to other departments and
divisions.
POSITION: VICE PRESIDENT, MEDICAL AND SCIENTIFIC AFFAIRS
ORGANIZATIONAL RELATIONSHIP:
President/CEO
Executive Asst--------|---------Director, Corp Comm/
| Investor Relations
- ----------------------------------------------------------------------------
| | | | | | | |
VP, VP, VP, VP, VP, VP, VP, VP,
Finance Reg. Ther. Operations Clinical Sales & Medical General
and Admin- Affairs Services Diag. Marketing and Manager
istration Products Scientific Bioscot
Affairs Ltd.
EDUCATION/EXPERIENCE:
1. Licensed Medical Physician.
2. Comprehensive working knowledge of healthcare services industry, general
knowledge of medical technology related to disease-state diagnosis and
treatment.
3. Effective communications skills in dealing with peers, direct reports,
customers, regulatory officials, and medical professionals.
4. Demonstrated proficiency in identifying problems, implementing solutions
and motivating others to achieve established strategic goals. Strong
customer service orientation and interpersonal understanding.
PHYSICAL REQUIREMENTS:
1. Ability to travel via automobile and/or airplane.
2. Ability to articulate clearly and conduct oral presentations.
3. Occupational exposure to bloodborne pathogens.
I acknowledge by my signature below, that the duties listed on this job
description represent those tasks falling within my immediate
responsibility. I must inform my immediate supervisor and/or the Director,
Human Resources, should I have a significant change in duties or
responsibilities after signing this job description.
/s/Toby Simon, M.D.// 12/23/96
- ---------------------------------------------- ------------------
Signature of Employee Date
/s/Harold J. Tenoso, Ph.D.// 12/23/96
- ---------------------------------------------- ------------------
Signature of Supervisor/Manager Date
/s/Regina Bryant// 12/23/96
- ---------------------------------------------- ------------------
Signature of Director, Human Resources Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Serologicals Corporation and Subsidiaries Consolidated June 1997
Income Statement and Balance Sheet.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1997
<PERIOD-END> JUN-29-1997
<CASH> 14,371
<SECURITIES> 0
<RECEIVABLES> 8,368
<ALLOWANCES> 0
<INVENTORY> 7,706
<CURRENT-ASSETS> 31,712
<PP&E> 11,901
<DEPRECIATION> 0
<TOTAL-ASSETS> 93,458
<CURRENT-LIABILITIES> 12,415
<BONDS> 0
0
0
<COMMON> 149
<OTHER-SE> 77,806
<TOTAL-LIABILITY-AND-EQUITY> 93,458
<SALES> 45,962
<TOTAL-REVENUES> 45,962
<CGS> 29,211
<TOTAL-COSTS> 29,211
<OTHER-EXPENSES> 8,281
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (224)
<INCOME-PRETAX> 8,694
<INCOME-TAX> 3,196
<INCOME-CONTINUING> 5,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,498
<EPS-PRIMARY> $0.36
<EPS-DILUTED> 0<F1>
<FN>
<F1>Fully diluted EPS is anti-dilutive
</FN>
</TABLE>
