SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec 240.14(a)-12
Serologicals Corporation
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Serologicals Corporation
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- ------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
5) Total fee paid:
- ------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- ------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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</Page>
SEROLOGICALS CORPORATION
780 Park North Boulevard, Suite 110
Clarkston, Georgia 30021
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
___________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Serologicals Corporation (the "Corporation") will be held at 9:00 a.m., local
time, on May 20, 1997, at the Grand Hyatt Atlanta, Peachtree Street and
Piedmont Avenue, Atlanta, Georgia, for the following purposes:
1. To elect two directors of the Corporation to hold office
until the Annual Meeting of Stockholders occurring in 2000 and until the
election and qualification of their respective successors;
2. To vote upon a proposal to amend the Corporation's Amended
and Restated Certificate of Incorporation to increase the authorized common
stock, $.01 par value per share, of the Corporation from 30,000,000 shares
to 50,000,000 shares;
3. To ratify the appointment of Arthur Andersen LLP as
independent auditors of the Corporation for the 1997 fiscal year; and
4. To transact such other business as may properly come before
the meeting.
Only holders of record of the Corporation's Common Stock at the close of
business on March 31, 1997 are entitled to notice of, and to vote at, the
meeting and any adjournment thereof. Such Stockholders may vote in person or
by proxy.
STOCKHOLDERS WHO FIND IT CONVENIENT ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. IF YOU ARE NOT ABLE TO DO SO AND WISH THAT YOUR STOCK BE
VOTED, YOU ARE REQUESTED TO FILL IN, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
F. Janey Christine
Secretary
Dated: April 21, 1997
</Page>
SEROLOGICALS CORPORATION
780 Park North Boulevard, Suite 110
Clarkston, Georgia 30021
___________
PROXY STATEMENT
___________
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Serologicals Corporation (the "Corporation") of
proxies to be used at the Annual Meeting of Stockholders (the "Annual
Meeting") of the Corporation to be held at 9:00 a.m., local time, May 20,
1997, at the Grand Hyatt Atlanta, Peachtree Street and Piedmont Avenue,
Atlanta, Georgia and at any adjournments thereof. The purposes of the meeting
are:
1. To elect two directors of the Corporation to hold office
until the Annual Meeting of Stockholders occurring in 2000 and until the
election and qualification of their respective successors;
2. To vote upon a proposal to amend the Corporation's Amended
and Restated Certificate of Incorporation (the "Certificate of Incorporation")
to increase the authorized common stock, $.01 par value per share, of the
Corporation from 30,000,000 shares to 50,000,000 shares;
3. To ratify the appointment of Arthur Andersen LLP as
independent auditors of the Corporation for the 1997 fiscal year; and
4. To transact such other business as may properly come before
the meeting.
If proxy cards in the accompanying form are properly executed and
returned, the shares of Common Stock represented thereby will be voted as
instructed on the proxy. If no instructions are given, such shares will be
voted (i) for the election as directors of the nominees of the Board of
Directors named below, (ii) for the approval of the amendment to the
Certificate of Incorporation, (iii) for ratification of Arthur Andersen LLP as
independent auditors for the 1997 fiscal year, and (iv) in the discretion of
the persons named in the proxy card on any other proposals to properly come
before the meeting or any adjournment thereof. Any proxy may be revoked by a
stockholder prior to its exercise upon written notice to the Secretary of the
Corporation, or by the vote of a stockholder cast in person at the meeting.
The approximate date of mailing of this Proxy Statement is April 21, 1997.
All share and price amounts herein reflect the Corporation's 3-for-2 stock
split paid February 28, 1997 to stockholders of record on February 10, 1997.
VOTING
Holders of record of the Corporation's Common Stock on March 31, 1997
will be entitled to vote at the Annual Meeting or any adjournment thereof. As
of that date, there were 14,159,900 shares of Common Stock outstanding and
entitled to vote, and a majority, or 7,079,951 of these shares, will
constitute a quorum for the transaction of business. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Each share of Common Stock entitles
the holder thereof to one vote on all matters to come before the meeting,
including the election of directors.
Directors are elected by a plurality of votes cast. The favorable vote of
a majority of the outstanding shares of stock entitled to vote thereon is
necessary to approve the amendment to the Certificate of Incorporation. The
favorable vote of a majority of the votes cast at the meeting is necessary to
ratify Arthur Andersen LLP as independent auditors. Abstentions are counted
as a vote against the proposal being considered, except for the election of
directors as to which they will have no effect. Broker non-votes are counted
as a vote against the proposal to amend the Certificate of Incorporation but
will have no effect on the outcome of the election of directors or in the
ratification of Arthur Andersen LLP as independent auditors. The Board of
Directors recommends a vote FOR each of the nominees named below, FOR the
amendment to the Certificate of Incorporation and FOR the ratification of
Arthur Andersen LLP as independent auditors.
INFORMATION AS TO NOMINEES AND OTHER DIRECTORS
Two directors are to be elected at the Annual Meeting. The Board of
Directors has recommended the persons named in the table below as nominees for
election as directors. Both such persons are presently directors of the
Corporation. Unless otherwise specified in the accompanying proxy, the shares
voted pursuant to it will be voted for the persons named below as nominees for
election as directors. If, for any reason, at the time of the election any of
the nominees should be unable or unwilling to accept election, it is intended
that such proxy will be voted for the election, in such nominee's place, of a
substitute nominee recommended by the Board of Directors. However, the Board
of Directors has no reason to believe that any nominee will be unable or
unwilling to serve as a director and the nominees have each agreed to serve if
elected.
The Board currently consists of six members and is divided into three
classes. The following information is derived from information supplied by
the nominees and directors and is presented with respect to the nominees for
election as directors of the Corporation in Class 2 to serve for a term of
three years and until the election and qualification of their respective
successors, and for the directors in Classes 3 and 1 whose terms expire at the
annual meeting of stockholders occurring in 1998 and 1999, respectively, and
until the election and qualification of their respective successors.
NOMINEES FOR DIRECTOR WHOSE TERM EXPIRES IN 2000
(CLASS 2)
Has Been a
Director of the
Name of Nominee Age Corporation Since
------------------ --- -----------------
James L. Currie 60 1989
Samuel A. Penninger, Jr. 55 1983
DIRECTORS WHOSE TERM OF OFFICE
WILL CONTINUE AFTER THE ANNUAL MEETING
Directors Whose Term Expires in 1998 (CLASS 3)
Has Been a
Director of the
Name of Director Age Corporation Since
------------------ --- -----------------
Harold J. Tenoso, Ph.D. 58 1993
George M. Shaw, M.D., Ph.D. 43 1993
Directors Whose Term Expires in 1999 (CLASS 1)
Has Been a
Director of the
Name of Director Age Corporation Since
------------------ --- -----------------
Matthew C. Weisman 55 1992
Lawrence E. Tilton 61 1996
James L. Currie has been a director of the Corporation since December 1989.
In 1985, Mr. Currie organized Essex Venture Partners, a venture capital fund,
and has served as its Managing General Partner since that time. Mr. Currie
also serves as a director of Ethical Holdings, Limited, a publicly-held
pharmaceutical company, and Parexel International Corp., a publicly-held
clinical trials company, and as General Partner of The Woodlands/Essex Venture
Fund III, L.P., a venture capital fund.
Samuel A. Penninger, Jr. has served as Chairman of the Board of Directors of
the Corporation since March 1993, and from March 1983 until March 1993 he
served as President and as a director of the Corporation. Mr. Penninger founded
the Corporation in 1971. He has served as a director of the American Blood
Resource Association and is a member of the American Association of Blood
Banks.
Harold J. Tenoso, Ph.D. has served as President and Chief Executive Officer
of the Corporation since March 1993 and as a director since August 1993. From
1984 until April 1993, he served in various capacities at UNIMED, Inc.,
a publicly-held pharmaceutical company, including as Chief Executive Officer
from January 1989 to April 1992, Chairman from January 1991 to April 1992
and consultant from May 1992 to April 1993.
George M. Shaw, M.D., Ph.D. has been a director of the Corporation and member
of its Scientific Advisory Board since August 1993. Dr. Shaw has served as the
Deputy Director and Senior Scientist at the Center for AIDS Research and as
Senior Scientist at the Comprehensive Cancer Center at the University of
Alabama at Birmingham since July 1988. Dr. Shaw has also held teaching and
research positions since 1985 in the Division of Hematology/Oncology
(Department of Internal Medicine) at the University of Alabama at Birmingham,
where he is currently a Professor of Medicine. Dr. Shaw is also currently a
member of the Scientific Advisory Board of the Pediatric AIDS Foundation Ariel
Project and an External Advisory Committee Member for the New York University
Center for AIDS Research and the University of California at San Francisco
Center for AIDS Research.
Matthew C. Weisman has been a director of the Corporation since May 1992.
Since 1983, Mr. Weisman has been the President and Chief Executive Officer of
Cobey Corporation, a consulting and private investment company. Mr. Weisman
serves as a trustee of the Hebrew Rehabilitation Center for the Aged, a
chronic care hospital and geriatric teaching and research facility. Since
July 1994 Mr. Weisman has been a director of Orchard Cove, Inc., a
Massachusetts continuing care facility providing independent living,
assisted-living and skilled nursing facilities.
Lawrence E. Tilton has been a director of the Corporation since July 1996.
Mr. Tilton retired from American Cyanamid Company, a diversified chemical
and pharmaceutical company, in December 1994. Since 1960, Mr. Tilton served
in various capacities within American Cyanamid, including as President of the
Lederle Laboratories Division from December 1993 until his retirement and
President, Lederle Consumer Health from December 1990 to December 1993.
MEETINGS OF THE BOARD
During the fiscal year ended December 29, 1996, eight meetings of the
Board of Directors were held. Each of the directors attended 75% or more of
the aggregate number of meetings of the Board of Directors and committees on
which he served.
The Board of Directors has a Compensation Committee, which currently
consists of Messrs. Tilton and Currie. The Compensation Committee is
responsible for approving (or, at the election of the Compensation Committee,
recommending to the Board) compensation arrangements for officers and
directors of the Corporation, reviewing benefit plans and administering the
Corporation's various stock plans. This Committee held five meetings during
the Corporation's last fiscal year.
The Board of Directors also has an Audit Committee, which currently
consists of Mr. Weisman. The Audit Committee is responsible for selecting (or,
at the election of the Audit Committee, recommending to the Board) the
independent auditors of the Corporation, evaluating the independent auditors,
consulting with management, internal auditors and the independent auditors as
to the systems of internal accounting controls and reviewing the non-audit
services performed by the independent auditors. This Committee met twice
during the Corporation's last fiscal year.
The Board of Directors has no standing nominating committee.
SECURITY OWNERSHIP OF CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table provides information as of March 31, 1997 as to (i)
each person who is known to the Corporation to be the beneficial owner of more
than 5% of the Corporation's voting securities, (ii) each director and
nominee, (iii) each of the Named Executive Officers (as defined in "Executive
Compensation" below), and (iv) all directors and executive officers as a
group.
Amount and
Name and Address of Nature of Percent of
Beneficial Owner (1) Beneficial Ownership (1) Common Stock (2)
- ---------------------------- ------------------------ -----------------
BancBoston Ventures, Inc. ......... 1,184,961 8.4%
100 Federal Street
Boston, MA 02110
Samuel A. Penninger, Jr. (3)(4).... 1,053,777 7.4
Warburg, Pincus Counsellors, Inc... 1,009,800 7.1
466 Lexington Avenue
New York, NY 10017
Harold J. Tenoso Ph.D. (3)(5)...... 845,613 5.6
Essex Investment Management Co., Inc. 780,285 5.5
125 High Street
Boston, MA 02110
Timm M. Hurst (6).................. 422,953 3.0
James F. Sowinski (6).............. 402,777 2.8
James L. Currie (7)................ 51,750 *
Charles P. Harrison (8)............ 38,250 *
George M. Shaw, M.D., Ph.D. (9).... 32,850 *
Matthew C. Weisman (9)............. 36,750 *
Lawrence E. Tilton ................ --- *
All executive officers and
directors as a group (consisting
of 12 individuals) (10) 3,747,115 24.1%
___________
* Less than 1%.
(1) This table identifies persons having sole voting and investment power with
respect to the shares set forth opposite their names as of March 31, 1997,
except as otherwise disclosed in the footnotes to the table, according to
information publicly filed or furnished to the Corporation by each of
them and except that the information for each of BancBoston Ventures, Inc.,
Warburg, Pincus Counsellors, Inc. and Essex Investment Management Co., Inc.
is as of December 31, 1996 as reported in their respective filings with
the Securities and Exchange Commission.
(2) Shares beneficially owned, as recorded in this table, expressed as a
percentage of the shares of Common Stock of the Corporation outstanding as
of March 31, 1997. For purposes of calculating each person's beneficial
ownership, any shares subject to options exercisable within 60 days of
March 31, 1997 are deemed to be beneficially owned by, and outstanding
with respect to, such person.
(3) Addresses are c/o Serologicals Corporation, 780 Park North Boulevard,
Suite 110, Clarkston, Georgia 30021.
(4) Includes 612,518 shares held jointly with Mr. Penninger's spouse, and
40,000 shares held in two trusts for certain members of his family and of
which his spouse is trustee.
(5) Includes 838,113 shares of Common Stock which Dr. Tenoso has the right to
acquire pursuant to options exercisable within 60 days.
(6) Includes 69,900 shares of Common Stock which Messrs. Hurst and Sowinski
each have the right to acquire pursuant to options exercisable within 60
days.
(7) Includes 48,750 shares which Mr. Currie has the right to acquire pursuant
to options exercisable within 60 days.
(8) Includes 37,500 shares of Common Stock which Mr. Harrison has the right to
acquire pursuant to options exercisable within 60 days.
(9) Represents shares which the individual has the right to acquire pursuant
to options exercisable within 60 days.
(10) Includes 1,385,499 shares of Common Stock which members of the group have
the right to acquire pursuant to options exercisable within 60 days.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for the fiscal years ended December 29,
1996, December 31, 1995 and 1994, the compensation for services in all
capacities to the Corporation of the chief executive officer and the other
four most highly compensated executive officers of the Corporation during the
fiscal year ended December 29, 1996 (collectively, the "Named Executive
Officers"):
Long Term
Annual Compensation Compensation
---------------------- ------------
Other Securities All
Annual Underlying Other
Salary Bonus Compen- Options Compen-
sation sation
Name and Principal
Position Year ($) ($) ($) (#) ($)
- ----------------------- ---- --- --- --- --- ---
Harold J. Tenoso, Ph.D. 1996 200,000 150,000(1) (2) 90,000 4,967(3)
President and Chief 1995 200,000 88,000 62,964 36,000 2,310
Executive Officer 1994 197,413 108,000 -- 248,238 2,310
Samuel A. Penninger, Jr. 1996 143,049 -- (2) -- 2,889(3)
Chairman of the Board 1995 193,265 -- -- -- 2,310
1994 193,265 -- 80,191 -- 2,310
Charles P. Harrison 1996 132,692 75,000(1) 68,545(4) 150,000 522(3)
Vice President, 1995 -- -- -- -- --
Healthcare Services 1994 -- -- -- -- --
Timm M. Hurst 1996 125,000 -- 55,500 4,018(3)
Vice President, 1995 125,000 54,000 -- 21,600 --
Sales and Marketing 1994 132,822 65,900 -- -- 1,327
James F. Sowinski 1996 125,000 -- (2) 55,500 1,853(3)
Vice President, 1995 125,000 54,000 33,516 21,600 2,263
Operations 1994 119,192 65,900 -- -- 1,779
___________
(1) Represents cash bonuses earned in 1996 and paid in 1997.
(2) Excludes amounts which did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the Named Executive Officer.
(3) Consists of Corporation contributions to the Corporation's 401(k) plan of
$356, $1,331, $2,218 and $1,157 for Dr. Tenoso and Messrs. Penninger,
Hurst and Sowinski, respectively, and premiums paid for term life
insurance of $4,611, $1,558, $522, $1,800 and $696 for Dr. Tenoso and
Messrs. Penninger, Harrison, Hurst and Sowinski, respectively.
(4) Consists of $44,670 of relocation expenses and $23,875 of reimbursement
for taxes related thereto.
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during
the fiscal year ended December 29, 1996 to each of the Named Executive
Officers who received options during such year.
%
Number of of Total Potential Realized
Securities Options Value at Assumed
Under- Granted Annual Rates of
lying to Stock Price
Options Emp- Appreciation for
loyees Exercise Option Term (1)
Granted in fiscal Price Expiration 5.0% 10.0%
Name (#) Year ($/sh) Date ($) ($)
- ---- --- --------- ----- ---- --- ---
Harold J. Tenoso, Ph.D. 30,000(2) 4.3% $11.00 1/03/2006 207,535 525,935
60,000(3) 8.6% $12.33 2/27/2006 465,382 1,179,369
Charles P. Harrison 150,000(4) 21.6% $10.00 2/05/2006 943,342 2,390,614
Timm M. Hurst 18,000(2) 2.6% $11.00 1/03/2006 124,521 315,561
37,500(3) 5.4% $12.33 2/27/2006 290,864 737,106
James F. Sowinski 18,000(2) 2.6% $11.00 1/03/2006 124,521 315,561
37,500(3) 5.4% $12.33 2/27/2006 290,864 737,106
___________
(1) Potential realizable values are based on the fair market value per share
as determined by the Corporation on the date of the grant and represent
hypothetical gains that could be achieved for the respective options if
exercised at the end of the option term. The dollar amounts set forth in
these columns are the result of calculations at the five percent and ten
percent rates set by the Securities and Exchange Commission, and are not
intended to forecast possible future appreciation, if any, of the
Corporation's Common Stock price. There can be no assurance that such
potential realizable values will not be more or less than that indicated
in the table above.
(2) These options were immediately exercisable upon grant.
(3) These options became fully-vested on February 28, 1997.
(4) These options vest and are exercisable at the rate of 25% of the shares
covered by the option on each of the first four anniversary dates of the
commencement of employment.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information with respect to (i) each
exercise of options by the Named Executive Officers during the fiscal year
ended December 29, 1996, (ii) the number of unexercised options held by each
of the Named Executive Officers who held options as of December 29, 1996 and
(iii) the value of unexercised in-the-money options as of December 29, 1996.
Number of
Securities
Underlying
Unexercised Value of Unexercised
Options at In-the-Money
Shares Fiscal Year End Options at
Acquired on Value (#) Fiscal Year End($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (1)
---- --- --- -------------- ----------------
Harold J. Tenoso 75,000 $1,128,000 719,238/84,000 $12,444,259/$887,280
Charles P. Harrison -- -- 0/150,000 $0/$1,563,000
Timm M. Hurst -- -- 25,200/51,900 $290,184/$544,498
James F. Sowinski -- -- 25,200/51,900 $290,184/$544,498
___________
(1) Calculated on the basis of the fair market value ($20.42) of the Common
Stock as of December 27, 1996, minus the per share exercise price.
Compensation of Directors
Outside directors are paid $1,000 for each Board and Committee meeting
attended and are reimbursed for out-of-pocket expenses in connection with
attendance at such meetings. In lieu of receiving cash compensation for
serving as a director and a member of the Corporation's Scientific Advisory
Board, Dr. Shaw is compensated pursuant to a consulting arrangement in the
aggregate amount of $22,500 per annum. Dr. Shaw provides technical and
scientific consulting services to the Corporation relating to research and
development matters as requested by the Corporation from time to time.
On August 9, 1995, the Board of Directors adopted the 1995 Non-
Employee Directors' Stock Option Plan (the "1995 Director Plan"). Pursuant
thereto, Mr. Currie received a lump sum grant of options to purchase 48,000
shares of Common Stock (the "Lump Sum Grant") at an exercise price of $8.50
per share, the fair market value per share of the Common Stock on the date of
grant. Dr. Shaw and Mr. Weisman waived their rights to receive such Lump Sum
Grant of options under the 1995 Director Plan. Pursuant to the 1995 Director
Plan, each person who after the adoption of such plan becomes a non-employee
director of the Corporation is automatically granted a Lump Sum Grant on the
day after such person's first election to the Board. In addition, the 1995
Director Plan also provides for the automatic grant of options to purchase
3,000 shares of Common Stock on an annual basis to each non-employee director
of the Corporation who (or would have, but for the non-employee director
having declined Lump Sum Grant) vested in full in their Lump Sum Grant.
Options granted under the 1995 Director Plan typically vest over a four year
period. The Compensation Committee administers the 1995 Director Plan.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
In connection with the commencement of Dr. Tenoso's employment, the
Corporation entered into an employment agreement with him in March 1993 for an
initial term of three years and subsequent automatic one-year renewals unless
earlier terminated pursuant to the provisions thereof. Such agreement has been
automatically renewed through March 1998. Such agreement, as amended in
December 1994, provides for a current base salary of $200,000 per annum,
participation in all bonus and incentive plans of the Corporation and certain
insurance, automobile and relocation allowances and other benefits. In
addition, pursuant to such agreement, Dr. Tenoso received options to purchase
up to 734,238 shares of Common Stock, 504,000 of which have an initial
exercise price of $2.29 per share (of which 75,000 have been exercised) and
230,238 of which have an initial exercise price of $3.67 per share. The
exercisability of all such options became vested in accordance with their
terms upon the Corporation's initial public offering. In connection with such
vesting, the Corporation recognized compensation expense in 1995 of
approximately $346,500 ($215,000 net of income taxes). The shares issuable
upon exercise of the options are subject to certain registration and
anti-dilution rights.
Dr. Tenoso's agreement further provides that in the event his
employment is terminated within six months of a Change of Control or a
Constructive Termination, Dr. Tenoso shall receive a payment of 2.99 times his
highest annual salary and bonus pursuant to the agreement. "Change of Control"
is defined in the agreement as (a) the acquisition by an individual or group
other than Dr. Tenoso or a group including him of (i) beneficial ownership of
30% of the Corporation's voting securities or (ii) all or substantially all of
the assets of the Corporation, (b) commencement of a tender offer for the
Common Stock, or (c) a majority change in the composition of the Board of
Directors not approved by the current directors, and a "Constructive
Termination" is defined as a change in title or positions, a material
diminution in the nature or scope of authorities, powers, functions, duties or
responsibilities, or a reduction of 10% or more of compensation and benefits.
Such employment agreement provides that Dr. Tenoso shall be entitled to a bonus
equal to the largest bonus received by him during the term of the agreement
and to his base salary and benefits for the later of the remainder of the term
and 12 months from the date of termination in the event his employment is
terminated by the Corporation other than for cause (as defined in the
employment agreement), death or disability, or by Dr. Tenoso for a
Constructive Termination. Such agreement also contains confidentiality
provisions for the period of employment and 12 months thereafter and
non-competition provisions for the period of employment and 24 months
thereafter.
In connection with the commencement of Mr. Harrison's employment, the
Corporation entered into an employment agreement with him in January 1996 for
an initial term of one year and subsequent automatic one-year renewals unless
terminated earlier pursuant to the provisions thereof. Such agreement
provides for a current base salary of $150,000 per annum (the "Base Salary"),
participation in all bonus and incentive plans of the Corporation available
to officers and certain insurance, automobile and relocation allowances and
other benefits. In addition, pursuant to such agreement, Mr. Harrison
received options to purchase 150,000 shares of Common Stock with an initial
exercise price of $10.00 per share. Such options vest at the rate of 25% per
annum, commencing with the first anniversary of the commencement of Mr.
Harrison's employment.
Mr. Harrison's agreement provides that if prior to May 5, 1997 his
employment is terminated on account of a Constructive Termination or for any
reason other than "for cause", Mr. Harrison shall receive payments equivalent
to the Base Salary and benefits through such date and for a period equal to
six months thereafter. If such employment terminates anytime thereafter, Mr.
Harrison shall receive payments equivalent to the Base Salary and benefits
for a six-month period. "Constructive Termination" is defined as a change in
title or position, a material diminution in the nature or scope of
authorities, powers, functions, duties or responsibilities, or a reduction in
the Base Salary or the base compensation provided to Mr. Harrison (unless
substantially all officers of the Corporation agree to substantially similar
percentage reductions in their base compensation). Such agreement also
contains non-competition provisions for the period of employment and 24
months thereafter.
In addition, the Corporation has entered into severance agreements
with Messrs. Penninger, Hurst and Sowinski. Each such agreement provides that
(i) in the event of termination of such executive's employment by the
Corporation with or without cause at any time before normal retirement age or
(ii) in the event such executive's compensation is reduced or his benefits are
materially reduced and he elects to resign, such executive shall be entitled
to continue to receive his base monthly salary for a number of months that is
equal to the number of years such executive had been employed by the
Corporation; provided, however, that the period shall not be shorter than 12
months and shall not be longer than 24 months.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are set forth under
"Meetings of the Board" and their relationship to the Corporation is set forth
under "Information as to Nominees and Other Directors."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes and
reviews the Corporation's arrangements and programs for compensating executive
officers, including the Named Executive Officers and all arrangements involving
stock options. The Compensation Committee is composed entirely of directors
who are neither officers nor employees of the Corporation.
Philosophy and Policy
The Compensation Committee's policy is to design executive
compensation packages that reward the achievement of both the short-term and
long-term strategic objectives of the Corporation. Under this approach, the
attainment of targeted earnings and other pre-determined short-term goals is
compensated through annual cash bonuses, the acceleration of the vesting
period of stock options granted to executives, or both. Long-term incentives
are provided through the grant of stock options which typically vest over a
four year period. Cash bonuses and stock options are awarded in addition to
executives' yearly base salaries, which are determined in a manner to be
competitive with companies which the Compensation Committee believes are
comparable to the Corporation in the Corporation's industry. Salaries for all
officers, other than the Chief Executive Officer, are recommended by the Chief
Executive Officer to the Compensation Committee for its approval.
Annual bonus payments, and the acceleration of the vesting period
associated with stock options granted to executives, are based primarily on
the attainment of pre-determined corporate earnings targets. These earnings
targets are recommended by management, approved by Dr. Tenoso and approved by
the Corporation's Compensation Committee at the beginning of each fiscal year.
Cash bonuses are granted and the vesting period of options will accelerate if
the target level of earnings is achieved, and the size of the executive's cash
bonus typically increases with the level of earnings growth up to a certain
maximum level of bonus. Dr. Tenoso has the discretion, subject to approval of
the Compensation Committee, to adjust annual cash bonuses in the event that
the achievement of corporate or divisional results do not adequately reflect a
participant's effort. The percentage of an eligible executive's salary which
may be earned as a bonus varies depending on the individual's position with
the Corporation.
The Compensation Committee believes that, in addition to compensating
executives for the long-term performance of the Corporation, the grant of
stock options aligns the interest of the executives with those of the
Corporation's stockholders. The Compensation Committee determines the
recipients of stock option grants and the size of the grants consistent with
these principles, based on the individual's position with the Corporation.
Compensation of the Chief Executive Officer
Dr. Tenoso's compensation for fiscal year 1996 was determined by an
employment agreement entered into in March 1993. The overall compensation
included in the agreement was determined in a manner to be competitive with
companies which the Compensation Committee believes are comparable to the
Corporation in the Corporation's industry. Pursuant to that agreement, Dr.
Tenoso is entitled to participate in any bonus arrangements maintained by the
Corporation. Dr. Tenoso recommends a bonus which is, after review and analysis,
approved or modified by the Compensation Committee. In February 1997, for 1996,
the Compensation Committee approved a cash bonus to Dr. Tenoso of $150,000
and a grant of 46,875 stock options in recognition of the Corporation's
recent financial performance and growth.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") generally limits the annual tax deduction for applicable remuneration
paid to the Corporation's Chief Executive Officer and certain other highly
compensated executive officers to $1,000,000. The Compensation Committee does
not believe that the compensation to be paid to the Corporation's executives
will exceed the deduction limit set by Section 162(m).
Compensation Committee
Lawrence E. Tilton
James L. Currie
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), unless the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Performance Graph
The following graph compares the cumulative total stockholder return
on Common Stock with the cumulative total return of the Nasdaq Stock Market
Index and the Nasdaq Pharmaceutical Stocks Index for the period commencing
June 15, 1995 (the date of the Corporation's initial public offering). The
graph assumes that the value of the investment in Common Stock was $100 on
June 15, 1995 and that all dividends were reinvested. Past performance is not
any indication of future performance.
Serologicals Corporation
Performance Graph
[GRAPH]
Total Return Analysis
Peer Group
(Nasdaq
Pharmaceutical The Nasdaq Serologicals
Date Stocks) Stock Market Corporation
- -------- -------------- ------------ ------------
6/15/95 100.00 100.00 100.00
6/30/95 105.09 103.49 92.39
9/29/95 131.30 115.95 134.78
12/29/95 153.12 117.37 143.48
3/29/96 159.08 122.85 239.07
6/28/96 154.22 132.80 228.07
9/30/96 158.32 137.61 302.17
12/27/96 151.93 144.55 266.24
APPROVAL OF THE PROPOSAL
TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
The Corporation's Certificate of Incorporation presently authorizes
the issuance of 31,000,000 shares of stock, consisting of 1,000,000 shares of
Preferred Stock, par value $.01 per share, and 30,000,000 shares of Common
Stock, par value $.01 per share. As of March 31, 1997, there were 14,159,900
shares of Common Stock outstanding and 4,836,505 shares were reserved for
issuance under the Corporation's compensation plans or upon conversion or
exercise of convertible debt or warrants, leaving a balance of 11,003,595
authorized, unissued and unreserved shares of Common Stock. No shares of
Preferred Stock are outstanding.
Because of the limited number of shares of Common Stock available to
be issued, the Board of Directors has unanimously approved an amendment of
the Certificate of Incorporation, subject to approval by the stockholders, to
increase the authorized Common Stock from 30,000,000 to 50,000,000 shares.
The Board recommends that the stockholders approve the amendment of Article
FOURTH of the Certificate of Incorporation so that, as amended, it shall read
as follows:
"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 shares
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")."
The additional shares of Common Stock, when issued, would have the same
rights and privileges as the shares of Common Stock now issued. There are no
pre-emptive rights relating to the Common Stock. If the proposed amendment
is approved by the stockholders, it will become effective upon filing a
Certificate of Amendment as required by the General Corporation Law of
Delaware.
Although the Corporation has no present plans, agreements, or
understandings regarding the issuance of the proposed additional shares, the
Board of Directors believes that adoption of the amendment is advisable
because it will provide the Corporation with greater flexibility in
connection with possible future financing transactions, acquisitions, stock
dividends or splits, employee compensation plans, and other proper corporate
purposes. Moreover, having such additional authorized shares available will
give the Corporation the ability to issue shares without the expense and
delay of a special meeting of stockholders. Such a delay might deprive the
Corporation of the flexibility the Board views as important in facilitating
the effective use of the Corporation's shares. Except as otherwise required
by applicable law or stock exchange rules, authorized but unissued shares of
Common Stock may be issued at such time, for such purposes, and for such
consideration as the Board of Directors may determine to be appropriate,
without further authorization by stockholders.
Since the issuance of additional shares of Common Stock, other than on a
pro rata basis to all current stockholders, would dilute the ownership
interest of all stockholders, including a person seeking to obtain control of
the Corporation, such issuance could be used to discourage a change in
control of the Corporation by making it more difficult or costly. The
Corporation is not aware of anyone seeking to accumulate Common Stock or
obtain control of the Corporation, and has no present intention to use the
additional authorized shares to deter a change in control.
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the meeting is needed to approve the proposed
amendment of the Certificate of Incorporation.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless stockholders
specify otherwise in this proxy.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Corporation, upon the recommendation of
the Audit Committee, has appointed the firm of Arthur Andersen LLP to serve
as independent auditors of the Corporation for the 1997 fiscal year. Arthur
Andersen LLP has served as independent auditors of the Corporation for many
years and is considered by management to be well qualified. The Corporation
has been advised by the firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Corporation or any of its
subsidiaries in any capacity.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting of Stockholders, will have an opportunity to make a statement
if they so desire and are expected to be available to respond to appropriate
questions.
The affirmative vote of a majority of the votes cast at the meeting is
needed to ratify the appointment of Arthur Andersen LLP as independent
auditors.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless stockholders
specify otherwise in this proxy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation's executive officers, directors and greater than ten
percent beneficial owners are required under the Exchange Act to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Copies of those reports must also be furnished to the Corporation.
Based solely on the Corporation's review of the copies of such reports it has
received, and written representations from its executive officers, directors
and greater than ten percent beneficial owners, the Corporation believes that
all its executive officers, directors and greater than ten percent
beneficial owners complied with all filing requirements applicable to them,
except that BancBoston Ventures, Inc. was late in filing one Form 4 relating
to the sale of stock in the Company's secondary offering and Lawrence E.
Tilton was late in filing one Form 3 related to his initial election to the
Board of Directors.
OTHER BUSINESS
The Board of Directors of the Corporation knows of no other matters to be
presented at the Annual Meeting. However, if any other matters properly come
before the meeting, or any adjournment thereof, it is intended that proxies in
the accompanying form will be voted in accordance with the judgment of the
persons named therein.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the next annual
meeting of the Corporation's stockholders must be received by the Corporation
for inclusion in the Corporation's 1998 Proxy Statement and form of proxy on
or prior to December 22, 1997.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Corporation for the fiscal year
ended December 29, 1996 (the "Annual Report") is being furnished
simultaneously herewith. Such Annual Report is not to be considered a part of
this Proxy Statement.
Upon the written request of any stockholder, the Corporation will provide,
free of charge, a copy of the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 29, 1996, including the financial statements and
schedules thereto. Requests should be directed to Director, Investor
Relations, Serologicals Corporation, 780 Park North Boulevard, Suite 110,
Clarkston, Georgia 30021.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or will
be borne by the Corporation. Directors, officers and employees of the
Corporation may solicit proxies personally or by telephone or other means of
communications. Although there is no formal agreement to do so, arrangements
may be made with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to their principals, and the
Corporation may reimburse them for any attendant expenses.
___________
It is important that your shares be represented at the meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
By Order of the Board of Directors,
F. Janey Christine
Secretary
Dated: April 21, 1997
Clarkston, Georgia
</PAGE>
PROXY CARD
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1. ELECTION OF DIRECTORS. / / / / / /
James L. Currie and Samuel A. Penninger, Jr.
For Against Abstain
2. Approval of amendment to Amended / / / / / /
and Restated Certificate of
Incorporation.
For Against Abstain
3. Ratification of appointment of / / / / / /
Arthur Andersen LLP as independent
auditors.
4. In their discretion, the proxies are authorized to vote
on such other business as may properly come before the
Meeting or any adjournment(s) thereof.
RECORD DATE SHARES:
Date:______________
Please be sure to sign and date this proxy.
Check if you intend to attend the Annual / /
Meeting of Stockholders.
Mark box at right if comments or address / /
change have been noted on the reverse side
of card.
_____________________ _____________________
Shareholder sign here Co-owner sign here
===============================================================================
DETACH CARD
SEROLOGICALS CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, May 20,
1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Serologicals Corporation
</PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SEROLOGICALS CORPORATION
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 21, 1997, and does hereby
appoint Harold J. Tenoso, Ph.D., Russell H. Plumb and F. Janey Christine, or
any of them, with full power of substitution, as proxy or proxies of the
undersigned to represent the undersigned and to vote all shares of Common Stock
of Serologicals Corporation (the "Corporation"), which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Corporation to be held at 9:00 a.m., local time, on May 20, 1997 at the
Grand Hyatt Atlanta, Peachtree Street and Piedmont Avenue, Atlanta, GA, and at
any adjournment(s) or postponements thereof, hereby revoking all proxies
heretofore given with respect to such stock.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
IT WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED HEREIN,
FOR THE APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION AND FOR THE RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) on the books of the
Corporation. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
Has your address changed? Do you have any comments?
___________________________ ____________________________
___________________________ ____________________________
___________________________ ____________________________
</PAGE>
