<PAGE>
SEROLOGICALS CORPORATION
780 PARK NORTH BOULEVARD, SUITE 110
CLARKSTON, GEORGIA 30021
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1998
------------------------
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 19, 1998, at the Cobb Galleria Centre, Two Galleria Parkway,
Atlanta, Georgia 30339, for the following purposes:
1. To elect two directors of the Corporation to hold office until the
Annual Meeting of Stockholders occurring in 2001 and until the election and
qualification of their respective successors;
2. To approve amendments to the Corporation's Amended and Restated 1994
Omnibus Incentive Plan (the "Omnibus Plan") to (a) increase the maximum
number of shares available under the Omnibus Plan to 3,250,000, (b) simplify
the provisions of the Omnibus Plan relating to future amendments and (c)
provide for the ability to make awards under the Omnibus Plan to officers,
directors, consultants or other employees of minority-owned subsidiaries and
joint ventures formed or entered into by the Corporation;
3. To approve amendments to the Corporation's 1995 Non-Employee
Directors' Stock Option Plan, as amended (the "NED Plan") to (a) (i)
decrease the initial one-time grant to directors upon their first election
to the Board of Directors to options to purchase 24,000 shares of Common
Stock and (ii) increase the annual grant to directors to options to purchase
6,000 shares of Common Stock and (b) simplify the provisions of the NED Plan
relating to future amendments; 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, 1998 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 13, 1998
<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 19, 1998, at the Cobb
Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339, 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 2001 and until the election and
qualification of their respective successors;
2. To approve amendments (the "Omnibus Plan Amendments") to the
Corporation's Amended and Restated 1994 Omnibus Incentive Plan (the "Omnibus
Plan") to (a) increase the maximum number of shares available under the
Omnibus Plan to 3,250,000, (b) simplify the provisions of the Omnibus Plan
relating to future amendments and (c) provide for the ability to make awards
under the Omnibus Plan to officers, directors, consultants or other
employees of minority-owned subsidiaries and joint ventures formed or
entered into by the Corporation;
3. To approve amendments (the "NED Plan Amendments") to the
Corporation's 1995 Non-Employee Directors' Stock Option Plan, as amended
(the "NED Plan") to (a) (i) decrease the initial one-time grant to directors
upon their first election to the Board of Directors to options to purchase
24,000 shares of Common Stock and (ii) increase the annual grant to
directors to options to purchase 6,000 shares of Common Stock and (b)
simplify the provisions of the NED Plan relating to future amendments; 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 Omnibus Plan Amendments, (iii) FOR the approval of
the NED Plan Amendments 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 13, 1998.
VOTING
Holders of record of the Corporation's Common Stock on March 31, 1998 will
be entitled to vote at the Annual Meeting or any adjournment thereof. As of that
date, there were 15,813,107 shares of Common Stock outstanding and entitled to
vote, and a majority 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 votes cast at the meeting is necessary to adopt the Omnibus Plan
Amendments and the NED Plan Amendments. 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 will have no effect on the
outcome of any of the proposals. The Board of Directors recommends a vote FOR
each of the nominees named below, FOR the adoption of the Omnibus Plan
Amendments and FOR the adoption of the NED Plan Amendments.
<PAGE>
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 of Directors currently consists of seven 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 3 to serve for a
term of three years and until the election and qualification of their respective
successors, and for the directors in Classes 1 and 2 whose terms expire at the
annual meeting of stockholders occurring in 1999 and 2000, respectively, and
until the election and qualification of their respective successors.
NOMINEES FOR DIRECTOR WHOSE TERM EXPIRES IN 2001
(CLASS 3)
<TABLE>
<CAPTION>
HAS BEEN A
DIRECTOR OF THE
NAME OF DIRECTOR AGE CORPORATION SINCE
- --------------------------------------------------------------------- --- -------------------
<S> <C> <C>
Harold J. Tenoso, Ph.D............................................... 59 1993
George M. Shaw, M.D., Ph.D........................................... 44 1993
</TABLE>
DIRECTORS WHOSE TERM OF OFFICE
WILL CONTINUE AFTER THE ANNUAL MEETING
Directors Whose Term Expires in 1999 (CLASS 1)
<TABLE>
<CAPTION>
HAS BEEN A
DIRECTOR OF THE
NAME OF DIRECTOR AGE CORPORATION SINCE
- --------------------------------------------------------------------- --- -------------------
<S> <C> <C>
Matthew C. Weisman................................................... 56 1992
Lawrence E. Tilton................................................... 62 1996
</TABLE>
Directors Whose Term Expires in 2000 (CLASS 2)
<TABLE>
<CAPTION>
HAS BEEN A
DIRECTOR OF THE
NAME OF NOMINEE AGE CORPORATION SINCE
- --------------------------------------------------------------------- --- -------------------
<S> <C> <C>
James L. Currie...................................................... 61 1989
Samuel A. Penninger, Jr.............................................. 56 1983
Wade Fetzer, III..................................................... 60 1997
</TABLE>
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. Prior
to joining the Corporation, he served in various capacities since 1984 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.
2
<PAGE>
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 is an
Investigator with the Howard Hughes Medical Institute and Professor of Medicine,
Division of Hematology/Oncology (Department of Internal Medicine) at the
University of Alabama at Birmingham, where he has served on the faculty since
1985. 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 is
also currently a member of the Scientific Advisory Board of the Pediatric AIDS
Foundation Ariel Project and an External Advisory Committee Member of the Aaron
Diamond AIDS Research Center 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 has
served as a trustee of the Hebrew Rehabilitation Center for the Aged, a chronic
care hospital and geriatric teaching and research facility since July 1993.
Since May 1997, Mr. Weisman has been a Director of Thermedics Detection, Inc. an
American Stock Exchange listed company which designs and manufactures sensor
detection devices for laboratory and manufacturing applications. Mr. Weisman
also serves on the Board of one additional privately-held corporation.
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. Mr.
Tilton also serves as a director of TCC, Inc., a financial services company.
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
serves as General Partner of The Essex Woodlands Venture Partners, 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 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.
WADE FETZER, III has been a director of the Corporation since December 1997.
Mr Fetzer joined the Goldman Sachs Group in 1971 where he has served as a
General Partner from 1986 to 1994 and as a Limited Partner since 1994. Mr.
Fetzer currently serves on the Boards of three privately-held corporations. In
addition, he serves as Chairman for the University of Wisconsin Foundation and
Kellogg Alumni Advisory Board.
MEETINGS OF THE BOARD
During the fiscal year ended December 28, 1997, seven 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 (Chairman) 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 four meetings during the Corporation's
last fiscal year.
The Board of Directors has an Audit Committee, which currently consists of
Messrs. Weisman (Chairman) and Tilton. The Audit Committee is responsible for
selecting (or, at the election of the Audit
3
<PAGE>
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 once 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 April 1, 1998 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) by all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) (1) COMMON STOCK (2)
- ---------------------------------------------------------------------- ---------------------- ---------------------
<S> <C> <C>
Franklin Resources, Inc............................................... 2,166,270 13.7%
901 Mariners Island Blvd., 6th Floor
San Mateo, CA 94404
Warburg Pincus Asset Management....................................... 1,113,375 7.0%
466 Lexington Avenue
New York, NY 10017
Harold J. Tenoso, Ph.D. (3)........................................... 822,925 4.9%
Samuel A. Penninger, Jr. (4).......................................... 773,777 4.9%
Timm M. Hurst (5)..................................................... 234,412 1.5%
Russell H. Plumb (6).................................................. 157,362 1.0%
Charles P. Harrison (7)............................................... 88,875 *
James L. Currie (8)................................................... 53,250 *
George M. Shaw, M.D., Ph.D. (9)....................................... 34,350 *
Toby L. Simon, M.D. (10).............................................. 15,000 *
P. Ann Hoppe (11)..................................................... 11,250 *
Matthew C. Weisman (12)............................................... 8,250 *
Wade Fetzer, III...................................................... -- *
All executive officers and directors as a group (consisting of 12 2,109,560 12.3%
individuals) (13)...................................................
</TABLE>
- ------------------------
* Less than 1%.
(1) This table identifies persons having sole voting and investment power with
respect to the shares, or shares underlying options, set forth opposite
their names as of April 1, 1998, 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 Franklin Resources, Inc. and Warburg Pincus Asset Management is as of
December 31, 1997 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 April 1, 1998. For purposes of calculating each
4
<PAGE>
person's beneficial ownership, any shares subject to options exercisable
within 60 days of April 1, 1998 are deemed to be beneficially owned by, and
outstanding with respect to, such person.
(3) Includes 815,425 shares of Common Stock which Dr. Tenoso has the right to
acquire pursuant to options exercisable within 60 days.
(4) Includes 658,777 held jointly with Mr. Penninger's spouse, and 20,000 shares
held in two trusts for certain members of his family and of which his spouse
is trustee.
(5) Includes 84,812 shares of Common Stock which Mr. Hurst has the right to
acquire pursuant to options exercisable within 60 days.
(6) Includes 156,612 shares of Common Stock which Mr. Plumb has the right to
acquire pursuant to options exercisable within 60 days.
(7) Includes 88,125 shares of Common Stock which Mr. Harrison has the right to
acquire pursuant to options exercisable within 60 days.
(8) Includes 50,250 shares of Common Stock which Mr. Currie has the right to
acquire pursuant to options exercisable within 60 days.
(9) Represents 34,350 shares of Common Stock which Dr. Shaw has the right to
acquire pursuant to options exercisable within 60 days.
(10) Represents 15,000 shares of Common Stock which Dr. Simon has the right to
acquire pursuant to options exercisable within 60 days.
(11) Represents 11,250 shares of Common Stock which Ms. Hoppe has the right to
acquire pursuant to options exercisable within 60 days.
(12) Represents 8,250 shares of Common Stock which Mr. Weisman has the right to
acquire pursuant to options exercisable within 60 days.
(13) Includes 1,273,103 shares of Common Stock which members of the group have
the right to acquire pursuant to options exercisable within 60 days.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table The following table sets forth for the fiscal
years ended December 28, 1997, December 29, 1996 and December 31, 1995, the
compensation for services in all capacities to the Corporation of the chief
executive officer and the other four most highly compensated executive officers
(as well as one officer who was not an executive officer at the end of the year)
of the Corporation during the fiscal year ended December 28, 1997 (collectively,
the "Named Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
------------------------------------- COMPENSATION
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS (1) COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) (2)
- -------------------------------------- --------- --------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Harold J. Tenoso, Ph.D. .............. 1997 200,000 65,000 37,126(3) 120,125 6,208
President and Chief 1996 200,000 150,000 -- 90,000 4,967
Executive Officer 1995 200,000 88,000 62,964 36,000 2,310
P. Ann Hoppe.......................... 1997 113,192(4) 60,000 85,348(3) 61,000 1,606
Vice President, 1996 -- -- -- -- --
Regulatory Affairs 1995 -- -- -- -- --
Toby L. Simon, M.D. .................. 1997 121,577(5) 50,000 83,365(3) 75,000 1,121
Vice President, Medical and 1996 -- -- -- -- --
Scientific Affairs 1995 -- -- -- -- --
Charles P. Harrison................... 1997 165,000 45,000 (6) 72,000 2,562
Vice President, Healthcare Services 1996 132,692 75,000 68,545 150,000 522
1995 -- -- -- -- --
Russell H. Plumb...................... 1997 120,250 45,000 (6) 50,050 1,710
Vice President, Finance and 1996 108,462 -- -- 45,000 1,433
Administration; Chief Financial 1995 100,000 51,500 -- 19,800 1,830
Officer
Timm M. Hurst......................... 1997 125,000 45,000 (6) 50,050 2,146
Vice President 1996 125,000 -- -- 55,500 4,018
1995 125,000 54,000 -- 21,600 --
</TABLE>
- ------------------------
(1) Represents cash bonuses earned in the year stated. Some amounts were paid in
the subsequent year.
(2) Consists of Corporation contributions to the Corporation's 401(k) plan of
$3,058, $1,584, $1,445 and $1,731 for Dr. Tenoso and Messrs. Harrison, Plumb
and Hurst, respectively, and premiums paid for term life insurance of
$3,150, $1,606, $1,121, $978, $265 and $415 for Dr. Tenoso, Ms. Hoppe, Dr.
Simon, and Messrs. Harrison, Plumb and Hurst, respectively.
(3) Consists of relocation expenses of $24,447, $60,780 and $59,576 and $1,103,
$24,568 and $23,789 of reimbursement for taxes related thereto for Dr.
Tenoso, Ms. Hoppe and Dr. Simon. Also includes $11,576 for Dr. Tenoso which
relates to additional life insurance and automobile expenses.
(4) Represents salary for Ms. Hoppe from March 6, 1997, the date her employment
commenced with the Corporation.
(5) Represents salary for Dr. Simon from March 10, 1997, the date his employment
commenced with the Corporation.
(6) Excludes amounts which did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the named executive officer.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
fiscal year ended December 28, 1997 to each of the Named Executive Officers who
received options during such year.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS OPTION TERM(1)
UNDERLYING GRANTED TO EXERCISE ------------------------
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION 5.0% 10.0%
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)
- ------------------------------- --------------- --------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Harold J. Tenoso, Ph.D. ....... 46,875(2) 4.17% $ 18.25 2/25/2007 $ 537,996 $ 1,363,394
48,750(3) 4.34% $ 20.21 1/29/2003 $ 335,057 $ 760,133
24,500(4) 2.18% $ 23.13 12/09/2003 $ 192,685 $ 437,137
P. Ann Hoppe................... 45,000(5) 4.01% $ 19.00 3/06/2007 $ 537,701 $ 1,362,647
16,000(4) 1.42% $ 23.13 12/09/2003 $ 125,835 $ 285,477
Toby L. Simon, M.D. ........... 60,000(6) 5.34% $ 17.50 3/10/2007 $ 660,335 $ 1,673,427
15,000(4) 1.34% $ 23.13 12/09/2003 $ 117,970 $ 267,635
Charles P. Harrison............ 15,000(7) 1.34% $ 18.25 2/25/2007 $ 172,158 $ 436,286
37,500(3) 3.34% $ 20.21 1/29/2003 $ 257,736 $ 584,727
19,500(4) 1.74% $ 23.13 12/09/2003 $ 153,361 $ 347,925
Russell H. Plumb............... 33,750(3) 3.01% $ 20.21 1/29/2003 $ 231,963 $ 526,246
16,300(4) 1.45% $ 23.13 12/09/2003 $ 128,194 $ 290,830
Timm M. Hurst.................. 33,750(3) 3.01% $ 20.21 1/29/2003 $ 231,963 $ 526,246
16,300(4) 1.45% $ 23.13 12/09/2003 $ 128,194 $ 290,830
</TABLE>
- ------------------------
(1) Potential realizable values are based on the fair market value per share 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) 75% of these options vested as of December 28, 1997, upon the Corporation's
achievement of certain predetermined performance objectives. The remaining
25% will vest on the third anniversary of the grant, which was January 29,
1997.
(4) These options vest and are exercisable on the third anniversary of the date
of the grant, which was December 9, 1997. However, 75% of the options are
subject to accelerated vesting provisions.
(5) 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
grant of the option, which was March 6, 1997.
(6) 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
grant of the option, which was March 10, 1997.
(7) These options vest and are exercisable at the rate of 33 1/3% of the shares
covered by the option on each of the first three anniversary dates of the
grant of the option, which was February 25, 1997.
7
<PAGE>
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
28, 1997, (ii) the number of unexercised options held by each of the Named
Executive Officers who held options as of December 28, 1997 and (iii) the value
of unexercised in-the-money options as of December 28, 1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT AT FISCAL YEAR END (#)
EXERCISE REALIZED FISCAL YEAR END (#) EXERCISABLE/UNEXERCISABLE
NAME (#) ($) EXERCISABLE/UNEXERCISABLE (1)
- ----------------------------------- ----------- --------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Harold J. Tenoso, Ph.D. ........... 40,000 763,350 751,238/132,125 $14,721,751/$ 653,796
P. Ann Hoppe....................... -- -- 0/ 61,000 $ 0/$ 208,500
Toby L. Simon, M.D. ............... -- -- 0/ 75,000 $ 0/$ 365,625
Charles P. Harrison................ 20,000 218,750 17,500/184,500 $ 236,250/$1,728,224
Russell H. Plumb................... 13,000 244,180 124,700/ 56,650 $ 2,005,158/$ 248,127
Timm M. Hurst...................... 18,000 209,250 51,900/ 57,250 $ 704,571/$ 260,031
</TABLE>
- ------------------------
(1) Calculated on the basis of the fair market value of $23.50 of the Common
Stock as of December 28, 1997, minus the per share exercise price.
COMPENSATION OF DIRECTORS
Commencing with the Board of Directors meeting held December 9, 1997,
compensation to outside directors increased to $2,000 from $1,000 for each Board
and Committee meeting attended. Outside directors are also 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 NED Plan. The NED Plan
currently provides for the grant of an option to purchase 48,000 shares of
Common Stock (the "Lump Sum Grant") to each eligible director upon such person's
first election to the Board. In addition, the NED Plan also currently 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 a Lump Sum Grant) vested
in full in their Lump Sum Grant. The Compensation Committee administers the NED
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 1999. 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 exercise price of $2.29 per share (of
which 115,000 have been
8
<PAGE>
exercised) and 230,238 of which have an 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, 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 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 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 his 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 connection with the commencement of Ms. Hoppe's employment, the
Corporation entered into an employment agreement with her in March 1997 for an
initial term of one year and subsequent automatic one-year renewals unless
terminated earlier pursuant to the provisions thereof. The agreement provides
for a current base salary of $135,000 per annum, participation in all bonus and
incentive plans of the Corporation available to officers and certain insurance,
relocation allowances and other benefits. In addition, pursuant to such
agreement, Ms. Hoppe received options to purchase 45,000 shares of Common Stock
with an initial exercise price of $19.00 per share. Such options vest at the
rate of 25% per annum, commencing with the first anniversary of the commencement
of Ms. Hoppe's employment. Ms. Hoppe's agreement provides that if her employment
is terminated for any reason other than "for cause", Ms. Hoppe shall receive
severance payments equivalent to her base salary plus benefits for a nine-month
period. Such agreement also contains non-competition provisions for the period
of employment and 12 months thereafter.
9
<PAGE>
In connection with the commencement of Dr. Simon's employment, the
Corporation entered into an employment agreement with him in March 1997 for an
initial term of one year and subsequent automatic one-year renewals unless
terminated earlier pursuant to the provisions thereof. The agreement provides
for a current base salary of $145,000 per annum, participation in all bonus and
incentive plans of the Corporation available to officers and certain insurance,
relocation allowances and other benefits. In addition, pursuant to such
agreement, Dr. Simon received options to purchase 60,000 shares of Common Stock
with an initial exercise price of $17.50 per share. Such options vest at the
rate of 25% per annum, commencing with the first anniversary of the commencement
of Dr. Simon's employment. Dr. Simon's agreement provides that if his employment
is terminated for any reason other than "for cause", Dr. Simon shall receive
payments equivalent to his base salary plus benefits for a nine-month period.
Such agreement also contains non-competition provisions for the period of
employment and 12 months thereafter.
In connection with the commencement of Mr. Plumb's employment, the
Corporation entered into an employment agreement with him in April 1994 for an
initial term of three years and subsequent one-year renewals unless terminated
earlier pursuant to the provisions thereof. Such agreement provides for a
current base salary of $125,000 per annum and participation in all bonus and
incentive plans of the Corporation. In addition, pursuant to such agreement, Mr.
Plumb received options to purchase up to 90,000 shares of Common Stock which
have an initial exercise price of $2.29 per share (of which 43,000 have been
exercised). The exercisability of all such options has vested in accordance with
their terms. Mr. Plumb's agreement provides that if his employment is terminated
for reasons relating to a change of control, acquisition or downsizing, Mr.
Plumb shall receive payments equivalent to his base salary plus benefits for a
twelve-month period. Mr. Plumb's agreement also provides that if his employment
is terminated for any reason other than "for cause" or those cited above, Mr.
Plumb shall receive payments equivalent to his base salary equal to four months
salary for each year he was employed with the Corporation, up to a maximum of
twelve months.
In addition, the Corporation has entered into severance agreements with Mr.
Hurst and certain other officers of the Corporation. 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 (the "Compensation
Committee") establishes and reviews the Corporation's arrangements and programs
for compensating its officers, including the Named Executive Officers and all
compensation related arrangements involving the Corporation's stock or stock
options. The Compensation Committee is composed of directors who are neither
officers nor employees of the Corporation.
PHILOSOPHY AND STRATEGY
The Compensation Committee's philosophy is to design executive compensation
packages that are competitive and reward employees for the Corporation's
achievement of its strategic objectives and, in the long term, the creation of
stockholder value. Under this approach, the Compensation Committee believes
10
<PAGE>
that the Corporation's executives and key managers should receive an annual base
salary which approximates the median for the market, the market being defined as
a peer group of comparable companies. Annual cash incentive compensation, which
is largely based upon the attainment of a specified growth rate in the earnings
of the Corporation, is targeted to be slightly above the market median,
resulting in annual cash compensation (base salary plus incentives) being at or
near the market median if the Corporation achieves its earnings objectives. To
align the long-term interests of the Corporation's executives and managers with
those of its stockholders, and to encourage and reward above-average performance
over time, the Compensation Committee believes that the Corporation's executives
and key managers should receive equity-based incentives, primarily in the form
of stock options, in excess of the market median resulting in the Corporation's
executives and key managers receiving total direct compensation (base salary
plus short-term and long-term incentives) in the 50th--75th percentile of the
market, but heavily weighted toward long-term incentives.
In 1997, a nationally recognized consulting firm retained by the Corporation
prepared an analysis to determine how competitive the Corporation's compensation
practices were in comparison to the market and if the Corporation's compensation
practices were consistent with its compensation strategies. The analysis
suggested that the Corporation's compensation practices relating to its
executive officers are currently less than competitive, and not consistent with
its compensation strategies. The Compensation Committee is therefore assessing
the Corporation's current compensation practices to ensure the Corporation
remains competitive in the market and continues to be able to attract and retain
qualified personnel.
DETERMINATION OF COMPENSATION
Salaries for all officers, other than the Chief Executive Officer, are
recommended by the Chief Executive Officer to the Compensation Committee for its
approval. The Compensation Committee, pursuant to the Chief Executive Officer's
employment agreement, determines the salary of the Chief Executive Officer.
Annual cash incentive payments, and, if applicable, the acceleration of the
vesting period associated with certain stock options granted to executives and
key managers, are based primarily on the attainment of predetermined corporate
earnings, earnings per share and divisional earnings targets. These earnings
targets are recommended by management, approved by Dr. Tenoso and approved by
the Compensation Committee and the Board of Directors at the beginning of each
fiscal year. Cash incentives are earned, and the vesting period of a portion of
the options granted annually accelerate, if the targeted level of earnings per
share and earnings is achieved. Dr. Tenoso has the discretion, subject to
approval of the Compensation Committee, to adjust annual cash incentives in the
event that the achievement of corporate or divisional results does not
adequately reflect a participant's effort. The percentage of a respective
executive's salary, which may be earned as a cash incentive, varies depending on
the individual's position and role with the Corporation.
Long-term incentives are provided primarily through the grant of stock
options that typically vest at the end of a three-year period but are subject to
the acceleration provisions described above. 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 and role
with the Corporation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Dr. Tenoso's compensation for fiscal year 1997 was determined by an
employment agreement entered into in March 1993, and renewed automatically for
an additional year in March 1998. The overall compensation included in the
agreement was determined in a manner to be competitive with companies in the
Corporation's industry that the Compensation Committee believes are comparable
to the Corporation. Pursuant to that agreement, Dr. Tenoso is entitled to
participate in any bonus or incentive arrangements maintained by the
Corporation. Dr. Tenoso recommends a bonus program which, after review and
analysis,
11
<PAGE>
is approved or modified by the Compensation Committee. For the fiscal year 1997,
the Compensation Committee approved a cash bonus to Dr. Tenoso of $65,000,
consistent with the Corporation's incentive plan and the performance of the
Corporation in 1997.
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
this 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.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
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 14, 1995 and
that all dividends were reinvested. Past performance is not any indication of
future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ THE NASDAQ SEROLOGICALS
<S> <C> <C> <C>
Pharmaceutical Stocks Stock Market Corporation
6/15/95 $100.00 $100.00 $100.00
12/31/95 153.12 117.37 143.48
12/29/96 151.93 144.55 266.30
12/28/97 153.10 170.51 306.52
</TABLE>
TOTAL RETURN ANALYSIS
[GRAPH]
<TABLE>
<CAPTION>
SEROLOGICALS
DATE NASDAQ PHARMACEUTICAL STOCKS THE NASDAQ STOCK MARKET CORPORATION
- --------- ----------------------------- ------------------------- -----------------------
<S> <C> <C> <C>
6/15/95 100.00 100.00 100.00
12/31/95 153.12 117.37 143.48
12/29/96 151.93 144.55 266.30
12/28/97 153.10 170.51 306.52
</TABLE>
13
<PAGE>
APPROVAL OF AMENDMENTS TO THE AMENDED AND RESTATED 1994
OMNIBUS INCENTIVE PLAN
In October 1994, the Board of Directors approved the Omnibus Plan, which was
amended in April 1995 and February 1996 and subsequently approved by the
Corporation's stockholders. The Omnibus Plan is designed to provide an incentive
to the officers and certain other key employees of and consultants to the
Corporation and its affiliates by making available to them an opportunity to
acquire an equity interest or to increase their equity interest in the
Corporation.
The Board of Directors proposes the Omnibus Plan Amendments to (a) increase
the maximum number of shares of Common Stock issuable under the Omnibus Plan to
3,250,000, (b) simplify the provisions of the Omnibus Plan relating to future
amendments and (c) provide for the ability to make awards under the Omnibus Plan
to officers, directors, consultants or other employees of minority-owned
subsidiaries and joint ventures formed or entered into by the Corporation.
In compensating management, the Board of Directors has historically sought
to align managements' interests with those of the stockholders by providing
long-term incentive compensation, primarily in the form of stock options as a
significant portion of management's total compensation. As a consequence of this
strategy, and the increase in the number of targeted optionees as a result of
its growth, the Corporation is close to exhausting the availability of the
existing stock options which are currently authorized under the Omnibus Plan.
The Omnibus Plan currently provides for a maximum number of shares of Common
Stock subject to options and other awards of 2,250,000. Presently, there are
options outstanding under the Omnibus Plan to purchase 1,553,581 shares of
Common Stock and 464,023 shares are remaining available for grant under the
Omnibus Plan. The Board of Directors believes that the authorization of
additional shares of Common Stock, which may be issued pursuant to awards
granted under the Omnibus Plan, would assist the Corporation in attracting and
retaining qualified employees and consultants on a basis consistent with the
Corporation's incentive compensation philosophy. Accordingly, on March 27, 1998,
the Board of Directors approved an amendment to the Omnibus Plan to increase the
number of shares of Common Stock issuable under the Omnibus Plan to 3,250,000.
In addition, the Board of Directors is mindful of the rapid changes in the
securities and tax laws as they relate to incentive plans and desires to keep
the Company's incentive plans modern and effective. Certain statutory changes
have eliminated the necessity of stockholder approvals in certain situations in
which the Omnibus Plan would nevertheless require a stockholder vote. In order
to reduce the cost and expense of soliciting proxies for stockholder approvals
that are no longer required by law and in an effort to make the amendment
provisions of the Omnibus Plan more consistent therewith, on March 27, 1998, the
Board of Directors approved an amendment to the Omnibus Plan to provide that
except as otherwise prohibited by law, the Board of Directors may (a) amend,
alter, suspend, discontinue or terminate the Omnibus Plan, provided that the
Board of Directors may condition any amendment on the approval of the
stockholders of the Corporation if such approval is necessary or advisable with
respect to tax, securities or other applicable laws and rules and regulations,
and (b) correct any deficiency, supply any omission or reconcile any
inconsistency in the manner and to the extent it shall deem desirable.
Finally, the Board of Directors desires that the Omnibus Plan accommodate
awards granted to officers, directors, consultants or other employees of
minority-owned subsidiaries and joint ventures formed or entered into by the
Corporation. The Omnibus Plan currently defines an affiliate of the Corporation
for purposes of eligibility of employees and consultants under the Omnibus Plan
as an entity that directly, or through one or more intermediaries, is controlled
by, controls or is under common control with the Corporation. Although the
Corporation does not currently have any minority-owned subsidiaries, the Board
of Directors believes that it is in the Corporation's best interest to have the
flexibility to provide equity benefits to employees of such entities in the
event they are formed. Accordingly, on March 27, 1998, the Board of Directors
approved an amendment to the Omnibus Plan to provide that "control" in the
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<PAGE>
definition of "affiliate" shall include, without limitation, the direct or
indirect beneficial ownership of 10% or more of an entity's equity securities or
economic interests.
DESCRIPTION
THE FOLLOWING DESCRIPTION OF THE SECOND AMENDED AND RESTATED 1994 OMNIBUS
INCENTIVE PLAN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
SECOND AMENDED AND RESTATED 1994 OMNIBUS INCENTIVE PLAN (WHICH IS AMENDED AND
RESTATED GIVING EFFECT TO THE OMNIBUS PLAN AMENDMENTS PROPOSED TO BE APPROVED BY
THE CORPORATION'S STOCKHOLDERS) SET FORTH AS ATTACHMENT A TO THIS PROXY
STATEMENT.
The Compensation Committee (the "Committee") administers the Omnibus Plan.
The Committee has the full power and authority, subject to the provisions of the
Omnibus Plan, to designate participants, grant compensatory awards ("Awards")
and determine the terms of all Awards. The Committee has the right to make
adjustments with respect to Awards granted under the Omnibus Plan in order to
prevent dilution of the rights of any holder. Members of the Committee are not
eligible to receive Awards under the Omnibus Plan and are non-employee directors
within the meaning of Section 16 of the Exchange Act and outside directors
within the meaning of Section 162(m) of the Code.
STOCK AWARDS. The Committee has the right to grant Awards of shares of
Common Stock that are subject to such restrictions (including restrictions on
transferability and limitations on the right to vote or receive dividends with
respect to the restricted shares) and such terms regarding the lapse of
restrictions as the Committee deems appropriate. Generally, upon termination of
employment for any reason during the restriction period, restricted shares shall
be forfeited to the Corporation.
OPTIONS ISSUED UNDER OMNIBUS PLAN. The Committee determines the terms of
specific options. Options granted may be non-qualified ("NQSO's") or incentive
stock options within the meaning of Code Section 422 ("ISO's"). The exercise
price per share for a non-qualified option is subject to the determination of
the Committee. Incentive stock options may not be granted at less than 100% of
the fair market value at the date of grant. Each option will be exercisable
after the period or periods specified in the option agreement, which will
generally not exceed 10 years from the date of grant. Options may be issued in
tandem with stock appreciation rights ("SARs") as a performance award ("Tandem
Options"). SARs may be granted upon such terms as the Board of Directors or the
Committee may from time to time determine.
Upon the exercise of an option, the option holder shall pay to the
Corporation the exercise price plus the amount of the required Federal and state
withholding taxes, if any. Options may be exercised and the withholding
obligation may be paid for with cash and, with the consent of the Committee,
shares of Common Stock, other securities (including options) or other property.
The periods after termination of employment during which an option may be
exercised is as determined by the Committee. In the absence of any specific
determination by the Committee, the following rules will generally apply. The
unexercised portion of any option granted under the Omnibus Plan will generally
be terminated (a) three months after the date on which the optionee's employment
is terminated for any reason other than (i) cause, (ii) mental or physical
disability, (iii) death or (iv) retirement; (b) immediately upon the termination
of the optionee's employment for cause; (c) six months after the date on which
the optionee's employment is terminated by reason of mental or physical
disability; or (d)(i) 12 months after the date on which the optionee's
employment is terminated by reason of retirement or the death of the employee,
or (ii) nine months after the date on which the optionee shall die if such death
shall occur during the three-month period following the termination of the
optionee's employment by reason of retirement or mental or physical disability.
SARS. An Award may consist of SARs. Upon exercising an SAR, the holder will
be paid by the Corporation an amount in cash equal to the difference between the
fair market value of the shares of Common Stock on the date of exercise and the
fair market value of the shares of Common Stock on the date of the grant of the
SAR, less applicable withholding of Federal and state taxes. In no event may a
15
<PAGE>
holder of an SAR, who is also an employee of the Corporation or its
subsidiaries, exercise an SAR if the aggregate amount to be received as a result
of his or her exercise of SARs in the preceding twelve month period exceeds such
employee's current base salary.
PERFORMANCE AWARDS CONSISTING OF OPTIONS AND SARS ISSUED IN TANDEM UNDER
OMNIBUS PLAN. Upon exercise of a Tandem Option, the optionee will be entitled
to a credit toward the exercise price equal to the value of the SARs issued in
tandem with the option exercised, but not to exceed the amount of the Federal
income tax deduction allowed to the Corporation in respect of such SAR. Upon
exercise of a Tandem Option, the related SAR shall terminate, the value being
limited to the credit which can be applied only toward the purchase price of
Common Stock. In all cases, full payment of the net purchase price of the shares
must be made in cash or its equivalent at the time the Tandem Option is
exercised, together with the amount of the required Federal and state
withholding taxes, if any. When an SAR issued as part of a Tandem Option is
exercised, the option to which it related will cease to be exercisable to the
extent of the number of shares with respect to which the SAR was exercised.
OTHER PERFORMANCE AWARDS ISSUED UNDER THE OMNIBUS PLAN. The Omnibus Plan
authorizes the Committee to grant, to the extent permitted under Rule 16b-3
promulgated under the Exchange Act and applicable law, other Awards that are
denominated or payable in, valued by reference to, or otherwise based on or
related to Common Stock. Furthermore, the amount or terms of an Award may be
related to the performance of the Corporation or to such other criteria or
measure of performance as the Committee may determine.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
relating to the grant and exercise of the benefits awarded under the Omnibus
Plan. This description does not purport to be a complete description of the
income tax aspects of the Omnibus Plan. The summary does not include any
discussion of state, local or foreign income tax consequences or the effect of
gift, estate or inheritance taxes, any of which may be significant to a
particular employee eligible to receive options.
There are generally no federal income tax consequences to employees, or the
Corporation, on the grant of a NQSO. Upon the exercise of a NQSO, the employee
generally recognizes taxable ordinary income, subject to withholding, equal to
the excess of the fair market value of the shares of Common Stock on the
exercise date over the option price of the shares. The Corporation is entitled
to a tax deduction in an amount equal to the amount of taxable ordinary income
recognized by the employee, provided the Corporation complies with applicable
withholding and/or reporting rules. Any taxable ordinary income recognized by an
employee upon exercise of a NQSO will increase his tax basis in the share of
Common Stock thereby acquired.
Any gain or any loss recognized upon the subsequent disposition of the
acquired Common Stock will be a capital gain or loss, and will be a long-term
gain or loss if such shares of Common Stock are held for more than one year. The
maximum capital gains rate for individuals is 28% with respect to shares held
for more than twelve months, but not more than eighteen months, and 20% with
respect to shares held for more than eighteen months.
An employee who surrenders shares of Common Stock as payment for the
exercise price of a NQSO will not recognize gain or loss on his surrender of
such shares, but will recognize taxable ordinary income on the exercise of the
NQSO as described above. Of the shares received in such an exchange, that number
of shares equal to the number of shares surrendered will have the same tax basis
and capital gains holding period as the shares surrendered. The balance of the
shares received will have a tax basis equal to their fair market value on the
date of exercise, and the capital gains holding period will begin on the date of
exercise.
With respect to ISOs, a participant generally does not recognize taxable
ordinary income, and no tax deduction is available to the Corporation, upon
either the grant or exercise of an ISO. However, the
16
<PAGE>
difference between the exercise price of an ISO and the market price of the
Common Stock on the exercise date will be included in the alternative minimum
taxable income of a participant for purposes of the "alternative minimum tax
("AMT")." Generally, if an optionee holds the shares acquired upon the exercise
of ISOs until the later of (i) two years from the grant of the ISOs or (ii) one
year from the date of acquisition of the shares upon exercise of ISOs, any gain
recognized by the participant on a sale of such shares will be treated as a
capital gain. The gain recognized upon the sale is the difference between the
option price and the sale price of the Common Stock. Generally, the income tax
consequences to the holder of ISOs is to defer, until the shares are sold, the
recognition of any increase in the value of the Common Stock from the time of
grant to the time of exercise, and to treat such increase as a capital gain. If
the optionee sells the shares prior to the expiration of the requisite holding
period set forth above, the optionee will recognize taxable ordinary income in
the amount equal to the difference between the fair market value on the exercise
date and the exercise price. The amount of taxable ordinary income will be added
to the optionee's basis for purposes of determining the gain on the sale of the
shares of Common Stock. If the application of the above-described rules would
result in a loss to the optionee, the taxable ordinary income required to be
recognized thereby would be limited to the excess, if any, of the amount
realized on the sale over the basis of the shares sold. If an optionee disposes
of shares obtained upon exercise of an ISO prior to the expiration of the
requisite holding period described above, the Corporation generally will be
entitled to a deduction in the amount of the taxable ordinary income that the
optionee recognizes as a result of the disposition. However, the use by an
optionee of shares previously acquired pursuant to the exercise of an ISO to
exercise an incentive stock option will be treated as a taxable disposition if
the transferred shares have not been held by the optionee for the requisite
holding period described above.
With respect to SARs, when a participant exercises an SAR grant under the
Omnibus Plan, the amount of cash received will be ordinary income subject, in
the case of an employee, to withholding, and will be allowed as a deduction to
the Corporation, subject to the Corporation satisfying its reporting and/or
withholding obligations.
Restricted stock and restricted stock units are not transferable and are
generally subject to forfeiture by a participant. Should a participant leave the
Corporation's employ during a specified period, for federal income tax purposes
the restricted stock and restricted stock units will be subject to a
"substantial risk of forfeiture" during such period. Thus, a participant will
defer the recognition of taxable ordinary income until the end of that period
and recognize such income equal to the fair market value of the restricted stock
and restricted stock units at such time, unless the participant elects to
recognize taxable income on the date of grant. Subject to the Corporation
satisfying certain reporting and/or withholding obligations, the Corporation
will be entitled to a deduction at the time and in an amount equal to the
taxable ordinary income recognized by the participant. Any additional gain or
any loss recognized upon the subsequent disposition of the acquired shares will
be a capital gain or loss, and will be a long-term gain or loss if the shares
are held for more than one year. The maximum capital gains rate for individuals
is 28% with respect to shares held for more than twelve months, but not more
than eighteen months, and 20% with respect to shares held for more than eighteen
months.
If the Corporation delivers cash, in lieu of fractional shares, the employee
will recognize taxable income equal to the cash paid and the fair market value
of any shares issued as of the date of exercise. An amount equal to such
ordinary income will be deductible by the Corporation, provided it complies with
applicable withholding requirements.
Section 162(m) of the Code, which generally disallows a tax deduction for
annual compensation in excess of $1,000,000 paid to the Chief Executive Officer
or certain other highly compensated executive officers, provides that
"performance-based" compensation will not be subject to the $1,000,000 deduction
limitation. Generally, since an employer is not entitled to a deduction upon the
grant or exercise of an ISO in any event, this provision does not affect the
Corporation's tax treatment with regard to ISOs. Options (other than ISOs) and
SARs granted under a plan approved by stockholders with an exercise price equal
to
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the fair market value of the underlying stock as of the date of grant are
considered performance-based compensation, if certain requirements are met. The
Omnibus Plan meets such requirements and, accordingly, any income realized by
employees with respect to options or SARs granted under the Omnibus Plan is not
subject to the deduction limitation of Section 162(m).
The Omnibus Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 and is qualified under Section 401(a) of the Code.
The Committee may take such additional steps as are necessary to ensure that
other Awards under the Omnibus Plan qualify for exemption from the deduction
limitations of Code Section 162(m).
NEW PLAN BENEFITS
SECOND AMENDED AND RESTATED 1994
OMNIBUS INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
DOLLAR SUBJECT TO
VALUE (1) OPTIONS
NAME AND POSITION (2) (1) (3)
- --------------------------------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Harold J. Tenoso, Ph.D........................................................... $ 415,718 120,125
President and Chief Executive Officer
P. Ann Hoppe..................................................................... $ 6,000 16,000
Vice President, Regulatory Affairs
Toby L. Simon, M.D............................................................... $ 5,625 15,000
Vice President, Medical and Scientific Affairs
Charles P. Harrison.............................................................. $ 209,475 72,000
Vice President, Healthcare Services
Russell H. Plumb................................................................. $ 117,184 50,050
Vice President, Finance and Administration, Chief
Financial Officer and Treasurer
Timm M. Hurst.................................................................... $ 117,184 50,050
Vice President
Named Executive Group (6 individuals)............................................ $ 871,186 323,225
Non Executive Officer Employee Group............................................. $ 873,683 383,183
(75 individuals)
</TABLE>
- ------------------------
(1) Reflects benefits under the Omnibus Plan received during the fiscal year
ended December 28, 1997.
(2) Based on difference between the exercise price of the options and the
December 28, 1997 closing sale price of the Common Stock of $23.50.
(3) Options granted during the fiscal year ended December 28, 1997. Persons and
groups listed in the table may also receive grants under the Omnibus Plan in
the future at the discretion of the Compensation Committee.
BOARD RECOMMENDATION
The Board of Directors believes that the Omnibus Plan Amendments will be
beneficial in enabling the Corporation to retain its current key employees and
to attract qualified and experienced employees by providing them the opportunity
to participate in the ownership of the Corporation and in the increased value
which they have helped the Corporation's stockholders realize. In addition, the
Board of Directors believes that the Omnibus Plan Amendments will be beneficial
in creating a unity of economic interests between the Corporation's employees
and its stockholders by creating a long-term incentive compensation system based
on the value of the Common Stock.
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 their proxy.
18
<PAGE>
APPROVAL OF AMENDMENTS TO THE
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN, AS AMENDED
In the opinion of the Board of Directors, the future success of the
Corporation depends, in large part, on its ability to attract, retain and
motivate directors with experience and ability. In that respect, the Board of
Directors of the Corporation adopted the NED Plan on August 9, 1995 to provide a
program of one-time and regular annual stock option grants to non-employee
directors of the Corporation. The stockholders of the Corporation subsequently
approved the NED Plan.
The Board of Directors proposes the NED Plan Amendments to (a) (i) decrease
the initial one-time grant to directors upon their first election to the Board
of Directors to options to purchase 24,000 shares of Common Stock and (ii)
increase the annual grant of options to directors to purchase 6,000 shares of
Common Stock and (b) simplify the provisions of the NED Plan relating to future
amendments.
The NED Plan currently provides for the grant of options to purchase 48,000
shares of Common Stock to each eligible director upon such person's first
election to the Board as well as an annual grant of options to purchase 3,000
shares of Common Stock beginning on the day after the first annual meeting of
stockholders after such person had vested in their initial grant. The Board of
Directors believes that the goals of the NED Plan to attract, retain and
motivate qualified directors would be better served with a smaller initial grant
and a larger annual grant. Accordingly, on March 27, 1998, the Board of
Directors approved an amendment to the NED Plan to (i) decrease the initial
one-time grant to directors upon their first election to the Board of Directors
to options to purchase 24,000 shares of Common Stock and (ii) increase the
annual grant to directors to options to purchase 6,000 shares of Common Stock
beginning on the day after the first annual meeting of stockholders after such
person had vested in their initial grant.
In addition, the Board of Directors is mindful of the rapid changes in the
securities and tax laws as they relate to incentive plans and desires to keep
the Company's incentive plans modern and effective. Certain statutory changes
have eliminated the necessity of stockholder approvals in certain situations in
which the NED Plan would nevertheless require a stockholder vote. The NED Plan
currently provides that the NED Plan shall not be amended more than once every
six months subject to certain exceptions. In order to reduce the cost and
expense of soliciting proxies for stockholder approvals that are no longer
required by law and in an effort to make the amendment provisions of the NED
Plan more consistent therewith, on March 27, 1998, the Board of Directors
approved an amendment to the NED Plan to provide that except as otherwise
prohibited by law, the Board may (a) amend, alter, suspend, discontinue or
terminate the NED Plan, provided that the Board may condition any amendment on
the approval of the stockholders of the Corporation if such approval is
necessary or advisable with respect to tax, securities or other applicable laws
and rules and regulations, and (b) correct any deficiency, supply any omission
or reconcile any inconsistency in the manner and to the extent it shall deem
desirable.
DESCRIPTION
THE FOLLOWING DESCRIPTION OF THE AMENDED AND RESTATED 1995 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION
PLAN (WHICH IS AMENDED AND RESTATED GIVING EFFECT TO THE NED PLAN AMENDMENTS
PROPOSED TO BE APPROVED BY THE CORPORATION'S STOCKHOLDERS) SET FORTH AS
ATTACHMENT B TO THIS PROXY STATEMENT.
Pursuant to the NED Plan, each person who becomes a non-employee director of
the Corporation is automatically granted an option (the "Lump Sum Grant") to
purchase 24,000 shares of Common Stock on the day after such person's first
election to the Board. The exercise price of the options is the fair market
value of the Common Stock on the date of grant. The exercisability of the
options vests at the rate of 25% per year commencing on the first anniversary of
the date of grant, subject to accelerated vesting for prior service as a
director of the Corporation or any subsidiary.
19
<PAGE>
The NED Plan also provides for the automatic grant of options to purchase
6,000 shares of Common Stock on an annual basis to non-employee directors of the
Corporation who have (or would have, had not the non-employee director declined
a Lump Sum Grant) vested in full in their Lump Sum Grant, commencing on the day
after the first annual meeting of stockholders commencing after such vesting.
The options shall be granted on the day after the annual meeting of stockholders
at which directors are elected each year. The exercise price of the options is
the fair market value of the Common Stock on the date of grant. Exercisability
vests at the rate of 25% per year commencing on the first anniversary of the
date of grant.
The aggregate number of shares which may be issued under the NED Plan is
540,000, subject to adjustment under certain circumstances. Options may not be
exercised after the tenth anniversary of their grant. Options may not be
transferred during the lifetime of an optionee. Payments by optionees upon
exercise of an option may be made (as determined by the Committee) in cash or
such other form of payment as may be permitted under the NED Plan. No options
may be granted under the NED Plan after August 9, 2005. All non-employee
directors of the Corporation are eligible to participate in the NED Plan.
The Committee administers the NED Plan. All members of the Committee are
non-employee directors within the meaning of Rule 16b-3 promulgated under the
Exchange Act. Subject to the terms of the NED Plan, the Committee will have no
authority to determine the participants in the NED Plan, the number of shares
subject to each option, the exercise periods or the conditions and dates of the
grants. The Committee will have the authority, subject to the terms of the NED
Plan, to construe and interpret any of the provisions of the NED Plan or any
option granted thereunder. Such interpretations are binding on the Corporation
and the optionee.
The NED Plan authorizes the issuance of stock options that do not conform to
the requirements of Section 422 of the Code, and thus are not incentive stock
options. Unexercised options will automatically terminate two years from the
date that an optionee ceases to serve as a director of the Corporation unless
such termination of the director's services as a director results from
termination for cause, in which case such options shall terminate immediately.
In the event of a change in the number or kind of shares issuable under the
NED Plan pursuant to a reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split or similar event, the NED
Plan provides for appropriate adjustment to be made with respect to the maximum
number of shares subject to such plan, the number of shares subject to the
unexercised portion of any option theretofore granted and the exercise price of
each option, to prevent the inequitable enlargement or dilution of any rights
under the NED Plan.
The NED Plan may be amended by the Board except that any amendment that
requires stockholder approval under tax, securities or other applicable laws,
rules or regulations, shall only be adopted by the Board subject to stockholder
approval.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
relating to the grant and exercise of the benefits awarded under the NED Plan.
This description does not purport to be a complete description of the income tax
aspects of the NED Plan. The summary does not include any discussion of state,
local or foreign income tax consequences or the effect of gift, estate or
inheritance taxes, any of which may be significant to a particular director
eligible to receive options.
Upon the exercise of an option granted under the NED Plan, an optionee will
generally recognize taxable ordinary income, subject to withholding, equal to
the difference between the exercise price of the stock option and the market
value of the Common Stock on the exercise date. The Corporation is entitled to a
deduction in connection with the exercise of an option under the NED Plan at
such time and to the extent that the optionee recognizes ordinary income. Any
additional gain or any loss recognized upon the
20
<PAGE>
subsequent disposition of the acquired shares will be a capital gain or loss,
and will be a long-term gain or loss if the shares are held for more than one
year. The maximum capital gains rate for individuals is 28% with respect to
shares held for more than twelve months, but not more than eighteen months, and
20% with respect to shares held for more than eighteen months.
Section 162(m) of the Code, which generally disallows a tax deduction for
compensation over $1,000,000 paid to the Chief Executive Officer and certain
other highly compensated employees ("covered employees"), should not apply to
the NED Plan because employees of the Corporation are not eligible to
participate in the NED Plan. If an option holder becomes a covered employee
before exercising options granted under the NED Plan, compensation otherwise
deductible under exercise of such options may be subject to the deduction
limitation of Section 162(m) of the Code unless another exception is available.
At the present time, the Corporation believes that such compensation would
satisfy the exception for "performance-based" compensation.
NEW PLAN BENEFITS
AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO
DOLLAR VALUE (1) OPTIONS
NAME AND POSITION (2) (1) (3)
- --------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
James L. Currie............................................................ $ 17,250 3,000
Wade Fetzer, III........................................................... $ 18,000 48,000
George M. Shaw, M.D., Ph.D................................................. $ 17,250 3,000
Lawrence E. Tilton......................................................... -- --
Matthew C. Weisman......................................................... $ 37,500 3,000
Non-Employee Director Group (5 individuals) (2)............................ $ 90,000 57,000
Nominee For Election as Director (1 individual) (2)........................ $ 17,250 3,000
</TABLE>
- ------------------------
(1) Reflects benefits under the NED Plan received during the fiscal year ended
December 28, 1997.
(2) Based on difference between the exercise price of the options and the
December 28, 1997 closing sale price of the Common Stock of $23.50.
(3) Options granted during the fiscal year ended December 28, 1997.
BOARD RECOMMENDATION
The Board of Directors believes that the NED Plan Amendments will be
beneficial in enabling the Corporation to retain its current directors and to
attract qualified and experienced directors by providing them with the
opportunity to participate in the ownership of the Corporation and in the
increased value which they have helped the Corporation to realize. In addition,
the Board of Directors believes that the NED Plan Amendments will be beneficial
in creating a unity of economic interests between the Corporation's employees
and its stockholders by creating a long-term incentive compensation system based
on the value of the Common Stock.
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 their proxy.
21
<PAGE>
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 and directors and greater than ten percent beneficial owners complied
with all filing requirements applicable to them, except that Wade Fetzer, III
was late in filing the Form 3 relating to his initial election to the Board of
Directors and Charles P. Harrison was late in filing one Form 4.
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 1999 Proxy Statement and form of proxy on or
prior to December 14, 1998.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Corporation for the fiscal year
ended December 28, 1997 (the "Annual Report") as well as the Corporation's Form
10-K are being furnished simultaneously herewith. Such Annual Report and Form
10-K are not to be considered parts of this Proxy Statement.
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 13, 1998
Clarkston, Georgia
22
<PAGE>
ATTACHMENT A
SEROLOGICALS CORPORATION
SECOND AMENDED AND RESTATED 1994 OMNIBUS INCENTIVE PLAN
SECTION 1. PURPOSE
The purposes of the Serologicals Corporation Second Amended and Restated
1994 Omnibus Incentive Plan (the "Plan") are to encourage certain directors and
selected employees (or consultants) of Serologicals Corporation (together with
any successor thereto, the "Company") and its Affiliates (as defined below) to
acquire a proprietary interest in the growth and performance of the Company, to
generate an increased incentive to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of its
stockholders, and to enhance the ability of the Company and its Affiliates to
attract and retain qualified individuals upon whom, in large measure, the
sustained progress, growth, and profitability of the Company depend.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity that, directly or through one or more
intermediaries, is controlled by, controls or is under common control with, the
Company; for purposes of this definition only, control shall include, without
limitation, the direct or indirect beneficial ownership of 10% or more of an
entity's equity securities or economic interests.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or other
Stock Award or Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean a written agreement, contract, or other
instrument or document evidencing an Award granted under the Plan.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall have the meaning provided in the Participant's employment
agreement; provided that if the Participant does not have an employment
agreement, Cause shall mean (i) the Participant's willful misconduct, gross
negligence or dishonesty in the performance of his duties on behalf of the
Company, (ii) the willful and repeated neglect, failure or refusal of the
Participant to carry out any reasonable request of the Board, the Chief
Executive Officer or any officer having supervisory authority over the
Participant, (iii) the material breach of any provision of any employment,
consulting, or other services agreement between the Participant and the Company
or (iv) the entering of a plea of guilty or nolo contendere to, or the
Participant's conviction of, a felony or other crime involving moral turpitude,
dishonesty, theft or unethical business conduct.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time-to-time.
(g) "Committee" shall mean a committee of the Board designated by the Board
to administer the Plan and composed of not less than two (2) directors, each of
whom qualifies as a "disinterested person" within the meaning of Rule 16b-3, and
an "outside director" as defined for purposes of Section 162(m) of the Code.
(h) "Dividend Equivalent" shall mean any right granted under Section 6(d) of
the Plan.
(i) "Fair Market Value" shall mean, with respect to Shares (i) if the Shares
are listed on a registered securities exchange or quoted on the National Market
System, the closing price per share of the Shares on
A-1
<PAGE>
such date (or, if there was no trading reported on such date, on the next
preceding day on which there was trading reported); (ii) if the Shares are not
listed on a registered securities exchange and not quoted on the National Market
System, but the bid and asked prices per share for the Shares are provided by
Nasdaq, the National Quotation Bureau Incorporated or any similar organization,
the average of the closing bid and asked prices per share of the Shares on such
date (or, if there was no trading in the Shares on such date, on the next
preceding day on which there was trading) as provided by such organization; and
(iii) if the Shares are not traded on a registered securities exchange and not
quoted on the National Market System and the bid and asked prices per share of
the Shares are not provided by Nasdaq, the National Quotation Bureau
Incorporated or any similar organization, solely as determined by the of
Committee in good faith; the "Fair Market Value" of any property (other than
Shares), shall mean the fair market value of such property determined by such
methods or procedures as shall be established from time-to-time by the
Committee.
(j) "Incentive Stock Option" shall mean an option granted under Section 6(a)
of the Plan that meets the requirements of Section 422 of the Code or any
successor provision thereto.
(k) "Key Employee" shall mean any officer, director, consultant, or other
employee who is a regular full-time employee of the Company or its present and
future Affiliates.
(l) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not an Incentive Stock Option.
(m) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock.
(n) "Participant" shall mean a Key Employee who has been granted an Award
under the Plan.
(o) "Performance Award" shall mean any right granted under Section 6(f) of
the Plan.
(p) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(q) "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have expired,
lapsed, or been waived.
(r) "Restricted Securities" shall mean Restricted Stock or any other Award
under which issued and outstanding Shares are held subject to restrictions
imposed by the terms of the Award.
(s) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(t) "Restricted Stock Unit" shall mean any right granted under Section 6(c)
of the Plan that is denominated in Shares.
(u) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation thereto.
(v) "Shares" shall mean the common stock of the Company, $.01 par value, and
such other securities or property as may become the subject of Awards pursuant
to an adjustment made under Section 4(b) of the Plan.
(w) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
(x) "Stock Award" shall mean an Award of an Option, Restricted Stock, or
other right or security consisting of or convertible into Shares.
(y) "Stock-Based Award" shall mean an Award of a Stock Appreciation Right,
Dividend Equivalent, Restricted Stock Unit or other right, the value of which is
determined by reference to Shares.
(z) "Tandem Option" shall mean a Non-Qualified Option issued in tandem with
a Stock Appreciation Right.
A-2
<PAGE>
SECTION 3. ADMINISTRATION
(a) GENERALLY. The Plan shall be administered by the Committee. Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee, may be made at any
time, and shall be final, binding and conclusive upon all Persons, including the
Company, any Affiliate, any Participant, any holder or beneficiary of any Award,
any Stockholder, and any employee of the Company or of any Affiliate.
Notwithstanding anything to the contrary contained in this Section 3, no member
of the Committee shall participate in any action of the Committee directly
affecting his rights under the Plan.
(b) POWERS. Subject to the terms of the Plan and applicable law, the
Committee shall have the full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of shares to be covered
by (or with respect to which payments, rights or other matters are to be
calculated in connection with), Awards; (iv) determine the terms and conditions
of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other Awards,
or other property, or canceled, forfeited, or suspended, and the method or
methods by which Awards may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, other property, and other amounts payable with
respect to an Award under the Plan shall be deferred; (vii) interpret and
administer the Plan and any instruments or agreements relating to, or Award made
under, the Plan; (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan.
(c) RELIANCE. Indemnification. The Committee may employ attorneys,
consultants, accountants or other persons and the Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Committee shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, or Awards made thereunder, and all members of
the Committee shall be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b):
(i) LIMITATION ON NUMBER OF SHARES. Awards issuable under the Plan are
limited such that the maximum aggregate number of Shares with respect to
which Stock Awards and Stock-Based Awards may be granted to any recipient
are 100,000 in any fiscal year, to an aggregate maximum for all recipients
in all years of 3,250,000 any or all of which may be subject to Incentive
Stock Options or other Awards in the discretion of the Committee. To the
extent that an Award ceases to remain outstanding by reason of termination
of rights granted thereunder, forfeiture or otherwise, the Shares subject to
such Award shall again become available for Award under the Plan; provided,
however, that in the case of the cancellation or termination of an Option in
the same fiscal year that such Option was granted (or for purposes of
determining the maximum number of Options which may be granted to any
recipient under the Plan, the cancellation or termination of the Option at
any time) both the canceled Option and the newly granted Option shall be
counted in determining whether the recipient has received the maximum number
of Options permitted to be issued to any one recipient under the Plan.
(ii) ACCOUNTING FOR AWARDS. For purposes of this Section 4, for any
Award which is denominated in, or with respect to, Shares, the number of
Shares covered by such Award, or to which such Award relates, shall be
counted on the date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan; provided, however, that
Awards that operate in tandem
A-3
<PAGE>
with (whether granted simultaneously with or at a different time from), or
that are substituted for, other Awards may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting. Any
Shares that are delivered by the Company pursuant to any Award, and any
Awards that are granted by or become obligations of the Company through the
assumption by the Company or an Affiliate of, or in substitution for,
outstanding awards previously granted by an acquired company shall be
counted against the Shares available for granting Awards under the Plan.
(iii) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
(b) ADJUSTMENTS. In the event that the Committee shall determine that any
(i) subdivision or consolidation of Shares, (ii) stock dividend or other
distribution of property other than cash, (iii) recapitalization or other
capital adjustment of the Company or (iv) merger, consolidation or other
reorganization of the Company or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event,
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(x) the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, (y) the number and type of Shares
(or other securities or property) subject to outstanding Awards, and (z) the
grant, purchase, or exercise price with respect to any Award or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, however, in each case, that with respect to Awards of Incentive
Stock Options no such adjustment shall be authorized to the extent that such
adjustment would cause the Plan to violate Section 422 of the Code or for
compensation otherwise exempt from the application of Code Section 162(m) to
fail to so qualify for such exemption; and provided further, however, that the
number of Shares subject to any Award denominated in Shares shall always be a
whole number.
SECTION 5. ELIGIBILITY FOR AWARDS
(a) ELIGIBILITY FOR AWARDS. Awards may be granted only to Key Employees and,
solely as provided in Section 5(b) hereof, to directors who are not otherwise
Key Employees. In determining the employees to whom Awards shall be granted and
the number of shares or units to be covered by each Award, the Committee shall
take into account the nature of employees' duties, their present and potential
contributions to the success of the Company and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the Plan. A
director of the Company or a subsidiary who is not also a regular full-time
employee will not be eligible to receive an Award except as provided in Section
5(b). A Key Employee who has been granted an Award or Awards under the Plan may
be granted an additional Award or Awards, subject to such limitations as may be
imposed by the Code on the grant of Incentive Stock Options. (b) AWARDS TO
DIRECTORS. (i) The following provisions shall apply to the Options to purchase
an aggregate of 48,000 Shares (after giving effect to the 6-for-5 stock split
declared by the Board of Directors on April 13, 1995) granted to the directors
who are not Key Employees, which Options were outstanding on November 15, 1994;
(1) Subject to clauses (2) through (4) below, such Options shall vest as
follows: 25% on April 26, 1994 and 25% on each of the first, second and
third anniversaries of such date;
(2) In the event such director ceases to serve as a director and is
otherwise no longer affiliated with the Company prior to the vesting in full
of the exercisability of such Options according to the schedule set forth
above in clause (1), vesting of previously unvested Options shall be
calculated on a quarterly basis for full calendar quarters served;
(3) Such Options shall immediately vest in full on the earlier of (x)
the Company's becoming subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended, and (y) the merger or other
business combination of the Company in which the Company is not the
surviving
A-4
<PAGE>
corporation or survives only as a subsidiary of another corporation, the
sale of all or substantially all of the assets or outstanding stock of the
Company or other similar transaction that results in the change in control
of the Company; and
(4) In the event of a voluntary resignation or involuntary removal of
the holder of such Options and the occurrence of any of the events specified
in clauses (x) or (y) of Section 5(b)(3) within twelve months of such
resignation or removal, such options shall immediately vest in full as of
the date of the event specified in clause (x) or (y) of Section 5(b)(3).
(ii) No other directors who are not Key Employees shall be entitled to
Option grants hereunder.
SECTION 6. AWARDS
(a) OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions, in either case not inconsistent with the provisions of the
Plan, as the Committee shall determine:
(i) EXERCISE PRICE. The purchase price per Share purchasable under a
Non-Qualified Stock Option shall be determined by the Committee. The
purchase price per Share purchasable under an Incentive Stock Option shall
not be less than 100% (110% in the case of a 10% shareholder as deemed for
purposes of Section 422(c)(5) of the Code) of the Fair Market Value of a
Share on the date of grant of such Incentive Stock Option.
(ii) OPTION TERM. The term of each Non-Qualified Stock Option shall be
faced by the Committee but generally shall not exceed ten (10) years (five
(5) years in the case of a 10% shareholder, as defined for purposes of
Section 422(c)(5) of the Code) from the date of grant. The term of each
Incentive Stock Option shall in no event be more than ten (10) years from
the date of grant.
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, and the
method or methods by which, and the form or forms (including, without
limitation, cash, Shares, outstanding Awards or other consideration, or any
combination thereof, having a Fair Market Value on the exercise date equal
to the relevant option price) in which, payment of the option prices with
respect thereto may be made or deemed to have been made.
(iv) EARLY TERMINATION. The unexercised portion of any option granted
under the Plan will generally be terminated (a) three (3) months after the
date on which the Participant's employment is terminated for any reason
other than (i) cause, (ii) mental or physical disability, (iii) death or
(iv) retirement; (b) immediately upon the termination of the Participant's
employment for cause; (c) Six (6) months after the date on which the
Participant's employment is terminated by reason of mental or physical
disability, or (d) (i) twelve (12) months after the date on which the
Participant's employment is terminated by reason of retirement or the death
of the employee, or (ii) nine (9) months after the date on which the
Participant shall die if such death shall occur during the three (3) month
period following the termination of the Participant's employment by reason
of retirement or mental or physical disability.
(v) INCENTIVE STOCK OPTIONS. All terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder. The Fair Market Value of Shares subject
to Incentive Stock Options (determined as of the date such Incentive Stock
Options are granted) exercisable for the first time by any individual during
any calendar year shall in no event exceed $100,000.
(b) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation
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Right granted under the Plan shall confer upon the holder thereof a right to
receive, upon exercise thereof, an amount in cash equal of the excess of (i) the
Fair Market Value of one Share on the date of exercise over (ii) the Fair Market
Value of one Share on the date of grant of the Stock Appreciation Right. Subject
to the terms of the Plan and any applicable Award Agreement, the grant price,
term, methods of exercise, methods of settlement, and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate, including,
but not limited to the following: a Participant may not exercise a Stock
Appreciation Right if the aggregate amount to be received as a result of his or
her exercise of Stock Appreciation Rights in the preceding twelve (12) month
period exceeds such Participant's current base salary.
(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other right or
property), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise, as the Committee may deem
appropriate but not inconsistent with the provisions of the Plan:
(i) REGISTRATION. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate, including,
without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock granted under the Plan, such
certificate shall be registered in the name of the Participant and shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(ii) FORFEITURE. Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by the
Committee) for any reason during the applicable restriction period, all
shares of Restricted Stock and all Restricted Stock Units still, in either
case, subject to restriction shall be forfeited to and reacquired by the
Company; provided, however, that the Committee may, when it finds that a
waiver would be in the best interest of the Company, waive in whole, or in
part, any or all remaining restrictions with respect to shares of Restricted
Stock or Restricted Stock Units.
(iii) LAPSE OF RESTRICTIONS. Unrestricted Shares, evidenced in such
manner as the Committee shall deem appropriate, shall be delivered to the
holder of Restricted Stock promptly after such Restricted Stock shall become
Released Securities.
(d) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant Awards
to Participants under which the holders thereof shall be entitled to receive
payments equivalent to dividends with respect to a number of Shares and payable
on such date or dates as determined by the Committee, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested. Subject to the terms of the Plan any
applicable Award Agreement, such Awards may have such terms and conditions as
the Committee shall determine.
(e) OTHER AWARDS. The Committee is hereby authorized, to the extent
permitted under Rule 16b-3 and applicable law, to grant to Participants such
other Awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities, convertible into Shares), as are deemed by the Committee
to be consistent with the purposes of the Plan. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine the terms and
conditions of such Awards. Shares or other securities delivered to a Participant
pursuant to a purchase right granted under this Section 6(e) shall be purchased
for such consideration, which may be paid by such method or methods and in such
form or forms, including, without limitation, cash, Shares, outstanding Awards,
or other consideration, or any combination thereof, as the Committee shall
determine.
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(f) PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Performance Award granted under the Plan (i) may
be denominated as a Stock Award or a Stock Based Award and payable in cash,
Shares, other securities or other property and (ii) shall confer on the holder
thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the achievement of such performance goals and during such performance periods as
the Committee shall establish. Subject to the terms of the Plan and applicable
Award Agreement, the performance goals to be achieved during any performance
period, the length of any performance period, and the amount of any payment or
transfer to be made pursuant to any Performance Award shall be determined by the
Committee.
(g) GENERAL.
(i) NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no
cash consideration or such minimal cash consideration as may be required by
applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, at the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any award granted
under any other plan of the Company or any Affiliate. Awards granted in
addition to or in tandem with other Awards, in addition to or in tandem with
awards granted under any other plan of the Company or any Affiliate, may be
granted either at the same time as or at a different time from the grant of
such other Awards or awards; provided, that any Tandem Option shall be
subject to the following provisions: upon exercise of an Option issued as
part of a Tandem Option, the participant shall be entitled to a credit
toward the option exercise price equal to the value of the Stock
Appreciation Rights issued in tandem with the Option exercised, but not in
an amount that would exceed the amount of the federal income tax deduction
allowed to the Company in respect of such Stock Appreciation Rights. Upon
such exercise of a Tandem Option, the related Stock Appreciation Right shall
terminate and the value of such Stock Appreciation Right shall be limited to
such credit. Upon the exercise of a Stock Appreciation Right issued as part
of a Tandem Option, the Option to which such Stock Appreciation Right
relates shall cease to be exercisable to the extent of the number of Shares
with respect to which the Stock Appreciation Right was exercised.
(iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and
of any applicable Award Agreement, payment or transfers to be made by the
Company or an Affiliate upon the grant or exercise of an Award may be made
in such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards, or other property,
or any combination thereof, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case in accordance with
rules and procedures established by the Committee. Such rules and procedures
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant of
crediting of Dividend Equivalents in respect of installment or deferred
payments denominated in Shares on other securities.
(iv) LIMITS ON TRANSFER OF AWARDS. No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, salable, or transferable by a Participant otherwise than by will
or by the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that, if so
determined by the Committee, a Participant may, in the manner established by
the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant, and to receive any property distributable, with
respect to any Award upon the death of the Participant. Each Award, and each
right under any Award, shall be exercisable, during the Participant's
lifetime, only by the Participant or, if permissible under applicable law
with respect to any Award that is not an Incentive Stock Option, by the
Participant's guardian or legal representative. No Award (other than
Released Securities), and no right under any such Award, may be pledged,
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alienated, attached, or otherwise encumbered, and any purported pledge,
alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(v) TERM OF AWARDS. Except as set forth in Section 6(a)(ii), the term of
each Award shall be for such period as may be determined by the Committee.
(vi) SHARE CERTIFICATES. All certificates for Shares or other securities
of the Company or any Affiliate delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations, and other restrictions of the Securities and
Exchange Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan, except that any amendment, alteration,
suspension, discontinuation, or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award theretofore
granted, shall require the consent of such Participant, other holder or
beneficiary of an Award. Notwithstanding the foregoing, the Board may condition
any amendment on the approval of the stockholders of the Company if such
approval is necessary or advisable with respect to tax (including Code Sections
162(m) and 422), securities or other applicable laws and rules and regulations
to which the Company, this Plan, Participants or other applicable Persons are
subject.
(b) CORRECTION OF DEFECTS, OMISSIONS, AND INCONSISTENCIES. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
SECTION 8. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. No Key Employee or Participant shall have any claim
to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Key Employees, Participants, or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each recipient.
(b) WITHHOLDING. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, or other
property) of withholding taxes due in respect of an Award, its exercise, or any
payment or transfer under such Awards or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. In case of Awards paid in Shares, the
Participant or other person receiving such Shares may be required to pay the
Company or Affiliate, as appropriate, the amount of any such withholding taxes
which is required to be withheld with respect to such Shares.
(c) NO LIMIT ON OTHER PLANS. Nothing contained in the Plan shall prevent the
Company or any Affiliate from adopting or continuing in effect other or
additional compensation arrangements and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. the Company or an Affiliate may at any
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time dismiss a Participant from employment, free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.
(e) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable federal law.
(f) SEVERABILITY. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, such
provision shall be deemed void, stricken and the remainder of the Plan and any
such Award shall remain in full force and effect.
(g) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(h) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(i) HEADINGS. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision hereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN
The Plan is effective as of November 14, 1994. The amendments to the Plan
are effective upon stockholder approval thereof.
SECTION 10. TERM OF THE PLAN
The Plan shall continue until the earlier of (i) the date on which all Stock
Awards and Stock Based Awards issuable hereunder have been issued, or (ii) the
termination of the Plan by the Board. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond such date and the authority of the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award, and the authority of the Board to
amend the Plan, shall extend beyond such date. Notwithstanding anything to the
contrary in this Section 10, no Incentive Stock Options may be granted under the
Plan more than ten (10) years after the date of adoption of the Plan.
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ATTACHMENT B
SEROLOGICALS CORPORATION
AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
1. PURPOSE. The Amended and Restated 1995 Non-Employee Directors' Stock
Option Plan (the "Plan") of Serologicals Corporation, a Delaware corporation
(the "Corporation"), is designed to aid the Corporation and its subsidiaries in
retaining and attracting non-employee directors of exceptional ability by
enabling such non-employee directors to purchase a proprietary interest in the
Corporation, thereby stimulating in such individuals an increased desire to
render greater services which will contribute to the continued growth and
success of the Corporation and its subsidiaries.
2. AMOUNT AND SOURCE OF STOCK. The total number of shares of the
Corporation's Common Stock (the "Shares") which may be the subject of options
granted pursuant to the Plan shall be limited so that the total number of Shares
issued upon the exercise of options granted pursuant to the Plan shall not
exceed 540,000 (after giving effect to the 3 for 2 split of the Shares in
February 1997), subject to adjustment as provided in paragraph 12. None of the
options to be granted under the Plan are intended to be "Incentive Stock
Options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations (whether proposed, temporary or final)
promulgated thereunder. Such Shares may be reserved or made available from the
Corporation's authorized and unissued Shares or from Shares reacquired and held
in the Corporation's treasury. In the event that any option granted hereunder
shall terminate prior to its exercise in full for any reason, then the Shares
subject to such option shall be added to the Shares otherwise available for
issuance pursuant to the exercise of options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee
(the "Committee") of the Board of Directors of the Corporation (the "Board")
comprised of two or more members of the Board, selected by the Board, all of
which members shall be "disinterested persons" as that term is defined in Rule
16b-3(d)(3) (or any successor provision) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Committee is
hereinafter sometimes referred to as the "Administrative Body." The
Administrative Body shall have full authority to interpret the Plan, to
establish and amend rules and regulations relating to it and to make all other
determinations necessary or advisable for the administration of the Plan.
4. NON-DISCRETIONARY LUMP SUM GRANTS.
(a) Each person who is elected for the first time to be a non-employee
director automatically shall, on the day after the date of his initial election
to be a non-employee director by the Board or stockholders of the Corporation,
be granted an option exercisable to purchase 24,000 Shares. The date on which an
option is granted under paragraph 4 or 5 to a specified individual shall
constitute the date of grant of such option (the "Date of Grant").
(b) Subject to subparagraph 13(b) hereof, options granted to a participant
under subparagraph 4(a) hereof shall vest at the rate of 25% per year commencing
on the first anniversary of the Date of Grant; provided that for each six months
(or portion thereof) of service as a director of the Corporation or any
subsidiary prior to the Date of Grant, such vesting shall accelerate by one (1)
year.
5. NON-DISCRETIONARY ANNUAL GRANTS.
(a) Each non-employee director shall automatically receive an annual grant
of an option to purchase 6,000 Shares on the day after the annual meeting of
stockholders at which directors are elected each year (the "Annual Meeting
Date"); PROVIDED, that the first grant of an option to a particular non-employee
director under this subparagraph 5(a) shall be made on the first Annual Meeting
Date after the option
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granted under subparagraph 4(a) shall have or would have (had not such director
elected to decline an award in accordance with subparagraph 6(a)), vested in
full.
(b) Subject to subparagraph 13(b) hereof, options granted to a participant
under subparagraph 5(a) hereof shall vest at the rate of 25% per year commencing
on the first anniversary of the Date of Grant.
6. ELECTION TO DECLINE GRANT; REVOCATION OF DECLINATION.
(a) Any non-employee director entitled to an option under paragraph 4 or 5
may, at any time on or before Date of Grant, elect to decline such award. Such
election shall be in writing, and signed by the non-employee director.
(b) A non-employee director who makes an election under (a) above, shall
receive no compensation as a substitute for the option(s) declined.
(c) An election described in (a) above may be revoked on a prospective basis
at any time prior to a scheduled award. Such revocation election must be in
writing and signed by the non-employee director.
7. OPTION PRICE. The exercise price of the Shares purchasable under any
option granted pursuant to the Plan shall be 100% of the fair market value of
the Shares subject to such option on the Date of Grant. For purposes of the
Plan, the "fair market value per share" of the Shares on a given date shall be:
(i) if the Shares are listed on a registered securities exchange or quoted on
the National Market System, the closing price per share of the Shares on such
date (or, if there was no trading reported on such date, on the next preceding
day on which there was trading reported); (ii) if the Shares are not listed on a
registered securities exchange and not quoted on the National Market System, but
the bid and asked prices per share for the Shares are provided by Nasdaq, the
National Quotation Bureau Incorporated or any similar organization, the average
of the closing bid and asked price per share of the Shares on such date (or, if
there was no trading in the Shares on such date, on the next preceding day on
which there was trading) as provided by such organization; and (iii) if the
Shares are not traded on a registered securities exchange and not quoted on the
National Market System and the bid and asked price per share of the Shares are
not provided by Nasdaq, the National Quotation Bureau Incorporated or any
similar organization, solely as determined by the Administrative Body in good
faith.
8. TERM OF OPTION.
(a) Options granted hereunder shall be exercisable for a period of ten (10)
years from the Date of Grant.
(b) The grant of options pursuant to the terms of the Plan shall be
effective as of the Date of Grant; provided, however, that no option granted
hereunder shall be exercisable unless and until this Plan has been approved by
the Corporation's stockholders and unless and until the holder has entered into
an individual option agreement with the Corporation that shall set forth the
terms and conditions of such option. Each such agreement shall expressly
incorporate by reference the provisions of this Plan (a copy of which shall be
made available for inspection by the optionee during normal business hours at
the principal office of the Corporation), and shall state that in the event of
any inconsistency between the provisions hereof and the provisions of such
agreement, the provisions of this Plan shall govern.
9. EXERCISE OF OPTIONS. An option shall be exercised when written notice of
such exercise, signed by the person entitled to exercise the option, has been
delivered or transmitted by registered or certified mail to the Secretary of the
Corporation at its then principal office. Such notice shall specify the number
of Shares for which the option is being exercised and shall be accompanied by
(i) such documentation, if any, as may be required by the Corporation as
provided in subparagraph 13(b), and (ii) payment of the aggregate option price.
Such payment shall be in the form of (i) cash or check payable to the order of
the Corporation in the amount of the aggregate option price, (ii) certificates
duly endorsed for transfer (with all transfer taxes paid or provided for)
evidencing a number of Shares of which the aggregate fair market
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value on the date of exercise is equal to the aggregate option exercise price of
the Shares being purchased, (iii) any method of payment which is acceptable to
the Administrative Body (including pursuant to a cashless exercise program
adopted by the Administrative Body) or (iv) a combination of these methods of
payment. Delivery of such notice shall constitute an irrevocable election to
purchase the Shares specified in such notice, and the date on which the
Corporation receives the last of such notice, documentation and the aggregate
option exercise price for all of the shares covered by the notice shall, subject
to the provisions of paragraph 13 hereof, be the date as of which the Shares so
purchased shall be deemed to have been issued. The person entitled to exercise
the option shall not have the right or status as a holder of the Shares to which
such exercise relates prior to receipt by the Corporation of the payment, notice
and documentation expressly referred to in this paragraph 9. Notwithstanding the
foregoing, a holder whose transactions in Common Stock are subject to Section
16(b) of the Exchange Act may tender Shares in payment of all or any portion of
the option price only if the following additional conditions are met: (i) the
tender is made at least six months after the Date of Grant and (ii) either (x)
the election to tender is irrevocably made at least six months in advance of the
tender of Shares or (y) the tender of Shares takes place during the period
beginning on the third business day following the date of release of the
Corporation's quarterly or annual financial results and ending on the twelfth
business day following such date.
10. EXERCISE AND CANCELLATION OF OPTIONS AFTER TERMINATION, DISABILITY OR
DEATH. Except as set forth below, if a holder shall voluntarily or involuntarily
cease to serve as a director of the Corporation or if a holder's service shall
terminate on account of death or disability, the option of such holder shall
terminate two years following the first day that the holder is no longer such a
director (the "Termination Date"); provided that if such director is removed for
cause, the option shall terminate immediately. In no event may the holder, or
the holder's guardian, conservator, executor or administrator, as the case may
be, exercise an option after the end of the original term of the option.
Nothing contained herein or in any option agreement shall be construed to
confer on any option holder any right to continue as a director of the
Corporation or derogate from any right of the Corporation, the Board or the
stockholders of the Corporation to remove such option holder as a director of
the Corporation, with or without cause.
11. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan shall
be sold, pledged, assigned or transferred in any manner except to the extent
that options may be exercised by an executor or administrator as provided in
paragraph 10 hereof. An option may be exercised, during the lifetime of the
holder thereof, only by such holder or his duly appointed guardian or
conservator in the event of his disability.
12. ADJUSTMENTS UPON CERTAIN EVENTS.
If the outstanding Shares are subdivided, consolidated, increased,
decreased, changed into, or exchanged for a different number or kind of shares
or other securities of the Corporation through reorganization, merger,
recapitalization, reclassification, capital adjustment or similar transaction,
or if the Corporation shall issue additional Shares as a dividend or pursuant to
a stock split, then the number and kind of Shares available for issuance
pursuant to the exercise of options to be granted under this Plan and all Shares
subject to the unexercised portion of any option theretofore granted and the
exercise price of such options shall be adjusted on a pro rata basis to prevent
the inequitable enlargement or dilution of any rights hereunder; provided,
however, that any such adjustment in outstanding options under the Plan shall be
made without change in the aggregate exercise price applicable to the
unexercised portion of any such outstanding option. Distributions to the
Corporation's stockholders consisting of property other than Shares of the
Corporation or its successor and distributions to stockholders of rights to
subscribe for Shares shall not result in the adjustment of the Shares
purchasable under outstanding options or the exercise price of outstanding
options. Adjustments under this paragraph shall be made by the Administrative
Body, whose determination thereof shall be conclusive and binding. Any
fractional Share resulting
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from adjustments pursuant to this paragraph shall be eliminated from any then
outstanding option. Nothing contained herein or in any option agreement shall be
construed to affect in any way the right or power of the Corporation to make or
become a party to any adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve,
liquidate or otherwise transfer all or any part of its business or assets.
13. GENERAL RESTRICTIONS.
(a) No option granted hereunder shall be exercisable if the Corporation
shall at any time determine that (i) the listing upon any securities exchange,
registration or qualification under any state or federal law of any Shares
otherwise deliverable upon such exercise, or (ii) the consent or approval of any
regulatory body or the satisfaction of withholding tax or other withholding
liabilities, is necessary or appropriate in connection with such exercise. In
any of the events referred to in clause (i) or clause (ii) above, the
exercisability of such options shall be suspended and shall not be effective
unless and until such withholding, listing, registration, qualifications or
approval shall have been effected or obtained free of any conditions not
acceptable to the Corporation in its sole discretion, notwithstanding any
termination of any option or any portion of any option during the period when
exercisability has been suspended.
(b) The Administrative Body may require, as a condition to the right to
exercise an option, that the Corporation receive from the option holder, at the
time of any such exercise, representations, warranties and agreements to the
effect that the Shares are being purchased by the option holder for investment
only and without any present intention to sell or otherwise distribute such
Shares and that the option holder will not dispose of such Shares in
transactions which, in the opinion of counsel to the Corporation, would violate
the registration provisions of the Securities Act of 1933, as then amended, and
the rules and regulations thereunder. The certificates issued to evidence such
Shares shall bear appropriate legends summarizing such restrictions on the
disposition thereof.
14. AMENDMENT. Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Option agreement or in the Plan:
(a) The Board may amend, alter, suspend, discontinue or terminate the Plan,
except that any amendment, alteration, suspension, discontinuation or
termination that would impair the rights of any participant, or any other holder
or beneficiary of any option theretofore granted to the extent such rights are
not then accrued and vested, shall require the consent of such participant,
other holder or beneficiary of an option. Notwithstanding the foregoing, the
Board may condition any amendment on the approval of the stockholders of the
Corporation if such approval is necessary or advisable with respect to tax
(including Code Sections 162(m) and 422), securities or other applicable laws
and rules and regulations to which the Corporation, this Plan, participants or
other applicable persons are subject.
(b) The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any option in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
15. TERMINATION. Unless the Plan shall theretofore have been terminated as
provided hereinafter and in paragraph 16 hereof, the Plan shall terminate on
August 9, 2005, and no options under the Plan shall thereafter be granted;
provided, however, that the Board may at any time, in its sole discretion,
terminate the Plan prior to the foregoing date. No termination of the Plan by
the Board shall, without the consent of the holder of an existing option,
materially and adversely affect his rights under such option.
B-4
<PAGE>
PROXY 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 13, 1998, 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 19, 1998 at the Cobb Galleria Centre, Two Galleria Parkway,
Atlanta, Georgia, and at any adjournments 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 OMNIBUS PLAN AMENDMENTS AND FOR THE APPROVAL OF THE
NED PLAN AMENDMENTS.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
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Please sign exactly as your name(s) appear(s) on the books of the Company.
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.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
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SEROLOGICALS CORPORATION
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Mark box at right if you intend to attend
the Annual Meeting of Stockholders. / /
Mark box at right if an address change or
comment has been noted on the reverse side
of this card. / /
RECORD DATE SHARES:
1. Election of Directors.
Harold J. Tenoso, Ph.D.
George M. Shaw, M.D., Ph.D.
For all With- For All
Nominees hold Except
/ / / / / /
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
2. Approval of amendments (the "Omnibus Plan Amendments") to the
Corporation's Amended and Restated 1994 Omnibus Incentive Plan (the
"Omnibus Plan") to (a) increase the maximum number of shares available
under the Omnibus Plan to 3,250,000, (b) simplify the provisions of the
Omnibus Plan relating to future amendments and (c) provide for the ability
to make awards under the Omnibus Plan to officers, directors, consultants
or other employees of minority owned subsidiaries and joint ventures
formed or entered into by the Corporation.
For Against Abstain
/ / / / / /
3. Approval of amendments (the "NED Plan Amendments") to the Corporation's
1995 Non-Employee Directors' Stock Option Plan, as amended, (the "NED
Plan") to (a)(i) decrease the initial one-time grant to directors upon
their first election to the Board of Directors to options to purchase
24,000 shares of Common Stock and (ii) increase the annual grant to
directors to options to purchase 6,000 shares of Common Stock and (b)
simplify the provisions of the NED Plan relating to future amendments.
For Against Abstain
/ / / / / /
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.
Please be sure to sign and date this Proxy. Date
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- --------Stockholder sign here--------------------Co-owner sign here----------
DETACH CARD DETACH CARD
