<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
SEROLOGICALS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SEROLOGICALS CORPORATION
780 PARK NORTH BOULEVARD, SUITE 110
CLARKSTON, GEORGIA 30021
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Serologicals Corporation (the "Corporation") will be held at 8:00 A.M., local
time, on May 18, 1999, at the corporate offices of Serologicals Corporation, 780
Park North Boulevard, Suite 110, Clarkston, GA 30021, for the following
purposes:
1. To elect two Class 1 directors of the Corporation to hold office
until the Annual Meeting of Stockholders occurring in 2002 and until the
election and qualification of their respective successors;
2. 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 22, 1999 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 9, 1999
<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 8:00 A.M., local time, May 18, 1999, at the corporate
offices of Serologicals Corporation, 780 Park North Boulevard, Suite 110,
Clarkston, GA 30021 and at any adjournments thereof. The purposes of the meeting
are:
1. To elect two Class 1 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 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 and
(ii) 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 9, 1999.
VOTING
Holders of record of the Corporation's Common Stock on March 22, 1999 will
be entitled to vote at the Annual Meeting or any adjournment thereof. As of that
date, there were 24,645,282 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. Abstentions and broker
non-votes will have no effect on the election of directors. The Board of
Directors recommends a vote FOR each of the nominees named below.
<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 eight 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 1 to serve for a
term of three years and until the election and qualification of their respective
successors, and for the directors in Classes 2 and 3 whose terms expire at the
annual meeting of stockholders occurring in 2000 and 2001, respectively, and
until the election and qualification of their respective successors.
NOMINEES FOR DIRECTOR WHOSE TERM EXPIRES IN 2002
(CLASS 1)
<TABLE>
<CAPTION>
HAS BEEN A
DIRECTOR OF THE
NAME OF NOMINEE AGE CORPORATION SINCE
- --------------------------------------------------------------------- --- -------------------
<S> <C> <C>
Matthew C. Weisman................................................... 57 1992
Lawrence E. Tilton................................................... 63 1996
</TABLE>
DIRECTORS WHOSE TERM OF OFFICE
WILL CONTINUE AFTER THE ANNUAL MEETING
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...................................................... 62 1989
Samuel A. Penninger, Jr.............................................. 57 1983
Wade Fetzer, III..................................................... 61 1997
</TABLE>
Directors Whose Term Expires in 2001 (CLASS 3)
<TABLE>
<CAPTION>
HAS BEEN A
DIRECTOR OF THE
NAME OF NOMINEE AGE CORPORATION SINCE
- --------------------------------------------------------------------- --- -------------------
<S> <C> <C>
Harold J. Tenoso, Ph.D............................................... 60 1993
George M. Shaw, M.D., Ph.D........................................... 45 1993
Desmond H. O'Connell, Jr............................................. 63 1998
</TABLE>
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
2
<PAGE>
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.
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. Mr. Currie is also a director of Avax Technologies, Inc., a
publicly traded development stage biopharmaceutical company.
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
as a member of the Kellogg Alumni Advisory Board of Northwestern University.
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.
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.
DESMOND H. O'CONNELL, JR. has been a director of the Corporation since July
1998. Mr. O'Connell retired from BOC Health Care in 1990,where he last served as
President and Chief Executive Officer. Since then, he has been an independent
management consultant. Mr. O'Connell currently serves as a director and a member
of the Executive Committee of the Board of Directors of Chrysalis International,
a publicly traded contract research organization company located in Raritan, NJ.
Mr. O'Connell also is a member of the Board of Directors for Abiomed, Inc. a
publicly traded cardiac research and development company located in Danvers, MA
and a Trustee of New Community Foundation of Newark, NJ, a charitable
organization.
MEETINGS OF THE BOARD
During the fiscal year ended December 27, 1998, eight meetings of the Board
of Directors were held. Each of the directors attended 75% or more of the
aggregate number of meetings of the Board of
3
<PAGE>
Directors and committees on which he served. The Board of Directors does not
have a standing nominating committee.
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 option and other equity related plans. This Committee held six
meetings during the Corporation's last fiscal year.
The Board of Directors also has an Audit Committee, which currently consists
of Messrs. Weisman (Chairman) and Fetzer. The Audit Committee is responsible for
selecting (or, at the election of the Audit Committee, recommending to the
Board) the independent auditors of the Corporation, evaluating the independent
auditors, consulting with management, internal auditors and the independent
auditors as to the systems of internal accounting controls and reviewing the
non-audit services performed by the independent auditors. This Committee met
twice during the Corporation's last fiscal year.
SECURITY OWNERSHIP OF CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table provides information as of March 22, 1999 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............................................. 2,729,270 11.07%
901 Mariners Island Blvd., 6th Floor
San Mateo, CA 94404
John McStay Investment Counsel...................................... 1,903,475 7.72%
5949 Sherry Lane, Suite 1560
Dallas, TX 75225
Warburg Pincus Asset Management..................................... 1,687,012 6.85%
466 Lexington Avenue
New York, NY 10017
Harold J. Tenoso, Ph.D. (3)......................................... 1,195,386 4.63%
Samuel A. Penninger, Jr. (4)........................................ 810,665 3.29%
Timm M. Hurst (5)................................................... 561,455 2.27%
Charles P. Harrison (6)............................................. 168,999 *
James L. Currie (7)................................................. 88,685 *
George M. Shaw, M.D., Ph.D. (8)..................................... 46,025 *
P. Ann Hoppe (9).................................................... 35,750 *
Toby L. Simon, M.D. (10)............................................ 39,375 *
Lawrence E. Tilton (11)............................................. 21,000 *
Wade Fetzer, III (12)............................................... 27,000 *
Matthew C. Weisman (13)............................................. 11,875 *
Desmond H. O'Connell................................................ -- --
All executive officers and directors as a group (consisting of 15
individuals)(14).................................................. 3,311,785 12.43%
</TABLE>
4
<PAGE>
- ------------------------
* 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 March 22, 1999, 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., John McStay Investment Counsel and Warburg
Pincus Asset Management is as of December 31, 1998 as reported in their
respective filings with the Securities and Exchange Commission.
(2) Shares beneficially owned, as recorded in this table, expressed as a
percentage of the shares of Common Stock of the Corporation outstanding as
of March 22, 1999. For purposes of calculating each person's beneficial
ownership, any shares subject to options exercisable within 60 days of March
22, 1999 are deemed to be beneficially owned by, and outstanding with
respect to, such person.
(3) Includes 1,184,136 shares of Common Stock which Dr. Tenoso has the right to
acquire pursuant to options exercisable within 60 days.
(4) Includes 770,665 shares held jointly with Mr. Penninger's spouse, and 7,500
shares held in each of two trusts for certain members of his family and of
which his spouse is trustee.
(5) Includes 111,455 shares of Common Stock which Mr. Hurst has the right to
acquire pursuant to options exercisable within 60 days.
(6) Includes 167,874 shares of Common Stock which Mr. Harrison has the right to
acquire pursuant to options exercisable within 60 days.
(7) Includes 79,875 shares of Common Stock which Mr. Currie has the right to
acquire pursuant to options exercisable within 60 days.
(8) Represents Common Stock which Dr. Shaw has the right to acquire pursuant to
options exercisable within 60 days.
(9) Represents Common Stock which Ms. Hoppe has the right to acquire pursuant to
options exercisable within 60 days.
(10) Represents Common Stock which Dr. Simon has the right to acquire pursuant
to options exercisable within 60 days.
(11) Represents Common Stock which Mr. Tilton has the right to acquire pursuant
to options exercisable within 60 days.
(12) Includes 18,000 shares of Common Stock which Mr. Fetzer has the right to
acquire pursuant to options exercisable within 60 days.
(13) Represents Common Stock which Mr. Weisman has the right to acquire pursuant
to options exercisable within 60 days.
(14) Includes 1,994,880 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 27, 1998,
December 28, 1997 and December 29, 1996, the compensation for services in all
capacities to the Corporation of the chief executive officer and the other four
most highly compensated executive officers of the Corporation during the fiscal
year ended December 27, 1998 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS (1) COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- -------------------------------------- --------- --------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Harold J. Tenoso, Ph.D. .............. 1998 245,202 37,116 34,229(2) -- 8,575(3)
President and Chief 1997 200,000 65,000 37,126 120,125 6,208
Executive Officer 1996 200,000 150,000 -- 90,000 4,967
Charles P. Harrison................... 1998 180,002 26,000 -- -- 4,031(3)
Vice President, 1997 165,000 45,000 -- 72,000 2,562
Therapeutic Business Unit 1996 132,692 75,000 68,545 150,000 522
Toby L. Simon, M.D. .................. 1998 165,000 24,000 -- -- 5,904(3)
Vice President, 1997 121,577 50,000 83,365 75,000 1,121
Medical and Scientific Affairs 1996 -- -- -- -- --
P. Ann Hoppe ......................... 1998 160,384 27,000 -- -- 6,832(3)
Vice President, 1997 113,192 60,000 85,348 61,000 1,606
Regulatory Affairs 1996 -- -- -- -- --
Timm M. Hurst ........................ 1998 149,997 28,500 29,888(2) -- 5,158(3)
Vice President, 1997 125,000 45,000 -- 50,050 2,146
Sales & Marketing 1996 125,000 -- -- 55,500 4,018
</TABLE>
- ------------------------
(1) Represents cash bonuses earned in the year stated and paid in the subsequent
year.
(2) Consists of $18,124 and $16,105 for Dr. Tenoso which relates to additional
life insurance and automobile expenses and reimbursement for taxes related
thereto, respectively, and $15,826 and $14,062 for Mr. Hurst which relates
to housing expenses and travel and reimbursement for taxes related thereto,
respectively.
(3) Consists of Corporation contributions to the Corporation's 401(k) plan of
$3,758, $2,423, $4,300, $4,408 and $2,925 for Dr. Tenoso, Mr. Harrison, Dr.
Simon, Ms. Hoppe and Mr. Hurst, respectively, and premiums paid for term
life insurance of $4,817, $1,608, $1,604, $2,424 and $2,233 for Dr. Tenoso,
Mr. Harrison, Dr. Simon, Ms. Hoppe and Mr. Hurst, respectively.
OPTION GRANTS IN LAST FISCAL YEAR
There were no option grants to the Named Executive Officers during the
Corporation's 1998 fiscal year. However, on December 31, 1998, subsequent to the
fiscal year end, the Corporation granted an aggregate of 251,880 options to the
Named Executive Officers.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to (i) each exercise
of options by the Named Executive Officers during the fiscal year ended December
27, 1998, (ii) the number of unexercised options held by each of the Named
Executive Officers who held options as of December 27, 1998 and (iii) the value
of unexercised in-the-money options as of December 27, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT AT FISCAL YEAR END ($)
EXERCISE REALIZED FISCAL YEAR END (#) EXERCISABLE/UNEXERCISABLE
NAME (#) ($) EXERCISABLE/UNEXERCISABLE (1)
- -------------------------------- ----------- ------------ ----------------------- --------------------------
<S> <C> <C> <C> <C>
Harold J. Tenoso, Ph.D. ........ 60,000 $ 1,105,062 1,190,699/74,345 $27,815,246/$1,049,044
P. Ann Hoppe.................... -- -- 34,875/56,625 450,374/795,123
Toby L. Simon, M.D.............. 18,000 145,665 21,375/73,125 264,468/1,100,154
Charles P. Harrison............. 30,000 398,331 124,124/148,876 2,003,527/2,784,939
Timm M. Hurst................... 13,500 194,626 131,455/18,770 2,289,917/242,024
</TABLE>
- ------------------------
(1) Calculated on the basis of the fair market value of $27.00 of the Common
Stock as of December 27, 1998, minus the per share exercise price.
COMPENSATION OF DIRECTORS
Non-Employee directors are paid $2,000 for each Board meeting attended and
$1,000 or $2,000 for each Committee meeting attended, depending on whether such
Committee meeting was held in conjunction with a full Board meeting.
Non-employee 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 Non-Employee Directors
Stock Option Plan (the "NED Plan"), and such plan was amended in May 1998. The
NED Plan currently provides for the grant of options to purchase 36,000 shares
of Common Stock (the "Lump Sum Grant"), which generally vest over four years, 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 9,000 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.
On May 19, 1998, the Board of Directors adopted the Serologicals Corporation
Compensation Plan for Non-Employee Directors (the "Director Compensation Plan").
Pursuant to the Director Compensation Plan, each non-employee director of the
Corporation may elect to receive their Board compensation either in cash, shares
of Common Stock or partly in cash and partly in shares of Common Stock. In
addition, an eligible director may defer the receipt of the Common Stock.
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 2000. Such agreement, as amended in December
1994,
7
<PAGE>
provides for a current base salary of $265,000 per annum, participation in all
bonus and incentive plans of the Corporation and certain insurance, automobile
allowances and other benefits. In addition, pursuant to such agreement, Dr.
Tenoso received options to purchase up to 1,101,357 shares of Common Stock,
756,000 of which have an exercise price of $1.53 per share (of which 262,500
have been exercised as of March 22, 1999) and 345,357 of which have an exercise
price of $2.44 per share (all of which are currently outstanding and
exercisable). The shares issuable upon exercise of the options are subject to
certain registration and anti-dilution rights.
Dr. Tenoso's employment agreement provides that he 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. 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 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 $180,000 per annum, participation in all bonus and
incentive plans of the Corporation available to officers and certain insurance,
automobile allowances and other benefits. In addition, pursuant to such
agreement, Mr. Harrison received options to purchase 225,000 shares of Common
Stock with an exercise price of $6.67 per share (of which 80,000 have been
exercised as of March 22, 1999). 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 $170,000 per annum, participation in all bonus and
incentive plans of the Corporation available to officers and certain insurance
and other benefits. In addition, pursuant to such agreement, Ms. Hoppe received
options to purchase 67,500 shares of Common Stock with an initial exercise price
of $12.67 per share (of which 16,000 have been exercised as of March 22, 1999).
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.
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 $170,000 per annum, participation in all bonus and
incentive plans of the Corporation available to officers and certain insurance
and other benefits. In addition, pursuant to such
8
<PAGE>
agreement, Dr. Simon received options to purchase 90,000 shares of Common Stock
with an initial exercise price of $11.67 per share (of which 22,500 have been
exercised as of March 22, 1999). 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 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.
In March 1998, the Corporation entered into severance agreements with each
named Executive Officer and certain other officers of the Corporation. The
Corporation entered into senior executive severance agreements with Dr. Tenoso
and Mr. Hurst (the "Senior Executive Agreements"). Pursuant to the Senior
Executive Agreements, each executive a party thereto is entitled to a
termination payment equal to 2.99 times such executive's salary and bonus
averaged over the most recent three year period, a gross-up for excise taxes, if
any, the continuation of benefits for three years and the vesting of all
outstanding and unvested stock options in the event that (a) such executive
elects to terminate his or her employment within twelve months following a
"Change in Control" (as defined therein) or (b) within two years after the
occurrence of a Change in Control, either (i) the Corporation terminates such
executive's employment or (ii) such executive terminates his or her employment
following a "Constructive Dismissal" (as defined therein). "Change in Control"
is defined as (a) a majority change in the Board of Directors not approved by
the incumbent Board, (b) any person or group (not including such executive)
acquires (i) beneficial ownership of thirty percent or more of the Corporation's
voting securities or (ii) all or substantially all of the assets of the
Corporation, (c) commencement of a tender offer for capital stock of the
Corporation or (d) the stockholders of the Corporation approve the liquidation
of the Corporation or the sale of all or substantially all of its assets.
"Constructive Dismissal" is defined as (a) demotion, (b) changes in title or
reporting relationship resulting in a diminution of position, duties, authority
or responsibility, (c) significant reduction of duties, (d) material decrease in
benefits or compensation by 10% or greater, (e) significant increase in duties
or responsibilities without a corresponding change of title and increase in
compensation or (f) relocation. The Corporation entered into executive severance
agreements with Messrs. Harrison, Dr. Simon and Ms. Hoppe (the "Executive
Agreements"). The Executive Agreements are substantially equivalent to the
Senior Executive Agreements except that (a) the termination payment provided for
in the Executive Agreements is equal to 2.0 times such executive's salary and
bonus averaged over the most recent three-year period, (b) the benefits are to
be continued for two years and (c) the executive's signatory thereto are not
entitled to trigger such termination payment by resigning within twelve months
following a Change of Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are described under "Meetings of
the Board" and their relationship to the Corporation is described under
"Information as to Nominees and Other Directors."
9
<PAGE>
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 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 predetermined earnings, earnings per
share and divisional earnings targets 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 50(th)--75(th)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 resulting
analysis suggested that the Corporation's compensation practices relating to its
executive officers were less than competitive and inconsistent with its
compensation strategy as stated above. In 1998, the Compensation Committee
altered the mix of the components of executive compensation to better reflect
the Corporation's compensation philosophy and 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 compensation, 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
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 annually granted 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.
10
<PAGE>
Long-term incentives are provided primarily through the granting 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 1998 was determined by his
employment agreement entered into in March 1993, and renewed automatically for
an additional year in March 1999. His overall compensation in 1998 was
determined in a manner to reflect the Compensation Committee's compensation
philosophy and to be competitive with companies in the Corporation's industry
that the Compensation Committee believes are comparable to the Corporation, in
part based on the compensation analysis referred to above. 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, is approved or modified by the
Compensation Committee. For the fiscal year 1998, the Compensation Committee
approved a cash bonus to Dr. Tenoso of $37,116, consistent with the
Corporation's incentive plan and the performance of the Corporation in 1998.
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 to be
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.
11
<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 $153.05 $117.34 $143.48
12/29/96 $152.36 $144.47 $266.30
12/28/97 $153.55 $170.38 $306.52
12/27/98 $191.59 $245.40 $528.26
</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
12/31/95 153.05 117.34 143.48
12/29/96 152.36 144.47 266.30
12/28/97 153.55 170.38 306.52
12/27/98 191.59 245.40 528.26
</TABLE>
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 and directors, the
Corporation believes that all its executive officers, directors and greater than
ten percent beneficial owners complied with all filing requirements applicable
to them, with the exception that James L. Currie was late in filing one Form 4.
12
<PAGE>
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
In accordance with the Corporation's Bylaws, any proposal by a stockholder
which he or she believes should be voted upon at the Annual Meeting must be
submitted in writing to the Secretary of the Corporation not less than 60 days
or more than 90 days prior to the first anniversary of the preceding year's
annual meeting of stockholders; provided, however, that in the event that the
annual meeting with respect to which such notice is to be tendered is not held
within 30 days before or after such anniversary date, notice by the stockholder
to be timely must be received no later than the close of business on the tenth
day following the day on which notice of the date of the annual meeting or
public disclosure thereof was given or made. In accordance with the
Corporation's Certificate of Incorporation, nominations for directors made by
stockholders must be submitted in the same manner. Each such submission must
include certain specified information concerning the proposal or nominee, as the
case may be, and information as to the proponent's ownership of Common Stock of
the Corporation. Proposals or nominations not meeting these requirements will
not be entertained at the Annual Meeting. The Secretary should be contacted in
writing at the address on the first page of this Proxy Statement to make any
submission or to obtain additional information as to the proper form and content
of submissions. In addition, in accordance with the Exchange Act, 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 2000 Proxy Statement and form of proxy on or prior to December
10, 1999.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Corporation for the fiscal year
ended December 27, 1998 (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.
INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the Corporation's
independent auditors for the 1999 fiscal year. Representatives of Arthur
Andersen LLP will be present at the Annual Meeting and will be available to
respond to questions from stockholders.
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 9, 1999
Clarkston, Georgia
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<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
-----------------------------------------------------------------
SEROLOGICALS CORPORATION
-----------------------------------------------------------------
1. Election of Directors.
MATTHEW C. WEISMAN
LAWRENCE E. TILTON
FOR ALL FOR ALL
NOMINEES WITHHOLD 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 nominee's name. Your
shares will be voted "For" the remaining nominee.
CONTROL NUMBER:
RECORD DATE SHARES:
2. 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.
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. / /
-------------------------------
Please be sure to sign and date this Proxy. Date
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- ------------------------------------ ------------------------------------
Stockholder sign here Co-owner sign here
DETACH CARD
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROXY
SEROLOGICALS CORPORATION
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement, each dated April 9, 1999, 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 8:00 a.m., local
time, on May 18, 1999 at the corporate offices of Serologicals Corporation,
780 Park North Boulevard, Suite 110, Clarkston, 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.
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PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE 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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