SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant |X|
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|_| Preliminary Proxy Statement |_| Confidential, For Use of the
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|_| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
BIOSOURCE INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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BIOSOURCE INTERNATIONAL, INC.
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 18, 2003
-----------
TO OUR STOCKHOLDERS:
Notice is hereby given that the 2003 Annual Meeting of Stockholders of
BioSource International, Inc. (the "Company") will be held at the Hyatt Westlake
Plaza, 880 S. Westlake Blvd., Westlake Village, California, 91361, on July 18,
2003 at 9:00 a.m., Pacific Time. The Annual Meeting is being held for the
following purposes:
1. To elect six directors to hold office for one year and until
their respective successors have been elected. The persons
nominated by our Board of Directors, Jean-Pierre L. Conte,
Leonard M. Hendrickson, David J. Moffa, Ph.D., John R.
Overturf, Jr., Robert J. Weltman, and John L. Zabriskie, Ph.D.
are described in the accompanying Proxy Statement;
2. To ratify the appointment of KPMG LLP, as our independent
public accountants for the year ending December 31, 2003; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements
thereof.
Only stockholders of record of our common stock at the close of
business on May 20, 2003, are entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof.
All stockholders of record are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the Annual Meeting,
you are urged to mark, sign and return the enclosed Proxy as promptly as
possible in the postage prepaid envelope enclosed for that purpose. Any
stockholder of record attending the Annual Meeting may vote in person, even
though he or she has returned a Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ CHARLES C. BEST
------------------------------------------
Charles C. Best,
CHIEF FINANCIAL OFFICER AND
EXECUTIVE V.P., FINANCE
Camarillo, California
May 21, 2003
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS
POSSIBLE. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES
REGISTERED IN DIFFERENT NAMES OR AT A DIFFERENT ADDRESS, EACH CARD SHOULD BE
COMPLETED AND RETURNED.
BIOSOURCE INTERNATIONAL, INC.
542 FLYNN ROAD
CAMARILLO, CALIFORNIA 93012
(805) 987-0086
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 18, 2003
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of BioSource International, Inc., a
Delaware corporation (the "Company"), for use at the 2003 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at Hyatt Westlake Plaza, 880 S.
Westlake Blvd., Westlake Village, California, 91361, on July 18, 2003 at 9:00
a.m., Pacific Time, and at any adjournments or postponements thereof, for the
purposes set forth herein and in the attached Notice of Annual Meeting of
Stockholders. Accompanying this Proxy Statement is the Board of Directors' Proxy
for the Annual Meeting, which you may use to indicate your vote on the proposals
described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to us
prior to the Annual Meeting, and which have not been revoked, will unless
otherwise directed by the stockholder be voted in accordance with the
recommendations of the Board of Directors set forth in this Proxy Statement. A
stockholder of record may revoke his or her Proxy at any time before it is voted
either by filing with our Secretary, at our principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote his or her
shares in person.
The close of business on May 20, 2003 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting or at any adjournments or postponements of the Annual Meeting. At
the record date, 9,555,955 shares of common stock, par value $.001 per share,
were outstanding. Our common stock is the only outstanding class of our
securities entitled to vote at the Annual Meeting.
It is anticipated that this Proxy Statement and the accompanying Proxy
will be mailed to stockholders on or about June 5, 2003.
VOTING PROCEDURES
A stockholder is entitled to cast one vote for each share held of
record on the record date on all matters to be considered at the Annual Meeting.
The six nominees for election as directors at the Annual Meeting who receive the
highest number of affirmative votes will be elected. Abstentions and broker
non-votes will be included in the number of shares present at the Annual Meeting
for the purpose of determining the presence of a quorum. Abstentions will be
counted toward the tabulation of votes cast on proposals submitted to
stockholders and will have the same effect as negative votes, while broker
non-votes will not be counted as votes cast for or against such matters.
1
ELECTION OF DIRECTORS
On April 22, 2003, in light of the resignation of our former director,
Robert D. Weist for personal reasons, the Board of Directors, in accordance with
the Bylaws of the Company, passed a resolution reducing the size of the Board to
six members, from its previous seven-member composition. At each annual meeting
of stockholders, the directors are elected, each for a one-year term. Six
directors will be elected at the Annual Meeting.
Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them for the nominees named below. If any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting or any
postponements or adjournments, the Proxies will be voted for such other
nominee(s) as shall be designated by the current Board of Directors to fill any
vacancy. We have no reason to believe that any nominee will be unable or
unwilling to serve if elected as a director.
The Board of Directors proposes the election of the following nominees
as directors:
Jean-Pierre L. Conte
Leonard M. Hendrickson
David J. Moffa, Ph.D.
John R. Overturf, Jr.
Robert J. Weltman
John L. Zabriskie, Ph.D.
If elected, each nominee is expected to serve until the 2004 Annual
Meeting of Stockholders. The six nominees for election as directors at the
Annual Meeting who receive the highest number of affirmative votes will be
elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE NOMINEES LISTED ABOVE.
2
INFORMATION WITH RESPECT TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
director nominees of the Company as of May 15, 2003.
NAME AGE POSITION
- ---- --- --------
Jean-Pierre L. Conte (1) 39 Chairman of the Board of Directors,
Director and Director Nominee
Leonard M. Hendrickson 55 President and Chief Executive Officer,
Director and Director Nominee
David J. Moffa, Ph.D. (1)(2) 60 Director and Director Nominee
John R. Overturf, Jr. (2) 42 Director and Director Nominee
Robert J. Weltman 38 Director and Director Nominee
John L. Zabriskie, Ph.D. (1)(2) 63 Director and Director Nominee
- ----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
- ----------
Brief statements setting forth the principal occupation and employment
during the past five years, the year in which first elected as director and
other information concerning each nominee appear below.
JEAN-PIERRE L. CONTE has served as a director of the Company since
February 2000 and was appointed as Chairman in May 2001. Mr. Conte is a Managing
Director of Genstar Capital LLC, which is the sole general partner of Genstar
Capital Partners II, L.P., a private equity limited partnership, and the
Chairman and Managing Director of Genstar Capital L.P., which is the sole
general partner of Genstar Capital Partners III, L.P. Prior to joining Genstar
in 1995, he was a principal for six years at the NTC Group, Inc., a private
equity investment firm. He is a director of several private companies. Mr. Conte
earned a Masters of Business Administration from Harvard University Graduate
School of Business and a Bachelor of Arts from Colgate University. Mr. Conte has
been appointed to the Board of Directors pursuant to an investor rights
agreement among Genstar, Stargen and us, which is described under "Relationships
and Related Transactions."
LEONARD M. HENDRICKSON became President and Chief Executive Officer on
October 15, 2001. He has been a director of BioSource since October 1993. Prior
to his position as President and Chief Executive Officer of the Company, Mr.
Hendrickson was President of Isotope Products Laboratories from February 1992 to
October 2001. He also held senior positions with Amersham, Covance and
Microchemics. Mr. Hendrickson holds a Bachelor of Science degree in Chemical
Engineering from the University of Pennsylvania and a Masters in Business
Administration from American University in Washington, D.C.
DAVID J. MOFFA, PH.D. has been a director of the Company since April
1995. Dr. Moffa serves as the Regional Director and as special projects director
for Lab Corporation of America, Inc. located in Fairmont, West Virginia,
positions he has held since 1982 and 1984, respectively. In addition, Dr. Moffa
currently serves as a Director of LabCorp in Pittsburgh, Pennsylvania, a
position he has held since 1985 and is Chairman and CEO of ClinServices LLC
since 1999. Dr. Moffa also serves as an advisor and consultant to various
diagnostic, scientific and health care facilities. Dr. Moffa also serves on a
number of committees and boards of directors of various privately held companies
and governmental offices. Dr. Moffa has completed a post doctoral fellowship in
Clinical Biochemistry at the West Virginia University National Institutes of
Health, holds a Ph.D. in Medical Biochemistry from the West Virginia University
School of Medicine, a Masters of Science degree in Biochemistry from West
Virginia University and a Bachelor of Arts degree in Pre-Medicine from West
Virginia University.
JOHN R. OVERTURF, JR. has been a director of the Company since
September 1993. Mr. Overturf serves as the President of R.O.I., Inc., a private
investment company, a position he has held since July 1993. He also serves as
3
President of the Combined Penny Stock Fund, Inc., a closed-end stock market
fund, a position he has held since August 1996. From September 1993 until
September 1996, Mr. Overturf served as Vice President of The Rockies Fund, Inc.,
a closed-end stock market fund. Mr. Overturf holds a Bachelor of Science degree
in Finance from the University of Northern Colorado.
ROBERT J. WELTMAN has served as a director of BioSource since February
2000. He is a Managing Director of Genstar Capital, L.P., the sole general
partner of Genstar Capital Partners II, L.P., a private equity limited
partnership. Mr. Weltman joined Genstar in August 1995. Prior to joining
Genstar, from July 1993 to July 1995, Mr. Weltman was an Associate with
Robertson, Stephens & Company, an investment banking firm. Mr. Weltman holds an
AB degree in Chemistry from Princeton University. Mr. Weltman has been appointed
to the Board of Directors pursuant to an investor rights agreement among
Genstar, Stargen and us, which is described under "Relationships and Related
Transactions."
JOHN L. ZABRISKIE, PH.D. has served as a director of BioSource since
July 2002. He is Co-founder and has served as Director of Puretech Ventures, a
venture creation company since 2001. From 1997 to 2000 Dr. Zabriskie was
Chairman and Chief Executive Officer of NEN Life Science Products, Inc., a
leading supplier of kits for labeling and detection of DNA. From 1995 to 1997,
Dr. Zabriskie was President and Chief Executive Officer of Pharmacia and Upjohn,
Inc., a Fortune 500 pharmaceutical company formed by the merger of Pharmacia AB
of Sweden and the Upjohn Company of Kalamazoo, Michigan. From 1965 until joining
Upjohn in 1994, Dr. Zabriskie was employed by Merck and Co., Inc. He began his
career at Merck as a chemist in 1965 and held various positions including
President of Merck Sharp & Dohme and Executive Vice President of Merck and Co.,
Inc. He has served on a number of boards for health care and academic
institutions and currently serves on the Board of Directors of Kellogg Co.,
Cubist Pharmaceutical, Inc., Biomira, Inc., Array BioPharma, and MacroChem Corp.
Dr. Zabriskie received his A.B. degree in Chemistry from Dartmouth College
(N.H.) in 1961 and his Ph.D. in Organic Chemistry from the University of
Rochester (N.Y.) in 1965.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held six meetings during fiscal 2002. No
director attended less than 75% of all the meetings of the Board of Directors
and those committees on which he served in fiscal 2002.
The Board of Directors maintains an Audit Committee and a Compensation
Committee. The Board of Directors does not maintain a Nominating Committee. The
Audit Committee currently consists of Messrs. Moffa, Overturf, and Zabriskie.
Dr. Moffa was elected to the Audit Committee on September 19, 2002, replacing
Mr. Weltman, who resigned from the committee on September 19, 2002, due to his
affiliated status to the Company, as defined under the current NASDAQ continued
listing requirements related to audit committee member independence. Dr.
Zabriskie was elected to the Audit Committee on April 22, 2003, replacing Robert
D. Weist, who resigned from our Board on April 22, 2003 for personal reasons.
The Audit Committee recommends the engagement of our independent public
accountants, reviews the scope of the audit to be conducted by such independent
public accountants, and meets with the independent public accountants and the
Chief Financial Officer to review matters relating to our financial statements,
our accounting principles and our system of internal accounting controls, and
reports its recommendations as to the approval of our financial statements to
the Board of Directors. Six meetings of the Audit Committee were held during the
year ended December 31, 2002.
The role and responsibilities of the Audit Committee are set forth in a
written Charter adopted by the Board of Directors. The Audit Committee reviews
and reassesses the Charter annually and recommends any changes to the Board of
Directors for approval. After reassessing the provisions of the Audit
Committee's prior Charter, and in light of recent changes in the securities
laws, the Audit Committee recommended, and the Board of Directors approved, an
Amended and Restated Audit Committee Charter on April 22, 2003. The Amended and
Restated Audit Committee Charter is attached to this proxy statement as
"Appendix A."
The Compensation Committee currently consists of Messrs. Conte, Moffa
and Zabriskie. Dr. Zabriskie was elected to the Compensation Committee on
September 19, 2002, replacing Leonard Hendrickson, who resigned from the
Compensation Committee on July 3, 2002. The Compensation Committee is
responsible for considering and making recommendations to the Board of Directors
regarding executive compensation and is responsible for administering our stock
option and executive incentive compensation plans. Eight meetings of the
Compensation Committee were held during the year ended December 31, 2002.
4
COMPENSATION OF DIRECTORS
Our non-employee corporate directors, except for Dr. Zabriskie,
currently are paid $2,000 for each board meeting attended, and $1,000 per year
for service on a board committee. In addition, non-employee directors, except
Dr. Zabriskie, receive an annual grant of 4,000 non-statutory stock options in
December of each year, exercisable at the fair market value of our common stock
on the date of grant, and which fully vest on the date of grant. Dr. Zabriskie
received 55,000 stock options upon his acceptance as a member of the Board of
Directors of the Company in July 2002. 20,000 of these stock options vested
immediately, 17,500 stock options will vest on July 18, 2003 and 17,500 stock
options will vest on the date of the 2004 Annual Meeting of Stockholders. Dr.
Zabriskie does not receive cash remuneration, nor do we currently anticipate
making any further stock option grants for his services on the Board. We also
pay out of pocket expenses incurred by all of our directors in connection with
their attendance.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, as to the Chief Executive Officer and
as to each of the other four most highly compensated officers whose compensation
exceeded $100,000 during the last fiscal year (the "Named Executive Officers"),
information concerning all compensation paid for services to us in all
capacities for each of the three years ended December 31 indicated below.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- ----------------------
YEAR OTHER NUMBER OF
ENDED ANNUAL SECURITIES ALL OTHER
NAME AND DECEMBER COMPEN- UNDERLYING COMPEN-
PRINCIPAL POSITION (1) 31, SALARY BONUS SATION OPTIONS SATION
- ------------------------------ -------- ---------- --------- --------- ---------- ---------
Leonard M. Hendrickson........ 2002 $250,000 $99,650 $ 1,548(4) 0
Chief Executive Officer and 2001 49,000(2) 90,000(3) 173(4) 280,000
President
David Thrower................. 2002 $124,506(5) $ 0 $14,053(6) 0
Senior Vice President, 2001 200,000 23,000 324(4) 110,000
Sales and Marketing 2000 28,750(5) 8,750 27(4) 235,000 $13,224(7)
Charles C. Best............... 2002 $166,400 $59,023 324(4) 0
Chief Financial Officer 2001 160,000 23,500 325(4) 87,500
and Executive Vice President 2000 142,200 22,500 489(4) 20,000
- ----------
<FN>
(1) For a description of employment agreements between certain executive
officers and the Company, see "Employment Agreements with Executive
Officers" below.
(2) Mr. Hendrickson joined the Company on October 15, 2001.
(3) Mr. Hendrickson received a signing bonus on October 15, 2001
(4) Consists of group life insurance premiums paid by the Company.
(5) Mr. Thrower joined the Company on November 1, 2000 and resigned from
the Company on July 26, 2002.
(6) Consists of $13,685 of accrued vacation paid by the Company upon
termination and $188 for a group life insurance premium paid by the
Company.
(7) Relocation expenses.
</FN>
5
OPTION GRANTS IN LAST FISCAL YEAR
No grants of stock options were made during the fiscal year ended December 31,
2002 to the Named Executive Officers.
OPTION EXERCISES AND STOCK OPTIONS HELD AT FISCAL YEAR END
The following table sets forth, for those Named Executive Officers who held
stock options at fiscal year end, certain information regarding options
exercised in fiscal year 2002, if any, the number of shares of common stock
underlying stock options held and the value of options held at fiscal year end
based upon the last reported sales price of the common stock on the NASDAQ
market on December 31, 2002 ($5.99 per share).
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ON VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME EXERCISE REALIZED DECEMBER 31, 2002 DECEMBER 31, 2002
- ---- -------- -------- ----------------- -----------------
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--- --- ----------- ------------- ----------- -------------
Leonard M. Hendrickson... -- -- 140,666 198,334 $191,163 $198,334
Charles C. Best.......... -- -- 62,124 71,786 48,450 7,500
6
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
We have entered into an employment agreement with Leonard M.
Hendrickson to serve as our President and Chief Executive Officer, effective as
of October 15, 2001. Pursuant to this agreement Mr. Hendrickson receives an
annual base salary of $250,000, which we may increase, at the Board's sole
discretion, at the end of each year of his employment. In addition to the base
salary to be paid to Mr. Hendrickson, the Company paid a one time signing bonus
to him in the amount of $90,000 upon the commencement of his employment. In
addition, Mr. Hendrickson is eligible to receive an annual bonus under the
Company's management incentive plan. The agreement terminates on December 31,
2004. In the event that Mr. Hendrickson's employment is terminated without cause
or due to a "change of control" during the term of the agreement, the Company is
obligated to continue paying Mr. Hendrickson's then-current base salary for a
period of 12 months following the effective date of such termination. Also, in
certain instances involving a "change of control," all stock options which have
been granted to Mr. Hendrickson that are unvested at the time of such change of
control shall become immediately vested and exercisable. According to our
agreement with Mr. Hendrickson, a "change of control" occurs if (i) any person
or entity (or group of related persons or entities acting in concert) acquires
shares of capital stock of the Company entitled to exercise 35% or more of the
total voting power represented by all shares of capital stock of the Company
then outstanding; or (ii) the Company enters into an agreement to sell or
otherwise transfer all or substantially all of its assets or enters into an
agreement to merge, consolidate or reorganize with any other corporation or
entity, as the result of which less than 75% of the total voting power
represented by the capital stock or other equity interests of the corporation or
entity to which the Company's assets are sold or transferred or surviving such
merger, consolidation or reorganization are held by the persons and entities who
were holders of common stock of the Company immediately prior to such agreement;
or (iv) the Company issues otherwise than on a pro rata basis additional shares
of capital stock representing (after giving effect to such issuance) more than
35% of the total voting power of the Company; or (v) the persons who were the
directors of the Company as of October 15, 2001 cease to comprise a majority of
the Board of Directors of the Company.
Effective as of December 17, 1999, Charles C. Best, our Chief Financial
Officer, entered into a separation agreement with us. In the event we experience
a "change of control," and the employment of Mr. Best is terminated within one
year of the "change of control," we are obligated to continue to pay Mr. Best
his then-current base salary for a period of 12 months following the effective
date of such termination. For purposes of Mr. Best's separation agreement, a
"change of control" occurs if (i) any person or entity acquires shares of our
capital stock entitled to exercise 35% or more of the total voting power of our
stockholders, (ii) we enter into an agreement to sell or otherwise transfer all
or substantially all of our assets or to effect a merger, consolidation or
reorganization with any other corporation or entity, which results in less than
75% of the total voting power represented by the capital stock or other equity
interests of the corporation or entity to which our assets are sold or
transferred or surviving such merger, consolidation or reorganization being held
by the persons and entities who were holders of our common stock immediately
prior to such agreement, (iii) we issue, otherwise than on a pro rata basis,
additional shares of capital stock representing (after giving effect to such
issuance) more than 35% of the total voting power of our stockholders, or (iv)
if the persons who were our directors as of the date of the separation agreement
cease to comprise a majority of our Board of Directors.
Effective May 18, 2001, David Thrower, our former Senior Vice President
of Sales and Marketing, entered into a separation agreement with us. In the
event the Company terminated Mr. Thrower's employment with the Company other
than for cause at any time (i) prior to July 15, 2002, or (ii) within six months
following a "change of control," we were required to pay Mr. Thrower his
then-current base salary for a period of 12 months following the effective date
of such termination. In addition, if the employment of Mr. Thrower was
terminated within six months of a "change of control," all stock options which
had been granted to Mr. Thrower that were unvested at the time of such change of
control would have become immediately vested and exercisable. According to our
agreement with Mr. Thrower, a "change of control" was defined as the acquisition
by any person or entity unaffiliated with Genstar Capital LLC of capital stock
representing at least 40% of the total fully diluted shares of the Company. Mr.
Thrower resigned from the Company on July 26, 2002 and did not receive any of
the described compensation.
7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Zabriskie,
Moffa and Conte. Dr. Zabriskie joined the Compensation Committee on September
19, 2002, replacing Leonard Hendrickson, who resigned from the Compensation
Committee on July 3, 2002. The Compensation Committee is responsible for
considering and making recommendations to the Board of Directors regarding
executive compensation and is responsible for administrating our stock option
and executive incentive compensation plans. None of the members of the
Compensation Committee is a current officer or employee of the Company. None of
our executive officers or Directors served as a member of the board of directors
of any other entity of which an executive officer or Director served on our
Board of Directors.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors determines
compensation paid to each of our executive officers and administers our Plans.
The objectives of our executive compensation policy include (1)
attracting, motivating and retaining talented executives by providing
compensation that is competitive with comparable companies, (2) maintaining
compensation levels that are consistent with the company's financial objectives
and operating performance and (3) aligning the interests of executive officers
and stockholders through bonuses based on the company's performance and by
providing equity compensation. Our compensation program currently consists of
base salary and incentive compensation in the form of cash bonuses and/or stock
options.
In arriving at an initial compensation offer to an individual, the
Compensation Committee considers determinants of the individual's market value
including experience, education, accomplishments and reputation, as well as the
level of responsibility to be assumed, in relation to the market value of such
qualifications and industry standards. When determining subsequent adjustments
to an individual's annual salary, the Compensation Committee also evaluates the
importance to stockholders of that person's continued service. The Compensation
Committee also reviews the annual salaries of our executive officers in relation
to the company's financial performance, annual budgeted financial goals and its
position in the industry. This is a judgment process, exercised by the
Compensation Committee with the advice of management and other consultants.
Cash bonuses were awarded during the past year, which were determined
on the basis of accomplishments measured against a management incentive plan
that was prepared by management and approved by the Compensation Committee.
Stock options are prospective incentives, aimed at keeping and motivating key
people by letting them share in the value they create for stockholders. They are
awarded at times deemed appropriate by the Compensation Committee in amounts
intended to secure the full attention and best efforts of executives upon whose
future performance the company's success will depend.
Effective as of October 15, 2001, Leonard M. Hendrickson became the
Company's President and Chief Executive Officer. In 2002, Mr. Hendrickson's
annual base salary was $250,000. The Committee may increase this compensation,
in its sole discretion, at the end of each year of his employment. In addition
to the base salary paid to Mr. Hendrickson, the Company paid a one time signing
bonus to him in the amount of $90,000 upon the commencement of his employment in
2001. In connection with his initial engagement, the Company also granted Mr.
Hendrickson options to purchase 280,000 shares of the Company's common stock.
Mr. Hendrickson's compensation package was established based upon the
Compensation Committee's comparative analysis of other similarly situated chief
executive officers, review of Mr. Hendrickson's prior experience and expected
contributions, and consideration of the relative importance of his respective
position in terms of achieving the Company's objectives, Additionally, the
Compensation Committee consulted with a professional recruiting firm hired as a
consultant to the Company to assist in the process of retaining a new President
and Chief Executive Officer. Mr. Hendrickson also participates in the management
incentive plan approved by the Compensation Committee.
COMPENSATION COMMITTEE
David J. Moffa, Ph.D.
Jean-Pierre L. Conte
Leonard M. Hendrickson (1)
John L. Zabriskie, Ph.D. (2)
(1) Resigned from the compensation committee on July 3, 2002
(2) Elected to the compensation committee on September 19, 2002
8
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. All of the members of
the Audit Committee are independent (as independence is defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards).
In discharging its responsibility for oversight of the audit process,
the Audit Committee obtained from the independent auditors, KPMG LLP, a formal
written statement describing any relationships between the auditors and the
Company that might bear on the auditors' independence consistent with the
Independent Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," discussed with the auditors any relationships that might impact the
auditors' objectivity and independence and satisfied itself as to the auditors'
independence.
The Audit Committee discussed and reviewed with the independent
auditors the communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent auditors' examination of the financial statements for the year
ended December 31, 2002.
The Committee reviewed the audited financial statements of the Company
as of and for the fiscal year ended December 31, 2002, with management and the
independent auditors. Management has the responsibility for preparation of the
Company's financial statements and the independent auditors have the
responsibility for examination of those statements. Based upon the
above-mentioned review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board that the Company's
audited financial statements be included in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, for filing with the Securities Exchange
Commission (the "SEC").
AUDIT COMMITTEE
John R. Overturf, Jr.
Robert J. Weltman (1)
Dave Moffa (2)
Robert D. Weist (3)
John L. Zabriskie, Ph.D. (4)
(1) Resigned from the Audit Committee on September 19, 2002
(2) Elected to the Audit Committee on September 19, 2002
(3) Resigned from the Board of Directors and the Audit Committee on April
22, 2003
(4) Elected to the Board of Directors on July 17, 2002 and to the Audit
Committee on April 22, 2003
9
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires our
executive officers, directors, and persons who own more than ten percent of a
registered class of our equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Executive officers, directors and greater-than-ten percent stockholders are
required by SEC regulations to furnish us with all Section 16(a) forms they
file. Based solely on our review of the copies of the forms received by us and
written representations from certain reporting persons that they have complied
with the relevant filing requirements, we believe that, during the year ended
December 31, 2002, all our executive officers, directors and greater-than-ten
percent stockholders complied with all Section 16(a) filing requirements, except
for the following; Robert D. Weist, who resigned from the Board in April 2003
filed two late Form 4s, each reporting late one transaction that occurred in
November 2002 and December 2002, respectively; and each of John R. Overturf,
Jr., David J. Moffa, Jean-Pierre L. Conte, and Robert J. Weltman filed one late
Form 4, each reporting late one transaction that occurred for each in December
2002.
RELATIONSHIPS AND RELATED TRANSACTIONS
WITH DIRECTORS AND EXECUTIVE OFFICERS
Since the beginning of our last fiscal year, there have been no
transactions, including loans or other indebtedness, to which we or our
subsidiaries were a party, and in which any of our directors, officers,
significant beneficial owners, or the respective families of the foregoing
persons, had a direct or indirect material interest. No such transactions are
currently proposed.
10
PERFORMANCE GRAPH
The following graph sets forth the percentage change in cumulative
total shareholder return of our common stock during the period from December 31,
1996 to December 31, 2002, compared with the cumulative returns of the Nasdaq
Stock Market (U.S. Companies) Index, the JP Morgan H & Q Biotechnology Index and
the NASDAQ Biotechnology index. The comparison assumes $100 was invested on
December 31, 1996 in our common stock and in each of the foregoing indices. The
stock price performance on the following graph is not necessarily indicative of
future stock price performance.
[PERFORMANCE GRAPH OMITTED]
BIOSOURCE INTL INC
Cumulative Total Return
----------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01 12/02
BIOSOURCE INTERNATIONAL, INC. 100.00 92.73 42.73 115.46 222.73 120.73 87.13
NASDAQ STOCK MARKET (U.S.) 100.00 122.49 172.70 320.29 192.82 152.97 105.74
JP MORGAN H & Q BIOTECHNOLOGY 100.00 101.22 154.14 329.48 354.22 294.61
NASDAQ BIOTECHNOLOGY 100.00 104.48 163.01 376.13 470.24 393.67 244.65
11
PROPOSAL NO. 2:
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors recommended and the Board
has selected, subject to ratification by a majority vote of the shareholders in
person or by proxy at the Annual Meeting, the firm of KPMG LLP to continue as
our independent public accountant for the current fiscal year ending December
31, 2003. KPMG has served as the principal independent public accounting firm
utilized by us during the years ended December 31, 1994 through 2002. We
anticipate that a representative of KPMG will attend the Annual Meeting for the
purpose of responding to appropriate questions. At the Annual Meeting, a
representative of KPMG will be afforded an opportunity to make a statement if
they so desire.
The following table presents fees for professional audit services
rendered by KPMH LLP for the audit of the Company's financial statements for
2001 and 2002, and fees billed for other services rendered by KPMG LLP.
2002 2001
-------- --------
Audit fees ......................... $160,250 $144,943
Audit related fees (1) ............. 0 23,847
-------- --------
Audit and related fees .... 160,250 168,790
Tax fees (2) ....................... 108,572 37,898
All other fees ..................... 0 0
-------- --------
Total fees ................ $268,822 $206,688
======== ========
- ----------
(1) Audit related fees consist principally of fees for certain due
diligence services
(2) Tax fees consisted of fees for tax consultation and tax compliance
services
The Audit Committee of the Board of Directors has reviewed and
considered whether the provision of services other than those services related
to the audit of the annual financial statements and reviews of the quarterly
financial statements is compatible with maintaining KPMG's independence as our
principal independent accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL NO.
2 RATIFYING THE APPOINTMENT OF KPMG, LLP AS OUR INDEPENDENT AUDITORS.
12
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth as of May 15, 2003 certain information relating
to the ownership of our common stock by (i) each person known by us to be the
beneficial owner of more than five percent of the outstanding shares of our
common stock, (ii) each of our directors, (iii) each of our executive officers,
and (iv) all of our executive officers and directors as a group. Except as may
be indicated in the footnotes to the table and subject to applicable community
property laws, each such person has the sole voting and investment power with
respect to the shares owned. Unless otherwise indicated, the address of each
person listed is in care of BioSource International, Inc., 542 Flynn Road,
Camarillo, California 93012, and the address of Messrs. Conte, Weltman and
Genstar Capital LLC is Four Embarcadero Center, Suite 1900, San Francisco,
California 94111.
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY
NAME AND ADDRESS OWNED (1) PERCENT (1),(2)
---------------- ---------------- ---------------
Genstar Capital LLC (3)................ 3,444,856 31.7%
Jean-Pierre L. Conte (3)............... 3,396,189 31.3%
Kennedy Capital Management, Inc. (4)... 759,428 7.9%
Dimensional Funds Advisors Inc. (5).... 595,300 6.2%
Royce & Associates LLC (6) 580,000 6.1%
Bricoleur Capital Management LLC (7) 493,510 5.2%
Leonard M. Hendrickson (8)............. 233,499 2.4%
John L. Zabriskie, Ph.D. (9) 35,000 *
David J. Moffa, Ph.D. (10)............. 43,900 *
John R. Overturf, Jr. (11)............. 29,600 *
Robert J. Weltman (12)................. 15,333 *
Charles C. Best (13)................... 81,602 *
All of the directors and executive
officers as a group (14)............ 3,835,123 34.2%
- ----------
* Less than one percent.
(1) Under Rule 13d-3, certain shares may be deemed to be beneficially owned
by more than one person (if, for example, persons share the power to
vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right
to acquire the shares (for example, upon exercise of an option) within
60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially
owned by such person (and only such person) by reason of these
acquisition rights. As a result, the percentage of outstanding shares
of any person as shown in this table does not necessarily reflect the
person's actual ownership or voting power with respect to the number of
shares of common stock actually outstanding at May 15, 2003.
(2) Percentage ownership is based on 9,555,955 shares of common stock
outstanding as of May 15, 2003.
(3) Genstar Capital Partners II, L.P. holds 2,032,809 shares of common
stock and 1,262,542 shares of common stock issuable upon exercise of
warrants and Stargen II LLC holds 34,380 shares of common stock and
24,458 shares of common stock issuable upon exercise of warrants, all
of which are currently convertible or exercisable. Includes 12,000
stock options held by Mr. Conte and 12,000 stock options held by Mr.
Weltman. In addition, Mr. Conte holds 30,000 shares of common stock,
Richard F. Hoskins holds 16,667 shares of common stock, Mr. Weltman
holds 3,333 shares of common stock, and Richard D. Paterson holds
16,667 shares of common stock. Genstar Capital LLC is the general
partner of Genstar Capital Partners II, L.P. Mr. Conte, Mr. Hoskins and
Mr. Paterson are the managers and managing directors of Genstar Capital
LLC and are members of Stargen, and Mr. Paterson is the Administrative
Member of Stargen. In such capacities Messrs. Conte, Hoskins and
Paterson may be deemed to beneficially own shares of common stock
beneficially held by Genstar Capital Partners and Stargen, but disclaim
such beneficial ownership, except to the extent of their economic
interest in these shares.
13
Messrs. Conte, Hoskins, Paterson, Genstar Capital LLC, Genstar Capital
Partners II, L.P. and Stargen II LLC may be deemed to be acting as a
group in relation to their respective holdings in BioSource but do not
affirm the existence of any such group.
(4) As disclosed in the Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2003 by Kennedy Capital Management, Inc.
(5) As disclosed in the Schedule 13G filed with the Securities and Exchange
Commission on February 3, 2003 by Dimensional Fund Advisors, Inc.
(6) As disclosed in the Schedule 13G filed with the Securities and Exchange
Commission on February 3, 2003 by Royce & Associates LLC.
(7) As disclosed in the Schedule 13G filed with the Securities and Exchange
Commission on February12, 2003 by Bricoleur Capital Management LLC.
(8) Includes (i) 181,499 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003; (ii) 48,000 shares of
common stock owned; and (iii) 4,000 shares of common stock held of
record by two of Mr. Hendrickson's minor children;
(9) Includes 20,000 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003.
(10) Includes (i) 36,500 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003; (ii) 550 shares of common
stock held solely by Dr. Moffa's spouse; (iii) 4,000 shares of common
stock held jointly with Dr. Moffa's spouse; and (iv) 2,850 shares of
common stock held directly.
(11) Includes (i) 24,000 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003; and (ii) 5,600 shares of
common stock owned.
(12) Includes (i) 3,333 shares of common stock held directly; (ii) 12,000
shares of common stock reserved for issuance upon exercise of stock
options that are currently exercisable or are exercisable within 60
days of May 15, 2003. Mr. Weltman is also a Principal of Genstar
Capital LP and a member, but not a managing member, of Stargen II LLC.
Mr. Weltman does not have power to vote or dispose of, or to direct the
voting or disposition of, any securities beneficially owned by Genstar
Capital LLC or Stargen II LLC. Mr. Weltman disclaims that he
beneficially owns any shares of common stock beneficially owned by
Genstar Capital LLC or Stargen II LLC, except to the extent of his
economic interest in shares owned by Genstar Capital LLC or Stargen II
LLC.
(13) Includes 81,602 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003.
(14) Includes (i) 367,601 shares of common stock reserved for issuance upon
exercise of stock options that are currently exercisable or are
exercisable within 60 days of May 15, 2003; (ii) 1,287,000 shares of
common stock reserved for issuance upon the exercise of warrants and
(iii) includes 2,180,522 shares of common stock owned.
14
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, promulgated by the SEC, any stockholder of record who intends to
present a proposal at the next Annual Meeting of Stockholders for inclusion in
our Proxy Statement and Proxy form relating to such Annual Meeting must submit
such proposal to us at our principal executive offices no later than February 6,
2004. In order for proposals by stockholders not submitted in accordance with
Rule 14a-8 to have been timely within the meaning of Rule 14a-4(c) under the
Securities Exchange Act of 1934, as amended, that proposal must have been
submitted so that it is received no later than April 21, 2004. In addition, in
the event a stockholder proposal is not received by us by April 21, 2004, the
Proxy to be solicited by the Board of Directors for the next Annual Meeting will
confer discretionary authority on the holders of the Proxy to vote the shares if
the proposal is presented at the next Annual Meeting without any discussion of
the proposal in the Proxy Statement for such meeting.
SOLICITATION OF PROXIES
It is expected that the solicitation of proxies will be primarily by
mail. The cost of solicitation by management will be borne by us. We will
reimburse brokerage firms and other persons representing beneficial owners of
shares for their reasonable disbursements in forwarding solicitation material to
such beneficial owners. Proxies may also be solicited by certain of our
directors and officers, without additional compensation, personally or by mail,
telephone, telegram or otherwise for the purpose of soliciting such proxies.
ANNUAL REPORT ON FORM 10-K
OUR ANNUAL REPORT ON FORM 10-K, WHICH HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2002, WILL BE
MADE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO CHARLES C.
BEST, CHIEF FINANCIAL OFFICER, BIOSOURCE INTERNATIONAL, INC., 542 FLYNN ROAD,
CAMARILLO, CALIFORNIA 93012
ON BEHALF OF THE BOARD OF DIRECTORS
/S/ CHARLES C. BEST
------------------------------------
Charles C. Best
CHIEF FINANCIAL OFFICER AND
EXECUTIVE V.P., FINANCE
Camarillo, California
May 21, 2003
15
APPENDIX A
AMENDED AND RESTATED
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF BIOSOURCE INTERNATIONAL, INC.
This Charter identifies the purpose, composition, meeting requirements,
committee responsibilities, annual evaluation procedures and investigations and
studies of the Audit Committee (the "COMMITTEE") of the Board of Directors (the
"BOARD") of BioSource International, Inc., a Delaware corporation (the
"COMPANY").
I. PURPOSE
The Committee has been established to: (a) assist the Board in its
oversight responsibilities regarding (1) the integrity of the Company's
financial statements, (2) the Company's compliance with legal and regulatory
requirements, (3) the independent accountant's qualifications and independence
and (4) the Company's internal and disclosure controls; (b) prepare the report
of the audit committee required by the United States Securities and Exchange
Commission (the "SEC") for inclusion in the Company's annual proxy statement;
(c) retain and terminate the Company's independent accountant; (d) approve audit
and non-audit services to be performed by the independent accountant; and (e)
perform such other functions as the Board may from time to time assign to the
Committee. In performing its duties, the Committee shall seek to maintain an
effective working relationship with the Board, the independent accountant and
management of the Company.
II. COMPOSITION
The Committee shall be composed of at least three, but not more than
five, members (including a Chairperson), all of whom shall be "independent
directors," as such term is defined in the rules and regulations of the SEC and
the Nasdaq National Market System ("NASDAQ"). The members of the Committee and
the Chairperson shall be selected by the Board and serve at the pleasure of the
Board. A Committee member (including the Chairperson) may be removed at any
time, with or without cause, by the Board. The Board may designate one or more
independent directors as alternate members of the Committee, who may replace any
absent or disqualified member or members at any meetings of the Committee. No
person may be made a member of the Committee if his or her service on the
Committee would violate any restriction on service imposed by any rule or
regulation of the SEC or any securities exchange or market on which shares of
the common stock of the Company are traded. The Chairperson shall maintain
regular communication with the chief executive officer, chief financial officer
and the lead partner of the independent accountant.
All members of the Committee shall have a working familiarity with
basic finance and accounting practices and be able to read and understand
financial statements, and at least one member of the Committee shall be a
"financial expert." A member shall be deemed a "financial expert" if the Board
determines that such person has, through education and experience as a public
accountant or auditor, or a principal financial officer, controller, or
principal accounting officer of a company that at the time the person held such
position was required to file periodic reports with SEC, or experience in one or
more positions that involve the performance of similar functions (or that
results, in the judgment of the Board, in the person having similar expertise
and experience), the following attributes:
o An understanding of generally accepted accounting principles
and financial statements;
o Experience applying such generally accepted accounting
principles in connection with the accounting for estimates,
accruals, and reserves that are generally comparable to the
estimates, accruals, and reserves, if any, used in the
registrant's financial statements;
o Experience preparing or auditing financial statements that
present accounting issues that are generally comparable to
those raised by the registrant's financial statements;
o Experience with internal controls and procedures for financial
reporting; and
o An understanding of audit committee functions.
16
Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Company or
an outside consultant.
Except for Board and Committee fees, a member of the Committee shall
not be permitted to accept any fees paid directly or indirectly for services as
a consultant, legal advisor or financial advisor or any other fees prohibited by
the rules of the SEC and Nasdaq. In addition, no member of the Committee may be
an "affiliated person" of the Company or any of its subsidiaries (as such term
is defined by the SEC). Members of the Committee may receive their Board and
Committee fees in cash, Company stock or options or other in-kind consideration
as determined by the Board or the Compensation Committee, as applicable, in
addition to all other benefits that other directors of the Company receive. No
director may serve on the Committee, without the approval of the Board, if such
director simultaneously serves on the audit committee of more than three public
companies.
III. MEETING REQUIREMENTS
The Committee shall meet as necessary, but at least quarterly, to
enable it to fulfill its responsibilities. The Committee shall meet at the call
of any member of the Committee, preferably in conjunction with regular Board
meetings. The Committee may meet by telephone conference call or by any other
means permitted by law or the Company's Bylaws. A majority of the members of the
Committee shall constitute a quorum. The Committee shall act on the affirmative
vote of a majority of members present at a meeting at which a quorum is present.
Without a meeting, the Committee may act by unanimous written consent of all
members. The Committee shall determine its own rules and procedures, including
designation of a chairperson pro tempore, in the absence of the Chairperson, and
designation of a secretary. The secretary need not be a member of the Committee
and shall attend Committee meetings and prepare minutes. The Committee shall
keep written minutes of its meetings, which shall be recorded or filed with the
books and records of the Company. Any member of the Board shall be provided with
copies of such Committee minutes if requested.
The Committee may ask members of management, employees, outside
counsel, the independent accountant or others whose advice and counsel are
relevant to the issues then being considered by the Committee, to attend any
meetings and to provide such pertinent information as the Committee may request.
The Chairperson of the Committee shall be responsible for leadership of
the Committee, including preparing the agenda, presiding over Committee
meetings, making Committee assignments and reporting the Committee's actions to
the Board from time to time (but at least once each year) as requested by the
Board.
As part of its responsibility to foster free and open communication,
the Committee should meet periodically with management and the independent
accountant in separate executive sessions to discuss any matters that the
Committee or any of these groups believe should be discussed privately. In
addition, the Committee or at least its Chairperson should meet with the
independent accountant and management quarterly to review the Company's
financial statements prior to their public release consistent with the
provisions set forth below in SECTION IV. The Committee may also meet from time
to time with the Company's investment bankers, investor relations professionals
and financial analysts who follow the Company.
IV. COMMITTEE RESPONSIBILITIES
In carrying out its responsibilities, the Committee's policies and
procedures should remain flexible to enable the Committee to react to changes in
circumstances and conditions so as to ensure the Company remains in compliance
with applicable legal and regulatory requirements. In addition to such other
duties as the Board may from time to time assign, the Committee shall have the
following responsibilities:
A. OVERSIGHT OF THE FINANCIAL REPORTING PROCESSES
1. In consultation with the independent accountant and
management, review the integrity of the
organization's financial reporting processes, both
internal and external.
2. Review and approve all related-party transactions,
unless such responsibility has been reserved to the
full Board or delegated to another committee of the
Board.
17
3. Consider the independent accountant's judgments about
the quality and appropriateness of the Company's
accounting principles as applied in its financial
reporting. Consider alternative accounting principles
and estimates.
4. Annually review major issues regarding the Company's
auditing and accounting principles and practices and
its presentation of financial statements, including
the adequacy of internal controls and special audit
steps adopted in light of material internal control
deficiencies.
5. Discuss with management and legal counsel the status
of pending litigation, taxation matters, compliance
policies and other areas of oversight applicable to
the legal and compliance area as may be appropriate.
6. Meet at least annually with the chief financial
officer and the independent accountant in separate
executive sessions.
7. Review all analyst reports and press articles about
the Company's accounting and disclosure practices and
principles.
8. Review all analyses prepared by management and the
independent accountant of significant financial
reporting issues and judgments made in connection
with the preparation of the Company's financial
statements, including any analysis of the effect of
alternative generally accepted accounting principle
("GAAP") methods on the Company's financial
statements and a description of any transactions as
to which management obtained Statement on Auditing
Standards No. 50 letters.(1)
9. Review with management and the independent accountant
the effect of regulatory and accounting initiatives,
as well as off-balance sheet structures, on the
Company's financial statements.
B. REVIEW OF DOCUMENTS AND REPORTS
1. Review and discuss with management and the
independent accountant the Company's annual audited
financial statements and quarterly financial
statements (including disclosures under the section
entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operation") and
any reports or other financial information submitted
to any governmental body, or the public, including
any certification, report, opinion or review rendered
by the independent accountant, considering, as
appropriate, whether the information contained in
these documents is consistent with the information
contained in the financial statements and whether the
independent accountant and legal counsel are
satisfied with the disclosure and content of such
documents. These discussions shall include
consideration of the quality of the Company's
accounting principles as applied in its financial
reporting, including review of audit adjustments
(whether or not recorded) and any such other inquires
as may be appropriate. Based on the review, the
Committee shall make its recommendation to the Board
as to the inclusion of the Company's audited
consolidated financial statements in the Company's
annual report on Form 10-K.
2. Review and discuss with management and the
independent accountant earnings press releases, as
well as financial information and earnings guidance
provided to analysts and rating agencies. The
Committee need not discuss in advance each earnings
release but should generally discuss the types of
information to be disclosed and the type of
presentation to be made in any earnings release or
guidance.
3. Review the regular internal reports prepared by
management.
- --------
1 SAS No. 50 provides performance and reporting standards for written reports
from accountants with respect to the application of accounting principles to new
transactions and financial products or regarding specific financial reporting
issues.
18
4. Review reports from management and the independent
accountant on the Company's subsidiaries and
affiliates, compliance with the Company's code(s) of
conduct, applicable law and insider and related party
transactions.
5. Review with management and the independent accountant
any correspondence with regulators or government
agencies and any employee complaints or published
reports that raise material issues regarding the
Company's financial statements or accounting
policies.
6. Prepare the report of the audit committee required by
the rules of the SEC to be included in the Company's
annual proxy statement.
7. Submit the minutes of all meetings of the Committee
to, or discuss the matters discussed at each
Committee meeting with, the Board.
8. Review any restatements of financial statements that
have occurred or were recommended. Review the
restatements made by other clients of the independent
accountant.
C. INDEPENDENT ACCOUNTANT MATTERS
1. The Committee shall be directly responsible for
interviewing and retaining the Company's independent
accountant, considering the accounting firm's
independence and effectiveness and approving the
engagement fees and other compensation to be paid to
the independent accountant.
2. On an annual basis, the Committee shall evaluate the
independent accountant's qualifications, performance
and independence. To assist in this undertaking, the
Committee shall require the independent accountant to
submit a report (which report shall be reviewed by
the Committee) describing (a) the independent
accountant's internal quality-control procedures, (b)
any material issues raised by the most recent
internal quality-control review, or peer review, of
the accounting firm or by any inquiry or
investigations by governmental or professional
authorities (within the preceding five years)
respecting one or more independent audits carried out
by the independent accountant, and any steps taken to
deal with any such issues and (c) all relationships
the independent accountant has with the Company and
relevant third parties to determine the independent
accountant's independence. In making its
determination, the Committee shall consider not only
auditing and other traditional accounting functions
performed by the independent accountant, but also
consulting, legal, information technology services
and other professional services rendered by the
independent accountant and its affiliates. The
Committee shall also consider whether the provision
of any of these non-audit services is compatible with
the independence standards under the guidelines of
the SEC and of the Independence Standards Board.
3. Approve in advance any non-audit services to be
provided by the independent accountant and adopt
policies and procedures for engaging the independent
accountant to perform non-audit services.
4. Review on an annual basis the experience and
qualifications of the senior members of the audit
team. Discuss the knowledge and experience of the
independent accountant and the senior members of the
audit team with respect to the Company's industry.
The Committee shall ensure the regular rotation of
the lead audit partner and audit review partner as
required by law and consider whether there should be
a periodic rotation of the Company's independent
accountant.
5. Review the performance of the independent accountant
and terminate the independent accountant when
circumstances warrant.
19
6. Establish and periodically review hiring policies for
employees or former employees of the independent
accountant.
7. Review with the independent accountant any problems
or difficulties the auditor may have encountered and
any "management" or "internal control" letter
provided by the independent accountant and the
Company's response to that letter. Such review should
include:
(a) any difficulties encountered in the course
of the audit work, including any restrictions on the
scope of activities or access to required information
and any disagreements with management;
(b) any accounting adjustments that were
proposed by the independent accountant that were not
agreed to by the Company; and
(c) communications between the independent
accountant and its national office regarding any
issues on which it was consulted by the audit team
and matters of audit quality and consistency.
8. Communicate with the independent accountant regarding
(a) critical accounting policies and practices to be
used in preparing the audit report, (b) alternative
treatments of financial information within the
parameters of GAAP that were discussed with
management, including the ramifications of the use of
such alternative treatments and disclosures and the
treatment preferred by the independent accountant,
(c) other material written communications between the
independent accountant and management of the Company,
and (d) such other matters as the SEC and Nasdaq may
direct by rule or regulation.
9. Periodically consult with the independent accountant
out of the presence of management about internal
controls and the fullness and accuracy of the
organization's financial statements.
10. Oversee the independent accountant relationship by
discussing with the independent accountant the nature
and rigor of the audit process, receiving and
reviewing audit reports and ensuring that the
independent accountant has full access to the
Committee (and the Board) to report on any and all
appropriate matters.
11. Discuss with the independent accountant prior to the
audit the general planning and staffing of the audit.
12. Obtain a representation from the independent
accountant that Section 10A of the Securities
Exchange Act of 1934 has been followed.
D. INTERNAL/DISCLOSURE CONTROL MATTERS
1. Discuss with management policies with respect to risk
assessment and risk management. Although it is
management's duty to assess and manage the Company's
exposure to risk, the Committee should discuss
guidelines and policies to govern the process by
which risk assessment and management is handled and
review the steps management has taken to monitor and
control the Company's risk exposure.
2. Establish regular and separate systems of reporting
to the Committee by each of management and the
independent accountant regarding any significant
judgments made in management's preparation of the
financial statements and the view of each as to
appropriateness of such judgments.
3. Following completion of the annual audit, review
separately with each of management and the
independent accountant any significant difficulties
encountered during the course of the audit, including
any restrictions on the scope of work or access to
required information.
20
4. Review with the independent accountant and management
the extent to which changes or improvements in
financial or accounting practices have been
implemented. This review should be conducted at an
appropriate time subsequent to implementation of
changes or improvements, as decided by the Committee.
5. Advise the Board about the Company's policies and
procedures for compliance with applicable laws and
regulations and the Company's code(s) of conduct.
6. Establish procedures for receipt, retention and
treatment of complaints and concerns regarding
accounting, internal accounting controls or auditing
matters, including procedures for confidential,
anonymous submissions from employees regarding
questionable accounting or auditing matters.
7. Periodically discuss with the chief executive officer
and chief financial officer (a) significant
deficiencies in the design or operation of the
internal controls that could adversely affect the
Company's ability to record, process, summarize and
report financial data and (b) any fraud that involves
management or other employees who have a significant
role in the Company's internal controls.
8. Ensure that no officer, director or any person acting
under their direction fraudulently influences,
coerces, manipulates or misleads the independent
accountant for purposes of rendering the Company's
financial statements materially misleading.
While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent accountant.
V. ANNUAL EVALUATION PROCEDURES
The Committee shall annually assess its performance to confirm that it
is meeting its responsibilities under this Charter. In this review, the
Committee shall consider, among other things, (a) the appropriateness of the
scope and content of this Charter, (b) the appropriateness of matters presented
for information and approval, (c) the sufficiency of time for consideration of
agenda items, (d) frequency and length of meetings and (e) the quality of
written materials and presentations. The Committee may recommend to the Board
such changes to this Charter as the Committee deems appropriate.
VI. INVESTIGATIONS AND STUDIES
The Committee shall have the authority and sufficient funding to retain
special legal, accounting or other consultants (without seeking Board approval)
to advise the Committee. The Committee may conduct or authorize investigations
into or studies of matters within the Committee's scope of responsibilities as
described herein, and may retain, at the expense of the Company, independent
counsel or other consultants necessary to assist the Committee in any such
investigations or studies. The Committee shall have sole authority to negotiate
and approve the fees and retention terms of such independent counsel or other
consultants.
VII. MISCELLANEOUS
Nothing contained in this Charter is intended to expand applicable
standards of liability under statutory or regulatory requirements for the
directors of the Company or members of the Committee. The purposes and
responsibilities outlined in this Charter are meant to serve as guidelines
rather than as inflexible rules and the Committee is encouraged to adopt such
additional procedures and standards as it deems necessary from time to time to
fulfill its responsibilities. This Charter, and any amendments thereto, shall be
displayed on the Company's web site and a printed copy of such shall be made
available to any shareholder of the Company who requests it.
Adopted by the Audit Committee and approved
by the Board of Directors on April 22, 2003
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BIOSOURCE INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a Stockholder of BIOSOURCE INTERNATIONAL, INC., a
Delaware corporation (the "Company"), hereby nominates, constitutes and appoints
JEAN-PIERRE L. CONTE, LEONARD M. HENDRICKSON and CHARLES C. BEST, or any one of
them, as proxy of the undersigned, each with full power of substitution, to
attend, vote and act for the undersigned at the Annual Meeting of Stockholders
of the Company, to be held on July 18, 2003, and any postponements or
adjournments thereof, and in connection therewith, to vote and represent all of
the shares of the Company which the undersigned would be entitled to vote, as
follows:
A VOTE FOR ALL PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
Proposal 1. To elect the Board of Directors' six nominees as directors.
Jean-Pierre L. Conte Leonard M. Hendrickson David J. Moffa, Ph.D.
John R. Overturf, Jr. Robert J. Weltman John L. Zabriskie, Ph.D.
[_] FOR ALL NOMINEES LISTED ABOVE (except as marked to
the contrary below)
[_] WITHHELD
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below:)
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The undersigned hereby confer(s) upon the proxies and each of them
discretionary authority with respect to the election of directors in
the event that any of the above nominees is unable or unwilling to
serve.
Proposal 2. To ratify the appointment of KPMG LLP as the Company's
independent public accountants for the year ending December 31, 2003.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned hereby revokes any other proxy to vote at the Annual
Meeting, and hereby ratifies and confirms all that said attorneys and proxies,
and each of them, may lawfully do by virtue hereof. With respect to matters not
known at the time of the solicitation hereof, said proxies are authorized to
vote in accordance with their best judgment.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH
ABOVE OR, TO THE EXTENT NO CONTRARY DIRECTION IS INDICATED, WILL BE TREATED AS A
GRANT OF AUTHORITY TO VOTE FOR ALL PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED
AT THE ANNUAL MEETING, THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE PROXIES.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated May 21, 2003, relating to the
Annual Meeting.
Dated:___________________________, 2003
Signature:_____________________________
Signature:_____________________________
Signature(s) of Stockholder(s)
(See Instructions Below)
The Signature(s) hereon should
correspond exactly with the name(s) of
the Stockholder(s) appearing on the
Share Certificate. If stock is jointly,
all joint owners should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
signer is a corporation, please sign
the full corporation name, and give
title of signing officer.
[_] Please indicate by checking this box if you anticipate attending the Annual
Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BIOSOURCE INTERNATIONAL, INC.