<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 Section 240.14a-11(c) or Section
240.14a-12
Biosite Diagnostics Incorporated
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
11030 Roselle Street
San Diego, CA 92121
(858) 455-4808
April 25, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on May 31, 2000, at 9:00 a.m., at the Hotel La Jolla, 7955 La
Jolla Shores Drive, La Jolla, California.
The formal notice of the Annual Meeting and the Proxy Statement have
been made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return,
at an early date, the enclosed proxy in the prepaid envelope to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
/s/
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 2000
------------
The Annual Meeting of Stockholders of Biosite Diagnostics Incorporated
(the "Company") will be held at the Hotel La Jolla, 7955 La Jolla Shores Drive,
La Jolla, California, on May 31, 2000, at 9:00 a.m., for the following purposes:
1. To elect two Class III directors.
2. To consider and vote upon a proposal to amend and restate the
Company's 1996 Stock Incentive Plan.
3. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
4. To transact such other business as may properly come before
the Annual Meeting and any adjournment of the Annual Meeting.
The Board of Directors has fixed the close of business on April 7,
2000, as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. A complete list
of stockholders entitled to vote will be available at the Secretary's office,
11030 Roselle Street, San Diego, California, for ten days before the meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE
YOU TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
/s/
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
April 25, 2000
<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
------------
PROXY STATEMENT
------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Biosite Diagnostics Incorporated, a Delaware
corporation ("Biosite" or the "Company"), with principal executive offices at
11030 Roselle Street, San Diego, California 92121, of proxies in the
accompanying form to be used at the Annual Meeting of Stockholders to be held at
the Hotel La Jolla, 7955 La Jolla Shores Drive, La Jolla, California, on May 31,
2000, at 9:00 a.m., and any adjournment of the Annual Meeting (the "Annual
Meeting"). The shares represented by the proxies received in response to this
solicitation and not revoked will be voted at the Annual Meeting. A proxy may be
revoked at any time before it is exercised by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date or by
voting in person at the Annual Meeting. On the matters coming before the Annual
Meeting for which a choice has been specified by a stockholder by means of the
ballot on the proxy, the shares will be voted accordingly. If no choice is
specified, the shares will be voted FOR the election of the two nominees for
Class III director listed in this Proxy Statement and FOR approval of proposals
2 and 3 described in the Notice of Annual Meeting and in this Proxy Statement.
Stockholders of record at the close of business on April 7, 2000 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on such date, the Company had 13,575,570 shares of Common Stock
outstanding and entitled to vote. Each holder of Common Stock is entitled to one
vote for each share held as of the record date.
Directors are elected by a plurality vote. The other matters submitted
for stockholder approval at the Annual Meeting will be decided by the
affirmative vote of a majority of shares present in person or represented by
proxy and entitled to vote on each such matter. Abstentions with respect to any
matter are treated as shares present or represented and entitled to vote on that
matter and thus have the same effect as negative votes. If shares are not voted
by the broker who is the record holder of the shares, or if shares are not voted
in other circumstances in which proxy authority is defective or has been
withheld with respect to any matter, these non-voted shares are not deemed to be
present or represented for purposes of determining whether stockholder approval
of that matter has been obtained.
The expense of printing and mailing proxy materials will be borne by
the Company. In addition to the solicitation of proxies by mail, solicitation
may be made by certain directors, officers and other employees of the Company by
personal interview, telephone or telegraph. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse brokerage
firms and others for their reasonable expenses in forwarding solicitation
materials to beneficial owners of the Company's Common Stock. The Company has
retained ChaseMellon Shareholder Services to assist in the solicitation of
proxies at a cost of approximately $6,000.
This Proxy Statement and the accompanying form of proxy are being
mailed to stockholders on or about April 25, 2000.
IMPORTANT
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE
YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE.
THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL
MEETING.
1
<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year
terms. Each Class consists of two directors. Two Class III directors are to be
elected at the Annual Meeting for a term of three years expiring at the Annual
Meeting in 2003 or until each such director's successor shall have been elected
and qualified. The other directors of the Company will continue in office for
their existing terms, which expire in 2001 and 2002 for Class I and Class II
directors, respectively. Shares represented by the enclosed proxy cannot be
voted for a greater number of persons than the number of nominees named.
COMPOSITION OF BOARD OF DIRECTORS
Unless authority to vote for directors is withheld, it is intended that
the shares represented by the enclosed proxy will be voted for the election of
Kim D. Blickenstaff and Gunars E. Valkirs as Class III directors. The nominees
have been nominated as Class III directors by the Company's Board of Directors.
In the event any of such nominees becomes unable or unwilling to accept
nomination or election, the shares represented by the enclosed proxy will be
voted for the election of the balance of those named and such other nominees as
the Board of Directors may select. The Board of Directors has no reason to
believe that any such nominee will be unable or unwilling to serve. There are no
family relationships among any of the directors or executive officers of the
Company.
Set forth below is information regarding the two nominees for Class III
director and the continuing directors of Class I and Class II, including
information furnished by them as to their principal occupations at present and
for the past five years, certain directorships held by each, their ages as of
March 31, 2000 and the year in which each became a director of the Company.
<TABLE>
<CAPTION>
NAME AGE
- ---- ---
<S> <C>
CLASS III
Kim D. Blickenstaff..............................................................47
Mr. Blickenstaff, a founder of the Company, has been a director and
President, Chief Executive Officer, Treasurer and Secretary since April 1988.
Mr. Blickenstaff is also a director of Micro Therapeutics Incorporated,
MediSpectra Inc., Amira Medical and Product Health Inc. Prior to joining
Biosite, he held various positions in finance, operations, research management,
sales management, strategic planning and marketing with Baxter Travenol,
National Health Laboratories and Hybritech Incorporated ("Hybritech"). Mr.
Blickenstaff holds an M.B.A. from the Graduate School of Business, Loyola
University, Chicago.
Gunars E. Valkirs, Ph.D. ........................................................48
Dr. Valkirs, a founder of Biosite and a co-inventor of certain of its
proprietary technology, has been a director and Vice President, Research and
Development and Chief Technical Officer since 1988. In March 1999, Dr. Valkirs
assumed the responsibility of heading up the Biosite Discovery Program. Prior to
forming Biosite, he was a Scientific Investigator with the Diagnostics Research
& Development Group at Hybritech, where he was the primary inventor of
Hybritech's patented ICON technology. Dr. Valkirs holds a Ph.D. in Physics from
the University of California at San Diego.
CLASS I
Lonnie M. Smith..................................................................55
Mr. Smith joined the Board of Directors in October 1997. Mr. Smith is
Chief Executive Officer of Intuitive Surgical Inc., a surgical device company.
From 1982 to February 1997, he served as Senior Executive Vice President in
charge of healthcare for Hillenbrand Industries, Inc. ("Hillenbrand"), a
diversified public holding company. Mr. Smith was a director of Hillenbrand from
1981 to February 1997. He had been employed by Hillenbrand or its subsidiaries
in various offices since 1976. Mr. Smith received a B.S. in Electrical
Engineering from Utah State University and an M.B.A. from Harvard Business
School.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Timothy J. Wollaeger.............................................................56
Mr. Wollaeger has served as Chairman of the Board of Directors since
the Company's inception. He is the general partner of Kingsbury Associates,
L.P., a venture capital firm he founded in December 1993. From May 1990 until
December 1993, he was Senior Vice President and a director of Columbia Hospital
Corporation (now Columbia/HCA Healthcare Corporation). From October 1986 until
July 1993, he was a general partner of the general partner of Biovest Partners,
a seed venture capital firm ("Biovest"). He is a director of Aurora Biosciences,
Inc. and a founder and director of several privately held medical products
companies. Mr. Wollaeger received a B.A. in Economics from Yale University and
an M.B.A. from Stanford University.
CLASS II
- --------
Anthony DeMaria, M.D.............................................................57
Dr. DeMaria joined the Board of Directors in June 1998. Dr. DeMaria is
Professor of Medicine and Chief, division of cardiology at University of
California, San Diego, School of Medicine. Prior to joining the University of
California in 1992, Dr. DeMaria was Director of the Kentucky Heart Institute.
Prior to joining the Kentucky Heart Institute, he held key management positions
at the University of Kentucky College of Medicine and the University of
California, Davis, School of Medicine. In 1988, Dr. DeMaria served as president
of the American College of Cardiology and he is past president of the American
Society of Echocardiography. Dr. DeMaria received a B.S. from College of the
Holy Cross, and his M.D. from New Jersey College of Medicine.
Howard E. Greene, Jr. ...........................................................57
Mr. Greene joined the Board of Directors in June 1989. Mr. Greene is an
entrepreneur who has founded, managed and financed a series of medical
technology companies during the past 20 years. From September 1987 to July 1996,
Mr. Greene was the founding Chief Executive Officer of Amylin Pharmaceuticals,
Inc., a biotechnology company developing drug candidates for treating diabetes
("Amylin"). From October 1986 until July 1993, Mr. Greene was a founding general
partner of Biovest. He was Chief Executive Officer of Hybritech from March 1979
until its acquisition by Eli Lilly & Co. in March 1986, and was co-inventor of
Hybritech's patented monoclonal antibody assay technology. Prior to joining
Hybritech, he was an executive with the medical diagnostics division of Baxter
Healthcare Corporation from 1974 to 1979, and a consultant with McKinsey &
Company from 1967 to 1974. He is Chairman of the Board of Epimmune Inc., and a
director of Amylin and The International Biotechnology Trust plc, a British
biotechnology investment company. Mr. Greene received an M.B.A. from Harvard
University.
</TABLE>
The Board of Directors held six meetings during the 1999 fiscal year.
All directors then in office attended at least 75% of the aggregate number of
meetings of the Board and of the Committees on which such directors served,
except for Fred Dotzler who attended one of the two Board meetings and the one
Audit Committee meeting held while he was a director.
The Board of Directors has appointed a Compensation Committee, a
Nominating Committee, an Employee Stock Option Committee and an Audit Committee.
The current members of the Compensation Committee are Lonnie M. Smith
and Timothy J. Wollaeger. The Compensation Committee held two meetings during
the 1999 fiscal year. The Compensation Committee's functions are to determine
and supervise compensation to be paid to officers and directors of the Company
and to assist in the administration of, and grant options under, the Amended and
Restated 1996 Stock Incentive Plan, to assist in the administration of the
Amended and Restated 1989 Stock Plan and the Amended and Restated Employee Stock
Purchase Plan and to assist in the implementation of, and provide
recommendations with respect to, general and specific compensation policies and
practices of the Company. See "Report to Stockholders on Executive
Compensation."
The current members of the Nominating Committee are Kim D. Blickenstaff
and Timothy J. Wollaeger. The Nominating Committee held no meetings during the
1999 fiscal year. The Nominating Committee's function is to select and nominate
individuals to fill vacancies in the Company's Board of Directors. The
Nominating Committee will not consider nominees recommended by security holders.
3
<PAGE>
The sole member of the Employee Stock Option Committee is Kim D.
Blickenstaff. The Employee Stock Option Committee acted by unanimous written
consent twenty-six times during the 1999 fiscal year. The Employee Stock Option
Committee's functions are to assist in the administration of, and grant options
under, the Company's Amended and Restated 1996 Stock Incentive Plan with respect
to employees who are not officers or directors of the Company.
The current members of the Audit Committee are Lonnie M. Smith, Timothy
J. Wollaeger and Howard E. Greene, Jr. The Audit Committee held two meetings
during the 1999 fiscal year. The Audit Committee's functions are to review the
scope of the annual report, monitor the independent auditor's relationship with
the Company, advise and assist the Board of Directors in evaluating the
auditor's report, supervise the Company's financial and accounting organization
and financial reporting and nominate for stockholder approval at the annual
meeting, with the approval of the Board of Directors, a firm of certified public
accountants whose duty it is to audit the financial records of the Company for
the fiscal year for which it is appointed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS III DIRECTOR
NOMINEES LISTED ABOVE.
4
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 31, 2000,
regarding beneficial ownership of the Company's Common Stock by (i) each
director and nominee for director, (ii) each of the Company's officers named in
the Summary Compensation Table set forth herein, (iii) all directors and
executive officers of the Company as a group and (iv) each person who is known
by the Company to beneficially own more than 5% of the Company's Common Stock.
Except as otherwise indicated and subject to applicable community property laws,
each person has sole investment and voting power with respect to the shares
shown. Ownership information is based upon information furnished by the
respective individuals or entities, as the case may be.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT BENEFICIALLY
OWNED OWNED
------------------- --------------------
<S> <C> <C>
Kopp Investment Advisors, Inc. (1).................. 2,576,292 19.0%
7701 France Avenue South
Suite 500
Edina, MN 55435
Wellington Management Company, L.L.P. (2)........... 920,000 6.8
75 State Street
Boston, MA 02109
William Blair & Company, L.L.C. (3)................. 757,225 5.6
222 West Adams Street
34th Floor
Chicago, IL 60606
Henry L. Hillman Trust
U/A Dated Nov. 18, 1995 (4) ........................ 755,920 5.6
1900 Grant Building
Pittsburgh, PA 15219
Kim D. Blickenstaff (5)............................. 430,999 3.2
Gunars E. Valkirs, Ph.D. (5)(6) .................... 395,119 2.9
Kenneth F. Buechler, Ph.D. (5)(7)................... 375,018 2.8
Howard E. Greene, Jr. (5)(8)........................ 302,087 2.2
Thomas M. Watlington (5)............................ 131,280 1.0
Charles W. Patrick (5)(9)........................... 111,587 *
Timothy J. Wollaeger (5)............................ 95,427 *
Lonnie Smith (5).................................... 8,245 *
Anthony Demaria, M.D.(5)............................ 6,998 *
All directors and executive officers................ 2,047,352 14.4%
as a group (13 persons) (5)(10)
</TABLE>
------------
* Less than 1%
(1) Based on its Schedule 13G/A dated February 4, 2000 and information
provided to the Company on April 5, 2000 by Kopp Investment Advisors,
Inc. ("KIA"), wherein KIA reported the beneficial ownership of
2,576,292 shares of Company Common Stock and stated that such shares
are held in a fiduciary or representative capacity by KIA. KIA reports
that it has sole voting power as to 589,500 shares, sole dispositive
power as to 420,000 shares and shared dispositive power as to 2,156,292
shares. Does not include 10,000 shares that may be deemed beneficially
owned by LeRoy C. Kopp as trustee of a qualified
5
<PAGE>
plan. Mr. Kopp owns 100% of the outstanding capital stock of Kopp
Holding Company, of which KIA is a wholly-owned subsidiary.
(2) Based on its Schedule 13G/A dated February 11, 2000, wherein Wellington
Management Company, L.L.P. ("WMC") reported the beneficial ownership of
920,000 shares of Company Common Stock. The Schedule 13G/A states that
such shares are owned by a variety of clients as to whom WMC is an
investment advisor. WMC reports that it has shared power to vote or to
direct the vote of 617,500 of such shares and shared power to dispose
or to direct the disposal of all 920,000 shares, and does not have sole
voting or dispositive power with respect to any of such shares. WMC
disclaims any pecuniary interest in such shares.
(3) Based on its Schedule 13G dated February 28, 2000.
(4) Based on its Schedule 13G/A dated February 14, 2000 wherein The Henry
L. Hillman Trust U/A Dated November 18, 1985, Henry L. Hillman, Elsie
Hilliard Hillman and C.G. Grefenstette, Trustees (the "HLH Trust")
reported the beneficial ownership of 755,920 shares of Company Common
Stock. The HLH Trust reports that it has sole voting and dispositive
power as to 455,920 shares and shared voting and dispositive power as
to 300,000 shares, which 300,000 shares are owned of record and
beneficially by Wilmington Interstate Corporation, a wholly-owned
subsidiary of Wilmington Securities, Inc., a wholly-owned subsidiary of
Wilmington Investments, Inc., a wholly-owned subsidiary of The Hillman
Company, which is controlled by the HLH Trust. The Schedule 13G/A
states that the Trustees of the HLH Trust share power to vote or direct
the vote and share power to dispose or direct the disposition of the
shares of Company Common Stock owned by the HLH Trust and Wilmington
Interstate Corporation.
(5) Includes shares which may be acquired pursuant to the exercise of
options within 60 days of March 31, 2000 as follows: Mr. Blickenstaff,
93,393; Dr. Valkirs, 157,881; Dr. Buechler, 54,538; Mr. Greene, 3,768;
Mr. Watlington, 121,558; Mr. Patrick, 61,797; Mr. Wollaeger, 3,768; Mr.
Smith, 8,245; Dr. DeMaria, 6,998; and all directors and executive
officers as a group, 601,235 (13 persons).
(6) Includes 235,834 shares held of record by the Valkirs Family Trust as
to which Dr. Valkirs has shared voting and investment power and 785
shares held by a family member as to which Dr. Valkirs has shared
voting and investment power.
(7) Includes 320,480 shares held in a trust for the benefit of Dr.
Buechler's family as to which Dr. Buechler has shared voting and
investment power.
(8) Includes 298,319 shares held in a trust for the benefit of Mr. Greene's
family as to which Mr. Greene has shared voting and investment power.
(9) Includes 49,790 shares held in trust for the benefit of Mr. Patrick's
family as to which Mr. Patrick has shared voting and investment power.
(10) Includes shares held by entities referenced in footnotes 6, 7, 8 and 9
which are affiliated with certain directors.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Information is set forth below concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal
years ended December 31, 1997, 1998 and 1999 of those persons who were at
December 31, 1999 (i) the Chief Executive Officer and (ii) the other four most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) (1) BONUS ($) COMPENSATION ($) (2) OPTIONS (#)
------------------ ---- -------------- ----------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
Kim D. Blickenstaff 1999 $241,364 $ 13,915 $1,717 100,000
President and Chief Executive Officer 1998 217,121 68,740 1,927 100,000
1997 205,682 112,159 1,567 25,000
Thomas M. Watlington 1999 220,515 40,056 540 50,000
Senior Vice President, 1998 199,408 16,753 638 50,000
Commercial Operations 1997 202,392 32,239 69,214 (3) 5,000
Gunars E. Valkirs, Ph.D 1999 192,515 50,000 1,511 75,000
Vice President, Research and Development 1998 171,697 92,220 1,661 75,000
1997 162,833 58,414 1,287 12,500
Kenneth F. Buechler, Ph.D. 1999 191,364 90,700 1,430 75,000
Vice President, Research 1998 165,970 72,220 1,528 75,000
1997 152,833 63,414 819 12,500
Charles W. Patrick, 1999 180,525 28,455 818 20,000
Vice President, Sales 1998 173,500 20,686 601 20,000
1997 165,697 34,670 574 7,500
</TABLE>
-----------------
(1) Includes amounts deferred by each individual under the Company's 401(k)
Plan.
(2) Except where noted amounts represent payments on behalf of each
individual for group term life insurance and separate term life
insurance.
(3) Amount also includes $41,468 of relocation costs and $27,134 related to
income tax associated with the relocation costs.
7
<PAGE>
STOCK OPTIONS
The following tables summarize option grants and exercises during
fiscal 1999 to or by the Chief Executive Officer and the Named Executive
Officers, and the value of the options held by such persons at the end of fiscal
1999. The Company has not granted any Stock Appreciation Rights.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM (4)
UNDERLYING EMPLOYEES IN EXERCISE OR ----------------------
OPTIONS FISCAL YEAR BASE PRICE EXPIRATION
NAME GRANTED(#) (1) (2) ($/SH) (3) DATE 5% ($) 10% ($)
---- -------------- --- ---------- ---- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kim D. Blickenstaff ............... 100,000 10.53 $10.00 6/9/09 628,895 1,593,742
Thomas M. Watlington .............. 50,000 5.26 $10.00 6/9/09 314,447 796,871
Gunars E. Valkirs, Ph.D............ 75,000 7.90 $10.00 6/9/09 471,671 1,195,307
Kenneth F. Buechler, Ph.D.......... 75,000 7.90 $10.00 6/9/09 471,671 1,195,307
Charles W. Patrick................. 20,000 2.11 $10.00 6/9/09 125,779 318,748
</TABLE>
----------------
(1) These options vest daily over a four-year period commencing on the date
of grant, except that no options are exercisable for the first six
months after the date of grant. The number of shares which have vested
under an option grant is determined by ascertaining the number of days
subsequent to the date of the option grant, multiplying that number of
days by the number of shares subject to the option grant, and in turn
multiplying that product by 0.000684931 (one divided by the product of
365 days and four years).
(2) The Company granted to employees options to acquire 949,850 shares of
the Company's Common Stock in 1999.
(3) The exercise price of each option was equal to 100% of the fair market
value of the Common Stock on the date of grant, as determined by the
Compensation Committee of the Board of Directors.
(4) The potential realizable value of each grant of options has been
calculated, pursuant to the regulations promulgated by the Securities
and Exchange Commission, assuming that the market price of the Common
Stock appreciates in value from the date of grant to the end of the
option term at the annualized rates of 5% and 10%, respectively. These
values do not represent the Company's estimate or projection of future
Common Stock value. There can be no assurance that any of the value
reflected in the table will be achieved.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND VALUE OF OPTIONS
AT END OF FISCAL 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT END OF IN-THE-MONEY OPTIONS AT END
SHARES FISCAL 1999 (#) OF FISCAL 1999($)(1)
ACQUIRED ON --------------- --------------------
NAME EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kim D. Blickenstaff........ 0 0 196,666 / 161,534 $1,837,116 / 758,884
Thomas M. Watlington....... 3,500 $26,687 103,919 / 97,581 $866,658 / 570,942
Gunars E. Valkirs.......... 0 0 138,498 / 117,202 $1,349,958 / 540,167
Kenneth F. Buechler........ 1,300 $10,822 147,098 / 117,202 $1,464,578 / 540,167
Charles W. Patrick......... 9,000 $100,215 59,305 / 35,595 $596,836 / 181,314
</TABLE>
----------------
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1999 ($16.00) minus the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during 1999 were
Lonnie M. Smith and Timothy J. Wollaeger. There were no interlocks or other
relationships among the Company's executive officers and directors that are
required to be disclosed under applicable executive compensation disclosure
regulations.
COMPENSATION OF DIRECTORS
In 1999, outside directors of the Company received from $750 to $1,000
for each Board Meeting attended and from $250 to $500 for each committee meeting
attended. Directors were also reimbursed for their expenses for each meeting
attended. Directors are eligible to participate in the Amended and Restated 1996
Stock Incentive Plan. In February 1997, the Board of Directors approved an
annual grant to each non-employee director of 2,500 non-qualified stock options
under the Stock Plan. Additionally, in May 1998, the Board of Directors approved
a grant of 10,000 non-qualified stock options under the Amended and Restated
1996 Stock Incentive Plan to Anthony DeMaria. These options vest daily over a
four-year period commencing on the date of grant, and vested options are
exercisable commencing on the date of the grant.
Under the Amended and Restated 1996 Stock Incentive Plan, directors may
elect to defer their fees until they terminate service with the Board of
Directors. The deferred fees shall be deemed invested in Company Common Stock
and will be paid in cash in a lump sum or installments as determined by the
Company. Under this arrangement, Howard E. Greene, Jr. has deferred fees
equivalent to 1,038.70 stock units as of the end of fiscal year 1999.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension or long-term incentive plans.
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
This report on executive compensation is provided by the Compensation
Committee of the Board of Directors, which is comprised of two non-employee
directors (the "Compensation Committee" or the "Committee"), to assist
stockholders in understanding the objectives and procedures used in establishing
the compensation of the Company's executive officers and describes the basis on
which 1999 compensation determinations were made by the Committee. In making its
determinations, the Compensation Committee relied in part upon independent
surveys and public disclosures of the compensation of management of companies in
the medical device and biotechnology industries.
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It is the Company's policy generally to qualify compensation paid to
executive officers for deductibility under section 162(m) of the Internal
Revenue Code. Section 162(m) generally prohibits the Company from deducting the
compensation of executive officers that exceeds $1,000,000 unless that
compensation is based on the satisfaction of objective performance goals. The
Company's Amended and Restated 1996 Stock Incentive Plan is structured to
qualify awards under such plans as performance-based compensation and to
maximize the tax deductibility of such awards. However, the Company reserves the
discretion to pay compensation to its executive officers that may not be
deductible.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee believes that compensation of the Company's
executive officers should:
- encourage creation of stockholder value and achievement
of strategic corporate objectives;
- integrate compensation with the Company's annual and
long-term corporate objectives and strategy, and focus
executive behavior on the fulfillment of those
objectives;
- provide a competitive total compensation package that
enables the Company to attract and retain, on a long-term
basis, high caliber personnel;
- provide total compensation opportunity that is competitive
with companies in the biotechnology industry, taking into
account relative company size, performance and geographic
location, as well as individual responsibilities and
performance; and
- align the interests of management and stockholders and
enhance stockholder value by providing management with
longer term incentives through equity ownership.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Executive officer compensation is based primarily on the Company's
achievement of certain business objectives, as well as individual contribution
and achievement of individual business objectives by each of such officers.
Corporate and individual objectives are established at the beginning of each
fiscal year. Performance by the Company and executive officers is measured by
reviewing and determining if the corporate and individual objectives have been
accomplished. Currently, the Company's compensation structure for executive
officers includes a combination of base salary, cash bonuses and stock options.
BASE SALARY. Salary levels are largely determined through comparisons
with companies of similar headcount and market capitalizations or complexity in
the medical device and biotechnology industries. Actual salaries are based on
individual performance contributions within a competitive salary range for each
position that is established through job evaluation of responsibilities and
market comparisons. The Compensation Committee, on the basis of its knowledge of
executive compensation in the industry, believes that the Company's salary
levels for the executive officers are at a level that the Committee, at the time
such salary determinations were made, considered to be reasonable and necessary
given the Company's financial resources and the stage of its development. In
March of 1999, the Compensation Committee set annual salaries for 1999. The
Compensation Committee reviews salaries on an annual basis. At an annual review,
the Compensation Committee may increase each executive officer's salary based on
the individual's contributions and responsibilities over the prior 12 months and
expectations for the next 12 months.
BONUS. The Committee may award bonuses throughout the year based on the
Company's achievements and the individual's contributions to those achievements,
if it deems such an award to be appropriate. Based on the Company's achievement
of a number of key objectives in 1999 that were important for the continued
growth and development of the Company, including financial performance and
increase in stockholder value, the achievement of product development milestones
and the initiation and continuation of corporate collaborations, the Committee
awarded cash bonuses in 1999 to certain officers.
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STOCK OPTIONS. Long-term incentives are provided by means of periodic
grants of stock options. The Company's Amended and Restated 1996 Stock Incentive
Plan is administered by the Compensation Committee. The Committee believes that
by granting executive officers an opportunity to obtain and increase their
personal ownership of Company stock, the best interests of stockholders and
executives will be more closely integrated. The options have exercise prices
equal to fair market value on the date of grant, vest over a four-year period,
and expire ten years from the date of grant. Vesting ceases should the executive
leave the Company's employ. These vesting provisions of the option plan serve to
retain qualified employees, providing continuing benefits to the Company beyond
those achieved in the year of grant. Therefore, executive officers, as well as
employees, independent contractors and advisors who perform services for the
Company, are eligible to receive stock options periodically at the discretion of
the Committee. Consideration is given to the executive officer's performance
against the accomplishment of corporate objectives, to comparisons with other
medical device and biotechnology companies at similar stages of development as
determined by independent surveys and the Committee's knowledge of industry
practice, to the number of options previously granted to each executive officer
and to the extent of vesting of options and/or restricted stock previously
awarded to each executive officer.
CHIEF EXECUTIVE OFFICER COMPENSATION
The salary paid to Kim D. Blickenstaff, the Company's President and
Chief Executive Officer, was $241,364 in 1999. In establishing Mr.
Blickenstaff's salary base, the Committee recognized Mr. Blickenstaff's efforts
in advancing the development and growth of the Company and the corporate
objectives achieved. The Committee determined that the accomplishments were
critical to the Company's future growth and enhancement of stockholder value
and, accordingly, determined to compensate Mr. Blickenstaff for his efforts on
behalf of the Company. In addition, the Compensation Committee took into
consideration salary levels of chief executive officers at companies with
similar headcount and market capitalizations or complexity in the medical device
and biotechnology industries. Mr. Blickenstaff was also eligible for, and
received, a bonus in 1999 based on the level of the Company's sales, operating
income, earnings per share and stock price.
Mr. Blickenstaff is a member of the Board of Directors, but did not
participate in matters involving the evaluation of his own performance or the
setting of his own compensation.
The foregoing report has been furnished by the Compensation Committee
of the Board of Directors and shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this report by
reference and shall not otherwise be deemed filed under such Acts.
Timothy J. Wollaeger, Chairman
Lonnie M. Smith
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STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the Center for Research in Securities Prices
("CRSP") Total Return Index for The Nasdaq Stock Market (U.S. and Foreign) (the
"Nasdaq Composite Index") and the S&P Medical Products & Supplies Index (the
"S&P Medical Products Index") since February 12, 1997 (the effective date of the
Company's initial public offering). The comparisons in the graph are required by
the Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------- ----------- ------------ ------------ ------------- ------------- ------------ -----------
02/12/97 06/30/97 12/31/97 06/30/98 12/31/98 06/30/99 12/31/99
----------- ------------ ------------ ------------- ------------- ------------ -----------
- --------------------------- ----------- ------------ ------------ ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Biosite $100.00 $78.13 $73.96 $91.67 $101.56 $84.38 $133.33
- --------------------------- ----------- ------------ ------------ ------------- ------------- ------------ -----------
Nasdaq Composite 100.00 106.35 115.83 138.83 160.14 196.11 295.12
- --------------------------- ----------- ------------ ------------ ------------- ------------- ------------ -----------
S&P Medical Products 100.00 110.08 115.68 146.31 166.40 173.81 154.08
- --------------------------- ----------- ------------ ------------ ------------- ------------- ------------ -----------
</TABLE>
Assumes a $100 investment on February 12, 1997 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index and the
securities comprising the S&P Medical Products Index.
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CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
In April 1997, the Company loaned Mr. Blickenstaff, a director and
President, Chief Executive Officer, Secretary and Treasurer of the Company,
$150,000. The promissory note bore interest at 6.39% and was due on April 2,
2002. The note was secured by 50,000 shares of Company Common Stock owned by Mr.
Blickenstaff. Mr. Blickenstaff repaid the loan and all accrued but unpaid
interest in February 2000.
The Company believes that the foregoing transaction was in its best
interests. As a matter of policy this transaction was, and all future
transactions between the Company and its officers, directors or principal
stockholders will be, approved by a majority of the independent and
disinterested members of the Board of Directors, on terms no less favorable to
the Company than could be obtained from unaffiliated third parties and in
connection with bona fide business purposes of the Company.
PROPOSAL 2
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
BIOSITE DIAGNOSTICS INCORPORATED STOCK INCENTIVE PLAN
The 1996 Stock Incentive Plan (the "1996 Plan") was originally adopted
by the Board of Directors on December 5, 1996, to be effective December 1, 1996,
and was approved by the stockholders in December 1996. The 1996 Plan was amended
by the Board of Directors and the Company's stockholders in each of 1998 and
1999 to reserve an additional 50,000 and 1,000,000 shares, respectively, for
issuance under the plan. In addition, on April 20, 1999, the Board of Directors
amended the plan to remove provisions permitting the repricing of options at
lower exercise prices. The 1996 Plan replaced the Company's 1989 Stock Plan.
Awards are currently made under the 1996 Plan. Awards previously made under the
1989 Stock Plan, however, continue to be administered in accordance with the
1989 Stock Plan. On January 28, 2000, the Board of Directors amended and
restated the plan (as amended and restated, the "Stock Incentive Plan") to
reserve an additional 1,000,000 shares for issuance, subject to approval by the
Company's stockholders at the Annual Meeting.
The full text of the Stock Incentive Plan, substantially in the form in
which it will take effect if approved by the Company's stockholders, is set
forth in Exhibit A to this Proxy Statement. The following summary of the
principal features of the Stock Incentive Plan is subject to, and qualified in
its entirety by, Exhibit A.
DESCRIPTION OF THE STOCK INCENTIVE PLAN
PURPOSE
The purpose of the Stock Incentive Plan is to promote the interests of
the Company and its stockholders by encouraging key individuals to acquire stock
or to increase their proprietary interest in the Company. By providing the
opportunity to acquire stock or receive other incentives, the Company seeks to
attract and retain those key employees upon whose judgment, initiative and
leadership the success of the Company largely depends. The Company's Board of
Directors believes that the Stock Incentive Plan constitutes an important means
of compensating key employees.
SHARES SUBJECT TO THE STOCK INCENTIVE PLAN
The total number of restricted shares, stock units, options and stock
appreciation rights ("SARs") available for grant under the Stock Incentive Plan
is 3,400,000 (which number includes the 1,000,000 share increase that
stockholders are being asked to approve), increased by the amount of all
remaining shares available for grant under the 1989 Stock Plan as of December 1,
1996 and subject to anti-dilution adjustments. If any restricted shares, stock
units, options or SARs are forfeited, or if options or SARs terminate for any
other reason prior to exercise (other than the exercise of a related SAR or
option, and including any forfeiture or termination under the 1989 Stock Plan),
then they again become available for awards under the Stock Incentive Plan.
OUTSTANDING GRANTS
As of March 31, 2000, an aggregate of 1,038.70 stock units and
2,547,834 options were outstanding under the 1989 Stock Plan and the 1996 Plan
(collectively, the "Plan"). As of March 31, 2000, approximately 304
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employees and 4 directors were eligible to participate in the Plan. On March
31, 2000, the closing price of the Company's Common Stock on the Nasdaq
National Market was $24.375 per share. Of the options granted, 1,212,071 have
been exercised. As of March 31, 2000, an aggregate of 2,735,453 shares are
authorized, but unissued under the Plan.
As of March 31, 2000, the following persons or groups had in total
received restricted stock, stock units and/or options under the Plan: (i) the
Chief Executive Officer and the other remaining officers named in the Summary
Compensation Table: Mr. Blickenstaff 428,200 shares, Mr. Watlington 205,000
shares, Dr. Valkirs 300,700 shares, Dr. Buechler 300,700 shares and Mr. Patrick
169,900 shares; (ii) all current executive officers of the Company as a group:
1,805,050 shares; (iii) all current directors who are not executive officers as
a group: 48,538 shares; (iv) the nominees for Class III director: Mr.
Blickenstaff 428,200 shares and Dr. Valkirs 300,700 shares; (v) each associate
of any of such current directors, executive officers or nominees: 0; (vi) each
person who has received five percent of options granted other than those
included above: 0; and (vii) all employees and consultants of the Company:
4,567,725 shares.
ADMINISTRATION
The Stock Incentive Plan is administered by the Board of Directors or
its delegate. The Board, or its delegate, selects the employees of the Company
who will receive awards, determines the size of any award and establishes any
vesting or other conditions. Employees, directors, consultants and advisors of
the Company (or any subsidiary of the Company) are eligible to participate in
the Stock Incentive Plan, although incentive stock options may be granted only
to employees. No individual may receive options or stock appreciation rights
("SARs") covering more than 250,000 shares in any calendar year. The
participation of the outside directors of the Company is limited to 20% of
shares available under the Stock Incentive Plan.
The Stock Incentive Plan provides for awards in the form of restricted
shares, stock units, options or SARs, or any combination thereof. No payment is
required upon receipt of an award, except that a recipient of newly issued
restricted shares must pay the par value of such restricted shares to the
Company.
RESTRICTED STOCK
Restricted shares are shares of Common Stock that are subject to
repurchase by the Company at the employee's purchase price in the event that the
applicable vesting conditions are not satisfied, and they are nontransferable
prior to vesting (except for certain transfers to a trust). Restricted shares
have the same voting and dividend rights as other shares of Common Stock.
STOCK UNITS
A stock unit is an unfunded bookkeeping entry representing the
equivalent of one share of Common Stock, and is nontransferable prior to the
holder's death. A holder of a stock unit has no voting rights or other
privileges as a stockholder but may be entitled to receive dividend equivalents
equal to the amount of dividends paid on the same number of shares of Common
Stock. Dividend equivalents may be converted into additional stock units or
settled in the form of cash, Common Stock or a combination of both. Stock units,
when vested, may be settled by distributing shares of Common Stock or by a cash
payment corresponding to the fair market value of an equivalent number of shares
of Common Stock, or a combination of both. Vested stock units will be settled at
the time determined by the Compensation Committee. If the time of settlement is
deferred, interest or additional dividend equivalents may be credited on the
deferred payment.
The recipient of restricted shares or stock units may pay all projected
withholding taxes relating to the award with Common Stock rather than cash.
OPTIONS
Options may include nonstatutory stock options ("NSOs") as well as
incentive stock options ("ISOs") intended to qualify for special tax treatment.
The term of an ISO cannot exceed 10 years (five years for 10% stockholders), and
the exercise price of an ISO must be equal to or greater than the fair market
value of the Common
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Stock on the date of grant (or 110% of fair market value at the date of grant
for 10% stockholders). The exercise price of an NSO must be equal to or
greater than the par value of the Common Stock on the date of grant.
The exercise price of an option may be paid in any lawful form
permitted by the Compensation Committee, including (without limitation) the
surrender of shares of Common Stock or restricted shares already owned by the
optionee. The Compensation Committee may likewise permit optionees to satisfy
their withholding tax obligation upon exercise of an NSO by surrendering a
portion of their option shares to the Company. The Stock Incentive Plan also
allows the optionee to pay the exercise price of an option by giving
"exercise/sale" or "exercise/pledge" directions. If exercise/sale directions are
given, a number of option shares sufficient to pay the exercise price and any
withholding taxes is issued directly to a securities broker selected by the
Company who, in turn, sells these shares in the open market. The broker remits
to the Company the proceeds from the sale of these shares, and the optionee
receives the remaining option shares. If exercise/pledge directions are given,
the option shares are issued directly to a securities broker or other lender
selected by the Company. The broker or other lender will hold the shares as
security and will extend credit for up to 50% of their market value. The loan
proceeds will be paid to the Company to the extent necessary to pay the exercise
price and any withholding taxes. Any excess loan proceeds may be paid to the
optionee. If the loan proceeds are insufficient to cover the exercise price and
withholding taxes, the optionee will be required to pay the deficiency to the
Company at the time of exercise.
STOCK APPRECIATION RIGHTS
Stock appreciation rights SARs permit the participant to elect to
receive any appreciation in the value of the underlying stock from the Company,
either in shares of Common Stock or in cash or a combination of the two, with
the Compensation Committee having the discretion to determine the form in which
such payment will be made. The amount payable on exercise of an SAR is measured
by the difference between the market value of the underlying stock at exercise
and the exercise price. SARs may, but need not, be granted in conjunction with
options. Upon exercise of an SAR granted in tandem with an option, the
corresponding portion of the related option must be surrendered and cannot
thereafter be exercised. Conversely, upon exercise of an option to which an SAR
is attached, the SAR may no longer be exercised to the extent that the
corresponding option has been exercised. All options and SARs are
nontransferable prior to the optionee's death.
VESTING
The Compensation Committee determines the number of restricted shares,
stock units, options or SARs to be included in the award as well as the vesting
and other conditions. The vesting conditions may be based on the employee's
service, his or her individual performance, the Company's performance or other
appropriate criteria. In general, the vesting conditions will be based on the
employee's service after the date of grant. Vesting may be accelerated in the
event of the employee's death, disability or retirement or in the event of a
change in control with respect to the Company.
OTHER PROVISIONS
For purposes of the Stock Incentive Plan, the term "change in control"
is defined as any one of the following: (i) any person is or becomes the
beneficial owner, directly or indirectly, of at least 50% of the combined voting
power of the Company's outstanding securities ordinarily having the right to
vote at elections of directors; (ii) approval by the stockholders of the Company
of a merger or consolidation of the Company with or into another corporation or
entity or any other corporate reorganization in which over 50% of the combined
voting power of the continuing or surviving entity immediately after the merger,
consolidation or reorganization is owned by persons who were not stockholders of
the Company immediately prior to the merger, consolidation or reorganization; or
(iii) a change in the composition of the Board of Directors in which fewer than
half of the incumbent directors had been directors 24 months prior to the change
or were elected or nominated with the affirmative votes of directors 24 months
prior to the change.
Awards under the Stock Incentive Plan may provide that if any payment
(or transfer) by the Company to a recipient would be nondeductible by the
Company for federal income tax purposes, then the aggregate present value of all
such payments (or transfers) will be reduced to an amount which maximizes such
value without causing any such payment (or transfer) to be nondeductible.
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FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
Stock Incentive Plan as it relates to share awards, nonqualified stock options
and incentive stock options is intended to be a summary of applicable federal
law. State and local tax consequences may differ.
SHARE AWARDS
If a participant is awarded or purchases fully-vested shares, the
amount by which the fair market value of the shares on the date of award or
purchase exceeds the amount paid for the shares will be taxed to the participant
as ordinary income. The Company will be entitled to a deduction in the same
amount provided it includes the compensation element of the sale or award in
income on the Form W-2 or Form 1099 issued to the participant. The participant's
tax basis in the shares acquired is equal to the share's fair market value on
the date of acquisition. Upon a subsequent sale of any shares, the participant
will realize capital gain or loss (long-term or short-term, depending on whether
the shares were held for more than one year before the sale) in an amount equal
to the difference between his or her basis in the shares and the sale price.
If a participant is awarded or purchases shares that are subject to a
vesting schedule, the participant is deemed to receive an amount of ordinary
income equal to the excess of the fair market value of the shares at the time
they vest over the amount (if any) paid for such shares by the participant. The
Company is entitled to a deduction equal to the amount of the income recognized
by the participant, subject to the tax reporting requirements.
Code Section 83(b) permits a participant to elect, within 30 days after
the transfer of any shares subject to a vesting schedule to him or her, to be
taxed at ordinary income rates on the excess of the fair market value of the
shares at the time of the transfer over the amount (if any) paid by the
participant for such shares. Withholding taxes apply at that time. If the
participant makes a Section 83(b) election, any later appreciation in the value
of the shares is not taxed as ordinary income, but instead is taxed as capital
gain when the shares are sold or transferred.
OPTIONS
Incentive stock options and nonqualified stock options are treated
differently for federal income tax purposes. Incentive stock options are
intended to comply with the requirements of Section 422 of the Code.
Nonqualified stock options need not comply with such requirements.
An optionee is generally not taxed on the grant or exercise of an
incentive stock option. The difference between the exercise price and the fair
market value of the shares on the exercise date will, however, be a preference
item for purposes of the alternative minimum tax. If an optionee holds the
shares acquired upon exercise of an incentive stock option for at least two
years following grant and at least one year following exercise, the optionee's
gain, if any, upon a subsequent disposition of such shares is a capital gain (or
loss). The measure of the gain is the difference between the proceeds received
on disposition and the optionee's basis in the shares (which generally equals
the exercise price). If an optionee disposes of stock acquired pursuant to
exercise of an incentive stock option before satisfying the one and two-year
holding periods described above, the optionee will recognize both ordinary
income and capital gain (or loss) in the year of disposition. The amount of the
ordinary income will be the lesser of (i) the amount realized on disposition
less the optionee's adjusted basis in the stock (usually the option price) or
(ii) the difference between the fair market value of the stock on the exercise
date and the option price. The balance of the consideration received on such a
disposition will be capital gain if the stock had been held for at least one
year following exercise of the incentive stock option. The Company is not
entitled to an income tax deduction on the grant or exercise of an incentive
stock option or on the optionee's disposition of the shares after satisfying the
holding period requirement described above. If the holding periods are not
satisfied, the Company will be entitled to a deduction in the year the optionee
disposes of the shares, in an amount equal to the ordinary income recognized by
the optionee.
An optionee is not taxed on the grant of a nonqualified stock option.
On exercise, however, the optionee recognizes ordinary income equal to the
difference between the option price and the fair market value of the shares on
the date of exercise. The Company is entitled to an income tax deduction in the
year of exercise in the amount recognized by the optionee as ordinary income.
Any gain on subsequent disposition of the shares is a capital gain if the shares
are held for at least one year following exercise. The Company does not receive
a deduction for this gain.
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STOCK INCENTIVE PLAN BENEFITS
The Board is authorized, within the provisions of the Stock Incentive
Plan, to amend the terms of outstanding restricted shares or stock units, to
modify or extend outstanding options or SARs or to exchange new options for
outstanding options; provided, however, that such new or amended options must
have the same or a higher aggregate exercise price than the outstanding options.
Therefore, the benefits and amounts that will be received by each of the Named
Executive Officers, the Named Executive Officers as a group and all other key
employees are not determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION
OF THE AMENDMENT AND RESTATEMENT OF THE BIOSITE DIAGNOSTICS
INCORPORATED 1996 STOCK INCENTIVE PLAN.
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent auditors for the fiscal year ended December 31, 2000, subject to
ratification by the stockholders. Representatives of Ernst & Young are expected
to be present at the Company's Annual Meeting. They will have an opportunity to
make a statement, if they desire to do so, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement for presentation
at the Annual Meeting of Stockholders to be held in 2001 a stockholder proposal
must be received at the offices of the Company not later than December 28, 2000.
If a stockholder wishes to have a proposal considered at the Annual
Meeting of Stockholders to be held in 2001, but does not seek to have the
proposal included in the Company's Proxy Statement and form of Proxy for that
meeting, and if the stockholder does not notify the Company of the proposal no
less than 50 days nor more than 75 days prior to the date of the Annual Meeting
of Stockholders to be held in 2001, then the persons appointed as proxies by
management may use their discretionary voting authority to vote on the proposal
when the proposal is considered at the Annual Meeting of Stockholders to be held
in 2001, even though there is no discussion of the proposal in the Proxy
Statement for that meeting; provided, however, that if less than 65 days' notice
or prior public disclosure of the date of the Annual Meeting is given or made to
stockholders, a stockholder will have until the 15th day following the day on
which such notice of the date of the Annual Meeting was mailed or public
disclosure of the meeting date was given to notify the Company of the proposal
before the persons appointed as proxies may use their discretionary voting
authority to vote on such proposal. It is recommended that stockholders
submitting proposals or notices of proposal direct them to the Secretary of the
Company and utilize Certified Mail-Return Receipt Requested. Stockholders'
proposals should be submitted to the Company's office at 11030 Roselle Street,
San Diego, CA 92121.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) under the Securities Exchange Act of 1934, as
amended the Company's directors, executive officers, and any persons holding
more than 10% of the Company's Common Stock are required to report their initial
ownership of the Company's Common Stock and any subsequent changes in that
ownership to the SEC. Specific due dates for these reports have been established
and the Company is required to identify in this Proxy Statement those persons
who failed to timely file these reports.
The Company believes that during the 1999 fiscal year, all filing
requirements under Section 16(a) were satisfied.
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OTHER MATTERS
The Board of Directors knows of no other business that will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the persons voting the proxies.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Biosite Diagnostics Incorporated,
11030 Roselle Street, San Diego, California, 92121, (858) 455-4808. To provide
the Company sufficient time to arrange for reasonable assistance or
accommodation, please submit all requests by May 10, 2000.
Whether you intend to be present at the Annual Meeting or not, we urge
you to return your signed proxy promptly.
By order of the Board of Directors.
/s/
Kim D. Blickenstaff
President, Chief Executive Officer,
Secretary and Treasurer
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EXHIBIT A
BIOSITE DIAGNOSTICS INCORPORATED
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
ARTICLE 1 INTRODUCTION.
The Plan was adopted by the Board on December 5, 1996, and was approved
by the Company's stockholders on December 6, 1996. The Plan is effective
December 1, 1996. However, Articles 7, 8 and 9 shall not apply prior to the
Company's initial public offering. On February 27, 1998, the Plan was amended by
the Board to increase the number of shares under the Plan. The Plan was amended
again on March 26, 1999 and January 28, 2000, to increase the number of shares
under the Plan and on April 20, 1999, to remove provisions permitting the
repricing of options at lower exercise prices.
The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging Key Employees
to focus on critical long-range objectives, (b) encouraging the attraction and
retention of Key Employees with exceptional qualifications and (c) linking Key
Employees directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the
laws of the State of California.
ARTICLE 2 ADMINISTRATION.
2.1 COMMITTEE COMPOSITION. The Plan shall be administered by
the Committee. Except as provided below, the Committee shall consist
exclusively of directors of the Company, who shall be appointed by the Board.
In addition, the composition of the Committee shall satisfy:
(a) Such requirements, if any, as the Securities and
Exchange Commission may establish for administrators acting under plans
intended to qualify for exemption under Rule 16b-3 (or its successor) under
the Exchange Act; and
(b) Such requirements as the Internal Revenue Service
may establish for outside directors acting under plans intended to qualify
for exemption under section 162(m)(4)(C) of the Code.
The Board may act on its own behalf with respect to Outside Directors and may
also appoint one or more separate committees composed of one or more officers of
the Company who need not be directors of the Company and who need not satisfy
the foregoing requirements, who may administer the Plan with respect to Key
Employees who are not "covered employees" under section 162(m)(3) of the Code
and who are not required to report pursuant to ss. 16(a) of the Exchange Act.
2.2 COMMITTEE RESPONSIBILITIES. The Committee shall (a)
select the Key Employees who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
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ARTICLE 3 SHARES AVAILABLE FOR GRANTS.
3.1 BASIC LIMITATION. Common Shares issued pursuant to the
Plan may be authorized but unissued shares or treasury shares. The aggregate
number of Common Shares available for Restricted Shares, Stock Units, Options
and SARs awarded under the Plan shall not exceed 3,400,000. Of the Common
Shares available hereunder, no more than 20% in aggregate shall be available
with respect to Outside Directors. The limitation of this Section 3.1 shall
be subject to adjustment pursuant to Article 10. The number of Common Shares
available under this Plan shall be increased by unexercised or forfeited
Common Shares under the Company's 1989 Stock Plan.
3.2 ADDITIONAL SHARES. If Stock Units, Options or SARs are
forfeited or if Options or SARs terminate for any other reason before being
exercised, then the corresponding Common Shares shall again become available
for Awards under the Plan. If Restricted Shares are forfeited before any
dividends have been paid with respect to such Shares, then such Shares shall
again become available for Awards under the Plan. If Stock Units are settled,
then only the number of Common Shares (if any) actually issued in settlement
of such Stock Units shall reduce the number available under Section 3.1 and
the balance shall again become available for Awards under the Plan. If SARs
are exercised, then only the number of Common Shares (if any) actually issued
in settlement of such SARs shall reduce the number available under Section
3.1 and the balance shall again become available for Awards under the Plan.
3.3 DIVIDEND EQUIVALENTS. Any dividend equivalents
distributed under the Plan shall not be applied against the number of
Restricted Shares, Stock Units, Options or SARs available for Awards, whether
or not such dividend equivalents are converted into Stock Units.
ARTICLE 4 ELIGIBILITY.
4.1 GENERAL RULES. Only Key Employees (including, without
limitation, independent contractors who are not members of the Board) shall
be eligible for designation as Participants by the Committee.
4.2 OUTSIDE DIRECTORS. The Committee may provide that the
NSOs that otherwise would be granted to an Outside Director under this Plan
shall instead be granted to an affiliate of such Outside Director. Such
affiliate shall then be deemed to be an Outside Director for purposes of the
Plan, provided that the service-related vesting and termination provisions
pertaining to the NSOs shall be applied with regard to the service of the
Outside Director.
4.3 INCENTIVE STOCK OPTIONS. Only Key Employees who are
common-law employees of the Company, a Parent or a Subsidiary shall be
eligible for the grant of ISOs. In addition, a Key Employee who owns more
than 10% of the total combined voting power of all classes of outstanding
stock of the Company or any of its Parents or Subsidiaries shall not be
eligible for the grant of an ISO unless the requirements set forth in section
422(c)(6) of the Code are satisfied.
ARTICLE 5 OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under
the Plan shall be evidenced by a Stock Option Agreement between the Optionee
and the Company. Such Option shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The Stock Option Agreement shall specify whether the Option is an ISO
or an NSO. The provisions of the various Stock Option Agreements entered into
under the Plan need not be identical. Options may be granted in consideration
of a cash payment or in consideration of a reduction in the Optionee's other
compensation. A Stock Option Agreement may provide that a new Option will be
granted automatically to the Optionee when he or she exercises a prior Option
and pays the Exercise Price in the form described in Section 6.2.
5.2 NUMBER OF SHARES. Each Stock Option Agreement shall
specify the number of Common Shares subject to the Option and shall provide
for the adjustment of such number in accordance with Article 10.
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Options granted to any Optionee in a single calendar year shall in no event
cover more than 250,000 Common Shares, subject to adjustment in accordance
with Article 10.
5.3 EXERCISE PRICE. Each Stock Option Agreement shall
specify the Exercise Price; provided that the Exercise Price under an ISO
shall in no event be less than 100% of the Fair Market Value of a Common
Share on the date of grant and the Exercise Price under an NSO shall in no
event be less than the par value of the Common Shares subject to such NSO. In
the case of an NSO, a Stock Option Agreement may specify an Exercise Price
that varies in accordance with a predetermined formula while the NSO is
outstanding, provided that prior to the Company's initial public offering,
the NSO Exercise Price shall be at least 85% (110% for 10% shareholders) of
the Fair Market Value of a Common Share of Stock on the date of grant.
5.4 EXERCISABILITY AND TERM. Each Stock Option Agreement
shall specify the date when all or any installment of the Option is to become
exercisable, provided that prior to the Company's initial public offering,
Options shall become exercisable pursuant to a schedule providing for at
least 20% vesting per year over a five-year period (or, in the case of
performance options, to the extent permitted under applicable regulations of
the California Department of Corporations). The Stock Option Agreement shall
also specify the term of the Option; provided that the term of an ISO shall
in no event exceed 10 years from the date of grant. A Stock Option Agreement
may provide for accelerated exercisability in the event of the Optionee's
death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of
the Optionee's service. Notwithstanding the foregoing, no Options may be
accelerated prior to the Company's initial public offering.
Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited. NSOs may also be awarded in combination with Restricted Shares or
Stock Units, and such an Award may provide that the NSOs will not be exercisable
unless the related Restricted Shares or Stock Units are forfeited.
Prior to the Company's initial public offering, Options must be
exercised within 30 days of the termination of employment (six months for
termination on account of death or disability).
5.5 EFFECT OF CHANGE IN CONTROL. The Committee may
determine, at the time of granting an Option or thereafter, that such Option
shall become fully exercisable as to all Common Shares subject to such Option
in the event that a Change in Control occurs with respect to the Company.
5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume
outstanding options or may accept the cancellation of outstanding options
(whether granted by the Company or by another issuer) in return for the grant
of new options for the same or a different number of shares and at the same
or different exercise price; provided, however, that with respect to the
shares subject to the new Option, there shall be no decrease in the aggregate
exercise price of such shares, determined on an adjusted basis. The foregoing
notwithstanding, no modification of an Option shall, without the consent of
the Optionee, alter or impair his or her rights or obligations under such
Option.
5.7 OTHER REQUIREMENTS PRIOR TO COMPANY'S INITIAL PUBLIC
OFFERING. Prior to the Company's initial public offering, Optionees shall
receive Company financial statements at least annually.
ARTICLE 6 PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price of Common Shares
issued upon exercise of Options shall be payable in cash at the time when
such Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan,
payment shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. The Stock Option Agreement may specify
that payment may be made in any form(s) described in this Article 6.
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(b) In the case of an NSO, the Committee may at any
time accept payment in any form(s) described in this Article 6.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2
is applicable, payment for all or any part of the Exercise Price may be made
with Common Shares which have already been owned by the Optionee for more
than six months. Such Common Shares shall be valued at their Fair Market
Value on the date when the new Common Shares are purchased under the Plan.
6.3 EXERCISE/SALE. To the extent that this Section 6.3 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Common Shares and to deliver all or part of the sales
proceeds to the Company in payment of all or part of the Exercise Price and
any withholding taxes.
6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Common Shares to a securities
broker or lender approved by the Company, as security for a loan, and to
deliver all or part of the loan proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.
6.5 PROMISSORY NOTE. To the extent that this Section 6.5 is
applicable, payment may be made with a full-recourse promissory note;
provided that the par value of the Common Shares shall be paid in cash.
6.6 OTHER FORMS OF PAYMENT. To the extent that this Section
6.6 is applicable, payment may be made in any other form that is consistent
with applicable laws, regulations and rules.
ARTICLE 7 STOCK APPRECIATION RIGHTS.
7.1 SAR AGREEMENT. Each grant of an SAR under the Plan shall
be evidenced by an SAR Agreement between the Optionee and the Company. Such
SAR shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The provisions of
the various SAR Agreements entered into under the Plan need not be identical.
SARs may be granted in consideration of a reduction in the Optionee's other
compensation.
7.2 NUMBER OF SHARES. Each SAR Agreement shall specify the
number of Common Shares to which the SAR pertains and shall provide for the
adjustment of such number in accordance with Article 10. SARs granted to any
Optionee in a single calendar year shall in no event pertain to more than
250,000 Common Shares, subject to adjustment in accordance with Article 10.
7.3 EXERCISE PRICE. Each SAR Agreement shall specify the
Exercise Price. An SAR Agreement may specify an Exercise Price that varies in
accordance with a predetermined formula while the SAR is outstanding.
7.4 EXERCISABILITY AND TERM. Each SAR Agreement shall
specify the date when all or any installment of the SAR is to become
exercisable. The SAR Agreement shall also specify the term of the SAR. An SAR
Agreement may provide for accelerated exercisability in the event of the
Optionee's death, disability or retirement or other events and may provide
for expiration prior to the end of its term in the event of the termination
of the Optionee's service. SARs may also be awarded in combination with
Options, Restricted Shares or Stock Units, and such an Award may provide that
the SARs will not be exercisable unless the related Options, Restricted
Shares or Stock Units are forfeited. An SAR may be included in an ISO only at
the time of grant but may be included in an NSO at the time of grant or
thereafter. An SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.
7.5 EFFECT OF CHANGE IN CONTROL. The Committee may
determine, at the time of granting an SAR or thereafter, that such SAR shall
become fully exercisable as to all Common Shares subject to such SAR in the
event that a Change in Control occurs with respect to the Company.
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7.6 EXERCISE OF SARS. The exercise of an SAR shall be
subject to the restrictions imposed by Rule 16b-3 (or its successor) under the
Exchange Act, if applicable. If, on the date when an SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any
portion of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of an SAR, the Optionee (or any person having the right
to exercise the SAR after his or her death) shall receive from the Company (a)
Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the
Committee shall determine. The amount of cash and/or the Fair Market Value of
Common Shares received upon exercise of SARs shall, in the aggregate, be equal
to the amount by which the Fair Market Value (on the date of surrender) of the
Common Shares subject to the SARs exceeds the Exercise Price.
7.7 MODIFICATION OR ASSUMPTION OF SARS. Within the
limitations of the Plan, the Committee may modify, extend or assume
outstanding SARs or may accept the cancellation of outstanding SARs (whether
granted by the Company or by another issuer) in return for the grant of new
SARs for the same or a different number of shares and at the same or a
different exercise price. The foregoing notwithstanding, no modification of
an SAR shall, without the consent of the Optionee, alter or impair his or her
rights or obligations under such SAR.
ARTICLE 8 RESTRICTED SHARES AND STOCK UNITS.
8.1 TIME, AMOUNT AND FORM OF AWARDS. Awards under the Plan
may be granted in the form of Restricted Shares, in the form of Stock Units,
or in any combination of both. Restricted Shares or Stock Units may also be
awarded in combination with NSOs or SARs, and such an Award may provide that
the Restricted Shares or Stock Units will be forfeited in the event that the
related NSOs or SARs are exercised.
8.2 PAYMENT FOR AWARDS. To the extent that an Award is
granted in the form of newly issued Restricted Shares, the Award recipient,
as a condition to the grant of such Award, shall be required to pay the
Company in cash an amount equal to the par value of such Restricted Shares.
To the extent that an Award is granted in the form of Restricted Shares from
the Company's treasury or in the form of Stock Units, no cash consideration
shall be required of the Award recipients.
8.3 VESTING CONDITIONS. Each Award of Restricted Shares or
Stock Units shall become vested, in full or in installments, upon
satisfaction of the conditions specified in the Stock Award Agreement. A
Stock Award Agreement may provide for accelerated vesting in the event of the
Participant's death, disability or retirement or other events. The Committee
may determine, at the time of making an Award or thereafter, that such Award
shall become fully vested in the event that a Change in Control occurs with
respect to the Company.
8.4 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement
of vested Stock Units may be made in the form of (a) cash, (b) Common Shares
or (c) any combination of both, as determined by the Committee. The actual
number of Stock Units eligible for settlement may be larger or smaller than
the number included in the original Award, based on predetermined performance
factors. Methods of converting Stock Units into cash may include (without
limitation) a method based on the average Fair Market Value of Common Shares
over a series of trading days. Vested Stock Units may be settled in a lump
sum or in installments. The distribution may occur or commence when all
vesting conditions applicable to the Stock Units have been satisfied or have
lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend
equivalents. Until an Award of Stock Units is settled, the number of such
Stock Units shall be subject to adjustment pursuant to Article 10.
8.5 DEATH OF RECIPIENT. Any Stock Units Award that becomes
payable after the recipient's death shall be distributed to the recipient's
beneficiary or beneficiaries. Each recipient of a Stock Units Award under the
Plan shall designate one or more beneficiaries for this purpose by filing the
prescribed form with the Company. A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the Award
recipient's death. If no beneficiary was designated or if no designated
beneficiary survives the Award recipient, then any Stock Units Award that
becomes payable after the recipient's death shall be distributed to the
recipient's estate.
8.6 CREDITORS' RIGHTS. A holder of Stock Units shall have no
rights other than those of a general creditor of the Company. Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Stock Award Agreement.
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ARTICLE 9 VOTING AND DIVIDEND RIGHTS.
9.1 RESTRICTED SHARES. The holders of Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights
as the Company's other stockholders. A Stock Award Agreement, however, may
require that the holders of Restricted Shares invest any cash dividends
received in additional Restricted Shares. Such additional Restricted Shares
shall be subject to the same conditions and restrictions as the Award with
respect to which the dividends were paid. Such additional Restricted Shares
shall not reduce the number of Common Shares available under Article 3.
9.2 STOCK UNITS. The holders of Stock Units shall have no
voting rights. Prior to settlement or forfeiture, any Stock Unit awarded
under the Plan may, at the Committee's discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited with an
amount equal to all cash dividends paid on one Common Share while the Stock
Unit is outstanding. Dividend equivalents may be converted into additional
Stock Units. Settlement of dividend equivalents may be made in the form of
cash, in the form of Common Shares, or in a combination of both. Prior to
distribution, any dividend equivalents which are not paid shall be subject to
the same conditions and restrictions as the Stock Units to which they attach.
ARTICLE 10 PROTECTION AGAINST DILUTION.
10.1 ADJUSTMENTS. In the event of a subdivision of
the outstanding Common Shares, a declaration of a dividend payable in Common
Shares, a declaration of a dividend payable in a form other than Common Shares
in an amount that has a material effect on the price of Common Shares, a
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a lesser number of Common Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or more
of (a) the number of Options, SARs, Restricted Shares and Stock Units available
for future Awards under Article 3, (b) the limitations set forth in Sections 5.2
and 7.2, (c) the number of NSOs to be granted to Outside Directors under Section
4.2, (d) the number of Stock Units included in any prior Award which has not yet
been settled, (e) the number of Common Shares covered by each outstanding Option
and SAR or (f) the Exercise Price under each outstanding Option and SAR. Except
as provided in this Article 10, a Participant shall have no rights by reason of
any issue by the Company of stock of any class or securities convertible into
stock of any class, any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class.
10.2 REORGANIZATIONS. In the event that the Company is a
party to a merger or other reorganization, outstanding Options, SARs,
Restricted Shares and Stock Units shall be subject to the agreement of merger
or reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding Awards by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting and accelerated expiration (provided
the Company has previously had its initial public offering), or for
settlement in cash.
ARTICLE 11 AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards
may be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Article 3.
ARTICLE 12 PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
12.1 EFFECTIVE DATE. No provision of this Article 12 shall
be effective unless and until the Board has determined to implement such
provision.
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12.2 ELECTIONS TO RECEIVE NSOS, RESTRICTED SHARES OR STOCK
UNITS. An Outside Director may elect to receive his or her annual retainer
payments and meeting fees from the Company in the form of cash, NSOs,
Restricted Shares, Stock Units, or a combination thereof, as determined by
the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under
the Plan. An election under this Article 12 shall be filed with the Company
on the prescribed form.
12.3 NUMBER AND TERMS OF NSOS, RESTRICTED SHARES OR STOCK
UNITS. The number of NSOs, Restricted Shares or Stock Units to be granted to
Outside Directors in lieu of annual retainers and meeting fees that would
otherwise be paid in cash shall be calculated in a manner determined by the
Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be
determined by the Board.
ARTICLE 13 LIMITATION ON RIGHTS.
13.1 RETENTION RIGHTS. Neither the Plan nor any Award
granted under the Plan shall be deemed to give any individual a right to remain
an employee, consultant or director of the Company, a Parent or a Subsidiary.
The Company and its Parents and Subsidiaries reserve the right to terminate the
service of any employee, consultant or director at any time, with or without
cause, subject to applicable laws, the Company's certificate of incorporation
and by-laws and a written employment agreement (if any).
13.2 STOCKHOLDERS' RIGHTS. A Participant shall have no
dividend rights, voting rights or other rights as a stockholder with respect
to any Common Shares covered by his or her Award prior to the issuance of a
stock certificate for such Common Shares. No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date
when such certificate is issued, except as expressly provided in Articles 8,
9 and 10.
13.3 REGULATORY REQUIREMENTS. Any other provision of the
Plan notwithstanding, the obligation of the Company to issue Common Shares
under the Plan shall be subject to all applicable laws, rules and regulations
and such approval by any regulatory body as may be required. The Company
reserves the right to restrict, in whole or in part, the delivery of Common
Shares pursuant to any Award prior to the satisfaction of all legal
requirements relating to the issuance of such Common Shares, to their
registration, qualification or listing or to an exemption from registration,
qualification or listing.
ARTICLE 14 LIMITATION ON PAYMENTS.
14.1 BASIC RULE. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer
by the Company under the Plan to or for the benefit of a Participant (a
"Payment") would be nondeductible by the Company for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments
shall be reduced (but not below zero) to the Reduced Amount; provided that
the Committee, at the time of making an Award under this Plan or at any time
thereafter, may specify in writing that such Award shall not be so reduced
and shall not be subject to this Article 14. For purposes of this Article 14,
the "Reduced Amount" shall be the amount, expressed as a present value, which
maximizes the aggregate present value of the Payments without causing any
Payment to be nondeductible by the Company because of section 280G of the
Code.
14.2 REDUCTION OF PAYMENTS. If the Auditors determine
that any Payment would be nondeductible by the Company because of section 280G
of the Code, then the Company shall promptly give the Participant notice to that
effect and a copy of the detailed calculation thereof and of the Reduced Amount,
and the Participant may then elect, in his or her sole discretion, which and how
much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall advise the Company in writing of his or her election within 10 days of
receipt of notice. If no such election is made by the Participant within such
10-day period, then the Company may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 14, present
value shall be determined in
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accordance with section 280G(d)(4) of the Code. All determinations made by
the Auditors under this Article 14 shall be binding upon the Company and the
Participant and shall be made within 60 days of the date when a Payment
becomes payable or transferable. As promptly as practicable following such
determination and the elections hereunder, the Company shall pay or transfer
to or for the benefit of the Participant such amounts as are then due to him
or her under the Plan and shall promptly pay or transfer to or for the
benefit of the Participant in the future such amounts as become due to him or
her under the Plan.
14.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of
uncertainty in the application of section 280G of the Code at the time of an
initial determination by the Auditors hereunder, it is possible that Payments
will have been made by the Company which should not have been made (an
"Overpayment") or that additional Payments which will not have been made by the
Company could have been made (an "Underpayment"), consistent in each case with
the calculation of the Reduced Amount hereunder. In the event that the Auditors,
based upon the assertion of a deficiency by the Internal Revenue Service against
the Company or the Participant which the Auditors believe has a high probability
of success, determine that an Overpayment has been made, such Overpayment shall
be treated for all purposes as a loan to the Participant which he or she shall
repay to the Company, together with interest at the applicable federal rate
provided in section 7872(f)(2) of the Code; provided, however, that no amount
shall be payable by the Participant to the Company if and to the extent that
such payment would not reduce the amount which is subject to taxation under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in section 7872(f)(2) of
the Code.
14.4 RELATED CORPORATIONS. For purposes of this Article 14,
the term "Company" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 15 WITHHOLDING TAXES.
15.1 GENERAL. To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan. The
Company shall not be required to issue any Common Shares or make any cash
payment under the Plan until such obligations are satisfied.
15.2 SHARE WITHHOLDING. The Committee may permit a
Participant to satisfy all or part of his or her withholding or income tax
obligations by having the Company withhold all or a portion of any Common
Shares that otherwise would be issued to him or her or by surrendering all or
a portion of any Common Shares that he or she previously acquired. Such
Common Shares shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash. Any payment of taxes by assigning
Common Shares to the Company may be subject to restrictions, including any
restrictions required by rules of the Securities and Exchange Commission.
ARTICLE 16 ASSIGNMENT OR TRANSFER OF AWARDS.
16.1 GENERAL. An Award granted under the Plan shall not be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor's process, whether voluntarily, involuntarily or by
operation of law, except as approved by the Committee. Notwithstanding the
foregoing, ISOs and, prior to the Company's initial public offering, NSOs may
not be transferable. However, this Article 16 shall not preclude a
Participant from designating a beneficiary who will receive any outstanding
Awards in the event of the Participant's death, nor shall it preclude a
transfer of Awards by will or by the laws of descent and distribution.
16.2 TRUSTS. Neither this Article 16 nor any other provision
of the Plan shall preclude a Participant from transferring or assigning
Restricted Shares to (a) the trustee of a trust that is revocable by such
Participant alone, both at the time of the transfer or assignment and at all
times thereafter prior to such Participant's death, or (b) the trustee of any
other trust to the extent approved in advance by the Committee in writing. A
transfer or assignment of Restricted Shares from such trustee to any person
other than such Participant shall be permitted only to the extent approved in
advance by the Committee in writing, and Restricted Shares held by such
trustee shall be subject
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to all of the conditions and restrictions set forth in the Plan and in the
applicable Stock Award Agreement, as if such trustee were a party to such
Agreement.
ARTICLE 17 FUTURE OF THE PLAN.
17.1 TERM OF THE PLAN. The Plan, as set forth herein, was
adopted on December 5, 1996, and became effective December 1, 1996, except
that Articles 7, 8 and 9 shall not be effective prior to the date of the
Company's initial public offering. The Plan shall remain in effect until it
is terminated under Section 17.2, except that no ISOs shall be granted after
November 30, 2006.
17.2 AMENDMENT OR TERMINATION. The Board may, at any time
and for any reason, amend or terminate the Plan. An amendment of the Plan
shall be subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules. No Awards shall be
granted under the Plan after the termination thereof. The termination of the
Plan, or any amendment thereof, shall not affect any Award previously granted
under the Plan.
ARTICLE 18 DEFINITIONS.
18.1 "AWARD" means any award of an Option, an SAR, a
Restricted Share or a Stock Unit under the Plan.
18.2 "BOARD" means the Company's Board of Directors, as
constituted from time to time.
18.3 "CHANGE IN CONTROL" shall mean the occurrence of any of
the following events:
(a) The consummation of a merger or consolidation of
the Company with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately after
such merger, consolidation or other reorganization is owned by persons who
were not stockholders of the Company immediately prior to such merger,
consolidation or other reorganization;
(b) A change in the composition of the Board, as a
result of which fewer than one-half of the incumbent directors are directors
who either:
(A) Had been directors of the Company 24 months
prior to such change; or
(B) Were elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior to such
change and who were still in office at the time of the election or
nomination; or
(c) Any "person" (as such term is used in sections
13(d) and 14(d) of the Exchange Act) by the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having the right to vote at
elections of directors (the "Base Capital Stock"); except that any change in
the relative beneficial ownership of the Company's securities by any person
resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until such person increases in
any manner, directly or indirectly, such person's beneficial ownership of any
securities of the Company.
The term "Change in Control" shall not include the Company's initial public
offering or a transaction, the sole purpose of which is to change the state of
the Company's incorporation.
18.4 "CODE" means the Internal Revenue Code of 1986, as
amended.
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18.5 "COMMITTEE" means a committee of the Board, as
described in Article 2.
18.6 "COMMON SHARE" means one share of the common stock of
the Company.
18.7 "COMPANY" means Biosite Diagnostics Incorporated, a
Delaware corporation.
18.8 "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
18.9 "EXERCISE PRICE," in the case of an Option, means the
amount for which one Common Share may be purchased upon exercise of such
Option, as specified in the applicable Stock Option Agreement. "Exercise
Price," in the case of an SAR, means an amount, as specified in the
applicable SAR Agreement, which is subtracted from the Fair Market Value of
one Common Share in determining the amount payable upon exercise of such SAR.
18.10 "FAIR MARKET VALUE" means the market price of Common
Shares, determined by the Committee as follows:
(a) If the Common Shares were traded over-the-counter
on the date in question but was not traded on the Nasdaq Stock Market or the
Nasdaq National Market, then the Fair Market Value shall be equal to the mean
between the last reported representative bid and asked prices quoted for such
date by the principal automated inter-dealer quotation system on which the
Common Shares are quoted or, if the Common Shares are not quoted on any such
system, by the "Pink Sheets" published by the National Quotation Bureau, Inc.;
(b) If the Common Shares were traded over-the-counter
on the date in question and were traded on the Nasdaq Stock Market or the
Nasdaq National Market, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by the Nasdaq Stock Market or the
Nasdaq National Market;
(c) If the Common Shares were traded on a stock
exchange on the date in question, then the Fair Market Value shall be equal
to the closing price reported by the applicable composite transactions report
for such date; and
(d) If none of the foregoing provisions is
applicable, then the Fair Market Value shall be determined by the Committee
in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of THE Wall STREET
JOURNAL. Such determination shall be conclusive and binding on all persons.
18.11 "ISO" means an incentive stock option described in
section 422(b) of the Code.
18.12 "KEY EMPLOYEE" means (a) a common-law employee of the
Company, a Parent or a Subsidiary, (b) an Outside Director and (c) a
consultant or adviser who provides services to the Company, a Parent or a
Subsidiary as an independent contractor. Service as an Outside Director or as
an independent contractor shall be considered employment for all purposes of
the Plan, except as provided in Sections 4.2 and 4.3.
18.13 "NSO" means a stock option not described in sections
422 or 423 of the Code.
18.14 "OPTION" means an ISO or NSO granted under the Plan
and entitling the holder to purchase one Common Share.
18.15 "OPTIONEE" means an individual or estate who holds an
Option or SAR.
18.16 "OUTSIDE DIRECTOR" shall mean a member of the Board
who is not a common-law employee of the Company, a Parent or a Subsidiary.
18.17 "PARENT" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations other than the Company owns stock possessing 50%
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<PAGE>
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain. A corporation that attains the status
of a Parent on a date after the adoption of the Plan shall be considered a
Parent commencing as of such date.
18.18 "PARTICIPANT" means an individual or estate who holds
an Award.
18.19 "PLAN" means this 1996 Stock Incentive Plan of Biosite
Diagnostics Incorporated, as amended from time to time.
18.20 "RESTRICTED SHARE" means a Common Share awarded under
the Plan.
18.21 "SAR" means a stock appreciation right granted under
the Plan.
18.22 "SAR AGREEMENT" means the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her SAR.
18.23 "STOCK AWARD AGREEMENT" means the agreement between
the Company and the recipient of a Restricted Share or Stock Unit which
contains the terms, conditions and restrictions pertaining to such Restricted
Share or Stock Unit.
18.24 "STOCK OPTION AGREEMENT" means the agreement
between the Company and an Optionee which contains the terms, conditions and
restrictions pertaining to his or her Option.
18.25 "STOCK UNIT" means a bookkeeping entry
representing the equivalent of one Common Share, as awarded under the Plan.
18.26 "SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
ARTICLE 19 EXECUTION.
To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to affix the corporate name and seal hereto.
BIOSITE DIAGNOSTICS INCORPORATED
By______________________________
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<PAGE>
BIOSITE DIAGNOSTICS INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON MAY 31, 2000
Timothy J. Wollaeger and Kim D. Blickenstaff, or each of them, each with
the power of substitution, are hereby authorized to represent as proxies and
vote all shares of stock of Boisite Diagnostics Incorporated (the "Company")
that the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Hotel La Jolla, 7955 La Jolla
Shores Drive, La Jolla, California on Wednesday, May 31, 2000 at 9:00 a.m. or
at any postponement or adjournment thereof, and instructs said proxies to
vote as follows.
Shares represented by this proxy will be voted as directed by the
stockholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE
AUTHORITY TO VOTE FOR THE ELECTION OF THE TWO NOMINEES FOR CLASS III DIRECTOR
AND FOR ITEMS 2, 3 AND 4.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
/ X / Pleas mark votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE TWO
NOMINEES FOR CLASS III DIRECTOR AND "FOR" ITEMS 2, 3 AND 4.
FOR WITHHELD FROM
ALL NOMINEES ALL NOMINEES
1. ELECTION OF DIRECTORS / / / /
NOMINEES:
KIM D. BLICKENSTAFF
GUNARS E. VALKIRS
- ---------------------------------------------------------------
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominees name on the space provided above.)
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. To approve the amendment to the Stock / / / / / /
Incentive Plan.
3. To ratify the appointment of Ernst & Young LLP / / / / / /
as the Company's independent auditors.
4. In their discretion, upon such other business as / / / / / /
may properly come before the meeting.
MARK HERE ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
</TABLE>
Date:
- --------------------- --------------------- ------------
Signature Signature
Please sign exactly as your name or names appear on the proxy. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, each holder should sign.
